Thanks, US! Taiwan gets its WHA invite as the economy keeps tanking....

Richard Kagan sent me this nice poster he made of Tsai making Taiwan green.

Taiwan finally got its invite to observe the World Health Assembly. The Taipei Times noted the problem:

The Ministry of Foreign Affairs yesterday announced that the long-expected WHA invitation has finally arrived, yet, for the first time in history, UN Resolution 2758 and the “one China” principle are reported to have been specially noted on the invitation. This looks like manipulation by China to force president-elect Tsai Ing-wen’s (蔡英文) administration to recognize the so-called “1992 consensus.”

The Taipei Times and others are noting that these seemed aimed at Tsai Ing-wen: force Tsai to acknowledge that Taiwan is part of China. There were those who had been saying that Beijing would not even let an invite get sent out.

However, creatively exploited, Beijing is giving her an out. UN Resolution 2758 says nothing about the status of Taiwan. Tsai could probably find some language to leverage that.

It is also a very small thing, withal, and Taiwan can easily do without, if necessary. Note that if Beijing is punishing Taiwan, the punishments are not very severe.

The US led a push by several major western democracies to get this done. Great job, guys. Many thanks.

More ominous than the WHA is the evolving situation of Taiwan businessmen in China, who are facing increased hostility to their presence in China and falling levels of success, along with Taiwan bank exposure if China's economy seriously falters. The Yuan devaluation hit Taiwan's banking system hard, since so many punters were believing -- no, I kid you not -- that the Yuan would always go up...

The product causing the angst is a derivative called a target redemption forward (TRF). It pays the holder a monthly income so long as the yuan remains above a trigger price against the dollar. If the yuan falls, the investor has to payout.

For years, they seemed a sure bet to a steady income as the value of the yuan rose steadily against the dollar. The yuan's devaluation and subsequent slide have wiped away those assumptions and left many investors regretting the day they bought the product.

Banking industry analysts say the worst of the TRF crisis has passed, but Taiwan's banking industry is still vulnerable to swings in the Yuan. To use the TRF instrument, gamblers investors must make a refundable deposit with the bank which banks are liable for -- which means that they are exposed when their investors lose money.

 Taiwan's banks were seriously overexposed in China and began reducing exposure last year. 2015 was in fact the first year the industry as a whole in Taiwan experienced a loss (see Mathew Fulco's excellent piece on the shift from China towards ASEAN).

Will China use this instrument to punish Taiwan? With the economy now in recession (slowed even more than expected in Q1) and vulnerable banks, Tsai could well inherit a serious economic and financial crisis.

UPDATE: WHA invite (source)
Dr. Been-Huang Chiang 　　Minister 　　Ministry of Health and Welfare 10F. No. 488, Sec. 6, Zhongxiao E. Rd Nangang Dist., Taipei City 11558

6 May 2016

Dear Dr Chiang,

Recalling the United Nations General Assembly Resolution 2758 （XXVI） and WHA Resolution 25.1, and in line with the One-China principle as reflected therein, I wish to invite you to head a delegation from the Ministry of Health and Welfare, Chinese Taipei, to attend the Sixty-ninth World Health Assembly as an observer. The Assembly will be convened at 9:30 on Monday, 23 May 2016, at the Palais des Nations, Geneva, Switzerland and will close no later than Saturday, 28 May 2016.

I would appreciate it if you could confirm to me your attendance and the names of attendees from the Ministry of Health and Welfare, Chinese Taipei, at your earliest convenience. Registration should be completed by9 May 2016.

Upon receipt of your confirmation, the Secretariat will forward to you the relevant documentation.

Yours sincerely, Dr Margaret Chan Director-General
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