Cross-Strait Economics Blog

ECFA Passed

2010-07-21T23:06:00.010+08:00

Hi everyone!

I know it's been quite some time since I posted, but I've been enrolled in business school full-time since early 2009. I'm not finished with school quite yet and, unfortunately, don't have the time to start regularly posting again, but I can't resist posting a few links on the establishment of ECFA and commenting a bit about my thoughts.

As most of you already know, the Economic Cooperation Framework Agreement was signed on June 29, 2010 between Taiwan and Mainland China and is both politically contentious (in Taiwan, at least) and historic in scope. The agreement will significantly expand trade and investment activities across the Taiwan Strait. It's argued that Taiwan was able to negotiate the larger share of goodwill generated by the trade pact, but that the Mainland was happy to oblige for political reasons. Taiwan also hopes to use ECFA to engage other economies in the Pacific. Formerly, it is believed that China, using it's significant clout as a regional power, blocked Taiwan's attempts to do so. Many in Taiwan oppose the agreement, arguing that Beijing will use it to erode Taiwan's political autonomy.

For more detailed information, I recommend the following links:
China, Taiwan Forge Strongest Ties Yet With Sweeping Trade Deal - CSM
Taiwan's Trade Harvest - WSJ
Taiwan Legislature Clashes Mark Start of ECFA Review - Taiwan News

Investing in Cross-Strait Relations - WSJ

2009-05-04T10:37:00.004+08:00

From the WSJ Asia's Opinion Sec

By DANIEL H. ROSEN (bio)From today's Wall Street Journal Asia. (link)

"China Mobile's $530 million bid for a 12% stake in Taiwan's Far EasTone last week may seem ho-hum given the size of China's economy. Yet this overture is a big deal, for more reasons than most observers yet recognize.

Until now, Taiwan has blocked inward investment from China -- despite WTO obligations -- ostensibly out of national security concerns. While unofficial estimates of Taiwanese investment in mainland China range from $200 billion to $400 billion, reciprocal Chinese investment in Taiwan stands near zero. During the most recent round of direct China-Taiwan talks in Nanjing, agreement was reached to resolve this asymmetry. As a result, many sectors of Taiwan's economy stand to benefit from new inflows from across the Strait, including real estate, information and communications technology, areas of financial and business facilitation services, biotechnology and other sectors.

Taiwan stands to benefit disproportionately from these investments, although both sides have much to gain. Functionally, Taiwan knows how to do important things China is weak at, for instance basic and applied research and development and consumer-oriented brand development and management. These high-margin contributions depend on Taiwan's strong intellectual property rights protection and regulatory regimes, not just low labor costs, so they are likely to stay in Taiwan long after Chinese investment is permitted. Mainland investment in the years to come will help buffer Taiwan's economy from falling demand for its products in the West and bring the island closer to China's emerging domestic demand for higher quality goods.

The reduced political risk of cross-Strait hostility is the most exciting economic dividend of this breakthrough. Despite Taiwan's obvious competitive assets -- Mandarin language, proximity to the world's fastest-growing market and a robust regulatory and legal environment -- international investors have had to discount Taiwan's attractiveness due to the political risk of future dust-ups with Beijing. For this reason, Taiwan as an investment destination was inherently at a disadvantage to peer competitors and even to weaker entrants in the contest to attract multinational FDI.

The Nanjing agreement also paves the way for broader normalization of cross-Strait economic relations down the road. The next steps in this process could include parity for Taiwan with the lower tariffs that countries of the Association of Southeast Asian Nations start enjoying with China next year, lower import costs for Taiwanese consumers, better investment protection for Taiwanese businesses in the mainland, and recognition of Taiwan product certification standards.

Critics within Taiwan will inevitably argue that normalizing economic relations with China brings Taiwan additional national security risk. In the U.S. experience and world-wide, inward investment has proven not to undermine national security but rather enhance it. If Chinese firms build productive capacity in Taiwan, then that is so much more capacity within Taipei's direct reach in the unlikely event of future tensions.

