How did China transform from a poor country into the world's second largest economy?
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Martian2
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Aside from the export of 100 million Taiwanese-designed notebook computers from mainland China each year, there is a heavy presence of Taiwanese high-tech in many other mainland China exports.
For example, TSMC manufactures the processor chip in smartphones. Taiwan's MediaTek designs the chips. Taiwan's fingerprint-sensor companies supply the design for the fingerprint sensors in the smartphones. Taiwan's Largan supplies the camera module for smartphones.
Taiwan's innovative patents are in many high-tech products. The high-tech products are assembled in mainland China and the export "credit" is given to mainland China. However, the core technologies behind many mainland Chinese high-tech exports are actually Taiwanese.
Taiwan fingerprint sensor suppliers predict strong third quarter | Biometric Update (September 13, 2016)
For example, TSMC manufactures the processor chip in smartphones. Taiwan's MediaTek designs the chips. Taiwan's fingerprint-sensor companies supply the design for the fingerprint sensors in the smartphones. Taiwan's Largan supplies the camera module for smartphones.
Taiwan's innovative patents are in many high-tech products. The high-tech products are assembled in mainland China and the export "credit" is given to mainland China. However, the core technologies behind many mainland Chinese high-tech exports are actually Taiwanese.
Taiwan fingerprint sensor suppliers predict strong third quarter | Biometric Update (September 13, 2016)
Jlaw
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The returning Chinese scientist and tech experts also contributed to the modernization of China.
This is civilian tech. China had to develop it's own military tech which is a lot more difficult than civilian tech.
bbccdd1470
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What Martian2 said was right, HK has never been a strong technological based city. The strong point of HK is accumulation of capitals as a financial centre and sole gate to the Chinese market. We shouldn't deny or downplay any contribution that Taiwan made to the development of China due to the current political situation. Taiwan people in 70s to 80s were so different than today where most of them considered themselves as part of the Chinese community. Just like back in the days, a lots of HK people smuggled goods back to China when the west put their sanctions on us.
Martian2
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Taiwan transplanted industry-after-industry onto Mainland China
Look around the world. Aside from China, how many countries have made headway in industrialization during the last 40 years? The answer is none. The only newcomer is mainland China. Otherwise, the world's top ten exporters are still the same group of countries.
The question is how did China accomplish the difficult feat of industrialization in 40 years? I say the answer is Taiwan's transfer of industry-after-industry onto Mainland China.
After 1978, it started with bike manufacture. During the 1980s, Taiwan was the world's largest bike exporter and nicknamed the "Bicycle Kingdom" (citation: Taiwan’s Bicycle World | Georgia Asian Times).
Today, China has taken over Taiwan's crown as the world's largest bicycle exporter and pushed Taiwan into the second position (citation: Bicycles Exports by Country | WTEx (June 25, 2017)).
How did this happen? The obvious explanation is that Taiwan built bicycle manufacturing plants on mainland China and the mainland Chinese learned Taiwan's bicycle manufacturing technologies. This has forced Taiwan to create a stronghold in expensive mountain bikes and defend it with patents.
The problem is that US patents are valid for only 20 years. What happens when the Taiwanese mountain bike patents expire? Can Taiwan come up with new and improved patents for mountain bikes? Or has Taiwan hit a wall in innovation (because mountain bikes and their suspension can't be improved much more) and will succumb to China's larger economies of scale in production?
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Next, let's talk about the yacht industry. Taiwan is Asia's largest yacht manufacturer and the world's fifth-largest yacht builder (citation: About Horizon Power Catamarans "elevating Taiwan as one of the world’s top five luxury megayacht building nations"). After learning how to build yachts from Taiwan, mainland China bought an Italian yacht builder and is directly competing with Taiwan (citation: Chinese group buys yacht builder Ferretti, Bertram line | BizJournals).
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As in bicycle manufacture and yacht building, the same story applies to Taiwan's transplant of part of its textile industry to China. Taiwan brought in the capital, know-how, equipment, and buyers to mainland China. Over time, the local mainland Chinese have learned Taiwan's expertise in textile manufacturing and forced the Taiwanese firms to go upstream technologically to survive. However, there is a limit to technological improvement. Once mainland China can produce high-tech textiles like Taiwan, it will be "game over" again for another Taiwan industry.
