Taiwan Tati Cultural and Educational Foundation

Delegations from Taiwan and the People's Republic of China launched negotiations in Beijing earlier this week toward a controversial "economic cooperation agreement" that is being vigorously promoted by President Ma Ying-jeou's rightist Chinese Nationalist Party (Kuomintang) government as a panacea for our economic future.

Unfortunately, the talks, which are taking place under the framework of the non-official platform between Taipei's Strait Exchange Foundation and Beijing's Association for Relations Across the Taiwan Strait, promptly began with a major degradation of Taiwan's international status.

The local stock market has recently been the target of speculative investment from China’s qualified domestic institutional investors (QDII), but after a memorandum of understanding (MOU) on cross-strait financial supervision took effect on Jan. 16, the bubble that had been growing for so long finally burst when the Financial Supervisory Commission announced an investment limit for Chinese QDII of US$500 million.

This figure was one-60th of the US$30 billion that certain media outlets had talked about when trying to hype the issue. Although the reported figure was later changed to US$1 billion, that figure was still twice the final amount. The overall market value of the Taiwanese stock market is more than NT$20 trillion (US$624.4 billion), so the NT$16 billion that China’s QDII will be allowed to invest will be a drop in the ocean. This shows how all the talk about Chinese QDII investment was a deliberate fabrication by the government to trick investors into thinking things were looking good, and a topic that big market players and pro-unification media blew out of all proportion.