Terry Gou, the founder of Foxconn Technology Group, is running for Taiwan president. If he wins, he may be able to bring Taiwan and mainland China closer in economic terms. Taiwan’s business prospects could become much brighter as a result.
Gou’s flagship Hon Hai Precision Industry Co. Ltd. has a workforce of 1.3 million, making it the world’s third-largest employer after McDonald’s and Walmart.
With such a vast business empire – and counting leaders like Chinese President Xi Jinping and US President Donald Trump as friends – Guo should be a much more pragmatic leader if his election bid succeeds, setting him apart from other Taiwanese politicians.
While cross-strait tensions remain in place, Beijing has spared no efforts in forging direct links in mail, transport and trade, referred to as “three links”, with Taiwan.
To some extent, the economies of the mainland and Taiwan are already highly connected.
Currently, nearly 2 million Taiwanese live and work on the mainland. Taiwanese businessmen have invested over NT$9.7 trillion (US$313.8 billion) in the mainland over the years, creating over NT$12 trillion revenue per year, which is equivalent to 68 percent of Taiwan’s GDP last year.
Among the 30 blue-chip stocks listed in Taiwan, up to 21 companies get most of their revenues from the mainland.
Based on this foundation, Gou can take cross-strait economic ties one step further toward deeper integration.
For example, the long-awaited Cross-Straits Common Market agreement, similar to the United States-Mexico-Canada Agreement, could be signed.
Some might argue that Taiwan is highly dependent on China’s economy and not the other way round. But that may not be the case.
The ZTE saga has demonstrated well that China’s high-tech industry still relies heavily on Taiwan’s semiconductor business led by Taiwan Semiconductor Manufacturing Company (TSMC). Replicating the upstream and downstream industry chain backing top players like TSMC still looks like an impossible task for the mainland in the next decade.
And although a Sino-US trade deal may be reached by the end of May, relations between the two countries are expected to remain bumpy as they compete on various fronts, including technology, politics and military.
As such, China still needs a window to connect with global markets. Many believe that Hong Kong is increasingly becoming just another city of China, its autonomy diminishing. Taiwan could replace Hong Kong to play such a role in the future.
This article appeared in the Hong Kong Economic Journal on April 24
Translation by Julie Zhu
[Chinese version 中文版]
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