China Pledges to Expand Procurement of Taiwan-Made TFT LCD Panels

To strengthen its economic links with Taiwan, China offered to expand loans to Taiwanese-invested enterprises in China and step up procurement of Taiwan-made TFT LCD (thin-film-transistor liquid-crystal-display) panels during the 4th cross-Strait economic and cultural forum which concluded yesterday (Dec. 21).

During the closing ceremony of the two-day forum, an annual event between Chinese Communist Party and Kuomintang, held in Shanghai, Wang Yi, in his capacity as the director of the Taiwan Affairs Office of Chinese Communist Party`s central committee, announced that three major Chinese banks will provide loans totaling 130 billion yuan (NT$620 billion) to Taiwanese-invested enterprises in China within three years. In addition, China will expand its purchase of Taiwan-made TFT-LCD panels to US$2 billion in 2009, double the projected level, according to Wang, who is also director of Taiwan Affairs Office, the State Council.

The pledges are part of the comprehensive agreement between the two parties, which will be finalized in the meeting between P.K. Chiang, chairman of Straits Exchange Foundation, and Chen Yunlin, chairman of the Association for Relations across the Taiwan Strait (ARATS), scheduled in 2009.

Wang pointed out that the Industrial and Commercial Bank of China and Bank of China will each appropriate 50 billion yuan of loans for Taiwanese-invested small and medium enterprises in the next two to three years, while China Development Bank will add 30 billion of loans, on top of existing 30 billion, in the next three years for the same purpose.

How will China materialize its pledged benefits remains to be seen, though, as evidenced by the unsatisfactory effect of the previous pledge of the Chinese government to provide special loans of 30 billion yuan and 50 billion yuan, respectively, for Taiwanese-invested enterprises via China Development Bank and Huaxia Bank.

Meanwhile, Taiwanese makers are expected to provide Chinese LCD TV makers some 5 million pieces of TFT LCD panels, worth some US$1 billion, in 2009, about half of the latter`s total need. Some question Chinese government`s ability to double the amount to US$2 billion by intervening in the procurement activities of Chinese enterprises.