Move the investment to India

Taiwan should work closely with other democratic countries instead of its enemy China. Taiwanese businessmen must understand that China is a political and economic rival to Taiwan, not a partner. Taiwanese should not invest in a country that threatens force.

Taiwan Pushes India Trade Ties

March 20, 2006, 5:23AM
By STEPHAN GRAUWELS
Associated Press Writer © 2006 The Associated Press

TAIPEI, Taiwan — Taiwan's creation of a business council to promote commercial ties with India is part of the government's effort to reduce the island's growing economic dependence on rival China, experts said Monday.

Last month Taiwan announced the formation of a "Taiwan-India Cooperation Council" to push trade and investment with the booming South Asian nation.

The head of the new body is former Taiwanese Premier Yu Shyi-kun, who is now chairman of the ruling Democratic Progressive Party.

The DPP seeks to distance the self-governing island of 23 million people from the communist colossus 100 miles to its west, and fears that closer economic ties will reduce its room for political maneuvering.

"China is now employing a policy of 'using business to encircle Taiwan,'" said Hung Chin-tan, executive secretary of the Ministry of Economic Affairs' Investment Council.

Lin Wen-cheng, a China expert at Kaohsiung's National Sun Yat-sen University, says Taiwan has to find good alternatives to its commercial relations with China because of the tense political situation between the sides.

"I don't understand why Taiwan should invest in a country that threatens force," he said.

Taiwan and the mainland split amid civil war in 1949. Despite Chinese threats to attack if Taiwan moves to formalize its de facto independence, business between the two sides is booming, with Taiwanese companies having invested more than $100 billion since the early 1990s.

A report issued Saturday by the World Trade Organization said China's trade deficit with Taiwan was $58 billion _ meaning Taiwan exported to China far more than it imported _ the biggest deficit China has with any trading partner.

Taiwanese investment in India is still small _ about $200 million _ and at $2 billion its 2005 trade with the South Asian nation is only a fraction of its China commercial exchanges.

Taiwanese analysts say that Taiwan's sophisticated information technology industry has a lot to offer to India, which is developing rapidly as a major producer of high tech goods and services.

Many Taiwanese businessmen are drawn to China because of an assumption that a common culture and language will make business dealings easy.

However, that contention is not necessarily true, said political scientist Vincent Chen of Taipei's National Chengchi University.

"When Taiwanese business people invest in China, they have to deal with a communist system, and that's a far more difficult obstacle than any cultural differences with India," he said.