Hopefully, Taiwan's push into VR (virtual reality), AR (augmented reality), IoT (internet of things), etc. can replace the more traditional manufacturing industries that China will inevitably wrest from Taiwan.
Here is the cycle. Taiwan invests in mainland China, because Taiwanese firms earn a nice profit. After years, mainland Chinese employees learn the expertise and create their own companies to compete against the Taiwanese firms that transplanted the manufacturing plants onto mainland China.
It happened in bicycle manufacturing, yacht building, textiles, digital cameras, smartphone 3G chips, LEDs, LCDs, semiconductor 28nm logic-chip manufacture, CNC machine tools, specialty chemicals, etc.
The rise of mainland China from "a poor country into the world's second-largest economy" has been a story of mainland Chinese acquiring Taiwanese industrial know-how and then turning around and competing against those very same Taiwanese companies. This process has been going on for 40 years.
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Textile Makers in Taiwan Create a High-Tech Niche | The New York Times (December 12, 2012)
"Yet the [Taiwanese] good times might have a short shelf life. Chinese textile mills are learning and adopting production technologies that were first brought to the mainland by investors from Taiwan. Ms. Chen, the economist, estimated that China was 5 to 10 years behind Taiwan technologically, which keeps the pressure on companies in Taiwan to keep innovating.
'Our companies took a few pages to the mainland, but they avoided bringing the whole manual,' Ms. Chen said. 'Technologies like ultrathin, waterproof, breathable fabrics, we still own. In the future, we may need to build spacesuits to stay ahead.'
Peter Huang, the chairman of Kingwhale Industries, a thermal fleece supplier, said his clients came to his company only after failing to find mainland factories that could meet their needs.
'They literally see our product, tell us it’s nice, then fly to Shanghai or Guangzhou with our sample the next day,' Mr. Huang said. 'Then we get an awkward request from a Chinese factory asking us to teach them how to set up the production process.'"
Look around the world. Aside from China, how many countries have made headway in industrialization during the last 40 years? The answer is none. The only newcomer is mainland China. Otherwise, the world's top ten exporters are still the same group of countries.
The question is how did China accomplish the difficult feat of industrialization in 40 years? I say the answer is Taiwan's transfer of industry-after-industry onto Mainland China.
After 1978, it started with bike manufacture. During the 1980s, Taiwan was the world's largest bike exporter and nicknamed the "Bicycle Kingdom" (citation: Taiwan’s Bicycle World | Georgia Asian Times).
Today, China has taken over Taiwan's crown as the world's largest bicycle exporter and pushed Taiwan into the second position (citation: Bicycles Exports by Country | WTEx (June 25, 2017)).
How did this happen? The obvious explanation is that Taiwan built bicycle manufacturing plants on mainland China and the mainland Chinese learned Taiwan's bicycle manufacturing technologies. This has forced Taiwan to create a stronghold in expensive mountain bikes and defend it with patents.
The problem is that US patents are valid for only 20 years. What happens when the Taiwanese mountain bike patents expire? Can Taiwan come up with new and improved patents for mountain bikes? Or has Taiwan hit a wall in innovation (because mountain bikes and their suspension can't be improved much more) and will succumb to China's larger economies of scale in production?
----------
Next, let's talk about the yacht industry. Taiwan is Asia's largest yacht manufacturer and the world's fifth-largest yacht builder (citation: About Horizon Power Catamarans "elevating Taiwan as one of the world’s top five luxury megayacht building nations"). After learning how to build yachts from Taiwan, mainland China bought an Italian yacht builder and is directly competing with Taiwan (citation: Chinese group buys yacht builder Ferretti, Bertram line | BizJournals).
----------
As in bicycle manufacture and yacht building, the same story applies to Taiwan's transplant of part of its textile industry to China. Taiwan brought in the capital, know-how, equipment, and buyers to mainland China. Over time, the local mainland Chinese have learned Taiwan's expertise in textile manufacturing and forced the Taiwanese firms to go upstream technologically to survive. However, there is a limit to technological improvement. Once mainland China can produce high-tech textiles like Taiwan, it will be "game over" again for another Taiwan industry.
