Posted on 08/27/2002 11:19:47 AM PDT by dgallo51
Taiwan has seen a dramatic rise in the number of factory closures and a drastic plunge in incoming investments, as both Taiwanese manufacturers and overseas investors continue to flock to the lucrative Chinese market.
The figures are telling - factory closures rocketed by 67 per cent last month from a year earlier, to 296.
Foreign investments plummeted 49.7 per cent to US$352 million (S$617.4 million) in the same month, with total investments for the first seven months of this year shedding 47.44 per cent.
These statistics point to the faltering attractiveness of Taiwan's investment environment as well as the tremendous appeal of China to which most of the capital flowed, said analysts here.
'Mainland China has become an economic magnet that is proving too strong to resist,' said economist Liang Chin-yuan. 'The great potential of the vast mainland market has attracted both local and foreign investors, resulting in the drop in investments.'
According to the Economics Ministry, Taiwanese pumped US$1.94 billion into businesses in China in the first seven months of the year, up 19.59 per cent over the same period last year.
In fact, the fever has seized most of Asia, with 57 per cent of foreign investments that could have flowed to South-east Asia going to China, said economist Liu Tai-ying.
Mr Liu, chairman of China Development Holding and former financial caretaker of opposition party the Kuomintang, said Taiwanese investors had been relocating rapidly to the mainland.
'They have been fleeing to mainland China in quick succession,' he said.
Taipei businessmen who would have invested in the southern port city of Kaohsiung have also shifted to China, he added.
Official statistics in China showed more than 50,000 Taiwanese businessmen have poured between US$70 billion and US$100 billion into the vast Chinese market.
But Taiwanese officials tried to play down the attraction of China, pointing instead to Taiwan's brisk second-quarter exports, that have resulted in a trade surplus of US$5.98 billion.
Taiwan also enjoyed a record international balance of payments surplus at US$16.19 billion in the same period, with net capital inflow of US$10.66 billion, they said.
Taiwan has been counting on a rebound in exports to fuel a recovery from its worst recession on record. Economists, however, said Taiwan still had a long way to go.
Trade and payments surpluses and net capital inflow demonstrate signs of an improving economy, but imports were still low and domestic demand weak, they said.
'This is mainly because of the reduction in both local and foreign investments,' a central bank official told The Straits Times.
1. Most Taiwanese industrialists and investors moving their assets to the PRC are appeasers from the KMT, the most recent generation of which have apparently adopted just the sort of "convergence" mentality that the 3RD Way devotees here in the West subscribe to. They honestly think that there will be a place in the sun for them after a merger of Taiwan with the PRC. Dupes!
2. Add to that explicit directives from the customers of the Taiwanese companies, primary of which are large US OEMs who have the Taiwanese firms build logoless computers, consumer electronics and other hardware to be sold in the US. Initially, the US firms outsourced to the Taiwanese ones who at the time built their products in Taiwan. Now, the US firms, lacking the skill and discipline to get cost reduction out of products beyond reduction in labor overhead, are forcing the Taiwanese ones via cost pressures to locate their manufacturing ops on the mainland. Doh! Doh! Doh! Doh! Doh! Doh! Doh!......
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