Cross-Strait economic and investment agreements will help level the playing field for Taiwan with the rest of the countries that already have a "normal" economic relationship with China. But these deals are not an assurance of Taiwan's future prosperity. Agreements that dismantle the many barriers and impediments to free commerce that governments create are only a first step. The real challenge for Taiwan's leadership will be how to build on that foundation.

Mr. Rosen is principal at Rhodium Group, a New York-based advisory firm, and a visiting fellow at the Peterson Institute for International Economics in Washington, D.C. He is also the author of "Revisiting the Strategic Implications of China-Taiwan Economic Relations in a New Era" (Peterson Institute, forthcoming September 2009). "

Cross-Strait Financial Services Pact

2009-04-19T09:05:00.001+08:00

Fresh off the press: "TAIPEI, April 18 (Reuters) - Taiwan and China will sign a deal on financial services and expand direct flights at talks next week, officials said on Saturday, but continue to avoid tough political issues.

The negotiations, to take place in Nanjing, China, from April 25-29, point to a further warming of ties as the old foes prepare to sign agreements that will facilitate business between the two sides, useful especially for recession-strapped Taiwan.

"There are no real big differences between the two sides," said Maa Shaw-chang, deputy secretary general with the body that negotiates for Taiwan after meeting his Chinese counterparts in Taipei to set up the third round of talks.

Since Taiwan President Ma Ying-jeou took office last May, the China-friendly leader has eased tension with Beijing through trade and transit deals signed during talks last year

Topping the agenda at the next round of talks is a broad agreement on financial services cooperation. It will cover a currency clearing system between the Taiwan dollar and Chinese yuan and mutual access to information about markets, including securities and futures, Taiwan's top China policymaker Lai Shin-yuan told reporters.

The two sides will also expand on direct daily flights that began in December, allowing charters to become regular scheduled flights while adding routes and destinations, Lai said.

For most of the past 60 years direct flights have been banned for security reasons. But about 750,000 Taiwan investors live in China, lured by a common language and lower labour costs.

China has claimed self-ruled Taiwan since 1949, when Mao Zedong's Communists won the Chinese civil war and Chiang Kai-shek's Nationalists (KMT) fled to Taiwan. Beijing has vowed to bring the island under its rule, by force if necessary.

"If the third round of talks go smoothly, its a further assurance of their institutional dialogue, and that's important," said Alexander Huang, strategic studies professor at Tamkang University in Taipei. "We are still in the process of building consensus and confidence."

Taiwan and China are also expected to agree on ways to investigate and charge each other's criminals, officials said, and reach consensus on gradually opening Taiwan to Chinese investment in manufacturing, services and major infrastructure projects.

But both sides have shelved political issues and China's top official dealing with Taiwan said last month negotiations with the island will focus on economic ties for now."

From Reuters (link)

Promoting Peace and Prosperity in Asia: The Taiwan Relations Act at Thirty

2009-04-16T05:18:00.004+08:00

The American Enterprise Institute recently held a panel discussion on the status of US-Taiwan relations in lite of the 30th anniversary of the Taiwan Relations Act.

WATCH IT HERE

From the AEI Website:

"Adopted in 1979, the Taiwan Relations Act (TRA) has bound Washington and Taipei together ever since the United States withdrew diplomatic recognition from the Republic of China (ROC). The law requires that the United States provide Taiwan with "defense articles and defense services" necessary for the island's self-defense and that the president of the United States consult with Congress in the event of a threat to Taiwan's security. Over the past twenty years, surging economic growth in the People's Republic of China (PRC) has made it a central cog in the global economy. At the same time, it has engaged in a fast-paced modernization and buildup of its armed forces. China's rise has left Taiwan increasingly isolated and vulnerable to aggression from its much larger neighbor. As U.S.-Chinese relations have warmed, the TRA has ensured that the U.S.-Taiwan relationship does not fall by the wayside. But with new administrations in both Taipei and Washington--and both entrenched in economic crises--Taiwan's future peace and prosperity are less certain."

