Dow Jones International News: CHINA WATCH: Taiwan's Falun Leader Frets China Collapse

By Perris Lee Choon Siong

10/08/2002

TAIPEI - A Taiwan [practitioner] of the spiritual Falun Gong movement was detained together with her teenage child, interrogated and then repatriated back to the island days later by China's police on a family visit to the mainland last year. She wasn't given a clear idea of the charges leveled against her or the evidence to back up her arrest. To her fellow practitioners of the Falun Dafa society, the other name for the Falun Gong in Taiwan, that episode merely reflects the lack of civil liberties and a transparent rule of law in China.

That incident is also one of many affecting the Falun Gong, banned in China since 1999.

But for Chang Ching-hsi - an economics professor at Taiwan's top-rated National Taiwan University[…] that event reflects the risks facing the many Taiwan investors who have sunk some US$100-120 billion into the mainland over the last decade.

Taiwanese investors in China, warns Chang, are facing as much threat from the lack of a transparent rule of law on the mainland and its creaky banking system as the Falun Gong followers there face from Beijing.

Chang, who belongs to the school of thought that believes the Chinese economy is on the brink of disaster, says "China's collapse is just a matter of time."

Taiwan firms, meantime, continue to pour money into China.

Lending To Firms With Large China Exposure Discouraged

Chang acknowledges Taiwan manufacturers need to move their operations to China to cut costs, but frets about the rush of capital flowing into the mainland. The Taiwan government discourages banks from lending too much to local firms with too large an exposure to China.

As a result, Taiwanese investors there are likely to borrow more from the mainland's banks. Last month, for instance, four Chinese banks participated in a US$223 million syndicated loan for Nan Ya Plastics Corp. (Q.NYP), one of Taiwan's largest plastics company, for the firm's factory expansion in Suzhou.

But Chang says that China's banks are "saddled with so much bad loans, and (with) the government showing no respect for human rights, I don't know why I should feel happy for those going to China."

Official estimates in China reckon around 25% of banking loans in its state-owned commercial banks are overdue. But private economists say the actual figure could be 50%, or much higher.

Chris Leung, banking analyst at Dao Heng Bank in Hong Kong, says the most daunting problem lies within China's state-owned banks, namely Industrial & Commercial Bank of China, Agricultural Bank of China (Q.AGB), China Construction Bank (Q.CCB) and Bank of China (Q.BCH), which account for over 85% of outstanding lending in China.

State banks like those are likely to be involved in funding major projects by Taiwanese firms - including those building multimillion dollar semiconductor plants on the mainland after a ban on such investments was lifted recently by Taiwan.

Taiwan has been ruled by a separate government since a Chinese civil war ended in 1949. But Beijing has regarded the island as a runaway province to be taken back by force if necessary.

For Chang, a reunification between the island with the mainland is unlikely. He thinks the divide between the two on such key issues like ideology is far too wide to be ever bridged.

After the question of Taiwan's sovereignty, perhaps no other issue riles China more than the Falun Gong.

Beijing banned the group in July 1999 as there were fears the Falun Gong movement, roughly estimated at 60 million-70 million in China - more than the number of the Chinese Communist Party - would grow too big to become a threat to the government.

300,000-400,000 Falun Dafa Members In Taiwan

Since then, China has been widely reported to have detained and abused thousands of followers, while this movement - which stems from the ancient tradition of exercise and meditation of qigong - is legal and practiced openly in Taiwan and dozens of other countries.Chang himself has been a Falun Gong follower for four years. His Falun Dafa Society has grown quickly to some 300,000-400,000 practitioners islandwide.

Every early morning or evening, groups of Falun Dafa practitioners gather, including in public spaces, for meditation and exercises, believed to bring spiritual and physical betterment to individuals.

Contrast this with the Falun Gong movement in China. Meetings of the Falun Gong practitioners in China are mostly underground, given their illegal status.

There are also barely any contacts between the Falun Gong followers across the strait, says Chang, because China keeps tabs on what it views is a group bent on creating havoc in the country.

Last month, Beijing hurled more accusations against the Falun Gong. China alleged a Taiwan-based broadcast outfit was used by Falun Gong to hack into China's top television satellite systems. Taiwan officials are looking into the matter, but one said such possibilities are "farfetched."

Chang says he doesn't have any idea about the hacking, but notes that "there are too many deep-seated differences that will continue to keep the two sides apart."

Given such basic differences, he believes eventual integration - even an economic one - of China and Taiwan will be unlikely, if not impossible.