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Looking to China for InvestmentTaiwan Hints
At Possible


Behind the war of words between
Beijing and Taiwan

The three leading contenders for President of Taiwan all promise to remove the barriers to the economic integration of the highly-developed Chinese island with the giant mainland economy.


Since the election of Chen Shui-bian as President, moves toward economic integration between Taiwan and the mainland have increased dramatically.

In late July 2000, China Airlines of Taiwan began a deal to invest in China Cargo Airlines (Shanghai), a deal that could position the Taiwan flagship airline for the possible startup of direct air links.

For the first half of the year, Taiwan's government reported that 341 investments were made in and with China worth over US $1 billion, a 129.9 percent increase over the same period last year.

In early June 2000, Lienchiang County (the group of Taiwanese islands closest to the mainland coast of Fujian province), approved measures to allow direct trade links with the mainland.

The county government measures open five ports to direct trade although only Taiwan-based boats will be allowed. The move legitimizes a small volume of trade that has existed for some time already.

At the end of April 2000 Taiwan-China trade was up almost 30 percent from the beginning of the year totalling over US $9.5 billion. Taiwan has a very comfortable trade surplus with China but imports from the mainland surged almost 50% to almost US $2 billion for the period.

Imports from the mainland were primarily raw semi-finished industrial products such as steel and machine tools and consumer goods.

More than half of Taiwan exports were machinery, electronics, and plastics.

Most trade continues to be routed through the Hong Kong Special Administrative Region.

Based on Agence France Press reports and Sinomania! research

Originally posted on the eve of the Taiwan Presidential election

       In a well-orchestrated Guomindang (KMT or Nationalist) party meeting, under a giant portrait of China's republican founder Sun Yat-Sen, party candidate Lien Chan has presented a "Ten Point Peace Plan" calling for an end to tensions in the Taiwan strait and offered a rough framework for resuming high-level talks, opening trade zones, direct communications, and the establishment of a "hot line" between Taiwan and Beijing.

      The contentious issue of whether discussions of political reunification should occur at a state-to-state level, raised in 1999 by outgoing KMT President Lee Teng-Hui, was not directly addressed by Mr. Lien. Su Chi, the head of Taiwan's Mainland Affairs Council , indicated that the interpretation of the "one China" issue could be discussed in negotiations.

      Is this a sign that Taiwan will back down from its independence stance? Perhaps the KMT leadership does not sense committed support from the religious-minded Republicans in the American Congress, their most powerful cheerleaders. They may not be counted on in an election year in the United States, particularly given the concerted efforts of the still-in-power Clinton administration to gain China's admission into the World Trade Organization. More likely, however, is the probable realization by the KMT party that the vast majority of the Chinese island's population (80%) want to maintain status quo in developing integration with the mainland.

      The KMT party's two strongest challengers are similarly promising a peaceful end to the division. James Soong (a former KMT party member, now ousted) has said that while Taiwan is not just another local government under Beijing, it is not on equal footing with the mainland government. Opposition candidate Chen Shui-bian, once staunchely pro-independence, now supports direct trade, investment, and shipping flows between Taiwan and the mainland. Chen has said direct air traffic could follow.

       In Beijing, Li Jiaquan, a senior advisor on Taiwan to China's leadership, called the KMT party's proposal "positive and rational." Indications are China is willing to reenter negotiations for high-level talks but there will be no discussion of the "one China" position. The State Council's Taiwan Affairs Office pronounced through a spokesman that the "delivery of the mainland policy by a concerned person from Taiwan" would be read and entertained.

       Despite the condescending tone of the State Council comment, reminiscent of Forbidden City pronouncements in empires past, the desire for reunification is understood. Behind the posturing of politicians and antiquated political parties, a careful path is being set for the economic integration and ultimate reunification of Taiwan and the Chinese mainland.

      Through direct trade, investment, business cooperation and development, and open communications, China may accomplish what eluded Germany in the 1990s--the careful integration of two parts of her cultural and physical self, divided since the last world war, but without the pain, loss, and depression of one side suddenly ceasing to exist.

      The committment appears to be real on both sides. Expect to see large inflows of investment and a big increase in trade. Along with that Taiwan pop culture influences in music, television programming, and more.

      Much like the slow road that lead to the uneventful reunification with Hong kong, which began in the late 1970s and allowed the surrounding areas to coalesce into one well-developed regional economy by 1997, when political reunification of Taiwan and the mainland occurs, if it does occur in a framework we can even foresee at present, it too will be a non-event.

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