How effective has the TRA been to date? Will warming relations between Taipei and Beijing erode support for the TRA in Taiwan and the United States? Or will the PRC's military buildup and increasing assertiveness strengthen the U.S.-ROC relationship? Considering current trends, what are the prospects for democracy's future in Taiwan, and how will Taiwan's economy fare in the years ahead? These and other questions will be answered by speakers at this conference."

Speakers included (bios):

Dan Blumenthal - Resident Fellow, AEI

John Bolton - Senior Fellow, AEI

Arthur C. Brooks - President, AEI

C.J. Chen - Former Minister of Foreign Affairs (Taiwan)

Louisa Coan Greve - Program Director, National Endowment for Democracy

Christopher Griffin - Office of Senator Joseph Lieberman (I-D-Conn.)

Rupert Hammond-Chamber - President, US-Taiwan Business Council

Danielle Pletka - Vice President, AEI

Paul Wolfowitz - Visiting Scholar, AEI

Obama to Retain US "One China Policy"

2008-11-06T19:02:00.006+08:00

The U.S. presidential elections has just ended and Americans have overwhelming voted Barack Obama into office. Undoubtedly, the new President-elect has a tremendous amount of work to do before he steps into office on January 20th, but many in Asia are keen to see what he has in store for U.S.-China relations. During his campaign the Senator referenced the U.S.-China trade relationship in a negative light, according to the AFP (link), focusing his attention on some of Beijing's questionable trade policies. However, given the financial mess that the U.S. currently finds itself in, and given the complications it's facing in the Middle East, it's unlikely that any meaningful shifts in U.S.-China policy are likely to arise in the short-run.

On the cross-Strait issue, it is convincingly argued that Obama will default to the decades old 'One China Policy.' Taiwan's former representative to the U.S., Chen Chien-jen, said on Wednesday that, "the U.S. will stick to its one-China policy and the three communiques on cross-strait issues"(link).

"The Obama administration basically would like to see peace and stability in this region, " Chen said, adding that different U.S. administrations had repeatedly expressed the wish to see both sides of the strait engage in peaceful dialogue.

"We are having that peaceful dialogue right now," Chen noted.

The Obama administration would regard the current developments in cross-strait relations in a positive light, he said.

However, as it does not know how cross-strait relations will evolve, the new American government will keep a close eye on the developments in order to better understand how U.S. interests might be affected, Chen added.

He advised that while dealing with Beijing, Taiwan should not discard old friends such as the U.S. because America has been Taiwan's friend for many years and would continue to be in the future."

On this same subject, I'm also very interested to see who the Obama camp chooses to head up State and Defense. I'm also looking forward to watching the population of key China posts in both departments. I'll keep an ear open and will share the info as it comes in.

Hong Kong to Establish First Offical Office in Taiwan

2008-10-19T22:25:00.003+08:00

It was reported by the Central News Agency (link) that Taiwan has authorized the "Hong Kong Trade Development Council (HKTDC) to set up an office in Taipei, which will be the special administrative region's first official organization in Taiwan."

According to the article:

"The council applied to the relevant authorities in Taiwan earlier this year to establish an office in Taipei, and the approval was received Thursday, Cheung said, adding that the HKTDC welcomed the decision.

The council was established in 1966 as the international marketing arm of Hong Kong and now has 40 offices around the world, according to Cheung.

The council has rented an office in Taipei, and will send one staff member from Hong Kong, while other personnel will be recruited in Taiwan, Cheung said.

The Taipei office is being established to enhance bilateral trade relations and promote Hong Kong's services industry, with financial services, logistics, and real estate being the focus, Cheung said."

