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Banking

Taiwan agreement opens the gate for Chinese investment

An investor-protection act between Taiwan and mainland China is fuelling speculation of blockbuster investments. Such deals are vital – even if only in a symbolic sense to begin with.

The signing of an investor-protection act between Taiwan and mainland China last month has set bankers’ tongues wagging about imminent blockbuster acquisitions and infrastructure finance projects in Taiwan.

Their talk centres on two specific projects in the works. Within the next year, sources tell Euromoney, a firm close to the Chinese government will take on a buy-operate-transfer (BOT) infrastructure project in Taiwan. The second deal involves a leading Chinese bank in talks to buy a share, under the 5% legal limit, in one of Taiwan’s 39 private banks.

The firms in question have not yet come forward publicly, but investment bankers in Asia are sure these two deals will happen.

It is clear that the agreement and the resulting deals are important, if only from a symbolic point of view at this stage.

The BOT deal and the China bank investment indicate that both sides meant what they said about the protection deal: it will inject more mainland money into the much smaller, $431 billion export-driven Taiwanese economy, which today fluctuates sharply along with volatile global consumer demand.

China also values Taiwan’s economy for political gain, hoping that if the island – just 100 miles offshore – sees enough money, its people will favour unification with Beijing instead of the self-rule that the Communists have disputed for more than six decades.

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