Forbes came out with a couple of articles that highlight how close the DPP and KMT policies are on China investments. First, there was a very short article on Frank Hsieh, now Chairman of the DPP, who said:

The government should ease regulations on China investments as soon as possible, subject to national security considerations, the Commercial Times reported, citing Frank Hsieh, the presidential candidate of the ruling Democratic Progressive Party (DPP).

High on the agenda should be relaxing the provision that caps China investments at 40 pct of a company’s net worth and allowing local financial institutions to open shop on the mainland, Hsieh said in his capacity as acting chairman of the DPP.

Hsieh’s position, readers may recall, is opening to China on a “case-by-case” basis. Forbes has a much, much longer article on the KMT’s position, in which Chairman Wu argues that the KMT can prevent capital flight by opening even more to China:

Wu said the KMT is also ready to do away with the current provision capping China-bound investments by local companies at 40 pct of their net worth.

In its place will be a control regime patterned on the system developed by the US to regulate the export of technologies deemed crucial to national security, he said.

‘We believe only the right policy can help [dissuade capital flight and] retain capital here,’ he said. ‘Capital always finds places where it can best preserve value and the highest possible return.’

Currently, China-bound investments are mostly capped at 20-40 pct of a company’s net worth; higher net-worth companies have lower ceilings

Note that these are exactly the same positions: both argue for a case-by-case basis. Neither will restrain the flow of investments to China, since review systems in Taiwan rarely (1) have serious teeth or (2) are strictly enforced. It seems that both parties are signaling that business can do what it wants. However, rising labor costs in China may deflect investment elsewhere, to Vietnam, for example. India is often mentioned as a possible destination, but infrastructure there doesn’t match China’s.

Meanwhile Forbes has a little blurb that gives an authoritative estimate for the size of Taiwan’s investments in China that is much greater than I had realized:

No matter which side wins, the money that the Taiwanese have taken offshore — estimated by Morgan Stanley to be as much as $207 billion in capital outflow between 2000 and the end of the third quarter in 2007–should start to come home. This is a lot of money relative to the $625 billion market value of the Taiwanese stock market.

$207 billion — a sum equal to about 2/3 of Taiwan’s GDP. Sheesh!

Finally, Wendell Minnick over at has an excellent article on Ma Ying-jiu’s cross-strait policies and defense issues.