TAIPEI - Shortly after Taiwan
President Chen Shui-bian announced in January that he would harden Taiwan's
China policy, China's President Hu Jintao traveled to
Fujian province, just across the water from Taiwan, to shake hands with
Fujian-based Taiwanese businessmen. About two months later, Hu's support for
Fujian's development was revealed in a clause written into China's 11th
five-year plan, which talked about "supporting the economic developments of the
[Taiwan] Strait's west coast and any area with a concentration of Taiwan
businessmen". This has come to be known as the Western Shore Economic Zone
scheme.
Fujian, a province located between the Pearl River Delta and the Yangtze River
Delta, has been relatively left behind those two areas' rapid economic growth.
But provincial authorities believe
that they have finally found a way to boost Fujian's economy: by linking its
future to China's unification with Taiwan. Whether the policy can accomplish
anything, however, depends on how the province improves its infrastructure and
what kind of preferential treatment the State Council grants Taiwanese
investors, observers suggest.
"The preferential treatment will count for little if the economic zone doesn't
lead to commercial success," Chen Te-sheng, research fellow at the Institute of
International Relations at Taiwan's National Chengchi University, said.
Because of the common language (Minnanese, the dialect spoken in most of
Fujian, is extremely similar to Taiwanese, though the identification of the two
has become politicized) and deep family ties with Taiwan, Fujian province was
one of the first investment areas entered by Taiwanese businessmen in the early
1980s. In light of the province's geographic location next to Taiwan, its
capital Xiamen was named as one of China's first four special economic zones in
1980.
But bureaucratic corruption and a lack of direct transport links with Taiwan
eventually forced many Taiwanese investors to relocate. According to figures
from Taiwan's Investment Commission, more than 90% of Taiwanese investment is
concentrated in six of China's coastal provinces, including
Guangdong, Jiangsu,
Fujian, Zhejiang,
Hebei, and Shandong.
But investment in Fujian has accounted for less than a tenth of total
investment since 1996. By the end of last October, Taiwanese investment in
Fujian had reached US$3.9 billion, about 8% of total investment, compared with
Jiangsu's 44% and Guangdong's 28%. Based on China's figures, Fujian received
$7.5 billion of contracted foreign investment in 2004, from all countries,
compared with $36.1 billion to Jiangsu and $19.4 billion to Guangdong.
"Fujian has a reputation of failing to implement market-economy polices,
instead it emphasizes politics," explained a senior official at Taiwan's
semi-official Straits Exchange Foundation (SEF), who spoke on condition of
anonymity. "Corruption is another issue. The Yuanhua case is just one
[example]," the official added. In that notorious case, broken in 2000-01, the
Yuanhua Group smuggled cars, luxury goods, oil and other goods into Fujian's
Xiamen city, cheating the state of about $4 billion.
Thousands of government officials were involved: Lai Changxing, the chairman of
Lianhua group, had corrupted them by such means as wining and dining them,
hiring their children, or secretly filming them cavorting with hostesses at his
"underground palace", known as the "Little Red Mansion". Allegedly, Lai even
attempted to bribe then-premier Zhu Rongji to the tune of $2 billion. But Zhu
responded by sending hundreds of police investigators from outside the province
to Fujian, and dozens of officials were shot in the ensuing crackdown.
Complaints about local government corruption are widely circulated among
Fujian-based Taiwan businessmen. The chairman of the Fuzhou Chamber of Trade,
Hsu Jiun-Da, was arrested and interrogated for a week in 2002 after he publicly
criticized the local government's performance. Hsu, a Taiwanese businessman who
once operated a textile factory and invested in a hospital there, has been
withdrawing his investment from the province.
Another former Fujian-based businessman, Huang Rui-sin, noted, "It is always
difficult to get through Fuzhou customs, but that's never the case in
Beijing, Shanghai
[or] Shenyang."
Based on SEF statistics, some 250,000 Taiwanese residents have lived in
Guangdong province, with the same number having lived in the Yangtze River
Delta. This compares to 80,000 to 90,000 Taiwanese residents in Fujian.
Frustrated by the neighboring provinces' rapid development, Fujian Communist
Party Secretary Lu Zhangong officially introduced the policy of promoting
China's unification with Taiwan in January 2004 as a way to encourage Taiwan
investment. The policy was eventually endorsed by the central government after
a two-year campaign.
