20110218 Keeping close track of Chinese investments

Keeping close track of Chinese investments

By Huang Tien-lin 黃天麟

Chinese investment is not only a Taiwanese concern. In the US, Chinese telecommunications giant Huawei ran into difficulties with the US Committee on Foreign Investment last May as it tried to acquire US-based technology firm 3Leaf Systems. There are also rumors that Huawei’s cooperation with Amerilink Telecom will come to an end.

Is the administration of US President Barrack Obama also narrow-minded and pursuing an isolationist policy? No, the senators opposing these Chinese investments are not introducing a new era of McCarthyism: They are speaking up based on national security concerns and a sense of social responsibility.

Is there a relationship between Chinese investments and US national security? Yes, of course, because China is a potential threat to the US. By contrast, China is a current and ongoing threat to Taiwan’s security.

In other words, there is no question of whether Chinese investments should be controlled. They should be. Australia and Canada, two countries with a free investment environment, have rejected several Chinese investment projects over the past two years. Even Taiwan’s strongly pro-China newspaper the Economic Daily News has argued for the legitimacy of strictly managing Chinese investments. The problem lies in deciding which investment projects should be defined as Chinese investments.

If Chinese investments were to be defined as capital controlled by Chinese authorities, as the Chinese-language China Times said in its Feb. 10 editorial, or only as investments where Chinese capital exceeds 30 percent as the Chinese-language Want Daily said in its Feb. 11 editorial, then any investment review by Taiwanese authorities would be useless from a national security perspective. Instead, such reviews would become a ruse to cover up illegal investments by providing a thin veil of legality.

The crux of the problem is not who holds the investments, but the degree to which a foreign power can influence them. Chinese investment should be defined as any investment over which the Chinese government can exert official control, irrespective of the nationality of the source of investment — meaning it could be Chinese, Taiwanese or any nationality.

The state should keep tabs on investments in industries deemed to be of strategic importance to Taiwan. It needs to know whether the people who own these investments will be able to make decisions at crucial moments that might compromise national security. This is the thing that concerns us and which our government, as a national instrument, needs to be aware of to be able to safeguard national interests.

Taiwanese businesses don’t need to be overly concerned about being labeled as pro--communist, so long as they maintain the majority — more than 50 percent — of their business activities and capital in Taiwan or any other democratic country in the world. They might even earn a certain amount of kudos for doing so. Who would call companies like Formosa Plastics Corp or Taiwan Semiconductor Manufacturing Co pro-communist?

It is the other side of the coin that Taiwanese investors should think carefully about. Say a Taiwanese company moves lock, stock and barrel over to China to take advantage of the benefits such a move entails. They make a success of it and decide to expand their operations by investing back in Taiwan. They will find themselves still subject to directives from Beijing. Should their investments be regarded as Taiwanese or Chinese?

If we needed any reminder of how China is already infiltrating Taiwanese society, we need look no further than the espionage scandal involving Major General Lo Hsien-che (羅賢哲). It pays to be vigilant.

Huang Tien-lin is a former national policy adviser.