When Private Capital Becomes a Security Asset: Challenging Conventional Government/Business Interaction

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With the increase of cross-Strait economic activity, the interaction between Taiwanese business people and the Chinese government has gradually changed. As Taiwanese investment grew in volume, so did the number and frequency of contacts between the parties; a more institutionalised form regulating these contacts was established as a result. Nowadays Taiwanese businessmen have become an identifiable factor in Chinese governmental policy implementation; the process also has far-reaching implications. This paper argues that Taiwanese capital has become a Chinese governmental security asset and examines the importance of this factor when discussing conventional government/business interaction. This paper concludes that a superior national interest guides the warm welcome given by the Chinese government to Taiwanese businessmen.

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  1. 1.

    In this thesis, ‘China’ refers to the People’s Republic of China (PRC or ‘the Beijing government’). ‘Taiwan’ represents the Republic of China (ROC or ‘the Taipei government’). I will use the different terms alternatively.

  2. 2.

    On lifting martial law in July 1987, the Taiwanese government allowed Taiwanese businesses to invest in China. In November of the same year, the Taiwanese government allowed Taiwanese people to go to China to visit relatives. Many Taiwanese businesses sought the chance to invest in China in light of the new regulations.

  3. 3.

    My use of the word ‘Taiwanese’ in this thesis refers to all residents and businesses who live in Taiwan. It does not imply any ideological position on Taiwan’s current identity or international status.

  4. 4.

    The ‘Temporary Provisions Effective during the Period of Communist Rebellion’ were promulgated by the ROC’s secretary general to the office of the President on June 15, 1950., accessed date: July 18, 2007.

  5. 5.

    The Chinese government was furious that the United States issued a visa for then Taiwanese president Lee Teng-hui to visit Cornell University for his alumni reunion, as this violated the bilateral agreement between China and America. This triggered the so-called 1995–1996 cross-Strait missile crisis: the Chinese army launched a volley of nuclear-capable missiles into the sea 90 miles north of Taipei. This constituted a threat and thereafter some missile fire continued until 1996 [14].

  6. 6.

    This paper does not focus on the statistics of cross-Strait trading volume; it rather concentrates in depth on three case-study cities, Tianjin, Kunshan and Dongguan, and in so doing it aims to make bare the mechanisms which are in place to deal with Taiwanese business people.

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  9. 9.

    According to the United Nations Conference on Trade and Development (UNCTD), the definition of a non-market economy is as follows: ‘A national economy in which the government seeks to determine economic activity largely through a mechanism of central planning, as in the former Soviet Union, in contrast to a market economy which depends heavily upon market forces to allocate productive resources. In a “non-market” economy, production targets, prices, costs, investment allocations, raw materials, labour, international trade and most other economic aggregates are manipulated within a national economic plan drawn up by a central planning authority; hence the public sector makes the major decisions affecting demand and supply within the national economy.’, accessed date: June 9, 2006.

  10. 10.

    Interview data, D12, interview date: December 20, Dongguan.

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    Interview data, T11, interview date: November 14, 2004, Tianjin.

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    Interview data, K9, interview date: December 3, 2004, Kunshan.

  13. 13.

    Interview data, T4, interview date: November 2, 2004, Tianjin.

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    Interview data, K4, interview date: November 30, 2004, Kunshan.

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    Interview data, D1, interview date: December 20, 2004, Dongguan.

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    Interview data, TA1, interview date: December 26, 2006, Taipei.

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    Interview data, D10, interview date: December 23, 2004, Dongguan.

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    The discussion between the Dongguan TBA and the Dongguan government about this regulation was recorded from the 28th coordination conference on January 10, 2005, Dongguan.

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    The formula of the amount of a company’s ‘charity tax’ is calculated as following: Average number of disabled employees = average number of employees × 1.5%; Charity tax = average number of disabled employees × Average wage × 80%, Dongguan Ribao, May 10, 2004, p.1.


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Correspondence to Chun-Yi Lee.


Appendix 1

Table 2 Trade between Taiwan and Mainland China

Appendix 2

Code: T4

Interview date: November 2, 2004

Name: Den-hen Tuang

Position: General manager, TOYOTA Co. LTD.

Code: T11

Interview date: November 14, 2004

Name: Zi wei Zhong

Position: Active Director, Tianjin Commission of Foreign Economic Relations and Trade

Code: K4

Interview Date: November 30, 2004

Name: Zen-fen Wang

Title: The people government of Taiwanese Affair Office in Kunshan, Director

Code: K9

Interview Date: December 3, 2004

Name: Xiao yan Han

Title: Kunshan Zhangpu Town People’s Government Kunshan Economic Technology

Development Zone, Administering Committee The Foreign Sino Service Center of

Zhanpu Towan Kunshan City, Vice director

Code: D1

Interview Date: December 20, 2004

Name: Paley Ho

Title: Dongguan People’s Government Municipal Bureau of Taiwan Affairs, Director

General, Director General

Code: D10

Interview Date: December 23, 2004

Name: Wei nan Chao

Title: Taiwan businessmen Association Dongguan, Chief General Secretary

Code: D12

Interview Date: December 20, 2004

Name: Hong huei O

Title: Safeway LTD., Chairman,

Taiwan Businessman Association Dongguan, Vice Chairmen

Code: TA1

Interview date: December 26, 2006

Name: Chen-yuan Tung

Title: Vice Chairman of the Mainland Affair Council

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Lee, C. When Private Capital Becomes a Security Asset: Challenging Conventional Government/Business Interaction. East Asia 25, 145 (2008).

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  • Business/government relationship
  • Cross-strait relationship
  • Taiwanese businesses
  • The Chinese government