TAIPEI • Taiwan plans to enhance scrutiny over investment from Hong Kong to prevent illicit money from mainland China “infiltrating” its economy, after Beijing imposed a new security law on the Asian financial hub, a source with direct knowledge of the matter said.
Sweden yesterday said it supported Franco-German efforts for a robust response to the new security law, joining Denmark and the Netherlands in pushing the European Union to consider countermeasures against Beijing.
Taiwan, claimed by China as one of its provinces, has traditionally treated investment from semi-autonomous Hong Kong and Macau as foreign investment, without the controls and limits it has on money coming from mainland China.
However, the new law has been criticised by many Western nations and rights groups as undermining Hong Kong’s autonomy, prompting Taiwan to reassess how it does business with the city.
The new law targets secession, subversion, terrorism and collusion with foreign forces, with up to life imprisonment, and allows people to be sent to mainland China for trial.
Taiwan opened an office this month to help people fleeing Hong Kong after the law was imposed.
Taipei is on alert to ensure any influx of Hong Kong money is not secretly coming from mainland China. “We hope that money from Hong Kong and Macau comes over here, but we don’t want Chinese money to benefit,” said the source, asking not to be named.
“Investment from Hong Kong and Macau was originally treated as foreign investment, allowing them a greater investment scope, but now we have to pay attention to who is really pulling the strings,” the source noted.
The source said Taiwan will tweak legislation as needed to give it the legal right to review more closely investment from Hong Kong on national security grounds.
Official investment from Hong Kong into Taiwan was worth US$150 million (S$208 million) in the first five months of this year, or 4 per cent of total foreign investment in Taiwan.
The source said they were aware of cases of technology security companies providing information services in those sectors being funded by illicit Chinese money.
“China is fighting an information war and a hacker war against us,” the source said. “Information security is national security.”
Swedish Foreign Minister Anne Linde said ahead of an in-person meeting with her EU counterparts in Brussels: “There is a proposal of measures especially proposed by Germany and France that I will support because we need to react to what is happening in Hong Kong.”
EU officials have declined to go into details about the counter-measures, but two EU diplomats said they did not amount to formal sanctions against China, the bloc’s second-largest trading partner.
Sweden is seeking the release of its citizen Gui Minhai, who was sentenced to 10 years’ jail in February, accused by Beijing of illegally providing intelligence overseas. The bookseller, who sold books critical of China’s leadership, was detained by mainland police in 2018. He was seized while with Swedish diplomats on a Beijing-bound train.