Date
17 December 2017
Protesters shout slogans inside Taiwan's legislature in Taipei

The Big Picture: CROSS-STRAIT SERVICE PACT

Taiwan authorities are in a dilemma over a cross-strait services trade pact which many locals fear will offer the opportunity for China to extend its economic influence in the island.

Legislators from the opposition Democratic Progressive Party (DPP) have voiced strong objection to a decision by Chang Ching-chung {張慶忠}, convener of Taiwan’s ruling Kuomintang party, to close a committee discussion on the trade pact and send it to the island’s legislature.

Chang said that after three months in the committee stage there was no need to discuss the proposal clause by clause and that the pact should now be reviewed by the parliament. The DPP said the move goes against a previous understanding by the two parties.

Meanwhile, media reports said more than 100 students stormed Taiwan’s legislature Tuesday night and clashed with police, demanding that the government respond to public opposition to the deal.

The trade agreement, inked by Taiwan and China in June 2013, is aimed at opening up service industries on both sides to each other. It will help boost the sluggish Taiwanese economy and create jobs, Taiwan’s President Ma Ying-jeou {馬英九} said in recent speeches. Taiwanese firms can benefit by entering the e-commerce, information technology, financial, environmental protection, logistics and transport sectors in the mainland, Ma said. 

Taiwan’s Economic Minister Chang Chia-juch {張家祝} told the island’s parliament on March 11 that failure to pass the cross-strait service pact will stall the progress of ongoing negotiations for a trade in goods deal with the mainland and hurt the Taiwan economy, Economic Daily News reported Tuesday.

Taiwan also wants to join the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), two proposed regional free-trade pacts, but such plans cannot be achieved unless the cross-strait service and goods deals are ratified, Chang was quoted as saying. 

It may be true that some Taiwanese firms will enjoy faster growth in mainland China under the trade agreement but the negative impact on Taiwan overall is probably underestimated, observers say. Although some people may argue that Beijing will open 80 items while Taiwan will only open 64 items, it is obviously an unfair deal for the latter as the mainland side has a much larger economic scale to grab market share in the island but not vice versa.

There is a growing feeling that Beijing is trying to use economic means to push forward efforts for Taiwan’s reunification with the mainland. Beijing is considering making Taipei another offshore renminbi center after Hong Kong and Singapore. However, it is a fact that many Taiwan people do not trust China’s ruling Communist Party.

Under this situation, the Kuomintang government needs to think thoroughly before pushing for closer integration of the island’s economy with that of the mainland, observers say, warning that the matter could be more complicated than earlier believed.

Shanghai bourse lifts qualified foreign investor cap

The Shanghai Stock Exchange has raised the cap on foreign shareholding under the qualified foreign institutional investor and renminbi qualified foreign institutional investor schemes, China Securities Journal reported Thursday. Foreigners as a whole are now allowed to invest up to 30 percent in both schemes, up from 20 percent. The limit for individual investors is unchanged, the report said. Also, foreign investors are allowed to invest in a wider range of securities including preferred stocks, financial bonds and asset-backed securities as well as engage in pre-issuance trading of treasury bonds. There is no limit on strategic investment in listed companies. In addition, the alarm value for foreign shareholding has been raised to 26 percent from 16 percent, the report said.

–Contact HKEJ at [email protected]

JP/RC

 

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