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Business
in china on July 29, 2004 Investors
told to steer clear of independence CHINESE
PRESSURE: At a conference sponsored by the Chinese government, Taiwanese
investors got an earful from the presumptuous Taiwan Affairs Office minister
"It is not permissible for individuals to benefit from cross-strait
economic ties and yet remain proponents of Taiwan's independence while [in
Taiwan]," Wang Zaixi, vice minister of the Taiwan Affairs Office, said in a
speech yesterday. "It is very dangerous for Taiwan to think that China would be willing
to tolerate Taiwan's independence in order to promote economic development and
to host the Olympics," Wang warned. "Those supporting Taiwan's independence also express at the same time
a willingness to develop cross-strait economic relations," Wang said. He said that this made apparent the duplicity of Taiwan's policy on China,
saying that there were different policies for the political and the economic
spheres. According to reports yesterday, the conference attracted roughly 200
participants, more than in previous years. The Xinhua News Agency referred to
the forum as an instance of important cross-strait exchanges. It is also the
first forum on cross-strait relations organized by the Chinese government since
President Chen Shui-bian's inauguration in May. The forum is organized each year by a research institute affiliated with
China's Taiwan Affairs Office. The annual forum was attended by several high-profile Taiwanese investors,
including Shin Kong Financial chairman Eugene Wu, Formosa Plastics Corp
president Lee Chih-tsuen and Chinese Federation of Labor vice chairmen Preston
Chen. Several former Taiwanese government officials were in attendance yesterday.
Former Control Yuan president Wang Tso-jung, former minister of justice Liao
Cheng-hao and New Party Chairman Yok Mu-ming were all present. China Airlines, Evergreen International Corporation, Uni-President Group,
and Yulon Motors Co also sent representatives to the forum. Wang also addressed the issue of establishing direct links across the
Taiwan Strait, saying that it was an internal matter. "Direct links are a cross-strait matter. They are an internal affair
concerning the Chinese people on both sides of the strait. It is not an issue
between two countries," Wang said. He said that China welcomed non-governmental organizations or enterprises
in Taiwan to discuss the matter with China as long as it is in accordance with
principles of establishing direct and two-way links of mutual benefit. US
should take clear stand in Strait By Andrew Yang
In the past week or so, the US, China and Taiwan have all concentrated
formidable military forces in exercises in and around the Taiwan Strait. The
media in China, Taiwan and throughout the world have sensationalized the events.
Some people have taken the exercises out of context and are boldly predicting
that China, Taiwan and the US are on the brink of war. Though the drills heighten emotion and create tension, public opinion
favors the peaceful maintenance of the status quo. The question is how to define the status quo. In the Taiwan Strait, the
term has two levels of meaning. The first level is how Taiwan, China and the US
interpret the phrase. For the US, the status quo is based in its "one China" policy, in
which it seeks to maintain a situation of "no unification, no independence,
no conflict, no peace [treaty]," which in its own estimation best meets US
interests in the region. On this basis it encourages cross-strait dialogue,
breaking down prejudice and building consensus to create a stable political
environment. For China, status quo means discussing issues such as direct links under
the "one China" principle, preparatory to unification under a
"one country, two systems" structure. And for Taiwan, the status quo means that China and Taiwan are two
sovereign entities and that Beijing should accept this fact prior to entering
negotiations on issues such as direct links. The second level of the meaning of "status quo" refers to what
the various parties want to achieve within their definitions of the term. Since there is no consensus or common ground between China and Taiwan on
what it means to maintain the status quo, the policy pursued by both sides has
only deepened mutual sus-picions. Beijing believes that Taipei is pursuing
independence under the cover of maintaining the status quo, and the political
environment that has emerged after the recent presidential election tends to
reinforce this view. From Taiwan's perspective, China's attempts to isolate it politically and
economically are a result of Beijing's insistence on "one China" and
its efforts toward unification. As the two sides of the Strait become increasingly suspicious of each
other, they have both lobbied the US with accusations of wrong-doing on the
other side. At the same time, military threats and the manipulation of public
opinion have deepened the mistrust. This causes problems for US policymakers. Not only must they listen to the
complaints from both sides, but on the domestic front they also have to mediate
between the hawks and doves who are pulling in opposite directions on this
issue. Because the US position is full of contradiction and compromise, their
principles and policies for maintaining the status quo have gradually lost
credibility. With Taipei and Beijing largely concerned with their own interests, they
are not concerned with the US' problems. And Washington, while willing to help
