Analysis: The Risks of Chinese Investment in Taiwan Buildings
A construction firm in Taipei is under investigation for alleged embezzlement and for promising the building’s property rights to a Chinese brokerage as collateral. We ask what risks are associated with Chinese capital backing Taiwanese projects.
Transcript
00:00 A scandal has focused attention on the development of a skyscraper in Taipei, planned to be one
00:05 of Taiwan's tallest. The construction firm behind the Sky Taipei Tower is being investigated
00:11 for allegedly pocketing the equivalent of 32 million U.S. dollars. There are further
00:16 claims that developers promised the building's property rights to a Chinese brokerage as
00:21 collateral, giving it a seat at the project's meeting table. Construction is expected to
00:26 finish by the end of this year.
00:29 To learn more about the significance of this scandal, I spoke to Xu Guangze, Deputy Secretary-General
00:35 at the Taiwan Economic Democracy Union.
00:38 So why is it a problem that a Chinese company held the property rights to this building?
00:43 "Because it's a very important location in the Hsinchu area. A lot of tourists and
00:49 foreign friends from Taiwan come here to travel. If a building this big is affected by China,
00:56 it can do a lot of publicity. For example, if you put a slogan that supports unification
01:03 and opposes Taiwan independence, it can become a very serious media outlet for Chinese publicity.
01:10 This has happened in Taiwan in the past, but it was stopped by the government."
01:16 With such a high-profile project, how is it possible that almost 32 million U.S. dollars
01:22 is able to disappear and slip through the cracks?
01:25 "Because of this, the government in Taiwan is still investigating. So, in the end,
01:32 who is behind it, is it illegal, is China operating, we have to wait for the results to be confirmed.
01:37 But we think there is a loophole in it, which is that Taiwan's law is favorable to securities investment.
01:46 Taiwan's law is for single-time, if you only want to invest in stocks below 10%,
01:53 you don't need to go through our government to investigate. So, who is behind it,
01:58 is it the beneficiary, is it China, is it Hong Kong?
02:01 In fact, the government in Taiwan cannot find out at the first time. I think this is a big loophole."
02:05 What might happen to this project if it does get caught up in legal troubles?
02:10 "We think that if it is directly affected, the building may become,
02:15 in Taiwan's terms, a "wreckage building", that is, this building cannot be built,
02:21 it may become a big ugly building in that place.
02:26 Of course, this is a situation that only occurs when there is a big legal dispute."
02:30 [BLANK_AUDIO]