Taiwan frets China economic noose tightening as polls loom

Powertech Technology

07/01/2016 21:00

* Two Chinese firms announce $3 bln in investments before 
election 
    * Large investment in tech sector sparks heated debate in 
Taiwan 
    * Tsinghua Unigroup's investments may raise risk of monopoly 
 
    By Faith Hung and Yimou Lee 
    TAIPEI, Jan 8 (Reuters) - In the weeks ahead of Taiwan's 
elections, state-linked Chinese firms launched a $3 billion 
cross-strait investment grab, sparking fears Beijing was using 
economic clout to influence the island as it looks to vote in an 
independence-leaning president. 
    Mainland companies have a brief window to get deals approved 
before a change of leadership may present more hurdles, 
particularly if anti-Beijing sentiment flavours policy debates 
both before and after the polls in proudly-democractic Taiwan.  
    The island votes in a new president and parliament on Jan. 
16, when the China-friendly ruling Kuomintang (KMT) Party is 
expected to be defeated by the Democratic Progressive Party 
(DPP). 
    State-backed Chinese technology conglomerate Tsinghua 
Unigroup Ltd  TSHUAA.UL  is seeking to buy stakes in three 
Taiwanese chip packaging firms for $2.6 billion. Some of the 
investments could get the regulator's sign-off before a new 
government is inaugurated on May 20.  
    Tsinghua Unigroup's plans have raised questions among voters 
over China's economic agenda and the dangers of a monopoly. 
    "China is switching to an aggressive attitude toward Taiwan 
from previous elections," said Emile Chang, executive secretary 
of Taiwan's Investment Commission, noting that companies 
normally hold off on investments ahead of elections. "It's 
aiming for economic ties to remain on track." 
    The Ministry of Economic Affair's investment agency vets 
proposals on China and other foreign investments and usually 
announces a decision in two to three months. Approved 
investments cannot be challenged. 
    Tsinghua's investments, along with others connected to 
families of China's People's Liberation Army, have put the 
spotlight on the uneasy relationship between Taipei and Beijing. 
    China regards Taiwan as a renegade province to be unified 
with the mainland, by force if necessary, while Taiwan insists 
on its rights to be a self-governing entity. 
     
    MOOD CHANGE 
    Ties between China and Taiwan warmed under the government of 
President Ma Ying-jeou who took office in 2008. The years of 
engagement, however, have not stopped jobs and manufacturing 
migrating abroad nor bolstered the economy from recession. 
Taiwan has only become more dependent on the mainland.  
    "Unigroup is backed by the China government. They are 
acquiring Taiwan's key companies, generating negative 
perceptions among Taiwanese people," said Huang Weiche, a 
lawmaker of the DPP. 
    "China has said it costs less to absorb Taiwan via 
economical means than military force. That is what they are 
doing now." 
    Tsinghua wants to take a stake of about 25 percent in each 
of three chip testing and packaging firms: ChipMOS Technologies 
Inc  8150.TW , Siliconware Precision Industries Co Ltd  2325.TW  
and Powertech Technology Inc  6239.TW . urn:newsml:reuters.com:*:nL3N1403BT 
    U.S. film maker Dan Mintz has also agreed to acquire 
Taiwan's Eastern Broadcasting Corp (EBC) in a deal valued at 
$600 million. Mintz is a co-founder of Shenzhen-listed DMG 
Entertainment and Media Co  002143.SZ ; another co-founder Peter 
Xiao has links with the PLA  urn:newsml:reuters.com:*:nL3N13I04J  urn:newsml:reuters.com:*:nL3N1402C3.   
    Beijing is closely watching the outcome of the elections. A 
win by the DPP's candidate Tsai Ing-wen, the front-runner in the 
polls, could see Chinese investments coming under more scrutiny 
in future. 
    Tsai has said she sees Tsinghua's investments as a "huge 
threat" to Taiwan's semiconductor industry, concerned that a 
transfer of technological know-how will hurt domestic 
industries.  urn:newsml:reuters.com:*:nL3N1442KB Taiwan is home to the world's biggest 
contract chip manufacturer who supports global brands such as 
Apple Inc.  AAPL.O .    
    Some industry leaders say tie-ups will help both sides: 
Taiwan's tech exporters could scale up and stay relevant while 
Chinese firms could quickly acquire expertise. 
    "Where is Taiwan's future? China has set two goals for its 
economic development - overseas investment and technology 
development, and Taiwan should grab this opportunity," Tsinghua 
Unigroup chairman Zhao Weiguo said in a recent interview.  
    Since 2009, Taiwan has approved far fewer investments by 
China than the other way around. 
    Some 745 Chinese investments worth $1.33 billion have been 
approved as of October - less than 1 percent of Taiwanese 
investments in China, said Lee Rongmin, director general of the 
China Chamber of Commerce for Import and Export of Machinery and 
Electronics Products in Taipei. 
    "We're sorry that Tsinghua's planned investments have been 
seen as a threat of being taken over, creating a barrier for 
cooperation across the Taiwan Strait," Lee said. 
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
Taiwan-China investments     http://reut.rs/1UvGVAe 
Taiwan-China trade    http://link.reuters.com/nen53w 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
 (Editing by Jacqueline Wong) 
 ((faith.hung@thomsonreuters.com; 8862 2500 4893; Reuters 
Messaging: faith.hung.thomsonreuters.com@reuters.net)) 
 
Keywords: TAIWAN ELECTION/CHINA INVESTMENT