Tag Archives: Taiwan

China’s Automakers Likely To Cross Taiwan Strait For Parts

Taiwan’s three largest auto parts makers, Tong Yang Industry, TYC Brother Industrial and Depo Auto Parts Industrial, are open to investment from the mainland, Bloomberg reports. China’s car makers would get core design and manufacturing technologies they lack as assemblers and Taiwan’s parts makers would get access to on of the world’s still growing car markets. SAIC and Geely, who have acquired auto technologies in the U.K. and South Korea and Australia respectively, would be the most likely be in the vanguard of investors. Beijing lifted its ban on Taiwan investment on April 29 (see: “First Cross-Strait M&A Deals Struck“); for its part Taipei is considering opening 65 industries to mainland investment.

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First Cross-Strait M&A Deals Struck

An unsourced report in Taiwan’s Commercial Times (here via Bloomberg) says that some of the first companies on the island to offer to sell stakes in themselves to Chinese companies may include state-owned ones. Chinese companies will be able to take part ownership of Taiwanese companies, and vice versa, from the end of this week as part of the formal improvement of ties between Beijing and Taipei.

The first mainland investment in Taiwan we’ve heard of is China Mobile’s plans to take a $530 million 12% stake in Taiwan’s FarEasTone. The first known deal, however, was in the opposite direction. Taiwanese chip maker United Microelectronics says it will buy China’s He Jian Technology in a $285 million deal that will give it 85% of the company.

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Beijing, Taipei And The Diplomacy Of Art

China and Taiwan’s Palace Museums, collectively homes to the world’s best collection of Qing dynasty (1616-1911) treasures, have had informal but friendly ties for some time. Now that relations between Beijing and Taipei are thawing that relationship is getting complicated.

A weekend meeting between Zheng Xinmiao, curator of Beijing’s Palace Museum (the formal name for the Forbidden City), and his visiting counterpart from Taipei’s National Palace Museum, Chou Kung-hsin, was treated “as it involved two rival Chinese emperors themselves,” the FT reports. The two agreed some minor exchanges of staff and cooperation on academic research and publications, but didn’t take on any difficult issues such as labels.

Beijing won’t stand for anything that implies Taiwan is a independent state. For its part, Chou’s museum won’t lend anything to its Beijing counterpart without legal guarantees that it will get the artifacts back. It has a huge collection of Chinese treasures that arrived with the Kuomintang in 1949. Beijing holds that the treasures are in foreign hands and should be returned for free.

The Taipei museum will, though, be borrowing 29 artifacts from Beijing for three months for an exhibition about Emperor Yongzheng (1722-1735).  So the cultural diplomacy is at least flowing in one direction.

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China Steps Out Despite All

Amid all the handwringing over the seriousness of the slowdown of the economy, two pieces of the other side of China.

One: Beijing has offered financial assistance to help Taipei cope with the impact of the global economic crisis and has proposed broader financial links, which would be another step in restoring government-level talks.

Two: a pair of Navy destroyers and a supply vessel will head for the Gulf of Aden on December 26 to protect merchant ships from attacks by Somali pirates. The ships will join warships from the EU, U.S., India, Russia, Malaysia and seemingly now Iran.

Steppin’ out.

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Taiwan’s Ex-President Chen Detained

The detention of Taiwan’s ex-President Chen Shui-bian on corruption allegations turns what had started out as another episode of a soap opera into a serious drama.

Chen stands accused of money laundering and illegally using 14.8 million Taiwan dollars, about half a million U.S. dollars, of a special presidential fund. He denies the allegations which he says are politically motivated.

Strongly nationalist, Chen says his successor Ma Ying-jeou, who campaigned on promises to expand ties with Beijing and put relations with the mainland on a less confrontational footing, has had him detained to curry favor with Beijing. He is, he has said, “a sacrifice to appease China.”

His arrest came at the end of a landmark visit by Chen Yunlin, the highest ranking official to visit the island since 1949. Beijing and Taipei signed a number of trade and communications agreements during the visit which was also marked by a series of unruly anti-Beijing protests.

Following a court hearing, interrupted when Chen had to go to hospital for treatment after being jostled on his way into court, the former president can now be detained for four months in prison, though he has not been formally charged.

Chen’s eight years as president were marked by a succession of corruption allegations against his family and advisors. His son-in-law was charged in 2006 with insider trading on the stock market and then jailed for seven years. That politically damaged the main opposition Democratic Progressive Party, a point probably not lost on Ma’s Kuomintang ahead of next year’s local elections.

Note and update: This post was written before Chen started his hunger strike, but publishing gremlins delayed its posting. (We have had the offending gremlin 404’d.) After five days without eating, Chen has been taken from his prison cell to hospital suffering an irregular heartbeat.

