As Taiwan and China engage in the second round of negotiations on a proposed economic cooperation framework agreement (ECFA), it might be worthwhile to look at the long-term consequences of increasing Chinese investment in Taiwan.
Earlier this week, this paper referred to a recent report about possible People’s Republic of China (PRC) funding and involvement in the consortium of Hong Kong-based firms that has sought to acquire Nan Shan Financial Life Insurance Co. Earlier this month, financial regulators said they still had more than 40 unanswered questions about the application by one of the principal investors, China Strategic.
Nan Shan is the nation’s second-largest life insurer, with more than 4 million customers. If the Investment Commission approved the acquisition, this would be the largest takeover of a local financial group by foreign buyers in the nation’s history, which explains why regulators and the media have paid special attention to the case. However, Nan Shan is only one among many Taiwanese corporations from numerous sectors that are — or soon will be — coveted by Chinese and/or Hong Kong-based investors.
In the immediate term, attempted investments are already proving problematic. Nan Shan is one example; China Mobile’s attempt to acquire part of Far EasTone Telecommunications Co is another. What hasn’t been explored, however, are the long-term consequences of those acquisitions, even if, in the eyes of financial regulators, the investments are legal. Deals that involve murky and ill-defined consortiums, such as the one for Nan Shan, are especially troublesome. The reason for this stems from the fact that cross-strait investment — and by extension an ECFA — are all based on vague assurances by Beijing that, in the short term, may actually be implemented.
But what happens five, 10 years down the road after those companies have been acquired? What would Taiwan do if, say, the Hong Kong investors involved in the Nan Shan bid were exposed as having been controlled and financed by the PRC, or if Chinese firms, or the government, suddenly took over those Hong Kong investors? It is difficult to imagine that Nan Shan, or Taiwanese authorities, would decide to annul the investment, and next thing you know, Nan Shan would be controlled by Chinese investors and the personal information of more than 4 million Taiwanese made available to Chinese authorities.
What we must bear in mind is that despite laws that limit the share that Chinese investors can own in the Taiwanese financial sector — which prompted Chinese firms to turn to Hong Kong as an investment springboard — it will be next to impossible to ensure that the shareholder structure of those investing firms does not change in China’s favor at some point. In other words, the Chinese government could be using legitimate Hong Kong investors as Trojan Horses — legitimate on paper, but used as a means to an end — to penetrate the Taiwanese market.
Ironically, it is Hong Kong that provides the clearest warning to Taiwanese. In the years prior to handover in 1997, Beijing made a number of vague promises that the rights and welfare of the people of Hong Kong would be preserved. As Hong Kong academic and former legislator Christine Loh (陸恭蕙) wrote recently in her history of the Chinese Communist Party (CCP) in Hong Kong, however, the devil is in the details. Little by little, the people in the special administrative region found that those vague promises foundered on the shores of the core interests of the CCP. Universal suffrage was delayed time and again. Harsh security laws were implemented. Certain liberties were curtailed — all in the name of Beijing’s core interests: stability and one-party rule.
If Taiwanese are not careful, it could happen here.
Chinese Nationalist Party (KMT) caucus whip Fu Kun-chi (傅?萁) has caused havoc with his attempts to overturn the democratic and constitutional order in the legislature. If we look at this devolution from the context of a transition to democracy from authoritarianism in a culturally Chinese sense — that of zhonghua (中華) — then we are playing witness to a servile spirit from a millennia-old form of totalitarianism that is intent on damaging the nation’s hard-won democracy. This servile spirit is ingrained in Chinese culture. About a century ago, Chinese satirist and author Lu Xun (魯迅) saw through the servile nature of
In their New York Times bestseller How Democracies Die, Harvard political scientists Steven Levitsky and Daniel Ziblatt said that democracies today “may die at the hands not of generals but of elected leaders. Many government efforts to subvert democracy are ‘legal,’ in the sense that they are approved by the legislature or accepted by the courts. They may even be portrayed as efforts to improve democracy — making the judiciary more efficient, combating corruption, or cleaning up the electoral process.” Moreover, the two authors observe that those who denounce such legal threats to democracy are often “dismissed as exaggerating or
Monday was the 37th anniversary of former president Chiang Ching-kuo’s (蔣經國) death. Chiang — a son of former president Chiang Kai-shek (蔣介石), who had implemented party-state rule and martial law in Taiwan — has a complicated legacy. Whether one looks at his time in power in a positive or negative light depends very much on who they are, and what their relationship with the Chinese Nationalist Party (KMT) is. Although toward the end of his life Chiang Ching-kuo lifted martial law and steered Taiwan onto the path of democratization, these changes were forced upon him by internal and external pressures,
The Chinese Nationalist Party (KMT) caucus in the Legislative Yuan has made an internal decision to freeze NT$1.8 billion (US$54.7 million) of the indigenous submarine project’s NT$2 billion budget. This means that up to 90 percent of the budget cannot be utilized. It would only be accessible if the legislature agrees to lift the freeze sometime in the future. However, for Taiwan to construct its own submarines, it must rely on foreign support for several key pieces of equipment and technology. These foreign supporters would also be forced to endure significant pressure, infiltration and influence from Beijing. In other words,
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