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Taiwan business in China supports
opposition
By Peter
Morris
Taiwan's close presidential
election, scheduled for March 20, may now hinge on the votes
and campaign funding of China-based Taiwanese
businessmen who say President Chen Shui-bian is not actively
protecting their mainland investments of more than
US$100 billion. As a result, the business community is
supporting the pan-blue opposition ticket and pledging
to mobilize 200,000 Taiwan businessmen in China -
bringing them home to vote.
After shying
away from Taiwan politics for years, the business
community collectively has decided to play an active role in
the island's convoluted politics in order to safeguard
their mainland economic interests. The Taiwan Chamber
of Commerce in China last week openly endorsed
Kuomintang (KMT) presidential candidate Lien Chan, who heads
the ticket, with vice-presidential candidate James Soong of
the People First Party (PFP). Their coalition is known
as the pan-blue opposition, after the blue color of the
KMT emblem.
Many analysts describe the election
as a horse race between the pan-blues and Chen's
Democratic Progressive Party (DPP). The latest polls
show Chen trailing by a slim margin.
In an unprecedented
move, Chang Hanwen, chairman of the Taiwan Business
Association, said the business community would bring
200,000 members back home to cast their votes on March
20. Chang, along with hundreds of other Taiwanese businessmen
in mainland China, publicly backed Lien's
presidential bid last week, calling his Beijing-leaning
policies more pragmatic and business-friendly than those
of the Chen government.
The Lien-Soong ticket
has promised immediately to reopen long-stalled talks
with Beijing on improving relations and set up direct
shipping services between both sides within a year,
followed by direct air links within two years. Chen's
measures on travel and shipping links are regarded as
too little, too late.
The Taiwan Institute of Economic
Research estimates that about 50,000 Taiwanese
firms are operating on the mainland. With bilateral
trade between the two sides of the Taiwan Strait
registering a 23.2 percent year-on-year rise in the
first 11 months of last year, the business community
said there was too much at stake to support a president
whom they see as not only recklessly provoking Beijing
with his "defensive" referendum but also pursuing
anti-business policies.
Despite furious warnings
from Beijing and great displeasure from Washington, Chen
has scheduled a referendum on the same day as the
presidential election. Voters will be asked whether
China should redirect nearly 500 missiles currently
pointed at Taiwan, and if China refuses, whether Taiwan
should try to acquire advanced anti-missile weapons and
technology. Voters will also be asked whether Taipei
should start negotiations with Beijing on establishing a
"peace and stability framework" for relations across the
Taiwan Strait.
Exports to mainland nearly $32
billion last year
On Monday, Taiwan's Board
of Foreign Trade (BOFT) reported that during the
11-month period last year, Taiwan's exports to mainland
China amounted to $31.91 billion, up 19.5 percent from
the year-earlier level, while imports from the
mainland totaled $9.78 billion, up 37.3 percent. Taiwan's
exports to China will continue to rise this year because
of rapid growth in mainland exports and increasing
domestic demand, as well as a strong recovery in the
global information-technology (IT) industry.
The business community says Chen has been slow in
fulfilling his promises to liberalize current restrictions
on travel to and from mainland China and
regulations prohibiting Taiwanese from raising capital for
their China businesses on the Taiwanese stock exchange,
the Taiex. Last year, Chen promised to open direct
air passenger and cargo links by the end of 2004 to strengthen
trade ties, but critics call this lip
service. Indeed, many businessmen perceive Chen's
pronouncements and efforts as election-year
grandstanding aimed at satisfying potential voters
rather than a concrete policy change.
Chen's
policies
have been shaped by fears among some Taiwanese that
the island's economy will become increasingly dependent
upon and eventually absorbed by China, thereby losing
its de facto independence. And Chen's political
career is predicated on reaffirming the unique,
independent identity of the Taiwanese people in relation
to their mainland counterparts.
Taiwanese
investors in China, on the other hand, want to maintain
the status quo while they get down to business. Much of
the $100 billion-plus that they have poured into China
is concentrated in manufacturing - an extremely
competitive market segment that has seen profit margins
plummet in recent years. As such, Taiwanese can no
longer afford to be hamstrung by government regulations
prohibiting the free flow of goods and people across the
Taiwan Strait.
Moreover, China's entry into the
World Trade Organization (WTO) in 2001 established an
open, non-discriminatory and rules-based trading
environment, thereby reducing the benefits that
Taiwanese have enjoyed by virtue of their close cultural
ties with the mainland. While Taiwanese executives may
still have the advantage of speaking the same language
as their mainland counterparts and being familiar with
Chinese business culture, the level playing field
ushered in by the WTO has made it a lot easier for
foreign competitors from Europe, Japan and the United
States to do business in China.
