TAIWAN FIRMS PUSH TIGHTER TRADE TIES WITH CHINA

TAIWAN FIRMS PUSH TIGHTER TRADE TIES WITH CHINA

Taiwan's trade with China continues to climb rapidly and firms say they remain keen on investing in the mainland despite political alarms and government attempts to spread risks.

Indirect trade jumped nearly 37 percent in the first half from a year earlier to $10.4 billion, the Ministry of Economic Affairs said. Exports rose 26 percent to $8.85 billion, while imports ballooned 98.6 percent to $1.59 billion, it said.Direct trade isn't legal, so most goods are routed via Hong Kong. That business accounted for 10 percent of Taiwan's overall trade in the period, the figures show.

The ministry attributed the growth to the Taiwan government's continuing efforts to liberalize commerce across the Taiwan Strait and allow more imports of semi-finished products from the mainland.

Relations have been strained recently by China's strident criticisms of President Lee Teng-hui and its military exercises just off Taiwan's northern tip. Both are widely seen as attempts to intimidate the island it deems a renegade province.

The government in Taipei has long advised its business community, chafing under steadily rising costs, not to become too reliant on the mainland.

For all that, a new survey by the ministry of 1,680 manufacturing companies found 66.8 percent of respondents have investment in China, up 9.7 percent

from the level recorded in a survey conducted in 1993. About 57 percent said China is their key overseas investment hub.

The survey did find evidence of some caution: The percentage of those who concentrate investments in China is likely to fall to 50 percent in the next three years, it said.

"Such a ratio is still too high in consideration of the treacherous investment climate on the mainland," said Yang Tsai-yuan, director-general of the ministry's statistics department. "Government agencies should keep a close watch on the developments."

Approved mainland investment in the first half of July slumped 44 percent

from the June level to $49.5 million. In the second half of July, it was off a further 65 percent to $17.42 million.

"The figures point to a slowdown in cross-strait investment activities following Beijing's recent displays of military might in areas just north of Taiwan," an official of the Investment Commission said. It has received no requests to withdraw investments from China.

Perhaps in response to government urging, the survey indicates the number of Taiwanese companies with investments in Southeast Asia will increase 68 percent over the next three years and probably double in Singapore, Indonesia and the Philippines.