The signing of a service trade agreement between Taiwan and China will allow the capital markets on both sides of the Taiwan Strait to complement each other and improve their competitiveness, the Taiwan Stock Exchange Corp (TSEC) said yesterday.
The agreement promised to further open up the financial services industry to investment from across the Taiwan Strait.
Taiwan’s banking and financial services industry has been granted preferential access to 15 Chinese sectors — six from the banking industry, eight from securities and futures, and one from insurance.
The TSEC said the development of the high-tech industry has contributed greatly to Taiwan’s economic growth in the past, and the capital market has made enormous contributions to the industry by providing the necessary capital for its development.
Taiwan has secured a key status in the global manufacturing chain for information technology products and is capable of developing a fund-raising platform for the high-tech industry in the Asia-Pacific by making good use of its abundant capital.
In terms of market, Taiwan and China have a common language and culture, with similar investor structure, the TSEC said.
The two countries’ industrial structures complement each other, which is why investors on both sides are interested in investing in one another’s industries, it added.
If Taiwan and China further increased their cooperation, they could push for diversified development of the capital markets on both sides and create a brand new investment model for them, the TSEC said.
Taiwan and China should cooperate by using their respective advantages in the banking and financial industry, collaborate in technology professional training, and increase exchanges to promote understanding of each other in order to improve their competitiveness in the international community, it said.
After the cross-strait Economic Cooperation Framework Agreement (ECFA) was established, the capital markets on both sides have been pushing for cooperation to create more business opportunities and value in the financial sector, the TSEC said.
Taiwan, as an economic and trade hub in Asia, is facing external competition from Shanghai, Hong Kong and Singapore and dealing with internal challenges posed by industry transformation.
As the country has launched a number of technology investment initiatives and major infrastructure projects, local capital market should expand its market scale by making good use of cooperation with China to gain an edge in regional competition, the TSEC added.