China’s largely rubber stamp parliament revised a law on Saturday to simplify investment procedures for Taiwan companies, in another attempt by Beijing to show goodwill to the Chinese-claimed island ahead of elections there on Jan. 11.
China, with its 1.3 billion people, is Taiwan’s favourite investment destination with Taiwan companies investing more than $100 billion there since China began landmark economic reforms in the late 1970s, drawn by a common culture and low costs.
China has extended what it views as olive branches to Taiwan in the run-up to the election, including opening further sectors to Taiwanese investors, with the ultimate goal of enticing the island to accept Beijing’s control.
Taiwan’s government has warned against falling for China’s inducements and has called on China instead to grant its own people democracy and freedom of speech. China has never renounced the use of force to bring Taiwan under its control.
The revised law removes several layers of bureaucracy to simplify procedures for investment from Taiwan, with the aim of encouraging more of it.
Chinese commerce ministry official Jiang Chenghua told reporters the central government “paid great attention” to protecting and encouraging Taiwan investment and it had support from the highest levels, including President Xi Jinping.
“Although the revised clauses are not many, they are of great significance and are conducive to optimising the investment environment for Taiwan compatriots in the mainland and to further expand economic and trade exchanges and cooperation between the two sides,” Jiang added.
The revision is designed to dovetail with a new foreign investor law which comes into force on Jan. 1. Chinese Commerce Minister Zhong Shan said this week he wanted “our Taiwan compatriots to share the benefit of this great change”.
Taiwan says China has been stepping up its efforts to sway electors and is planning an anti-infiltration law to counter Chinese influence efforts, which could pass next week.
Next month’s elections pit President Tsai Ing-wen of the pro-independence Democratic Progressive Party against Han Kuo-yu of the main opposition party the Kuomintang, which favours close ties with China.
China is Taiwan’s top trading partner, with trade totalling $226 billion in 2018. Taiwan runs a large trade surplus with China.
Taiwan has been trying to wean itself off its reliance on China and to encourage Taiwan companies to come back home or to shift their investments to other parts of the world, notably Southeast Asia.
Taiwan’s economy has benefited from its firms moving manufacturing back to the island to escape higher tariffs from the China-U.S. trade war, though the dispute has also caused some disruption for Taiwan’s economy.