Since President Ma Ying-jeou (馬英九) took office in May last year, financial analysts have shown an alarming tendency to attribute rises on the Taiwanese stock market to “closer relations with China” or the signing of agreements between Taipei and Beijing, while drops on the local bourse have often been blamed on rallies organized by the Democratic Progressive Party (DPP). Those assessments — which are picked up by news wire agencies and newspapers — often ignore macroeconomic variables and regional trends that explain stock fluctuations far better than local political developments.
For example, a modest rise on the Taiwanese stock exchange on July 27 was far more likely to have resulted from global optimism about a financial recovery than the “election” the previous day of Ma as chairman of the Chinese Nationalist Party (KMT). And yet, news agencies — quoting or paraphrasing analysts from global financial institutions, both “local and international,” as a reporter at a major wire agency told me during a telephone interview on July 29 — wrote that the 0.79 percent rise was the result of Ma’s election and a congratulatory missive from Chinese President Hu Jintao (胡錦濤).
That very same day, every market in Asia was up, not because of developments in Taiwan or even warming ties across the Taiwan Strait, but because investor sentiment was turning optimistic, as a number of wire agencies reported.
This begs the question: Why are financial analysts and news agencies attributing fluctuations in the Taiwanese stock exchange on local-specific events rather than general macroeconomic trends?
Part of the answer lies in the general belief that Ma’s KMT is pro-business, while the DPP is against business (ironically, during his second term, former president Lee Teng-hui [李登輝] of the KMT was far more radical in his opposition to cross-strait economic liberalization than former president Chen Shui-bian [陳水扁] of the DPP was during the first two years of his first term). Still, given the DPP’s pro-independence ideology, the perception that the pan-green camp is not “business friendly” — especially on cross-strait investment and integration — is almost universal, which invites the belief that its actions are aimed at derailing efforts to increase cross-strait financial cooperation launched by the Ma administration.
These perceptions alone, however, do not explain why financial analysts would deliberately attribute stock exchange negatives to the DPP and positives to the KMT. Something else must be at play, such as institutional biases or self-interest.
Starting in the mid-1990s, the nature of Taiwanese investment in China changed dramatically after a revaluation of the New Taiwan dollar severely increased the cost of manufacturing domestically, forcing Taiwanese companies to increase their investments abroad. Cultural and linguistic affinities, along with cheap labor and investment incentives, made China a logical choice. Over the years, the size of the Taiwanese companies investing in China also increased dramatically, as did the nature of the products that were manufactured there. In recent years, powerful companies in the electronics and computer sectors, among others, have established a foothold in China.
At least part of the billions of dollars required by those companies to develop business operations in China likely came in the form of loans by financial institutions and other private investors, who have an interest in seeing those investments prosper. Anything that threatens the return on investment — such as tensions in the Taiwan Strait, the threat of embargoes or war — is therefore unwelcome by banks and investors who have a stake in stability.
Given, as we have seen, the DPP’s pro-independence mandate and Beijing’s claims on Taiwan, the DPP has therefore come to be seen as a “destabilizing” factor, while the KMT, which favors cross-strait economic integration and warmer ties with Beijing, is now perceived as a “stabilizing” force. For Taiwanese companies operating in China (many, though not all, are either pro-KMT or silent about their pan-green political inclination lest they be singled out by Chinese authorities, as has happened in the past) and their financial backers, the KMT is seen as a far safer option when it comes to safeguarding their financial interests.
What this means is that the same financial institutions that lend money to Taiwanese companies operating in China will tend to produce, or develop intimate relations with, analysts who rather than being neutral, will politicize their assessments in a way that reflects the financial priorities of their masters. If this means portraying the KMT as business-friendly, or overemphasizing local developments in a way that favors the KMT as a means to explain fluctuations in the financial market, so be it.
Equally important is the fact that many Taiwanese firms, for reasons ranging from insuring their business interests to raising enough capital, have formed multinational corporations (MNCs) with other countries to operate in China. Usually on a bigger scale, those MNCs require huge amounts of capital that can only be obtained from major financial lenders (according to statistics, 400 of the Fortune 500 multinational companies have made direct investments in more than 2,000 projects in China). Given the stakes, those lenders will also seek to ensure that their investments are shielded from the possibly disruptive consequences of rising tensions in the Taiwan Strait.
Consequently, MNCs and their international financial backers will tend to disparage the DPP while encouraging the KMT to consolidate stability by accelerating economic integration with China. (This view in part stems from the contentious theory in political science that increased trade between two entities will, over time, reduce the likelihood of conflict or war by raising the cost of conflict.) Maximizing investments and protecting financial interests register far more with those multinationals and financial institutions than the question of Taiwanese sovereignty, which is the raison d’etre of the DPP.
