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STRATFOR.com
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Taiwan: Local Politics Trump State Security
December 5, 2001
Summary
Taiwan's government announced last week that it will permit its high-tech firms to move manufacturing operations to China. Concerns over Taiwan's economic vulnerability postponed the decision for years, but the Dec. 1 parliamentary election provided an opportunity to push the ruling over the final hurdle. Now Taiwan will move its economy -- and politics -- closer to China.
Analysis
Taiwan's Cabinet last week cleared the way for 122 products to be made in China, including previously restricted hi-tech items such as notebook computers, mobile phones and DVD players. The ruling -- announced the day before Taiwan's Dec. 1 parliamentary election -- was a key demand of the country's business community, which hopes to take advantage of China's low-cost labor.
Until now, no matter what political party was in power, the government chose security and political independence over the economic benefits of locating Taiwan's high-tech industry on Chinese soil. But internal politics now appear to have trumped security concerns. The decision will boost Taiwan's economy as well as the political power of President Chen Shui-bian's Democratic Progressive Party (DPP).
Greater economic integration with China will also force Taiwan to take a less-belligerent stance on its own independence. Taipei instead will need to focus on economic and political engagement with Beijing rather than on confrontation.
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Dan
Taiwan: Local Politics Trump State Security . . .