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Beijing And Taipei Sign Suite Of Trade Deals

Immediate results from Chen Yunlin’s visit to Taipei, the highest level visitor to the island from the mainland since 1949: daily direct flights and new cargo routes among a suite of 13 trade agreements that set aside long-standing security and sovereignty issues.

The number of direct China-Taiwan charter flights will triple to 108 per week and they will run daily instead of four days out of seven. Routes will be shortened, obviating the need for a Hong Kong or Macao stop. Private business jets will be allowed to fly and there will be 60 direct cargo flights per month. Direct cargo shipments by sea will be allowed between 11 ports in Taiwan and 63 in China, tax free.

Next steps in the growing cross-Straits relations will likely be Taiwanese banks setting up branches on the mainland and vice versa.

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Vale Backs Down Over Iron Ore Premium

Baosteel Group, the country’s biggest steelmaker, says Cia. Vale Do Rio Doco, the world’s largest iron ore supplier, has dropped its demand for a 12% premium on its exports to China. The global slowdown has led to a slump in demand for Chinese steel at home and abroad — and piles of unused iron ore piling up at Chinese ports. Vale had already raised its annual contract price for 2008 by 70%, and most Chinese steelmakers are now losing money. So Vale’s threat to withhold supplies unless the premium was paid, initiated last July before the dramatic change in market conditions, had little sting (see: “Flat Output Will Help Steelmakers Strike Better Iron Ore Deals“)

The slump is likely to lead to widespread consolidation of the industry. In that regard, this caught this Bystander’s eye: Baosteel’s chairman Xu Lejiang says that his company is looking to promote “intensive cooperation” with Taiwan’s China Steel, Bloomberg reports. The Taiwanese company’s Chang Chi-juch says the two companies are looking to share their acquisitions expertise.

The comments come as Beijing’s top envoy on Taiwan affairs, Chen Yunlin, arrived in Taipei with a 60-strong delegation for talks to push for stronger ties across the Straits. He is the most senior official to go to Taiwan since 1949.

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Taiwan Arms Sales A Storm In A Teacup

Beijing’s response to last week’s announcement of the U.S.’s $6.5 billion arms sale to Taiwan has been prompt if largely symbolic: cancellations of military and diplomatic exchanges with the U.S.

Several planned senior level visits and military-to-military exchanges for this month have been scrapped, according to the U.S. Defense Department. The U.S. State Department says China has also pulled out of some meetings on humanitarian assistance and disaster relief.

At the weekend, state media scolded the U.S. over the sales, saying they endangered China’s national security and would have an adverse effect on Sino-U.S. relations. So all in all it looks as if this will all blow over.

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U.S. Announces $6 Billion Arms Sale To Taiwan

The White House might have thought the news would whistle by a bailout-distracted American audience, but Beijing is sure to notice.

The U.S. government said it is selling six bundles of arms worth a collective $6.5 billion to Taiwan. The bills of goods includes 30 Apache attack helicopters, 300 Patriot missiles and 32 Harpoon submarine-launched missiles. it is the first time that Taiwan has been allowed to buy those missiles, which will enhance the island’s defensive capabilities against missile attacks. Congress has 30 days to block the deals (the Pentagon’s announcement came by way of the executive branch’s notification to Congress), but lawmakers rarely take such action.

Taiwan’s defense minister Chen Chao-min has been on a low key trip to Washington this week, the first such visit since 2002. The Bush administration has been dialing down its military cooperation with Taipei to help keep the island’s relations with Beijing on an even a keel as possible. Its decision to resume arms sales after a lull of more than a year may just be a way of doing its successor a favor, in getting what would be an uncomfortable choice for a new president off the table, while making it harder for that new president to change gears on policy toward Taipei should he be so minded.

Either way, Beijing is unlikely to be pleased, and we are likely to hear so shortly.

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Ripples From Tainted Dairy Products Scandal Spread Wider

It is less than 48 hours since a senior official said the problems with tainted dairy products were under control. Since then the E.U., India, France and South Korea have joined the ranks of those imposing restrictions on Chinese milk and dairy related imports, the maker of White Rabbit candy has issued a product recall, Japan’s Lotte Group has removed its popular chocolate-filled Koala-shaped cookies, which are made in Macau, from Hong Kong supermarket shelves, and there have been reports of baby zoo animals developing kidney stones after being fed melamine contaminated milk.

China’s exports of dairy products are modest, worth $232 million last year, but the danger to Chinese exporters lies in collateral damage to all food exports on the grounds that the lax health and safety standards uncovered in the dairy industry will be thought to be widespread. Government-to-government negotiations to allow cooked chicken exports to the U.S. for the first time are likely to be stalled because of the milk scandal.

Meanwhile, the scandal has brought down its first government minister, but in Taiwan. Lin Fang-yue, the island’s health minister, said he would resign in face of public outrage that the government would allow sales of Chinese milk products with low levels of melamine.

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