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Awkward Bedfellows: Taiwanese Businessmen, Mainland Chinese

Shelley Rigger, Davidson College; Peter Chow, City College of New York; Frank Hsaio, University of Colorado; and Scot Tanner, The Rand Corporation

Date & Time

Tuesday
Jul. 18, 2006
3:30pm – 5:30pm ET

Overview

There was a consensus at the July 18 seminar that, economically, Taiwan has too many "eggs" in the mainland basket, and would do well to diversify a bit. Politically, the Taiwanese living on the mainland do not identify themselves as Chinese. On the contrary, when they depart from Taiwan to China, they say they are "going abroad," and once in China they feel culturally different from Chinese and miss their island "home."

Peter Chow, professor of economics at the City University of New York, estimated the number of Taiwanese businessmen residing on the mainland at 800,000. He noted that in 2000, 34% of Taiwan's total foreign direct investment (FDI) went to China. This rose to 71% in 2005, clearly a huge amount. Chow also estimated that Taiwanese investment has created somewhere between 6.9 and 9.2 million new jobs on the mainland. Both direct investment from Taiwan and employment opportunities created by Taiwan mitigate the amount of pressure China is able to put on the island, given the interdependence of the two economies. Nonetheless, Chow felt Taiwan's economic relationship with China is out of balance; "There are too many eggs in one basket." He advised that Taiwan balance the China market with the global market.

Shelley Rigger, Brown Professor of East Asian Politics at Davidson College, focused on the attitude of the Taiwanese businessmen living in China. Rigger, who had just returned from several months of interviewing Taiwanese businessmen in Shanghai, concluded that there is little sense of Chinese identity among Taiwanese businessmen residing on the mainland. For example, when Taiwanese are about to depart for China, they use the term "going abroad." Once in China, they feel, despite the linguistic similarities, that there is a difference between themselves and the Chinese in culture, attitude, and behavior. Indeed, stated Rigger, the basic negative for Taiwanese living in China is that they miss being "home."

Frank Hsiao, professor of economics at the University of Colorado, essentially agreed with Chow's economic assertions. He stated that in 2004, 37% of Taiwan's total exports were to China, while imports from the PRC were only 11% of Taiwan's total. He pointed out that China's wage rates are increasing at a very high rate, suggesting that eventually Taiwan's concentration on investment in the PRC would lessen, given that China's comparative advantage in wages is decreasing. He predicted that Taiwan, over time, would be moving investment to countries where wages were cheaper, such as Vietnam and the Philippines. Hsiao also recommended that the government on Taiwan should promote a free trade agreement (FTA) between Taiwan and the U.S. as a way of reducing Taiwan's economic reliance on China.

Scot Tanner, senior political scientist at the RAND Corporation, analyzed the PRC's ability to put pressure on Taiwanese businessmen living on the mainland and concluded that China has not been very successful in this endeavor. To induce Taiwanese businessmen to lobby for economic concessions from the Taiwan government is one thing; to have them lobby on behalf of the PRC's concept of sovereignty is quite another. Indeed, Taiwanese businessmen residing on the mainland prefer these days to lie low, and try their best not to get involved in political arguments between China and Taiwan. Over the last two years, noted Tanner, the Chinese have been backing away from their previous threatening behavior, and have adopted more of a "charm offensive" toward the Taiwanese businessmen in their midst.

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Indo-Pacific Program

The Indo-Pacific Program promotes policy debate and intellectual discussions on US interests in the Asia-Pacific as well as political, economic, security, and social issues relating to the world’s most populous and economically dynamic region.   Read more

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