ARATS Chairman to Visit Taiwan

2008-10-19T21:43:00.003+08:00

As many of you already know, Chen Yun-lin, Chairman of China's quasi official Association of Relations Across the Taiwan Strait (ARATS), is to visit Taiwan in late October or early November. The meeting is of historic importance as it's the first time a Chinese envoy has travelled to Taiwan since 1992, when the ROC and PRC began formal contacts. ARATS is described as a nominally private body that's managed by the Taiwan Affairs Office of the PRC's State Council. The Straits Exchange Foundation might be considered their Taiwanese counterpart.

The meeting represents the most recent manifestation of the growing dialogue between Taiwan and China which has accelerated since the election of Ma Ying-jou earlier this year. The AP reported (link) that "Taiwan and China have agreed not to discuss the contentious issue of the island's sovereignty while making preparations for a new round of high-level negotiations on economic ties..." Fu Dong-Cheng, Vice Chairman of the Mainland Affairs Council, was quoted as saying, "We will proceed with the negotiations as two equals, recognizing the reality of our coexistence."

It's hoped that the meeting will furether strengthen cross-Strait communications and transportation links. Xinhua reports (link) that food safety issues will also be discussed. This last June at a similear meeting in Beijing the two sides were able to negotiate regular direct weekend flights.

Taiwan's Democratic Progressive Party (DPP) isn't very pleased with the meeting and are scheduling a mass-protest to greet the Chinese officials on October 25th. The Taipei Times reported today (link) that the demonstration could top out at one million people.

China Investment Corporation

2008-10-13T01:23:00.004+08:00

The US Congress's Congressional Research Service (CRS) released a report earlier in the year on China's recently created Sovereign Wealth Fund (SWF), the China Investment Corporation (CIC). A little dated but an interesting read none the less (link).

While these kinds of entities are numerous, the CIC got off to a powerful start last year when Beijing gave it an initial alotment of US$200 billion to manage. You may remember having read about the CIC's US$3 billion investment in Blackstone and then later the 9.99% stake they took in Morgan Stalney. I've recently read rumors that the CIC was considering taking a larger stake in Morgan Stanley but that they backed away when they reflected on the losses they've already seen in aforementioned investments.

For a backgrounder on Soverign Wealth Funds see this economist article from January, 2008.

SEF Chair on CS Trade and Taiwan's future

2008-10-12T16:30:00.005+08:00

A quick post on an interesting article from Taiwan News.

In a recent article in Taiwan News it was reported that Chiang Pin-kung (江丙坤), Chairman of the Straits Exchange Foundation (SEF), recently said that Taiwan's future economic prosperity is intrinsically tied to the islands ability to maintain a healthy relationship with the Mainland. That being the case, he went on to say that in spite of this Taipei won't sacrifice it's autonomy to guarantee strong economic performance.

Speaking at a press conference, Chiang stated that "without a sound and peaceful cross-strait relations, it is impossible to improve Taiwan’s economy. Therefore, he believes that the deeper issue to be put first is ameliorating the current relations between the two sides of the Taiwan Strait."

Opponents to increased cross-Strait economic and trade ties often argue that giving Beijing too much leverage over Taiwan's economy could be detrimental to maintaining Taiwan's autonomy from the Mainland. To this Chiang responds, "the more cross-strait interaction, the better the chances that Chinese people would feel the precious experience of Taiwan's democratic politics as well as its status as a sovereign nation."

Taiwan likely to allow 12-inch fab investment in China in September

2008-07-30T23:28:00.003+08:00

"Taiwan semiconductor players that wish to establish 12-inch wafer fab in China are expected to hear good news in September. Taiwan president Ma Ying-Jeou reasserted that the relaxation of restriction on China investment does no harm to Taiwan industries, and the relaxation is likely to take place in September.

Considering that leading semiconductor company such as Intel have already established a foothold in China for cutting-edge 12-inch wafer production, Ma stressed that banning Taiwan players from moving across the strait with investment is indeed very unfavorable to local industry. Therefore, in September the government plans to lift bans on policies regarding investment ceilings, 12-inch wafer fab investment and China-based companies having their initial public offering (IPO) in Taiwan.

