No arm done

Taiwan’s new investment law

No arm done

In spite of the latest hue and cry over US arms sales to Taiwan, economic links between the island and the mainland are only getting deeper. Taipei may have spent $6.4 billion on American missiles and helicopters, but Taiwanese companies have invested an estimated $150 billion in mainland China – and they want to protect their investment. Last week the Taiwanese legislature relaxed laws regulating investment in mainland semi-conductor producers and flat-panel screen makers. It’s good news for the manufacturers, but less so for the opposition Democratic People’s Party, which worries that economic integration undermines political independence.

Taiwanese companies can now buy 100% of mainland chipmakers. Flat panel makers still can’t invest in mainland manufacturers, but they can now build up to three of their own new flat-panel factories in China.

The latest rule change is tailored to benefit a handful of Taiwan’s biggest companies. “To put it bluntly,” confessed Minister of Economic Affairs Shih Yen-Shiang, “[the new law is aimed] at the acquisition plans of TSMC and UMC.” TSMC and UMC are among the world’s biggest chipmakers.

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