Under Fujian's development plan, it will pursue closer commercial ties, direct
transport links, direct tourism exchanges, comprehensive agricultural
cooperation and cultural interaction with Taiwan. The economic zone will
"promote the better use of resources in east China and enhance [the region's]
overall economic strength", Wang Xiaojing, then executive vice governor of
Fujian, said in 2004.
As part of the provincial government's efforts to promote itself to Taiwan, it
now holds eight major promotional events a year, covering tourism, agriculture,
textiles, trade and forestry. To make it easier for Taiwan businessmen to take
part, they are allowed to apply for visas when they arrive in Xiamen and Fuzhou
rather than applying in advance. Certain Taiwan fruits can also be imported
free of tariffs. In addition, more agricultural investment parks, where Fujian
is seeking to attract Taiwanese farm technology, are being established.
However, a decision on whether to establish a free trade zone is still under
discussion.
Shortly after the policy's announcement, Ming-da Photonics, which produces
light-emitting-diode (LED) monitors, invested $50 million in Xiamen. The
company's chairman, Tung Sheng-nan, said he was honored to shake hands with Hu
Jintao three times on a visit to Fujian this January. Tung, a former city mayor
of Taiwan's high-tech Shinjeou city, declined to talk about his company, but
said it was backed by US money. But apart from from Ming-da, few companies have
shown an interest in Fujian following the new policy direction.
"Taiwan investors should wait for preferential treatment granted by the State
Council, as promises from local governments might not materialize," said Wu
Shiuan-miao, vice-chief financial officer at Taiwan's Cheng Shin Tire, which
invested in Fujian in the early 1990s.
Commenting on whether the province would achieve anything with the plan over
the next five years, Li Fei, a research fellow at Xiamen University, said that
would depend on Taiwan's attitude. Li argued that if Taiwan could expand the
"three mini links" between Taiwan's offshore islands and Fujian's ports,
without there being links to other areas on the Chinese mainland, Fujian would
definitely benefit.
The "three mini links" were introduced by Taiwan in 2001, allowing residents
and cargo to travel between Taiwan's offshore islands of Matsu and Kinmen
(which actually belong to the part of Fujian province administered by Taiwan)
and the cities of Fuzhou and Xiamen on the mainland.
Traffic from the two Chinese cities is also entitled to make the journey in the
opposite direction. Beijing was not very cooperative about the links in their
first two years of operation. According to statistics from Taiwan's Mainland
Affairs Council, 45 Chinese boats and 1,041 Chinese visited Taiwan in 2001,
compared with 137 Taiwanese boats and 11,729 Taiwanese who traveled to China.
The links became warmer in 2004, when 1,803 Chinese boats and 18,607 Chinese
traveled to Taiwan. Some 1,595 Taiwanese boats and 258,243 Taiwanese passengers
traveled to China in the same period.
Reviewing Fujian's development potential, the SEF official said, "If the area
can really create a thriving commercial zone, Taiwan businessmen will
definitely go. They are very perceptive."
Lin Chu-chia, a professor of economics at National Chengchi University, said
Fujian had to target new industries, such as banking and insurance, to enhance
its "uniqueness". In addition, he said the province should make it easier to do
business there, by such means as granting multiple-entry visas and money
exchange facilities to businessmen. Taiwan's former prime minister Vincent
Siew, on the other hand, suggested Taiwan take advantage of the idea and
establish a "cross-strait common market", similar to the European Union common
market.
A more negative view about China's new Fujian plan was expressed by Taiwan's
Mainland Affairs Council, which argued that the west coast project "would
simply suck out Taiwan's economy" and relegate China-Taiwan relations to the
province-to-province level. However, Chen Te-sheng, a research fellow at the
Institute of International Relations at National Chengchi University, said the
council should not be worried about the new policy.
In the long term, observers in Taiwan believe Fujian's main aim is not
unification, but promoting its own economy. Nonetheless, this fits nicely with
Beijing's policy of using the economy to accomplish its strategic goals with
respect to Taiwan. "China has been quietly laying the foundations for its 'One
China' policy using the economy," said a Taiwan senior government official.
That means the central and provincial governments both have a stake in making
Fujian's new policy work.
