Taiwan opens sensitive high-tech investment with rival China

Taiwan opened its sensitive high-tech industry and a raft of other sectors to investors from mainland China this month, bringing timely economic gains to the island and signaling a leap in political trust between two countries that once stood at the brink of war.

Taiwan's economic ministry spokesman said last week that the move to allow such investment was to "deepen cooperation between the two sides and expand the effects of mainland investment." Indeed, both China and Taiwan could gain from this partnership.

Investors from China will now be allowed to buy shares in industries that Taiwan once protected in an effort to keep technological secrets from leaking into the hands of trademark violators or spies.

And with the injections of Chinese money that will come to the island, Taiwanese companies stand to become more competitive against rival electronics firms from Japan and South Korea. Money from China may also create jobs here, a key election issue a year ahead of Taiwan's next presidential race.

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Benefits for China

China gets to link up with Taiwanese firms with technological know-how – advantages from decades of perfecting components for some of the world's bestselling computers and consumer electronics. Beijing has pushed for more access to Taiwan in return for allowing $12.2 billion worth of Taiwanese investment in China.

Much of what China wants is political. Beijing has claimed sovereignty over the self-ruled island since the 1940s, when Chiang Kai-shek's Nationalists fled there after losing the Chinese civil war to Mao Zedong's Communists.

Since 2008, when Taiwan's China-friendly President Ma Ying-jeou took office, the two countries have signed a series of trade deals. Taiwan had already opened more than 200 other sectors to China, attracting $139 million in investment and creating some 3,000 jobs on the island, official Chinese media say.

Through its extensive contact with Beijing officials, Mr. Ma's government says it believes China will be a responsible stakeholder in local businesses despite uneasiness in Taiwan that Beijing is using its economic might to improve the island economy and charm the citizens into wanting political reunification.

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