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Taiwan to Vietnam: ‘We’re not Chinese’

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Taiwanese companies in Vietnam are increasingly being squeezed between a rock and a hard place as China ramps up diplomatic pressure on their displays of national identity, reported Asia Times (Thailand).

If they hang Taiwan’s national flag outside their offices and factories, then China kicks up a threatening fuss with Hanoi about its professed sovereignty over the island state Beijing views as a renegade province.

If they keep their flags furled, then their factories may be perceived to be China-owned and potentially targeted by nationalistic protesters who see China’s growing commercial and economic interests in Vietnam as a threat to sovereignty.

The lose-lose situation came to a head in July, when Beijing lodged an official diplomatic complaint with Hanoi for allowing Taiwanese businesses to fly the red-and-blue-flag above their local buildings.

“There is only one China in the world, and Taiwan is part of China,” Chinese foreign ministry spokesman Geng Shuang was quoted saying in reports. “We have taken up the matter with the Vietnamese side, and they have already instructed the relevant companies to correct their wrong practices.”

That’s not immediately clear on the ground as the flag can still be seen at some Taiwanese businesses nearly a month later. Taiwan was Vietnam’s fourth largest foreign investor, with total invested capital of around US$8 billion, as of 2017, according to official statistics.

Vietnam is a key target of Taiwan’s so-called “Southbound” foreign policy to strengthen ties to Southeast Asia.

But the dust-up over Taiwanese flag-flying is part and parcel of an intensifying diplomatic drama between China and Vietnam, one that is raising new downstream risks to those who rely on Vietnamese production for their global supply chains.

Taiwan is unwillingly faced with rising anti-China sentiment in Vietnam, which over the last two months has seen some of the most intense and widespread anti-China protests in years. Hundreds of thousands protested across the country, sparking a harsh crackdown that has resulted in hundreds of arrests.

The spark: a draft special economic zone (SEZ) law that many Vietnamese believe will allow China to dominate major industrial areas through a new 99-year lease provision. Taiwanese businesses are now reportedly concerned that popular anger will mistakenly hit their factories and businesses during a new wave of protests.

“The protesters pointed to the risks of losing national sovereignty to China, alleged to be the key beneficiary of the Special Administrative and Economic zones scheme,” California State University professor Angie Ngoc Tran wrote in New Mandala, an academic blog.

Tran noted that while the draft law does not overtly mention China, it does grant special privileges to three of Vietnam’s special economic zones in particular: one on the Chinese border, another situated on the shores of the South China Sea, and a third bordering on an area of Cambodia dominated by Chinese investment.

“Who else would stand to benefit the most from both economic and administrative control over land, air, and sea lanes from these three zones?” she asked.

As Vietnamese ire rises against a law they see as ceding sovereignty to China, so too have Taiwanese flags outside of their local businesses.

Observers say the Taiwanese companies are not so much taking a patriotic stand vis-à-vis China than taking pragmatic corporate decisions. Taiwanese firms here know acutely how politics and business often mix volatilely in Vietnam.

In May 2014, Beijing’s decision to position an oil rig in a part of the South China Sea claimed by Hanoi led to days of fiery anti-China demonstrations across Vietnam. Local protests took out their fury on perceived Chinese interests by damaging, looting and destroying over 350 factories in Binh Duong province alone.

The protestors, however, often missed their nationalistic mark by apparently targeting plants with foreign Asian lettering on their signs that resulted in not only Chinese but also Korean, Japanese and Taiwanese factories coming under assault.

While Vietnam confirmed three Chinese deaths in the 2014 melee, foreign reports quoting doctors put the figure as high as 21. Hundreds of Chinese fled the violence, with many taking flight across the border into neighboring Cambodia.

Flag-flying Taiwanese businesses clearly fear a possible repeat of the overly anti-China violence that also indiscriminately targeted foreigners.

One Taiwanese businessman told a local newspaper his furniture company suffered US$1 million in losses in the 2014 violence and that he recently erected Taiwan’s flag outside of his firm when anti-China protests kicked up again in June.

The draft SEZ law that sparked the protests is now on hold in the Communist Party-dominated National Assembly, but some believe a new wave of anti-China demonstrations could erupt if and when the law is finally passed.

Taiwan’s recent experience adds to its political risk. In 2016, Taiwanese steel maker Formosa caused one of Vietnam’s worst ever environmental disasters when it was found to have dumped tons of toxic waste in the central region’s sea, a spill that killed a massive number of fish and devastated coastlines.

The disaster sparked nationwide protests that were fueled in part by perceived as insensitive remarks by a Formosa executive who said at the height of the disaster that Vietnam needed to choose between having a modern steel or traditional fishing industry.

The company paid a US$500 million fine but is now expanding the same contentious facility that was also hit in the 2014 violence. But if new anti-China protests erupt in the weeks ahead, it’s not entirely clear that flying the flag will protect Taiwanese businesses from xenophobic sentiment.

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Taiwan’s transport ministry is said to be considering taking “countermeasures” against foreign airlines that have yielded to Beijing’s demand that they refer to the island as part of China on their websites, reported South China Morning Post (Hong Kong).

In addition to barring them from using passenger boarding bridges at airports, the carriers could also be subject to random adjustments to their take-off and landing slots by air traffic controllers as Taipei tries to apply pressure on them, a Taipei-based newspaper reported on Monday, citing an unnamed ministry source.

Meanwhile, carriers that took a more neutral approach to the request from Beijing – by just dropping the country name from their Taiwan destinations – would be given incentives such as reduced or no landing fees and facilities charges, according to United Daily News.

On April 25, Beijing issued an order to 44 international airlines that operate mainland routes to stop listing Taiwan as a country on their websites and instead refer to it as “Taiwan, China” or the “China Taiwan region”. It also wanted the airlines to display Taiwan on their maps in the same colour used for mainland China. The White House described the demands as “Orwellian nonsense”.

Four US carriers – American Airlines, Delta Air Lines, United Airlines and Hawaiian Airlines – removed any reference to Taiwan, using only city names on their booking pages. Hong Kong’s airlines changed the reference to “Taiwan, China”, while many international carriers also complied with the demand.

Beijing sees Taiwan as a part of its territory awaiting reunification, by force if necessary, even though the island views itself as a sovereign nation and is a self-ruling democracy.

Taiwanese transport minister Wu Hong-mo said Taipei could not accept such an arrangement and would have to take “countermeasures”, according to United Daily News. The newspaper then quoted an unnamed ministry source giving details of what those countermeasures might include.

The report drew criticism from academics and opposition lawmakers in Taiwan, who described the measures as “absurd”, saying they would create huge inconvenience for passengers and could lead to retaliatory action from countries whose airlines had been targeted.

But government spokeswoman Kolas Yotaka said any countermeasures were just at the discussion stage within the transport ministry and had not been decided on.

“We haven’t received any proposals from the ministry about how to deal with this case, and as the government, we have to consider the rights and interests of our people,” she said, adding that causing inconvenience to passengers would go against government policy.

Deputy transport minister Wang Kwo-tsai said the ministry had written to the airlines asking them to go back to their original way of referring to Taiwan, but it had yet to decide how to deal with the issue if they did not comply.

American Airlines, Emirates and Cathay Pacific did not respond to requests for comment. A Korean Air spokesman said they had not received any notification from Taiwan’s transport ministry about possible countermeasures, while a Singapore Airlines spokesman declined to comment, saying its communications with the regulators were confidential.

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Reporter: Denes Osvalt
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