Ma emphasized that the relaxation is not harmful to Taiwan. Citing relaxation of notebook production in China in 2002, the president said Taiwan's corresponding share of the global notebook production value expanded from 56% that year to 92% in 2007 because of an accurate government policy. The same principle should be also applied to other industries, he said.

Ma recently addressed such matter during a forum hosted by the Monte Jade Science & Technology Association of Taiwan."

from Digitimes

Further CS Investment Liberalization

2008-07-30T11:34:00.003+08:00

Yesterday, the Council of Economic Planning and Development's (CEDP) Chairman Chen Tain-jy said that Taiwan may allow increased levels of China based investment into Taiwan's economy this coming August. According to the Taipei Times the liberalizations would be directed at "Chinese investors [looking] to put money in the local stock and property markets," and woulden't require negotiations with Beijing.

The BBC reports that "[a]fter raising the cap on China-bound investment earlier this month, the government is seeking to relax rules governing overseas companies with Chinese capital seeking to invest in Taiwan, in a bid to make the country a regional financial centre, the nations top economic planner said yesterday."

At present firms that have more than 20 percent of their capital tied to mainland investments are forbidden to trade on the TAIEX. Liberalizing these restrictions, it is argued, would help Taiwanese firms based in China raise funds in Taiwan to expand their operations on the mainland. "On July 17 the Cabinet approved lifting the cap on China-bound investment to 60 per cent of a companys net worth, from 40 per cent, granting firms greater financial leverage to conduct business there."

Chen also said that the Ma Administration was considering allowing Chinese Qualified Domestic Institutional Investors (QDII) to invest in Taiwan's financial markets. He believes opening Taiwan to these investors would turn Taiwan into a "regional fund-raising and asset management hub and replace Hong Kong as the financial centre in the Asia-Pacific region"

Opponents of liberalizing these kinds of investments argue that doing so poses a danger to Taiwan's national security and autonomy. An over reliance and over exposure to China's economy makes Taiwan vulnerable to political pressure from Beijing, it is said.

Alibaba Arrives

2008-07-24T19:52:00.003+08:00

It appears that Chinese mega e-commerce firm Alibaba has opened an office in Taipei. Reuters reports that the new office is Alibaba's fourth outside mainland China and complements offices in Hong Kong, Switzerland and the United States.

Purportedly, Alibaba serves 40,000 local members in Taiwan. The firm's CEO, David Wei, stated that, "[Alibaba] can provide Taiwan's 220,000 export orientated (small and medium-sized enterprises) with the right tools to connect with a huge pool of active international buyers and increase their competitiveness." It seems the firm is optimistic about rising levels of cross-Strait trade.

Recent data published by the People's Daily reports that cross-Strait trade has surged to USD 61.8 billion in the first half of 2008 - up 23 percent year-on-year. Undoubtedly, Alibaba plans to capture some of this growth by facilitating communication and deal-making across the Taiwan Strait. Given their tremendous success on the mainland, and barring any reversal in cross-Strait economic liberalization, I think they'll do just that.

According to Xinhua (via Market Watch), "Alibaba.com's three websites -- for global trade, domestic trade in mainland China and trade with Japan -- collectively form a business community of close to 30 million registered users from over 240 countries and regions... Taiwan is a priority market for Alibaba.com and the company is committed to bringing global trade opportunities to Taiwan SMEs by helping them reach millions of buyers and sellers around the world. Alibaba.com is the only business-to-business e-commerce company that connects its Taiwan members with potential trading partners in mainland China..."

"Alibaba.com recently launched its Gold Supplier membership package in Taiwan. This paid service enables suppliers to gain more exposure to buyers on Alibaba.com's international marketplace by providing them with a premium storefront, priority placement in search results and high quality customer service. The Taipei office will provide local customer service, marketing and sales support, as well as conducting offline education and training for its Taiwan customers. Currently, Alibaba.com has about 2,000 paying members in Taiwan."

