Since taking office, President Ma Ying-jeou (馬英九) has sped up the process of opening up to China, making Taiwan more reliant on its giant neighbor. His rationale is the claim that his predecessors Lee Teng-hui (李登輝) and Chen Shui-bian (陳水扁) hindered Taiwan’s economic development through isolationist policies. The two big items on Ma’s agenda are allowing Chinese investment in Taiwan and signing an economic cooperation framework agreement (ECFA).
Ma’s Chinese Nationalist Party (KMT) can boast of being in complete charge of all branches of government. The legislature does not play its role of supervisor and counterbalance to the administration and has become a mere rubber stamp for Ma’s policies.
Surprisingly, however, the legislature’s Organic Laws and Statutes Bureau recently released a research paper on the prospects for Chinese investment in Taiwan that presents strong doubts about the government’s policy of attracting Chinese investment with few safeguards. The questions raised in the report are both substantial and pertinent and should trigger some alarms. It is by no means certain, however, that this report will wake Ma and his ministers from their stupor.
The report makes two main points. First, it criticizes the Ministry of Economic Affairs’ regulations governing Chinese investment as unclear, since they make no mention of safeguarding industrial technology. The report suggests that regulations governing cross-strait commerce should clearly prohibit Chinese investment in areas that concern national security and that have a monopolistic nature.
It also suggests the government appoint a committee to establish a threshold for investment in key industrial technologies and draw up measures for protecting commercial secrets.
Second, the bureau urged the government to prevent China from coercing Taiwanese doing business in China into acting as agents for Chinese investment. The report suggests the government refer to South Korean regulations to establish the real identity of investors.
The report suggests a mechanism be established to monitor the flow of Chinese investment. It notes that China prohibits private individuals from investing abroad, which means that almost all Chinese investment abroad is state-owned capital.
Taiwan must prevent politically motivated acquisitions by Chinese investors, and regulations on cross-strait investment should include precautions against the strategic withdrawal of investments. The government should be prepared to take over businesses with Chinese investment for the sake of national security if necessary.
We have been expressing such concerns for a long time. Over the past year, we have pleaded with Ma’s government to take note of these worries, though our advice has fallen on deaf ears. Unfortunately the Ma administration has clung obstinately to its course.
China has changed its unification strategy to a carrot-and-stick approach, with economic integration the main element in the softer side of the strategy and cross-strait investment playing a key role. China’s investments abroad require official approval, which is granted according to Beijing’s interests.
Chinese investment in Taiwan will, therefore, be geared to use Beijing’s enormous foreign exchange reserves to acquire major firms and technology and to hollow out Taiwan’s industrial base. It will be used to speculate on financial markets in order to turn Taiwan into an economic colony.
China may use its stakes in Taiwanese companies or contracts for public construction projects to make Taiwanese firms subordinate to their Chinese counterparts and act as their agents in Taiwan. They may then be used to influence elections and policies and gradually gain political control of Taiwan.
Our reservations about Chinese investment are not just ideological.
Even the distinguished Japanese writer Kenichi Ohmae, known for his unending praise for China, has expressed similar doubts.
Interviewed recently by Taiwanese media, Ohmae trumpeted China’s economic virtues. When asked about Taiwan’s policy of opening up to Chinese investment, however, he expressed concern, warning that it would be unwise to allow unlimited Chinese investment.
It is clear enough, then, that allowing China to invest in Taiwan is like allowing a fox into a henhouse. If we want to ensure the survival of Taiwanese manufacturing, we should not allow Chinese investment at all.
Unfortunately the Ma administration has its mind set on opening the door to Chinese investment, and the legislature offers almost nothing to stop it. Only now has the Organic Laws and Statutes Bureau spoken out, advising the government to amend the regulations governing cross-strait relations to limit Chinese investment. Even at this late stage, perhaps such limitations could reduce the harm done by Ma’s erroneous policies.
Considering the Ma administration’s near monopoly on power, the bureau is to be commended for its professionalism and courage in voicing opinions that challenge government policy.
Ma’s Cabinet has shown itself to be mediocre. It is barely competent to handle day-to-day affairs. When the global financial crisis struck last year, the government was so helpless it was embarrassing. No wonder its approval rates have plunged — from winning over half the votes in last year’s elections to today’s situation — where it has completely lost the public’s confidence.
If Ma were willing to face up to his failures, he could avoid doing great harm to the country. However, if he persists in trying to fool the public into believing that he can save Taiwan, he will be nothing more than a quack.
In opening Taiwan to Chinese investment and pushing for an ECFA, however, he is more like Pandora opening her legendary box. Rather than exorcising evil spirits, he is inviting the Chinese devil into Taiwan. With the Ma government on one side and the Chinese ogre on the other, Taiwanese are in a sticky situation indeed.
TRANSLATED BY JULIAN CLEGG
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