The Mainland Affairs Council (MAC) on Saturday issued its first economic risk warning for China this year, saying that Taiwanese businesses should evaluate carefully whether they conduct business there, due to economic loss and personal safety risks.
The council referred to a recent case, saying that investing and working in China involves considerable economic risks, and under China’s system in which politics and economy are inseparable, the political risks have risen sharply.
The Hong Kong-based Ta Kung Pao (大公報) newspaper on Friday targeted Minister of the Interior Liu Shyh-fang (劉世芳), saying that she had received political donations from her nephew, Yen Wen-chun (顏文群), who holds executive positions at three companies in China.
Photo: Chung Li-hua, Taipei Times
The report said that Liu, whom it described as a supporter of Taiwanese independence, allowed relatives to profit from business in China while discouraging cross-strait relations.
China’s Taiwan Affairs Office (TAO) said it is investigating the matter in accordance with laws and regulations.
The MAC on Saturday issued the “2026 China Economic Risk Warning,” urging Taiwanese businesses to carefully assess the situation before doing business in China.
China’s economy is struggling with internal structural adjustments, including ongoing economic downside risks, a sharp decline in foreign investment, high youth unemployment, insufficient consumption momentum and a sluggish real-estate market, the MAC said.
Massive government subsidies in China have led to industrial overcapacity, involution-style competition and stagnant prices or even deflation, it said, adding that all these factors would impact the operations and profitability of Taiwanese businesses and could lead to unpredictable risks.
China’s economy is also facing increasingly high external risks, as its unfair competitive practices and overcapacity have triggered an ongoing tariff and technology war with the US, it said.
Meanwhile, European countries and Japan have been increasing “de-risking” measures on trade with China, while global dumping of Chinese products has drawn international concern and led to more joint countermeasures, it said.
Such developments are likely to intensify investment and operational risks for Taiwanese businesses operating in China, it added.
“The Chinese economy continues to decline, and although Beijing claims its economic growth rate was 5 percent last year, international organizations and professional investment firms questioned the authenticity of these statistics and are pessimistic about the nation’s long-term economic development,” the MAC said.
The council said that in the past few years, foreign investors have significantly reduced or withdrawn their investments from China.
Taiwanese businesses should be more vigilant toward the immense economic risks of investing in China and readjust their overseas layouts, it said.
Chinese authorities, under the guise of punishing “Taiwanese independence advocates,” have targeted people and politically implicated innocent Taiwanese businesspeople, posing an unpredictable threat to their assets and personal safety, it said.
“The TAO’s distortion of facts, blatant intimidation of Taiwanese businesses, and unscrupulous political manipulation highlight the grim reality of an authoritarian state abusing its power,” the council said.
The council also urged Chinese Communist Party authorities to “cease interfering with normal economic and trade activities,” saying that it forces Taiwanese businesses to “de-risk” and sever supply chains, causing deteriorating cross-strait exchanges.
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