Investors undaunted by China's saber rattling

By Rachel Morarjee

NINGBO, China (AFP): Undaunted by the aggressive posturing by China's communist government towards new Taiwanese President Chen Shui-bian, Taiwan's businesses are still pouring money into the mainland.

"Taiwanese people will continue to invest in China unless the Taiwan government forbids people to do so or seeks to limit investment," said Jerry Tsai, who runs the Far East Industrial Park in the eastern Chinese city of Ningbo.

Tsai, who has been doing business on the mainland for over 10 years, said 70 percent of the firms which have set up shop in his investment park are Taiwanese and for most it is business as usual.

Tsai draws a clear line between large conglomerates looking at investment projects involving over US$100 million and the bulk of small and medium-sized firms which have put down roots in the mainland to cash in on lower labor costs.

"For firms with investments of under 100 million, politics won't change things," he explained.

Figures recently released by Taiwan's Investment Commission bear out Tsai's prognosis. The commission showed mainland-bound investment in the January to May period more than doubling compared with the first five months in 1999.

The commission approved 256 investment projects worth $802 million to the mainland in the first five months of 2000, up 142 percent year-on-year.

The figures clearly show that Taiwanese investors are ignoring the political currents flowing across the Straits and keeping their eyes firmly on the bottom line.

"Cross-straits tensions won't have any effect on my business," said Tseng Sheng Ming, vice-president of machinery manufacturer Chin Fong China Ltd.

Tseng says Chin Fong, which has already invested $24 million in China, plans to expand its business here later this year, adding, "We've had these kind of tensions before. Both sides are Chinese and although they have different views they will move closer over time."

The last few months have marked an increase in cross-Straits tensions after Chen took office last month.

Chen has distanced himself from his pro-independence stand of the past and has appeared anxious to improve economic ties between the two sides.

The Taiwanese government is planning to ease investment restrictions to boost local businesses' competitiveness when China opens its market after expected entry into the World Trade Organization later this year or early next year.

However, Beijing remains deeply suspicious of Chen, reiterating its right to use force against Taiwan if the island declares independence and backing that up with displays such as the three-day-long military exercises it staged near Taiwan- controlled islands last week.

Some Taiwanese firms, such as petrochemical giant Chi Mei, have been caught in the political crossfire.

Chi Mei announced this month it will consider scaling back investments on the mainland after a series of usual and disruptive inspections at most of its plants on the mainland.

After Chi Mei's group chairman W.L. Shi backed Chen Shui- bian's election campaign, the company was inundated with inspections from tax, customs, environmental protection and labor officials, Taiwanese media reported.

But while Beijing rattles sabers, provincial officials in towns like Ningbo continue to court Taiwanese businessmen.

At the Zhejiang Investment and Trade Fair earlier this month, officials organized a seminar for Taiwanese investors which was attended by executives from three government-run investment parks all anxious to lure Taiwanese firms into their folds.

Tsai, who attended the seminar explained that politics is not the main consideration for Taiwanese investors in China and that most people with long-term investment plans are keeping their heads down and waiting for the turbulence to blow over.

"My plans are long-term and I've been here for over 10 years so I am here to stay but of course I'm worried about cross- Straits relations. It's not possible not to be worried," he said.