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New dawn arises for cross-Straits ties

By Tom McGregor (China Daily) Updated: 2012-10-11 17:47

Relations between Beijing and Taipei appear to have entered a permanent thaw with better business and trade ties. Taiwan "President" Ma Ying-jeou delivered a speech in Taipei on Wednesday to introduce measures that would encourage more investments from the mainland.

A few days earlier, Frank Hsieh Changting, a power broker of the pro-independence Democratic Progressive Party, visited the mainland for the first time and he was greeted by high-level Beijing officials including: State Councilor Dai Bingguo, Chen Yunlin, chairman of the Association for Relations across the Taiwan Straits, and Wang Yi, director of the State Council Taiwan Affairs Office, among others, according to the Asia Times.

The sudden warming of Beijing-Taipei ties occur at an opportune moment when Taiwan is struggling with annual economic growth rates at around 2 percent, while the mainland appears headed for a "soft landing" in its overall economic outlook. It seems that as the saying goes, "a friend in need is a friend indeed."

Due to a continued widespread global economic slowdown, improved cross-Straits ties have become a greater necessity and a stronger friendship could enhance Beijing's "soft power" image abroad. Emphasizing business relations to overcome ideological differences mark a transformational shift for both sides, since Ma suggested he would overlook political issues to push ahead with better cross-Straits economic ties.

"Taiwan is looking to further relax restrictions on investments from (the mainland), Economic Minister Shih Yen-shiang said (on Thursday)," according to the China Post of Taipei. "The manufacturing sector is already 98 percent open to investments from (the mainland), while the service sector is 50 percent open," Shih said.

During his "presidential" address in Taipei, Ma said that in terms of overseas investment, "in the future, liberalized polices will become the norm, and barriers the exception," as reported by the China Post.

Taiwan's government officials have hinted they would relax restrictions on overseas investments. Taipei had been imposing tougher regulations on Chinese mainland investors than with overseas Chinese investors, which is discriminatory and should be scrapped.

For example, according to the China Post, investors from the Chinese mainland "require government approval for investments, but the government is seeking to change related procedures, requiring only a notification to the authorities after the investments are made, Shih said."

Shih explained that Taipei could modify another restriction "that investors from the Chinese mainland are not allowed to have control over a company in the manufacturing sector and their share must not exceed 50 percent."

This rule change could act as a major stimulus for the island's lackluster local economy. Many cash-rich Chinese mainland enterprises could restore the financial footing of Taiwan companies that hold vital infrastructure and assets for the manufacturing and services sectors, but are low on capital liquidity.

In the 1980s and 1990s, Taiwan enjoyed robust economic growth, since many entrepreneurs on the island founded top-notch high-tech companies that were manufacturing key component parts for computers, TVs, phones and other gadgets that made life easier for people all over the world.

However, most business trends are cyclical by nature and Taiwan's once booming high-tech economy would eventually experience a downturn. The island has entered such a stage and Taiwan could regain its lost momentum by adapting to current changes in the global economy.

A sovereign debt crisis in Europe and dismal economic growth rates in the US and Japan had lowered overall export demand for its goods and services, and hence the mainland has become a more pivotal partner for Taiwan.

Taipei is making a smart move by upgrading its relations with Beijing that can enrich the living standards for residents on the island, while they can also embark on a path of a shared vision for a brighter future along with their brothers and sisters on the Chinese mainland.

The views do not necessarily reflect those of China Daily.

Mcgregor@chinadaily.com.cn

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