China may be losing its influence over Taiwanese business
ON JANUARY 13TH William Lai Ching-te was elected as Taiwan’s president. He thus secured a third term for his pro-independence Democratic Progressive Party (dpp). The vote will shape relations between self-governing Taiwan and China, which wants the island to be governed from Beijing. It will also affect the commercial relations between the two—and, because Taiwanese manufacturers sit at the heart of critical global supply chains, between them and the rest of the world.
For Taiwan’s big businesses, the cross-strait tensions are unwelcome. Taiwanese entrepreneurs have been building factories on the mainland since the 1980s. These used to make textiles and other cheap goods. Today many make sophisticated electronics, including chips. Chinese data suggest that in 2022 Taiwanese firms had assets worth $43bn in the People’s Republic; by comparison the figure for companies from America, an economy 35 times the size of Taiwan’s, was $86bn. The real sum is almost certainly higher, as Taiwanese companies often channel investments via Hong Kong and other jurisdictions to avoid the scrutiny of their China-wary government.
The Chinese Communist Party is likely to express its displeasure at the dpp victory by putting a squeeze on Taiwanese business. It has form. The corporate supporters of the first DPP president, Chen Shui-bian, who served from 2000 to 2008, faced regulatory scrutiny and investment restrictions from China, according to Taiwan’s Mainland Affairs Council, an agency dealing with cross-straits relations. In 2005 Shi Wen-Long, a petrochemical magnate and one of Mr Chen’s biggest backers, was forced into a humiliating public endorsement of China’s anti-secession law, which formalised military threats against the island.
2024-01-15 12:37:29
Source from www.economist.com
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