ANNUAL REPORT

368
Foreign Direct Investment
China is Taiwan’s top destination for foreign direct investment
(FDI). 86 According to official Taiwan data, Taiwan FDI to China in
2015 totaled $10.4 billion. 87 Between 2014 and 2015, this number
increased by 5.8 percent. 88 In 2015, for the second year in a row,
Taiwan FDI to China recorded growth after decreasing in 2012 and
2013 (see Figure 5). 89 The growth in FDI over the past two years
was primarily the result of new Taiwan FDI in the electronic parts
manufacturing and computer manufacturing sectors in 2014, followed
by an increase in Taiwan FDI in the financial and insurance
sectors and the non-metal mineral products manufacturing industry
in 2015. 90 In 2015, investment in the financial and insurance
sectors comprised the largest percentage of Taiwan’s total FDI in
China, with 25.4 percent. 91 The next largest recipients of Taiwan
FDI in China in 2015 were electronic parts and components manufacturing
(11.2 percent) and computers, electronic, and optical products
manufacturing (10.1 percent). 92
Year-on-year, the value of Chinese investment in Taiwan
dropped by about 27 percent to approximately $244 million in
2015, but the number of Chinese investment cases approved by the
Taiwan government increased by 25 percent to 170. 93 According to
Taiwan’s National Development Council, a policy planning organization
under the Executive Yuan, the number of cases increased
while the value decreased, primarily because the majority of Chinese
investment in Taiwan is in services, and investments in services
are generally smaller than those in manufacturing. The council
reported that the percentage of Chinese investments in services increased
by 9.7 percent to a total of 79.4 percent of all Chinese investment
in Taiwan in 2015. 94 FDI from China had been steady between
2012 and 2014 after it more than tripled between 2010 and
2012, 95 a spike largely due to the Ma Administration’s loosening of
investment caps and regulations on Chinese investment into Taiwan.*
Chinese investments are still limited. All investments require
Taiwan government approval, and the Taiwan government
prohibits Chinese investors from appointing managers or having
controlling stakes. 96 In 2015, 62.4 percent of the value of Chinese
FDI to Taiwan was in wholesale and retail, 10.4 percent was in
electronic parts and electronic components manufacturing, and 7.3
percent was in information and software services. 97
dkrause on DSKHT7XVN1PROD with USCC
* For example, in March 2012, Taiwan loosened Chinese investment caps of 10 percent stakes
in local firms and 50 percent in joint ventures in Taiwan’s semiconductor and metal tool manufacturing
sectors, among others. PricewaterhouseCoopers, ‘‘Chapter 4: The Bigger Picture—
China’s Impact on the Semiconductor Industry 2012 Update,’’ September 2012.
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