Taiwan is moving to end a half-century ban on direct economic links across the Strait, but there is a hitch: Beijing wants Taiwan to say it's part of China first.
The proposal -- revealed Sunday by the cross-strait panel of the Economic Development Advisory Conference -- comes as a growing chorus of Taiwanese business leaders, politicians and economists demand the government increase trade ties with China.
The current "no haste, be patient" China investment policy would be replaced by a policy of "aggressive, active opening," a statement from the Mainland Affairs Council said yesterday.
Taiwan has been cautious about easing the restrictions, fearing that an exodus of capital might cripple the nation's economy, already hit hard by the global slowdown.
The policy bans single investments worth more than US$50 million and bars those in the infrastructure and advanced technology sectors. However, such investments are often channeled through foreign subsidiaries of Taiwan companies -- with or without government approval.
Taiwan's manufacturers and opposition politicians have called for a policy change. Rising labor and land costs are making local companies less competitive against global rivals who are moving operations to China, they argue.
The cross-strait panel will present its proposals by Aug. 15 for review at the economic conference, to be held from Aug. 24 to Aug. 26. Premier Chang Chun-hsiung (張俊雄) yesterday guaranteed that "any agreements arrived at during the council discussions would be fully implemented by the government."
But China's cold-shouldering of President Chen Shui-bian's (
"It's an important first step, but it takes two to tango," said Daryl Goh, an economist at SG Securities (HK) Ltd. "The Chinese could use this as a bargaining chip to bring Taiwan back to the negotiating table to talk about `one China.'"
"This is a problem," said Fang Jeng-ren, an economist at President Securities Corp (
"The extensiveness of these relaxation measures should draw a response from China," Fang said. "It may open up a little."
Political observers said the policy turnaround was essential as both Taipei and Beijing are set to join the WTO later this year or early next year.
"Once the rivals are allowed in the global trade regulatory body, Taiwan must open its markets to China exactly as it does for other countries," said Chang Hsien-chao, assistant professor of National Sun Yat-sen University's Graduate Institute of Mainland China Studies.
Meanwhile, Vice President Annette Lu (
"That individual [Chen] in control, that person in power, should gather his courage and consult [his] conscience, so that [he] can take responsibility for the historical decision," Lu said.
Lu also had harsh words for Taiwanese businessmen.
"At present, Taiwanese businessmen are fleeing like a swarm of bees to China, taking Taiwan's hard-earned capital and investing it there," Lu said. "And now they want to force the government to open up trade without any limitations."
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