The person, who asked not to be named, told Dow Jones Newswires the new rule--which will require final approval from the Cabinet--would allow Chinese investors to own up to a 50% stake in any Taiwanese tech firm, from 10% currently. The new rule would apply to companies including flat-panel and semiconductor manufacturers, the person added.There's precious little investment from China in Taiwan, especially compared to the massive monies that Taiwanese have pumped into China, and even less into the tech sector. The move is ostensibly to permit Taiwan's capital-hungry firms to receive injections of lucre from China. Yet the pattern so far has been that there is no quid without a political pro quo from Beijing....
Another issue here is that approvals of such investments would likely be on a case-by-case basis. Readers will recall that back in 2009 Taiwan telecom giant FarEastOne inked a deal to sell a 12% share to a ginormous China firm, but the deal was never approved. I blogged on it at the time, citing an excellent piece by J Michael Cole on the Chinese firm's close ties to the government and state security entities.
It appears likely that the KMT Administration might promulgate such a law in order to appear as if it is doing something, but in fact throw up bureaucratic obstacles to concrete realization of the law. Even if the Ma government is sincere about letting Beijing's firms invest in Taiwan's tech sector, the turning over of a large chunk of a local crown jewel to Beijing may well spark the kind of public outcry that would kill the deal. If Beijing is smart its first investment will not be large and the usual connections to state security and investment firms will be lacking.
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