Hasty decision to open Chinese investments to Taiwan could lead to disastrous consequences

Regarding the Executive Yuan’s announcement on the opening of Taiwan’s stock market to Chinese capital, as well as allowing some Chinese enterprises to be listed on Taiwan’s stock exchange, the Director of the Department of Culture and Information Cheng Wen-tsang responded that it is a reckless policy which needs further evaluation in order to ensure Taiwan’s security and interests are met. Additionally, Cheng pointed out that this hasty decision to further relax cross-strait financial exchanges could become a repeat of the already discredited “Chinese tourist’ policy which has so far brought more negative influences than the economic benefits the Ma administration has promised

Director Cheng pointed out that Taiwan and China do not have a memorandum of understanding, so the government would not be able to effectively monitor cross-strait capital flows. By relaxing financial interactions between the two sides prior to establishing mechanisms that could monitor these exchanges would allow the entering of Chinese enterprises that are poorly funded or lack financial transparency to come and manipulate Taiwan’s market. The Ma administration has relied on further opening of cross-strait trade to stimulate economic growth. However, without the proper measures in place, this would be an absolute disaster for Taiwan.