Hopefully, Taiwan's push into VR (virtual reality), AR (augmented reality), IoT (internet of things), etc. can replace the more traditional manufacturing industries that China will inevitably wrest from Taiwan.
Here is the cycle. Taiwan invests in mainland China, because Taiwanese firms earn a nice profit. After years, mainland Chinese employees learn the expertise and create their own companies to compete against the Taiwanese firms that transplanted the manufacturing plants onto mainland China.
It happened in bicycle manufacturing, yacht building, textiles, digital cameras, smartphone 3G chips, LEDs, LCDs, semiconductor 28nm logic-chip manufacture, CNC machine tools, specialty chemicals, etc.
The rise of mainland China from "a poor country into the world's second-largest economy" has been a story of mainland Chinese acquiring Taiwanese industrial know-how and then turning around and competing against those very same Taiwanese companies. This process has been going on for 40 years.
----------
Textile Makers in Taiwan Create a High-Tech Niche | The New York Times (December 12, 2012)
"Yet the [Taiwanese] good times might have a short shelf life. Chinese textile mills are learning and adopting production technologies that were first brought to the mainland by investors from Taiwan. Ms. Chen, the economist, estimated that China was 5 to 10 years behind Taiwan technologically, which keeps the pressure on companies in Taiwan to keep innovating.
'Our companies took a few pages to the mainland, but they avoided bringing the whole manual,' Ms. Chen said. 'Technologies like ultrathin, waterproof, breathable fabrics, we still own. In the future, we may need to build spacesuits to stay ahead.'
Peter Huang, the chairman of Kingwhale Industries, a thermal fleece supplier, said his clients came to his company only after failing to find mainland factories that could meet their needs.
'They literally see our product, tell us it’s nice, then fly to Shanghai or Guangzhou with our sample the next day,' Mr. Huang said. 'Then we get an awkward request from a Chinese factory asking us to teach them how to set up the production process.'"
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Kyle Sun
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Are you Kiddddding me ????
Jlaw
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@Kyle Sun @Martian2 it's obvious that a combination of factors helped with China's development. First, China had higher work ethics and higher IQ resulting in a small learning curve that made the transition easier. Secondly, the foundation was already set by Mao and Deng for modernization. Taiwan tech, HK money, overseas Chinese money, returning educated Chinese Patriots, and sound centralized planning of resource allocation made the transformation nothing less than a miracle. This will not be repeated by any other countries. Hats off to all the patriotic Chinese who contributed to China's success. 
Martian2
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I am very serious and not joking.
The Wall Street Journal (a highly reputable business publication) states that unofficial Taiwanese investment in mainland China is in the range of $200 billion to $400 billion.
Investing in Cross-Strait Relations - WSJ (May 4, 2009)
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Secondly, one to two million Taiwanese live and work on mainland China. The Taiwanese are there to look after their investments. In contrast, the number of Japanese in China is negligible.
Cross-Strait Relations and International Organizations: Taiwanâs ... - Björn Alexander Lindemann - Google Books
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Thirdly, every industry that Taiwan is strong in, China is also very strong. This implies a technological transfer over time from Taiwanese mainland investment businesses to Chinese employees.
http://www.solarbusinessfocus.com/assets/images/editorial/figure-2.jpg
Taiwan is economically strong in photovoltaics, LED, LCD, semiconductors (foundry and SoC design), electronics, machine tools, petrochemicals, yacht building, personal computers (both desktop and notebook computers), computer servers for enterprises, etc.
China is economically strong in the exact same Taiwan strengths. This means the decades of Taiwanese investments on mainland China have transferred technology to the Chinese employees that now own a competing business.
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Fourthly, Taiwan industrialized a decade before South Korea. Taiwan's cumulative USPTO patents are 150,000. South Korea lags behind. Why does South Korea have a higher standard of living than Taiwan?
There was a massive outflow of investment money from Taiwan into mainland China. Instead of spending the money at home to upgrade Taiwanese manufacturing plants, Taiwan spent the money in China. This meant mainland Chinese were being paid nice wages and the mainland Chinese cities benefited from real estate taxes. A good example is the transfer of all notebook computer production from Taiwan to China.
