| China unlikely to impose sanctions on Taiwan, The Straits Times, June 28, 2004 Analysts say economic punishment will hurt Chinese industry more and result in substantial job losses TAIPEI - Despite China's mounting calls for economic sanctions to prevent Taiwan drifting away from the 'motherland', Beijing is unlikely to adopt dramatic measures which analysts say might do it more harm than good. But individual Taiwanese businesses operating in China may still be harassed to stop them crossing the 'red line' of backing Taiwanese independence and to provide a proper outlet for rising nationalist sentiment in China, they warn. 'Unless it is crazy, Beijing is not likely to push that far for now,' said Professor Chang Hsien-chao at National Sun Yat-sen University's Graduate Institute of Mainland China Studies. Since the March re-election of President Chen Shui-bian, China has ratcheted up its rhetoric, reiterating its long-standing vow to take Taiwan by force should he move the island towards a formal separation from Beijing. Researchers at Chinese universities and think-tanks have called on their government to use sanctions to cripple the Taiwan economy in a bid to snuff out moves towards independence, China's state media said earlier last week. 'It is high time that we mobilise all resources, including economic measures, to crack down on pro-independence forces,' Mr Xu Bodong, director of the Institute of Taiwan Studies at Beijing Union University, was quoted by the official China Daily as saying. However, analysts believe the warning might be a bluff rather than a prelude to immediate action, given the close 'industrial division of labour' between the island and the mainland. Many Taiwanese firms on the mainland import raw materials from Taiwan for processing and then sell the products abroad, earning China billions of US dollars in foreign exchange each year. Should sanctions be adopted, losses could account for 1.8-3.1 per cent of Taiwan's total gross domestic product (GDP), said Mr Tung Chen-yuan, a researcher at National Chengchi University's Institute of International Relations, citing a study he carried out in 1999. But China would feel the pain as well: Such losses could make up for 2.4-2.8 per cent of its GDP, Mr Tung said. 'The reasonable ratio of such losses may further rise to account for 3 per cent of China's total GDP if Taiwan's increased China-bound investments over the past few years are taken into consideration,' he said. Taiwanese businesses have funnelled at least US$70 billion (S$120 billion) into China for investment projects. China could also see the number of jobless surge. 'Just imagine the immense pressure from local governments if so many people lose their jobs overnight,' Prof Chang said. In 1999, Taiwanese firms as a whole hired some nine million people in China. The number was estimated at 12 million this year. Since Taiwanese businesses have played a key role in the global information technology supply chain, sanctions would also cause international concerns, particularly in the United States. Instead, Beijing could continue to harass Taiwanese businesses which have close ties with President Chen, Mr Tung suggested. 'There is no need to 'slash'. All they have to do is make the gesture of 'raising their knives', a move already giving Taiwanese businesses the jitters,' he said. -- AFP |
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