The much-awaited set of new regulations governing cross-strait market access for the banking, securities brokerage and insurance sectors announced by the Financial Supervisory Commission on Tuesday showed that the financial regulator has taken public concerns to heart.
However, as any market-access deal takes two to tango, there is bound to be uncertainty over whether President Ma Ying-jeou’s (馬英九) administration will stick to its bottom line and refrain from making concessions in the upcoming negotiations over a proposed economic cooperation framework agreement (ECFA) with China, during which further relaxations of financial rules may be agreed upon.
From the Taiwanese side, to ease concerns that the Taiwanese banking sector may use local deposits to fund its loan businesses in China, the commission’s new regulations stipulate that half of the loans to be granted by the banks’ to-be-established outlets in China will have to come from Chinese depositors. The commission has also placed a cap on each Taiwanese bank’s China-bound investment at less than 15 percent of a bank’s net worth or 10 percent of a financial service provider’s net worth.
All of this means that the capital outflow of 14 Taiwanese banks to China will be capped at NT$25 billion (US$785 million), while that of 13 financial service providers will not exceed NT$50 billion.
To a certain degree, both rules aim to put a brake on the acceleration of China-bound capital flight within the banking sector, which was previously barred from branching into China.
This contrasts with earlier estimates by China Development Industrial Bank president Simon Dzeng (曾垂紀), at the time executive vice president at Mega Financial Holding Co, that once the government gave the green light, most domestic banks would move into the Chinese market “within three months,” resulting in a fund outflow of as much as NT$300 billion.
However, we shouldn’t expect the banking sector to be satisfied with the new regulations. It is very likely that it will push for more open policies before the government sits down with its Chinese counterparts.
Meanwhile, the commission has opened the door just a little for Chinese banks wishing to branch into Taiwan. Chinese banks will remain barred from setting up subsidiaries here and will have to wait two years before they can upgrade their representative offices into branches.
In terms of share investments, Chinese financial institutions will not be allowed to own more than 10 percent of a Taiwanese rival’s stock, although the regulator has said it would further relax, “in a progressive manner,” such rules after — and if — an ECFA is signed.
Many Chinese banks have made it clear they have no interest in single-digit holdings in Taiwanese banks, as Taiwanese banks are already allowed to take up stakes of up to 20 percent in Chinese banks via overseas outlets.
It does appear that the new regulations were baby steps that will please nobody. This said, we must hope the government will remain steadfast and refrain from making careless moves when it negotiates with the Chinese government on further market access. When dealing with Beijing, baby steps might just be advisable.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
In an article published on this page on Tuesday, Kaohsiung-based journalist Julien Oeuillet wrote that “legions of people worldwide would care if a disaster occurred in South Korea or Japan, but the same people would not bat an eyelid if Taiwan disappeared.” That is quite a statement. We are constantly reading about the importance of Taiwan Semiconductor Manufacturing Co (TSMC), hailed in Taiwan as the nation’s “silicon shield” protecting it from hostile foreign forces such as the Chinese Communist Party (CCP), and so crucial to the global supply chain for semiconductors that its loss would cost the global economy US$1
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
Sasha B. Chhabra’s column (“Michelle Yeoh should no longer be welcome,” March 26, page 8) lamented an Instagram post by renowned actress Michelle Yeoh (楊紫瓊) about her recent visit to “Taipei, China.” It is Chhabra’s opinion that, in response to parroting Beijing’s propaganda about the status of Taiwan, Yeoh should be banned from entering this nation and her films cut off from funding by government-backed agencies, as well as disqualified from competing in the Golden Horse Awards. She and other celebrities, he wrote, must be made to understand “that there are consequences for their actions if they become political pawns of
RSS