Patent Counts By Country, State, and Year - All Patent Types (December 2014)
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Taiwan's last notebook factory closes - Taipei Times (September 19, 2005)
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The final argument is that Taiwan is responsible for 60% of Chinese high-tech exports. Using induction, all of those Taiwanese manufacturing plants on mainland China must have been built with a massive inflow of FDI (ie. foreign direct investment) from Taiwan.
In conclusion, Taiwan is responsible for the vast majority of the investments through Hong Kong and into China.
Why Taiwan Is Asia’s Hidden Tech Mecca - Uncommon Wisdom Daily (November 27, 2012)
"More than 60% of Chinese technology exports are made by Taiwanese companies. What that means is that most of the technology profits coming from anything stamped with 'Made in China' are probably going to Taiwan."
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Martian2
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It takes US$400 billion in investment from Taiwan and tech transfers to modernize China in 40 years.
Mr. Huang Tien-lin is a former presidential adviser for Taiwan.
He said Taiwan has invested $10 billion officially and another $10 billion unofficially in mainland China for twenty years. According to Mr. Huang Tien-lin, Taiwan has invested a cumulative total of $400 billion in mainland China.
That was the price tag to modernize China in forty years. The other part of the story was the massive tech transfer when Chinese companies hired Taiwanese experts to set up a competing business.
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‘Lost years’ showcase Taiwan’s true story | Taipei Times (April 23, 2012)
"Last year alone, formal applications from Taiwanese companies for investment in China exceeded US$10 billion. Add on other investments for which applications were never filed and the total amount of Taiwanese investments in China last year exceeded US$20 billion. This is equivalent to 57 percent of the major private investments in Taiwan — US$35 billion — and 27 percent of the nation’s total private investment — US$73 billion. With such massive capital outflows to China, it would be another miracle if the talented Taiwanese individuals were not attracted to China. It is clear that it is the over-heated 'China fever' that causes the outflow of talent.
...
The true story of Taiwan, then, is the story of how, over the past dozen years, China has attracted more than US$20 billion away from Taiwan every year, reaching a total of more than US$400 billion. It is the story of how national industry has been hollowed out, how the average salary has declined to the same level it was 13 years ago, how youth unemployment has continued to increase, how the brain drain has never stopped and how the wealth gap has rapidly widened. While all this has been going on, the public suffers and the suicide rate keeps climbing."
Mr. Huang Tien-lin is a former presidential adviser for Taiwan.
He said Taiwan has invested $10 billion officially and another $10 billion unofficially in mainland China for twenty years. According to Mr. Huang Tien-lin, Taiwan has invested a cumulative total of $400 billion in mainland China.
That was the price tag to modernize China in forty years. The other part of the story was the massive tech transfer when Chinese companies hired Taiwanese experts to set up a competing business.
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‘Lost years’ showcase Taiwan’s true story | Taipei Times (April 23, 2012)
"Last year alone, formal applications from Taiwanese companies for investment in China exceeded US$10 billion. Add on other investments for which applications were never filed and the total amount of Taiwanese investments in China last year exceeded US$20 billion. This is equivalent to 57 percent of the major private investments in Taiwan — US$35 billion — and 27 percent of the nation’s total private investment — US$73 billion. With such massive capital outflows to China, it would be another miracle if the talented Taiwanese individuals were not attracted to China. It is clear that it is the over-heated 'China fever' that causes the outflow of talent.
...
The true story of Taiwan, then, is the story of how, over the past dozen years, China has attracted more than US$20 billion away from Taiwan every year, reaching a total of more than US$400 billion. It is the story of how national industry has been hollowed out, how the average salary has declined to the same level it was 13 years ago, how youth unemployment has continued to increase, how the brain drain has never stopped and how the wealth gap has rapidly widened. While all this has been going on, the public suffers and the suicide rate keeps climbing."
TaiShang
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@Kyle Sun @Martian2 it's obvious that a combination of factors helped with China's development. First, China had higher work ethics and higher IQ resulting in a small learning curve that made the transition easier. Secondly, the foundation was already set by Mao and Deng for modernization. Taiwan tech, HK money, overseas Chinese money, returning educated Chinese Patriots, and sound centralized planning of resource allocation made the transformation nothing less than a miracle. This will not be repeated by any other countries. Hats off to all the patriotic Chinese who contributed to China's success.