ease the tension between Taipei and Beijing, is clearly unable to achieve much. With domestic security and the war against terrorism the primary concerns
of the US political establishment, they have little time to concern themselves
with the Strait. Even the nuclear crisis on the Korean Peninsula has to be
sorted out through six-nation talks. It is quite clear that the US is can do little to resolve the cross-strait
crisis. In response to Taipei's complaints, it can only recommend calm, and
advise the country to bide its time to win greater space to maneuver. But the
government does not see time as being on its side. Already there is a sense of
anxiety among politicians and the public over the nation's political ambitions,
which indicate that Taipei is in a hurry. The same can be said of Beijing. It is anxious to resolve the question of
Taiwan. But in the face of US prevarication and the strong emotional response
that their ultimate goal triggers in Taiwan, there is little they can do but
deal with the issue sternly. History has taught us that when two great powers
face off over a flashpoint, the only way of easing the pressure is for both
parties to show their hand. In its recent military exercise, Beijing has
revealed how it may handle the issue. The only thing they are concerned about
is: "Will the US go to war over Taiwan?" The ball is in the US' court. Clearly, its version of the "status
quo" is increasingly untenable. It is time for the US to show its hand.
Both sides of the Strait wait for this with bated breath. Andrew
Yang is the secretary general of the Chinese Council of Advanced Policy Studies.
Translated
by Ian Bartholomew Go
slow on cross-strait investment According to the confidence index released by China's Economic Observation
Research Institute, 1,200 listed companies in China failed a confidence
evaluation survey among their investors. The average survey score was only 35.6
out of 100 and the highest score was just 51. This indicates that Chinese investors have very little confidence in listed
companies in China. This announcement, together with several recently uncovered
financial scandals, suggests a serious internal crisis in the Chinese economy.
Such information also serves as a lesson for many Taiwanese who advocate
investing in China and encourage China-based Taiwanese companies to be listed
here. The survey results are not unexpected. It's simple logic that economics can
never be separated from politics, and that economic transparency correlates
directly to the degree of political transparency. Can we expect companies in
China, where dictatorship and lack of openness in political decision-making are
the norm, to offer transparent information? Taiwan's transparency of information has been recognized by foreign
investment funds. Morgan Stanley Capital International announced last month that
it would increase the weighting of its Taiwan Index from 55 to 75 percent by the
end of this year and to 100 percent by next May. This suggests that the nation
already stands as a mature capital market in the eyes of foreign investors. But even so, corporate scandals still hit the headlines. For example, the
fraud uncovered last month at Procomp Informatics Ltd has led to tremendous
losses for its investors. How much more likely is an incident like this in
China, with its authoritarian political environment and financial markets that
are still in their infancy? We can see from reports on China Central Television
that there are numerous companies that sell fake products with a total disregard
for people's lives. Consumers are afraid of purchasing products that may cause
cancer; investors are afraid of putting their money into a company on the basis
of false information. It is said that "when the water is too clear there are no fish,"
but in a chaotic investment environment, investors must remain alert at all
times. Information on China's companies is often false and the risks that this
leads to should not only warn us to be cautious when investing in or trading
with Chinese companies, but also should warn us not to blindly allow Taiwanese
firms based in China to list on the stock exchange here. The logic of this is
simple. Take Procomp. Every company that goes public is required to accept
supervision and scrutiny from Taiwan's financial authorities. Even here there
are legal loopholes, so we need hardly mention what the situation will be like
for Taiwanese companies that have invested in China. There are no legal or financial audit mechanisms operating across the
Taiwan Strait so there is no possibility of the nation's financial authorities
crossing over to audit such companies. If these companies were listed here, the
only way to ascertain the veracity of the information contained in their
financial statements would be by divination. Investors buying such stocks could
only close their eyes and hope for the best. The question is, can the government allow investors to take such risks? The
answer is no. It is not that Taiwanese companies based in China aren't
believable, but simply that the legal and financial structures in China cannot
gain investor confidence. It is impossible for Taiwan's financial authorities to
audit these companies, so we recommend that the government proceed slowly in
this matter. Priority should be given to pushing forward President Chen
Shui-bian's financial reforms and consolidating the nation's capital markets.
Only after we become a more mature and highly developed market should we proceed
further.
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