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Taiwan to Puts Inbound Chinese Investment Plans Under National Security Scrutiny

2011/05/31 | By Ken Liu

Taipei, May 31, 2011 (CENS)--Taiwan's National Security Bureau will join forces with the Ministry of Economic Affairs (MOEA) to evaluate the investment plans filed by Huawei Technologies Co. and mainland China's banks to set up branches on the island, these enterprises have close connection with Chinese governments.

The bureau and MOEA today will assess the plan forwarded by Huawei, the mainland's biggest telecom-infrastructure supplier whose top executives are retired People's Liberalization Army officers. Huawei plans to upgrade its representative office in Taiwan to a branch.

MOEA's ranking officials pointed out that although the ministry's Investment Commission is made up of 19 members from different government agencies, National Security Bureau representative has the final say on whether to approve Huawei's plan or not. The commission is in charge of reviewing inbound and outbound investment projects.

Over the past years, the Mainland Affairs Council (MAC) under the Executive Yuan, Taiwan's Cabinet, has been the gatekeeper of any inbound Chinese investment plans involving national security implication. Huwei is the first case that calls for the bureau's review.

According to Taiwan's officials dealing with mainland China affairs, the bureau's participation in the review task is similar to the operation that the Committee of Foreign Investment in the United States (CFIUS), an inter-agency committee authorized to review transactions that could result in control of a U.S. business by a foreign person (“covered transactions”), in order to determine the effect of such transactions on the national security of the United States.

In May last year, CFIUS convinced Huwei to give up a plan to acquire Santa Clara, California-based 3Leaf Systems Inc. in 2008, CFIUS vetoed Huwei's plan to acquire 3Com, whose subsidiary Tipping Point provides federal government and U.S. military network security services.

MOEA officials said that Beijing is watching closely how Taiwan will deal with Huwei's case and an undesirable outcome may impact the seventh round of talk between Chairman P.K Jiang of Taiwan's Straits Exchange Foundation and Chairman Chen Yunlin of China's Association for Relations Across the Taiwan Straits on bilateral investment agreement, which will be held sometime in the second half of this year.