Very well said and I hope this excellent summary of yours will help end the pointless debate on who contributed how much to the rise of China.
Martian2
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Official statistics can be misleading
Some of you think Hong Kong was mainland China's biggest investor. You have fallen into the trap of citing a MISLEADING statistic. Hong Kong is a mere transhipment city. Hong Kong has no high-tech industry and generates relatively little wealth. The heavy hitter was always Taiwan. The routing of Taiwanese money through Hong Kong created a misleading impression that Hong Kong was important in financing investments on mainland China.
Similarly, a very MISLEADING statistic occurred in Iran's trade data. For years, the OFFICIAL largest trade partner for Iran was the UAE. This doesn't make any sense. The UAE exports oil. Iran has plenty of oil and would not import oil from the UAE. What's going on? How did the UAE become Iran's OFFICIAL largest trade partner?
In actuality, the UAE was a transhipment point for Chinese goods being shipped into Iran. Large cargo ships carried Chinese goods to the UAE. After delivery at the UAE, Chinese goods were off-loaded onto smaller UAE ships for delivery to Iranian ports. The official manifest said the goods came from the UAE for trade with Iran. China did not violate the US sanctions on Iran. However, in reality, China was Iran's largest trade partner.
Similarly, it was the massive flood of Taiwanese money that flowed through Hong Kong on their way to building manufacturing plants on mainland China. An estimated total of US$400 billion flowed from Taiwan to mainland China. Approximately half of the Taiwanese investments were not declared to the Taiwanese government and went into China anonymously through Hong Kong.
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China is largest exporter to Iran after sanctions lifted
Surprisingly, it turns out that past records of the UAE being Iran's largest trade partner were incorrect. The UAE was a mere transhipment point for Chinese goods that were ultimately destined for Iran.
Iran had been under economic sanctions by the United States. To conform to US sanctions, Chinese companies exported goods to the UAE. After arriving at the UAE, the goods were delivered to Iran via small boats.
Since US sanctions against Iran have been lifted, Chinese goods are arriving directly at Iranian ports on large cargo ships.
The story makes sense. The UAE is mainly an exporter of oil. Iran has plenty of oil and would not import UAE oil. Thus, the UAE was a transhipment point for Chinese goods and this artificially inflated the official statistics of UAE exports to Iran.
The real exporter to Iran had always been China. In the future, we should analyze "official" trade figures and see whether they make sense.
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China, Iran's biggest exporter after sanctions lifted | Payvand News of Iran
"Figures reported by Iran's state news agency IRNA show that imports from China since 2013 - when President Hassan Rouhani was elected to office - had already reached $43.7 billion.
Imports from 2009 to 2013 - when former president Mahmoud Ahmadinejad was in office - stood at $26.2 billion.
Mohammad Saeidnejad, the managing director of Iran's Ports and Maritime Organization (PMO), was quoted by IRNA as saying that almost all exports to Iran were made through a mechanism known as 'trans-ship' over the years that the country was under sanctions.
The mechanism, Saeidnejad said, envisaged delivering cargos at secondary ports in neighboring countries - mainly the UAE - before final shipments were done through small boats to Iran's southern ports.
'Now that the sanctions have been lifted, most of the goods that Iran imports are shipped directly by 18 global freight forwarders which are now free to call at Iran's ports,' he added.
This, the official emphasized, has already made China Iran's primary import destination instead of the UAE.
IRNA's report further wrote that the combination of goods imported from China included machinery, electronic devices, steel, iron, clothes, chemicals, household utensils and plastic items."
Some of you think Hong Kong was mainland China's biggest investor. You have fallen into the trap of citing a MISLEADING statistic. Hong Kong is a mere transhipment city. Hong Kong has no high-tech industry and generates relatively little wealth. The heavy hitter was always Taiwan. The routing of Taiwanese money through Hong Kong created a misleading impression that Hong Kong was important in financing investments on mainland China.
Similarly, a very MISLEADING statistic occurred in Iran's trade data. For years, the OFFICIAL largest trade partner for Iran was the UAE. This doesn't make any sense. The UAE exports oil. Iran has plenty of oil and would not import oil from the UAE. What's going on? How did the UAE become Iran's OFFICIAL largest trade partner?