If I were an exec at Alibaba I'd do the exact same thing. All this momentum in CS relations and expanding trade just screams - coordinate me! Facilitate me! A firm like Alibaba is in the perfect position to do so.

How Capitalist is China's Economy?

2008-06-23T19:27:00.005+08:00

I know the blog's been a bit underwhelming for the last month (I've started studying for the GMAT, so please forgive me), but I thought I'd link to a paper recently released my MIT's Sloan on the elusive question of 'How Capitalist is the Chinese economy?" While not strictly related to cross-Strait economics, I defiantly think it's an important question for those interested in the relationship.

According to the abstract, the paper is the first chapter of a forthcoming book entitled Capitalism with Chinese Characteristics (New York: Cambridge University Press, July 2008). The authors have attempted to bypass rhetoric and take a hard look at "detailed archival examinations of policy, bureaucratic and bank documents as well as several waves of household and private-sector firm surveys..." It should make for a great read (I've been looking for something to keep Naughton's The Chinese Economy (link) company and this may be the ticket)!

link to paper (by way of the China Economic Blog)

Forbes Interview with Ma Ying-jeou

2008-05-28T13:07:00.000+08:00

I'm in the midst of writing a post that's turned into a whopper. To whet your appetite check out this recent interview that Ma gave to Fortune Magazine. (link)

Questions raised include:

What will be the main priorities in economic policy for your first year in office?
There has been news recently about mainlanders coming to Taiwan to buy property. Is that something that is welcomed?
To what extent are you confident that the mainlanders will be happy when they are here?
What kind of joint initiatives would engage business cooperation between China and Taiwan, especially those that might occur here in Taiwan?

Let the healing begin

2008-05-21T00:38:00.016+08:00

Taiwan's new Premier, Dr. Liu Chao-shiuan, talks about the Ma administration's new plan to strengthen Taiwan's economy in this recent article from the China Post.

On issues related to Taiwan's economy, the new Premier promises that the Ma administration will "hit the ground running." Liu vows to strengthen economic ties with the U.S. while simultaneously expanding Taiwan's access to the Mainland via expanded direct links. He also promises that the political fissure between the Executive and Legislative Yuans is a thing on the past. Given the landslide win the Pan-Blue coalition achieved in January's LY election, this is likely to be true.

The Premier also sets some aggressive goals for Taiwan's economy. In addition to further opening trade, transportation and investment ties across the Strait, the new administration plans to use Kenysian economic policy to inject jobs and cash into the island's economy. The goal is to push Taiwan's GDP growth to over six percent a year.

Resembling the kind of theory that went into U.S. President Roosevelt's New Deal, Ma's Twelve Economic Reconstruction Projects, or i-Taiwan 12 Projects (see Michael Turton's take) are designed to, in conjunction with aforementioned cross-Strait economic liberalization, jump start Taiwan's weakened economy. The projects, estimated to cost NT$ 4 trillion (US$133 billion), will help to raise Taiwan's per capita GDP to US$30,000 by 2016, Liu argues. He also conjectures that by the mid-way point (2012), per capita GDP will have risen to US$20,000. Unemployment figures are expected to remain below 3 percent.

At the Boao Forum held this last April, where senior members of the KMT (including now Vice-President Vincent Siew) met with members of the Chinese government, Liu claims that Beijing offered Taiwan NT$1 trillion (US$33 billion) in Foreign Direct Investment (don't like 'F' in 'FDI'? - blame the China Post). Liu opines that if this investment were channeled into Ma's infrastructure projects, Beijing will have provided a quarter of the total funding. While this may sound encouraging, I'd imagine that there are more than a few people in Taiwan that would cringe at the thought of Beijing owning 1/4 of Taiwan's new infrastructure...

