The investment panel of the Economic Development Advisory Conference proposed over the weekend the establishment of an economic zone in southern Taiwan where preferential investment conditions would attempt to offer an alternative to investment by local firms in China.
Proposed by China Industrial Development Bank (
According to the proposal, banks from China would be allowed to establish branches in the zone, and a free flow of foreign currency would be permitted.
Liu, who suggested the idea to President Chen Shui-bian (陳水扁) during private meetings late last year, said the zone would essentially act as a "third territory" between China and Taiwan, essentially allowing direct links between both sides to flow through the zone. The favored location for the zone is the Changpin (彰濱) Industrial District in Changhua County, which has solid infrastructure, including sufficient supplies of water and electricity, Liu said.
Minister of Economic Affairs Lin Hsin-yi (林信義) said the proposal had his "full support," saying that the establishment of the zone would help to reduce the growing numbers of local firms relocating to China.
"Once the work week is reduced to 42 hours the labor costs of companies in Taiwan will increase by 18.75 percent ... So allowing an easing of restrictions on importing labor into the zone will allow firms to enjoy labor costs similar to those in China," Lin said.
But Lin touched on the potential of the measure being branded as simply a stop-gap measure and voiced his fears that the zone would lose out once the direct links across the Strait were opened.
And while Lin pointed out that regardless of whether the advisory conference proposes opening direct links with China, implementing the policy will require bilateral discussions, which China continues to rebuff while Taiwan refuses to accept the "one China" policy.
Mainland Affairs Council chairwoman Tsai Ing-wen (蔡英文), echoed Lin's sentiments saying over the weekend that opening the direct "three links" was a project that required the mutual cooperation of both sides.
Tsai said in an interview with the Broadcasting Corporation of China Saturday that the government's cross-strait policy would continue to lean toward openness and could not be reversed, adding that entry into the WTO, expected early next year, "would be the crucial point for the timing of opening cross-strait ties."
"After China enters the WTO, its trade environment will automatically change and be subject to revision. Therefore, we believe that relaxing restrictions on investment and trade with China at that time would be more significant," she said.
The panel will now pass the proposal on to the cross-strait advisory panel, which is scheduled to hold its second meeting tomorrow.
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