In actuality, the UAE was a transhipment point for Chinese goods being shipped into Iran. Large cargo ships carried Chinese goods to the UAE. After delivery at the UAE, Chinese goods were off-loaded onto smaller UAE ships for delivery to Iranian ports. The official manifest said the goods came from the UAE for trade with Iran. China did not violate the US sanctions on Iran. However, in reality, China was Iran's largest trade partner.
Similarly, it was the massive flood of Taiwanese money that flowed through Hong Kong on their way to building manufacturing plants on mainland China. An estimated total of US$400 billion flowed from Taiwan to mainland China. Approximately half of the Taiwanese investments were not declared to the Taiwanese government and went into China anonymously through Hong Kong.
----------
China is largest exporter to Iran after sanctions lifted
Surprisingly, it turns out that past records of the UAE being Iran's largest trade partner were incorrect. The UAE was a mere transhipment point for Chinese goods that were ultimately destined for Iran.
Iran had been under economic sanctions by the United States. To conform to US sanctions, Chinese companies exported goods to the UAE. After arriving at the UAE, the goods were delivered to Iran via small boats.
Since US sanctions against Iran have been lifted, Chinese goods are arriving directly at Iranian ports on large cargo ships.
The story makes sense. The UAE is mainly an exporter of oil. Iran has plenty of oil and would not import UAE oil. Thus, the UAE was a transhipment point for Chinese goods and this artificially inflated the official statistics of UAE exports to Iran.
The real exporter to Iran had always been China. In the future, we should analyze "official" trade figures and see whether they make sense.
----------
China, Iran's biggest exporter after sanctions lifted | Payvand News of Iran
"Figures reported by Iran's state news agency IRNA show that imports from China since 2013 - when President Hassan Rouhani was elected to office - had already reached $43.7 billion.
Imports from 2009 to 2013 - when former president Mahmoud Ahmadinejad was in office - stood at $26.2 billion.
Mohammad Saeidnejad, the managing director of Iran's Ports and Maritime Organization (PMO), was quoted by IRNA as saying that almost all exports to Iran were made through a mechanism known as 'trans-ship' over the years that the country was under sanctions.
The mechanism, Saeidnejad said, envisaged delivering cargos at secondary ports in neighboring countries - mainly the UAE - before final shipments were done through small boats to Iran's southern ports.
'Now that the sanctions have been lifted, most of the goods that Iran imports are shipped directly by 18 global freight forwarders which are now free to call at Iran's ports,' he added.
This, the official emphasized, has already made China Iran's primary import destination instead of the UAE.
IRNA's report further wrote that the combination of goods imported from China included machinery, electronic devices, steel, iron, clothes, chemicals, household utensils and plastic items."
Martian2
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People need to use their COMMON SENSE
The "official" statistics show Hong Kong as China's largest investor. This is clearly wrong.
Look on the ground on mainland China. Can you identify any billion-dollar Hong Kong companies and manufacturers? The answer is clearly no.
On the other hand, I can easily point to multi-billion Taiwanese investment plants in China. For example, Taiwan's AUO (ie. AU Optronics) built a US$3.25 billion 8.5G TFT-LCD display panel plant in China.
Another example is Taiwan TSMC's construction of a US$3 billion wafer plant in China.
A third example is Taiwan UMC investing US$1.35 billion into a Chinese joint-venture chip plant.
I could fill this thread with numerous billion-dollar Taiwanese investments in China.
What does that tell you?
The "official" statistic of Hong Kong investment is a cover for Taiwanese investment in mainland China. Hong Kong city never had the massive amount of money that Taiwan possessed from Taiwanese worldwide trade earnings.
Hong Kong has no technology and never built any meaningful high-tech plants in China. So how did Hong Kong end up being the "official" leader for FDI into China?
The answer is simple and obvious. Hong Kong was a conduit for Taiwan's annual multi-billion dollar investments into China. Taiwan was busy building one advanced manufacturing plant after another. I can compile a list of almost 100 Taiwanese tech companies with US$1 billion in annual sales or more. Those Taiwanese multinationals were busy investing in China for the last 40 years.
If I methodically went through every single Taiwanese high-tech company and tracked down their investments in China, I bet you I can easily compile a list of over US$100 billion of Taiwanese investment in mainland China.