Premier Liu goes on to say that under Ma's leadership, Taiwan will reestablish itself as one of the regions premier economies. He notes that the new administration's goal is nothing short of recapturing the white-hot economic growth Taiwan saw several decades ago.

"Taiwan's Renaissance"

2008-05-20T17:17:00.017+08:00

Today, former Taipei mayor and KMT Chairman Ma Ying-jeou ( 馬英九) was inaugurated as president of Taiwan. The ceremony, held at 9:00 am in Taipei, drew many of Taiwan's political and business elites, as well as representatives from around the world.

Ma won the election largely because of campaign promises he'd made on stabilizing relations with Beijing and deepening Taiwan's economic exposure to Mainland China - thus improving the domestic economy. His election marks the end of eight years of DPP control of the presidency under Chen Shui-bian ( 陳水扁). What follows are excepts from Ma's inauguration speech, entitled "Taiwan's Renaissance" (found here), and some brief comments on key points:

"The new administration's most urgent task is to lead Taiwan through the daunting challenges from globalization. The world economy is changing profoundly, and newly emerging countries are arising rapidly. We must upgrade Taiwan's international competitiveness and recover lost opportunities. The uncertainty of the current global economy poses as the main challenge to the revitalization of Taiwan's economy. Yet, we firmly believe that, with right policies and steadfast determination, our goals are within our grasp."

"Islands like Taiwan flourish in an open economy and wither in a closed one. This has been true throughout history. Therefore, we must open up and deregulate the economy to unleash the vitality of the private sector. This will strengthen Taiwan's comparative advantages. Taiwan's enterprises should be encouraged to establish themselves at home, network throughout the Asia-Pacific region, and position themselves globally. Taiwan's labor force must learn to adapt to rapid technological changes and industrial restructuring. Our youth must develop character, a sense of civic duty, global perspectives and lifelong learning capabilities. All forms of political interference in education must be eradicated. In this era of globalization, the government must satisfy the basic needs of the underprivileged and create opportunities for them to develop. While pursuing growth, we must seek environmental sustainability for Taiwan and the rest of the world."

I'll agree that islands - or any economy for that matter - don't usually benefit from economic isolationism. Not too meaningful, really. What one should pay attention to is the mention of Taiwan firms being given more leeway in operating overseas. Many of the Taishang, or Taiwan nationals working in China, as well as Taiwan's domestic business community have complained about the restrictive business policies that their firms face when working and investing in China. This is likely to change under Ma.

"Taiwan must play a greater role in regional cooperation. By strengthening economic relations with its major trading partners, Taiwan can better integrate itself in East Asia and contribute more to the region's peace and prosperity."

As China is Taiwan's largest trading partner this should probably read "By bettering our economic relationship with China we'll also advance our ability to integrate into the regional economy."
Many had argued that the previous administration (as of ten hours ago) had been pushing the establishment of a U.S.-Taiwan Free Trade Agreement, for among other reasons, to deepen Taiwan's often restricted regional economic ties. It is said that the establishment of an FTA with the US would encourage others in Asia to brave China's objections to building stronger political-economic ties with the island. I don't know whether Ma supports a US-Taiwan FTA as strongly as Chen did or whether he hopes to mediate regional economic isolation by negotiating directly with Beijing and other regional capitols.

"I sincerely hope that the two sides of the Taiwan Strait can seize this historic opportunity to achieve peace and co-prosperity. Under the principle of "no unification, no independence and no use of force," as Taiwan's mainstream public opinion holds it, and under the framework of the ROC Constitution, we will maintain the status quo in the Taiwan Strait. In 1992, the two sides reached a consensus on "one China, respective interpretations." Many rounds of negotiation were then completed, spurring the development of cross-strait relations. I want to reiterate that, based on the "1992 Consensus," negotiations should resume at the earliest time possible. As proposed in the Boao Forum on April 12 of this year, let's "face reality, pioneer a new future, shelve controversies and pursue a win-win solution." This will allow us to strike a balance as each pursues its own interests. The normalization of economic and cultural relations is the first step to a win-win solution. Accordingly, we are ready to resume consultations. It is our expectation that, with the start of direct charter flights on weekends and the arrival of mainland tourists in early July this year, we will launch a new era of cross-strait relations."

