June 4, 1996

Booming On The Front Line

As part of his occasional series, Eric Ellis visits Xiamen in Fujian Province, just across the straits from Taiwan.

WHEN your government decides to hurl missiles from your back yard, it's no surprise that the neighbours expect an explanation.

But if you are the Communist authorities of Xiamen, the front line for any conflict between China and Taiwan over the latter's presumed plans for independence, all explanations offered by Beijing are rhetoric.

"Taiwan is an inalienable part of China," says Xiamen's Deputy Mayor, Mr Liu Chengye, mouthing Beijing's oft-quoted propaganda on Taiwan. Discussion of the issue is out of the question, even though Xiamen gets more than 50 per cent of its investment from Taiwanese business and Taiwan, in the form of heavily defended Quemoy Island, lies less than two kilometres away. The term "boom" is sometimes too readily applied to reformist China but in Xiamen it has literally been true in recent months, as the People's Liberation Army whistled warheads across the region to the seas perilously close to Taiwan and its elections.

As local officials tell it, it was much ado about nothing. Election day, March 23, was just another day for Xiamen where it was and remains business as usual in the "special economic zone", the historic treaty port once known as Amoy.

"I can't even remember what happened," says Mr Tang Maoxiang, deputy director of the local Foreign Ministry office. When pressed, he admits the winner was indeed the hated Mr Lee Teng-hui, a man he dismisses as having "imperial pretensions", another of Beijing's favourite put-downs.

Xiamen's authorities go out of their way to give the impression that Fujian isn't fussed about the military running around in their backyard.

Visitors are wined and dined, impressive statistics are quoted, smart suits are put on and compliant Taiwanese investors are trotted out for the record to say that their investment plans are going ahead regardless of the political tension. And there were no tanks in the streets of Xiamen, they claim. One such businessman is Mr C.K. Chiang, whose Minshing industrial group assembles aluminium alloy auto wheels in Xiamen.

"Business is business, politics is politics," is about as expansive as Mr Chiang gets, perhaps mindful that a Communist Foreign Ministry official sits just opposite the interviewer. He said the election was an historic occasion but not enough to move him to vote.

"I listened to the election on my radio." he says, adding that the result made no difference to him or his company's investment.

Of course, it may be difficult to be totally frank when a party cadre is sitting in your office, but anecdotal evidence in Taipei suggests corporate Taiwan is adopting a "wait-and-see" approach.

With a collective $US20 billion ($25 billion) at stake, there may well be legitimate concerns.

A feature of Beijing's campaign against Taiwan has been the absolute lack of input from the economic ministries, which gained in influence and power as reform has brought prosperity to China.

"The economic ministries have been totally sidelined. It underlines just how seriously China takes the sovereignty issue and is prepared to put it ahead of the economy," says an Australian Embassy analyst.

Beijing strongly suspects Mr Lee has a private agenda to make Taiwan independent. Should he go public with such an agenda, Beijing would likely put aside economic consequences and threaten to seize or freeze Taiwan assets, and bear the ripple-down consequences such an action would have beyond Taiwan.

Beijing tried a similar but less drastic tactic with a series of missile tests, hoping to spook the stockmarket while blaming Mr Lee for the instability. The strategy, which had worked in Hong Kong in turning tycoons away from British Governor Mr Chris Patten's democracy reforms, was for plummeting portfolios to deter voters from voting Lee.

While the market temporarily got the jitters, Mr Lee held his ground with his own reforms of the Taipei market and voters gave him a strong mandate.

But just as Taiwan has become accustomed to the mainland's cheap labour and big market, Fujian is reliant on Taiwanese dollars to fund its ambitious reform program. When asked about this Mr Liu, whose bailiwick includes the glittering new Haicang investment zone, said: "We can never sacrifice our sacred national duty (to re-unify with Taiwan).

"This consideration of course will come before foreign investment. It is the common will of both the peoples of China and Taiwan."

Mr Huang Qing Quan of Xiamen's influential Foreign Investment Committee put a more sinister spin on it: "The entrepreneurs of Taiwan would have to take into account the actions of their Government."

Remarks like that don't go down well in Taipei.