The government should factor in the size of Taiwanese and Chinese companies and their operations when negotiating a financial memorandum of understanding (MOU) with China on market access, academics said yesterday.
Ray Dawn (董瑞斌), a finance professor at China University of Technology, told a Taiwan Research Institute forum in Taipei that the government should, under the principle of parity, seek permission from Beijing for Taiwanese lenders to process yuan transactions, while at the same time only allowing China’s urban banks to operate in Taiwan.
Dawn, an expert on cross-strait finance, said that even after being granted market entry, Taiwanese lenders would have to wait five years — including two years to set up offices and three years to upgrade the offices to branches — before being able to process yuan transactions.
However, Chinese financial services would be able to commence trading immediately upon obtaining approval to operate in Taiwan, he said.
Financial Supervisory Commission Chairman Sean Chen (陳冲) said Taiwan and China may sign an MOU on financial supervision and market access this month or next.
Seven Taiwanese lenders have already set up offices in China with a view to turning them into branches or subsidiaries once legal obstacles are overcome.
Dawn said Taiwanese banks are no match for their Chinese counterparts in terms of capital and assets, and a failure to address this would place them in a disadvantaged position.
Total loans from the Industrial and Commercial Bank of China (中國工商銀行), for instance, are 10.6 times greater than those from the Bank of Taiwan (臺灣銀行), Dawn said.
He suggested limiting market entry to China’s urban banks to minimize the impact on Taiwan’s banking industry.
William Lin (林蒼祥), a finance professor at Tamkang University, said the government should adopt a broader strategy and persuade China to view the MOU as part of regional economic integration endeavors.
Under this approach, Taiwan would seek market entry for domestic securities brokerages and lenders on a trial basis, he said.
Lin said that private companies make up a large part of Taiwan’s stock exchange, while 85 percent of listed companies in China are state-run.
Taiwanese equity markets are more properly regulated, though they are overcrowded, he said, urging the government to seek better terms for local securities and futures companies.
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