In addition, Taiwanese medium-sized companies built business empires in food and retail in China.
A huge flood of Taiwanese businesses invested billions into mainland China. In contrast, Hong Kong is a transhipment port and Hong Kong has no real industry. Hong Kong never made any real investments in China. The vast majority of mainland China's civilian industrial capacity in high-tech were all built by Taiwanese companies.
Based on the evidence on the ground, it should be obvious to anyone with common sense that Taiwanese multi-billion dollar plants dominate the mainland Chinese landscape. In contrast, Hong Kong is almost completely absent. Common sense says that Taiwan is China's largest foreign investor. You can't argue with the Taiwanese multi-billion dollar plants in the real world in China that everybody can see.
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AUO Obtains Approval to Build 8.5G Plant in Kunshan, China | Asia Express (August 12, 2011)
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Taiwan's TSMC signs deal to build $3 billion wafer plant in China | Reuters (March 28, 2016)
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Taiwan's UMC to invest $1.35B in Chinese chip plant venture | Nikkei Asian Review (October 9, 2014)
The "official" statistics show Hong Kong as China's largest investor. This is clearly wrong.
Look on the ground on mainland China. Can you identify any billion-dollar Hong Kong companies and manufacturers? The answer is clearly no.
On the other hand, I can easily point to multi-billion Taiwanese investment plants in China. For example, Taiwan's AUO (ie. AU Optronics) built a US$3.25 billion 8.5G TFT-LCD display panel plant in China.
Another example is Taiwan TSMC's construction of a US$3 billion wafer plant in China.
A third example is Taiwan UMC investing US$1.35 billion into a Chinese joint-venture chip plant.
I could fill this thread with numerous billion-dollar Taiwanese investments in China.
What does that tell you?
The "official" statistic of Hong Kong investment is a cover for Taiwanese investment in mainland China. Hong Kong city never had the massive amount of money that Taiwan possessed from Taiwanese worldwide trade earnings.
Hong Kong has no technology and never built any meaningful high-tech plants in China. So how did Hong Kong end up being the "official" leader for FDI into China?
The answer is simple and obvious. Hong Kong was a conduit for Taiwan's annual multi-billion dollar investments into China. Taiwan was busy building one advanced manufacturing plant after another. I can compile a list of almost 100 Taiwanese tech companies with US$1 billion in annual sales or more. Those Taiwanese multinationals were busy investing in China for the last 40 years.
If I methodically went through every single Taiwanese high-tech company and tracked down their investments in China, I bet you I can easily compile a list of over US$100 billion of Taiwanese investment in mainland China.
In addition, Taiwanese medium-sized companies built business empires in food and retail in China.
A huge flood of Taiwanese businesses invested billions into mainland China. In contrast, Hong Kong is a transhipment port and Hong Kong has no real industry. Hong Kong never made any real investments in China. The vast majority of mainland China's civilian industrial capacity in high-tech were all built by Taiwanese companies.
Based on the evidence on the ground, it should be obvious to anyone with common sense that Taiwanese multi-billion dollar plants dominate the mainland Chinese landscape. In contrast, Hong Kong is almost completely absent. Common sense says that Taiwan is China's largest foreign investor. You can't argue with the Taiwanese multi-billion dollar plants in the real world in China that everybody can see.
----------
AUO Obtains Approval to Build 8.5G Plant in Kunshan, China | Asia Express (August 12, 2011)
----------
Taiwan's TSMC signs deal to build $3 billion wafer plant in China | Reuters (March 28, 2016)
----------
Taiwan's UMC to invest $1.35B in Chinese chip plant venture | Nikkei Asian Review (October 9, 2014)
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8888888888888
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There were good plannings by the central government during the past 30 years. For example no Taiwanese companies is needed to swear to be loyal to the CCP as Taiwan was under KMT during that era, so they were allowed to do whatever they want with government support and the CCP also build up the infrastructure to lessen to cost of setting up factories. I doubt China would grow as fast if there are elections every 4 years and every time there may be a change of government officials.
TaiShang
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In fact, Taiwan's economic fundamentals laid out during military rule. Same as Korea and Japan. They enjoyed reforms and explosive growth under single part rules.
Taiwan's economic performance now is a bad copy of the past. And we often are using up the wealth made in early years.
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