china's leverage

flair9999

raymond, i agree to the fact that taiwan's economy is growingly dependent on china, based on the export statistics. the argument i was making from the beginning is that china also needs the presence of these taiwanese companies for employment, management of labor, and technology transfer.

as you know, china produces more than 6 million university grads every year, and about a third of them are unemployed because there simply isn't enough companies in china to employ that many people. i'm sure you've seen how crowded those job fairs are in shengzhen and shanghai, and how many of them go home empty-handed. taiwan's net annual investment in china may seem little compared to the US, EU and Japan, but it is substantial and Taiwanese companies or Chinese companies owned by Tai-Shang do employ a huge number of people. Imagine the social chaos it would cause if all these people are suddenly laid off. Riots due to corruption and unemployment are frequent in many parts of China, even in the relatively wealthier south... these are all the signs of china's social problems, which you can't ignore. and for that very reason, china need these taiwanese companies to stay in china.

you also talked about how Japanese and Korean technologies are superior, which they are, in certain fields, and not others. for example, taiwan currently still is the world leader in the production of the smallest chips (90 nanometer technology). by 2010 china's fabs will only be able to produce 10% of the chips for its domestic market so you know where the rest of them have to come from... again it's true that the taiwan economy is dependent on china's demand, but then which one of the 4 dragons isn't? another technology is the tft flat panel, which taiwan's chimei and korea's samsung actually share (exchange) many of the key patents... the only difference is korea's samsung is much better known. and if you want to talk about tech transfer from japan, you can dream on... the japs are extra-cautious when transfering bottleneck technologies to chinese companies. the best way for china to catch up to the knowledge-based competition is to attract more Hai-Gui's, like those Qinhua and Beida engineers who got their PhDs in the US. China's Dopod is the best example of what chinese people can achieve when they actually choose to come home and not become white people's lab rats.