Lastly, we must turn to the convergence of the business sector and the rise of media conglomerates for possible conflicts of interest, which could also account for the bias against the DPP in news reporting. Over the past decade or so, the number of leading companies in the information sector has drastically narrowed.
News organizations like Thomson Reuters, Dow Jones and Bloomberg have branched off into other sectors and bolstered their empires through mergers and acquisitions. Thomson Reuters, for example, which has more than 50,000 employees and operates in 93 countries, now operates in the scientific, tax, accounting, legal and media sectors, with revenues last year totaling US$13.4 billion. Like any other major company, Reuters Thomson has sought to expand in China, hoping to tap into the potential 1.3 billion customers there. One recent example of this is the Scientific business of Thomson Reuters, which in September last year formed a partnership with the Investment Promotion Agency of the Ministry of Commerce of the People’s Republic of China to create a “World Innovation and Investment Promotion Platform” to boost the soft infrastructure of China’s high-tech zones, Xinhua/PRNewswire reported on Sept. 10.
As Mark Garlinghouse, vice president for Asia Pacific at Thomson Scientific, said: “The Scientific business of Thomson Reuters has long been a recognized information partner of top Chinese universities and government institutes such as the Chinese Academy of Sciences, China’s largest government research institute … We also provide patent, scientific and technical information to … well-known Chinese companies.”
This is just one example among many of media companies diversifying their business and entering lucrative marketss with both the private and government sector in China. As incentives increase, and with the promise of lucrative contracts with the cash-heavy Chinese authorities always in the background, it is likely that pressure — subliminal or as the result of direct external persuasion — will eventually build for those companies to “adjust” the information they provide in their news coverage so that it dovetails with their business interests. Time Warner’s ownership of CNN, Disney’s ownership of ABC and General Electric’s ownership of NBC are all examples of conglomerates imposing added business pressures on news organizations.
It is quite possible that portraying the KMT-CCP dyad in a favorable light — at least on the financial front — while painting the DPP in negative terms is the latest iteration of this phenomenon.
As long as big business, MNCs and their financial backers see the DPP as a “destabilizing” threat to Taiwan Strait economic integration, we can expect that the media conglomerates that are increasingly beholden to (if not part of) those giant, multifaceted corporations will continue to disparage the DPP and favor the KMT via stock market analysis.
J. Michael Cole is a writer based in Taipei.
The conflict in the Middle East has been disrupting financial markets, raising concerns about rising inflationary pressures and global economic growth. One market that some investors are particularly worried about has not been heavily covered in the news: the private credit market. Even before the joint US-Israeli attacks on Iran on Feb. 28, global capital markets had faced growing structural pressure — the deteriorating funding conditions in the private credit market. The private credit market is where companies borrow funds directly from nonbank financial institutions such as asset management companies, insurance companies and private lending platforms. Its popularity has risen since
The Donald Trump administration’s approach to China broadly, and to cross-Strait relations in particular, remains a conundrum. The 2025 US National Security Strategy prioritized the defense of Taiwan in a way that surprised some observers of the Trump administration: “Deterring a conflict over Taiwan, ideally by preserving military overmatch, is a priority.” Two months later, Taiwan went entirely unmentioned in the US National Defense Strategy, as did military overmatch vis-a-vis China, giving renewed cause for concern. How to interpret these varying statements remains an open question. In both documents, the Indo-Pacific is listed as a second priority behind homeland defense and
Every analyst watching Iran’s succession crisis is asking who would replace supreme leader Ayatollah Ali Khamenei. Yet, the real question is whether China has learned enough from the Persian Gulf to survive a war over Taiwan. Beijing purchases roughly 90 percent of Iran’s exported crude — some 1.61 million barrels per day last year — and holds a US$400 billion, 25-year cooperation agreement binding it to Tehran’s stability. However, this is not simply the story of a patron protecting an investment. China has spent years engineering a sanctions-evasion architecture that was never really about Iran — it was about Taiwan. The
In an op-ed published in Foreign Affairs on Tuesday, Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) said that Taiwan should not have to choose between aligning with Beijing or Washington, and advocated for cooperation with Beijing under the so-called “1992 consensus” as a form of “strategic ambiguity.” However, Cheng has either misunderstood the geopolitical reality and chosen appeasement, or is trying to fool an international audience with her doublespeak; nonetheless, it risks sending the wrong message to Taiwan’s democratic allies and partners. Cheng stressed that “Taiwan does not have to choose,” as while Beijing and Washington compete, Taiwan is strongest when
RSS