Wednesday, July 1, 2009

The Concern Over Chinese Investment

Mr. 謝 got a very good point on the issue of Chinese investment in Taiwan.

This issue actually bothers me quite a bit. Because on the one hand there is the traditional idea of opening market create prosperity, competition and stability, on the other hand China is not friendly toward Taiwan. The problem becomes, does it make sense to open market to a country that wants to swallow Taiwan? What 謝 said makes me realize the key point, and make my thoughts on this much clearer.

It's actually quite simple, just looking from the economical side:
  1. China is not real capitalism. A lot of big industries are under control of communist party, some even under control of PLA.
  2. Under normal circumstances, all corporation's goal is to gain money. When they invest, they also expect profit and risk etc. But as mention by point one. Chinese corporations are actually controlled by the government more or less. What does this mean then? It means those investment are not for profit. They are for Chinese government goal, to swallow Taiwan.
  3. Thus it will create unfair competition. Because they are not for profit, they will not reward those companies that are profitable, but those companies that are pro-China. It will mess up the whole market system. Because now the market is not driven by profit, but driven by political will of Beijing at the same time. Those company can get huge funds even if they are not profitable, as long as they are pro-China. Those companies that have very nice products, but are not favored by Chinese government, will face unnecessary tough competitors. Thus the free market become not free because the Chinese government can manipulate it.
  4. With the huge control Chinese government has, the whole economic system of Taiwan might fall completely into Chinese control. The market system will be destroyed, replaced by Chinese controlled market.
I think this is one of the possible outcome. Probably some economic experts with more solid data can have a more clear and concrete view on this. But I think these are the general idea and the danger. There are actually already some example we can take note from. One is Hong Kong. In the recent July 1st celebration we can see how much Hong Kong's political circle has changed. A lot of politicians simple kiss Beijing's ass. Furthermore, if we really think about it, there is no way Hong Kong can break free from the grip of China, because their economy is "infiltrated" by China and is now under Chinese control.

And I haven't even mention the obvious political implication. As 謝 mentioned, with Chinese investment in, China can indirectly "participate" in Taiwan's election, through election campaign donation. What will result from this, I think everyone knows already.

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