The government is in the "last stage of deliberation" to allow the exchange of the New Taiwan dollar and the Chinese yuan in Taiwan proper, after the establishment of a bilateral currency clearance mechanism, an industry representative said yesterday, citing Premier Frank Hsieh (
The Chinese yuan exchange was launched in Kinmen and Matsu on Oct. 3 in a range of NT$4.039 to NT$4.199 to 1 yuan.
But Theodore Huang (黃茂雄), chairman of the Chinese National Association of Industry and Commerce (工商協進會), said that considering the huge amount of cross-strait business, the service should be available nationwide.
Huang made the remark after a breakfast meeting with Hsieh and several high-ranking government officials yesterday.
Support 'In Principle'
Huang said Hseih supported the idea in principle and the Cabinet is mulling the idea of setting up a "currency clearance mechanism" instead of inking a "currency clearance agreement" with Beijing.
Hsieh did not set a timetable for the issue, Huang said.
York Liao (廖耀宗), director- general of the overall planning department of the Council for Economic Planning and Development, said that under Article 38 of the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area (兩岸關係條例), the term "agreement" applies to nation-to-nation relations.
Wordplay
By replacing the word with "mechanism," the dispute could be settled, Liao said, citing Hsieh.
Since the conversion service began, approximately 1 million yuan (US$22,912) a day has been exchanged, Liao said.
How to help Taiwanese banks tap the Chinese market and how to help China-bound Taiwanese businesspeople obtain loans were other issues addressed by the association at yesterday's meeting.
At present, Taiwanese banks can only set up representative offices in China; they cannot engage in lending.
While the Financial Supervisory Commission (FSC) has proposed allowing the banks to acquire a controlling stake in smaller Chinese banks and provide loans to Taiwanese companies in China, the proposal is still under research, Huang said, again citing Hsieh.
More bourses
Huang also urged the government to speed up the establishment of a US dollar-denominated offshore bourse, unless it wants to see more local companies list on foreign stock markets.
According to the FSC's preliminary plan, a bourse will be opened for gold futures trading beginning next year. A bourse for bond futures will open after the Lunar New Year holiday, and one for company stocks will open after the second quarter of next year.
Eleven Taiwanese companies listed on Hong Kong's market last year because the territory has lower taxes and no limits on investing in China, and 44 more listed this year, Huang said.
To make Taiwan's bourse more attractive, Huang suggested opening it both to Taiwanese-run companies in China and to Chinese companies, as well as loosening restrictions on investment in China.
Currently, listed companies in Taiwan are not allowed to invest more than 40 percent of their net value in China.
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