Taiwan’s market regulator told financial institutions to respect Taiwan’s dignity in marketing materials for cross-strait financial products, after China Construction Bank Corp.’s reference to the “island” was perceived as offensive.
Cross-strait market participants must uphold the principles of equal standing, in accordance with the act governing relations between Taiwan and mainland China, the Financial Supervisory Commission said in a statement yesterday.
CCB is one of the first four Chinese companies to sell yuan debt in Taiwan after banks were permitted to start holding deposits in the mainland currency this year. Taiwan, formally known as the Republic of China, has been ruled separately from China since the Nationalist party lost control of the mainland to Communist forces in 1949.
A Construction Bank ad published on Dec. 9 referred to its yuan bond issue as the largest “within the island.” The wording “belittles Taiwan,” the Taipei-based Liberty Times said in in a Dec. 11 front-page story that carried the headline: “Siphoning money and brainwashing.” China has pledged to unify the two sides, by force if necessary.
“It’s like us calling China a ‘Communist area,’ ” said Ting Jen-fang, a political scientist at Taiwan’s National Cheng Kung University. “It implies Taiwan is a part of China.”
Relations across the Taiwan Strait have warmed under President Ma Ying-jeou, who has made closer economic ties to China a centerpiece of his economic agenda. Ma’s administration has pursued a policy of neither recognizing or denying the legitimacy of the People’s Republic of China, preserving political ambiguity while building economic exchanges. As exports to China climbed to about 40 percent of total overseas shipments, Taiwan signed trade agreements with New Zealand and Singapore in order to diversify its economic allies.
A trade agreement with China opening 80 service sectors is still under legislative review six months after its signing, in part because of fears that Chinese labor will “eventually steal jobs” from the Taiwanese, according to Ting.
“On the other hand, people here are quite realistic and open to the yuan,” Ting said. “But this is different from accepting China’s statements that Taiwan is a part of it.”
Taiwan started competing for yuan business with Hong Kong, Singapore and London in February after China’s central bank allowed Bank of China’s Taipei branch to clear yuan last year. Taiwan’s Chinatrust Commercial Bank was the first issuer of yuan-denominated debt on the island, and Chinese corporates were allowed to issue yuan bonds last month.
Gretai Securities Market Secretary-General Huang Bing-jing said the bond exchange sent a letter to CCB’s Taipei branch saying the reference “hurt” relations. The Bank of Communications Co., Bank of China Ltd. and the Agricultural Bank of China were also approved to list their bonds on the Gretai exchange this week, with the four lenders raising the combined total of 6.7 billion yuan ($1.1 billion).
As of the end of October, Taiwan banks’ yuan deposits totaled 123.2 billion yuan, compared with 98.7 billion yuan a month earlier, according to the local central bank.