Chinese investments are coming

Vice Minister of Economic Affairs Deng Cheng-chung announced the implementation of the two sets of regulations governing Chinese investment plans and the qualified projects in Taiwan at a press conference yesterday afternoon.

The ministry began to accept and handle applications for investment projects by Chinese businesses immediately, including opening their subsidiaries or branch offices in Taiwan.

Deng, a former vice chairman of the Mainland Affairs Council, said easing restrictions on Chinese investments will enable enterprises on both sides of the Taiwan Strait to complement each other and beef up their efforts to jointly develop the international markets.

He said Taiwan will enjoy the benefits of expanding export sales, inducing a more prosperous economy and increasing job opportunities.

In the initial stage, the investment liberalization will include 64 industries in the manufacturing sector covering traditional Chinese herbal medicines, automobiles, textiles, plastic and rubber processing products.

There will be 117 business lines in the services sector, including wholesale, retailing, tourism, and transport services.

In addition, 11 operations in the infrastructure sector will be open to Chinese investments. But contract business will be excluded to protect local construction contractors.

The MOEA will continue monitoring the Chinese investments here to ward off any possible negative effects, Deng said.

The second phase of policy relaxation will be adopted after a review of the effects of the measures in the first stage, he said.

Under the new rules, Chinese funds cannot enter Taiwan without prior government permission.

Funds from organizations tied to the Chinese military or from Chinese companies related to military purposes will remain prohibited.

The laws also consider Chinese investors' purchases of more than 10 percent of shares of a listed company in Taiwan as a "direct investment."

Enterprises in a third country will have to present financial reports to the governing agencies and accept examination each year if at least 30 percent of shares of those companies are controlled by Chinese investors.

Chinese funds are not allowed to enter the utilities industries such as water, electricity and fuel suppliers, or business sectors that play a key role in domestic economic development, financial stability and national security, according to the new regulations.

The move represents a landmark in cross-Taiwan Strait relations, which had been stagnant until President Ma Ying-jeou of the ruling Kuomintang (KMT) came to power last May.

Ma advocates stopping the hostile standoff and atrophy in resources between the two sides since the end of the civil war in China in 1949.

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