Lien Chan's
and James Soong's China policies are considered by
the business community to be more pragmatic and
business-friendly than Chen's, but they also face the problem of
being perceived by many independence-minded Taiwanese as
too cozy by far with the autocrats in Beijing.
Chen's last-ditch effort to woo business
Realizing that the issue of economic ties with
the mainland could cost him the election, Chen gave the
go-ahead last week to expanded direct cargo and
passenger links between China and Taiwanese-controlled
Kinmen and Matzu islands off the coast of China's Fujian
province. The expanded transportation service will cut
travel costs and time for Taiwanese working in Fujian
and other parts of southeastern China, but it is also seen
as an incomplete measure, a half-hearted gesture,
offering little help to businesses operating in other
parts of China.
Experts estimate
that only 150,000 people use Taiwan's outlying islands
to travel between the two sides of the Strait each
year, a relatively low figure when compared with the total
number of businessmen and their families living in
China, estimated at more than a million people.
Chen also promised
to expand government health and educational programs
to include Taiwanese investors and their families
living on the mainland. Finally, Chen offered to hold
talks with China on opening up direct charter air cargo
service between the island and the mainland, as long
as China doesn't attach any political preconditions to
the negotiations.
However, unless Chen wins the
election - and that is far from certain - it is unlikely
that Beijing will agree to such discussions. Chinese
President Hu Jintao and the collective leadership in
Beijing have had a long-standing policy of trying to
isolate the Taiwanese president by avoiding all direct
contact with Chen and his administration. After all,
despite his talk of improving relations, Chen is
regarded by many as perhaps the most adamant supporter
of a free and independent Taiwan.
His referendum plans - which the Taiwan opposition is trying
to thwart - are also making Chen appear to some in
Washington as a loose cannon who could dangerously disrupt the status
quo in the Taiwan Strait. And a disruption of the status
quo could provoke Beijing militarily and draw the US
into a conflict. Still, the dangers of such a scenario
are so manifest that some analysts believe it simply
won't happen.
China successfully woos Taiwan
businessman
Chinese President Hu also has been
trying to influence Taiwanese voters, particularly the
influential business lobby. Besides encouraging business
leaders to vote for the opposition, Hu has an interest
in making sure Taiwanese investment keeps flowing into
China. To be sure, Taiwanese capital, technical
expertise and know-how have been crucial to China's
extraordinary economic growth over the past 20 years.
China needs the estimated 50,000 Taiwanese firms already on
the mainland to stay there, to invest more and attract
new firms that will promote economic development.
Hu also needs to soothe
rattled nerves after the arrest of 24 Taiwanese, allegedly spies masquerading
as businessmen, on the mainland in December. According to
Chinese authorities, state security officers were tipped
off to the existence of an extensive Taiwanese spy
network after Chen announced the precise location of 496
missiles pointed at Taiwan. Chen has long argued that
these missiles pose an unnecessary threat and are
tantamount to holding the island hostage.
Taiwan observers speculate that Beijing conjured up
the spy ring to embarrass President Chen ahead of the
elections. Soon after news of the espionage scandal
broke, Hu invited the heads of Taiwan Chambers of
Commerce in China to an impromptu closed-door meeting
at the Great Hall of the People in Beijing. It was a
rare opportunity for the businessmen to gain access to
China's top leader, and the session reassured the
Taiwanese business community that its investments would
be safe in China.
Hu also may have used the
occasion to encourage investors to fly back to Taiwan
for the elections and vote for the opposition ticket.
Many Taiwanese businessmen may not need to be reminded,
however, as they have already given up on Chen.
The KMT candidate, Lien, also is wooing Taiwan
businessmen and last week he promised to allow
China-based Taiwan companies to raise funds on the
Taiex, allow more mainland tourists into Taiwan and ease
curbs on mainland Chinese investment in the local real
estate market. Last year, mainland tourists were a boon
to Hong Kong's economy, since they are big spenders,
keen to show off their newly acquired wealth. They could
do the same in Taiwan.
The heat over
Chen's planned referendum is intensifying this week, as
China's top official handling Taiwan affairs, Chen Yunlin,
is visiting Washington. On Monday, in a highly
publicized effort to promote the referendum, Chen and his
DPP allies mobilized 70,000 people to form a human
chain across Taiwan's southern city of Tainan, one of
Chen's political strongholds. They shouted slogans such
as "peace referendum to save Taiwan". It was just a
warmup, however, for a larger human chain planned for
February 28. Organizers say that chain will span the
length of the island, about 400 kilometers.
One
thing is certain - the parties on both sides of the
Taiwan Strait will be falling over themselves in order
to woo Taiwan's business community, whose political
influence will continue to burgeon along with China's
economy.
(Copyright 2004 Asia Times Online Co,
Ltd. All rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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