I found this passage particularly interesting. Chen had vehemently denied the validity of the "1992 consensus," arguing that Taiwan had never agreed to the consensus' "One China - different interpretations" conclusion. Ma, however, has often defended it's validity.
I think it should also be noted that the goals of Taiwan and the PRC vary significantly regarding cross-Strait relations and what might be accomplished through any future negotiations. Ma has stated that negotiations on unification are strictly off the table while he's in office and, furthermore, that he doesn't believe they're likely to occur in his lifetime. China, on the other hand, is in this for that exact purpose. If Beijing feels it has no hope at chipping away at Taiwan's sovereignty in any economic negotiations I think it unlikely that much progress can be made. As such, Taiwan's successes in negotiating economic benefits for the island, vis-a-vis a stronger relationship with the Mainland, are likely to be predicated on Bejing's perceived ability to "bringing little sister back into the family."

"We will also enter consultations with mainland China over Taiwan's international space and a possible cross-strait peace accord. Taiwan doesn't just want security and prosperity. It wants dignity. Only when Taiwan is no longer being isolated in the international arena can cross-strait relations move forward with confidence. We have taken note that Mr. Hu Jintao has recently spoken on cross-strait relations three times: first, in a conversation of March 26 with US President George W. Bush on the "1992 Consensus"; second, in his proposed "four continuations" on April 12 at the Boao Forum; and third, on April 29 when he called for "building mutual trust, shelving controversies, finding commonalities despite differences, and creating together a win-win solution" across the Taiwan Strait. His views are very much in line with our own. Here I would like to call upon the two sides to pursue reconciliation and truce in both cross-strait and international arenas. We should help and respect each other in international organizations and activities. In light of our common Chinese heritage, people on both sides should do their utmost to jointly contribute to the international community without engaging in vicious competition and the waste of resources. I firmly believe that Taiwan and mainland China are open minded enough to find a way to attain peace and co-prosperity."

I enjoyed the references to Hu Jintao's (胡锦涛) recent statements on Taiwan and his hopes for the future. I'll come back to these three statements and look at each one individually in future posts.

"In resolving cross-strait issues, what matters is not sovereignty but core values and way of life. We care about the welfare of the 1.3 billion people of mainland China, and hope that mainland China will continue to move toward freedom, democracy and prosperity for all the people. This would pave the way for the long-term peaceful development of cross-strait relations."

I can't not address this headline inspiring paragraph in my opening post. While I’m not entirely surprised that Ma called for political liberalization in the PRC, I certainly think he had the option of not addressing it in his inauguration speech. I would argue that Ma is making a sincere effort to let Beijing and the Taiwan people know where his values lie. While he does champion better political and economic relations between Taiwan and the Mainland, he does not support these things unequivocally.

Hello World

2008-05-20T14:44:00.007+08:00

I've started this blog to document and discuss the history and trends in economic, trade, investment and business relations between Taiwan and the People's Republic of China. While I don’t necessarily consider myself an expert on these subjects, I do have a limited background in conducting research on cross-Strait economic issues and possess a strong desire to learn more. I hope to further develop my understanding of this fascinating and often contentious relationship by looking, in detail, at how Taiwan and China's economies interact and overlap.

That being said, this blog will not concern itself with rhetoric on political relations between Beijing and Taipei, or the justness or unfairness of current and historical relations across the Strait, unless it directly relates to the economic relationship between the two economies. There are many other blogs on cross-Strait political issues and I encourage you to visit some of the ones I list here.

Please feel free to comment on my posts and to challenge me with thoughtful and intelligible arguments - citing respected sources is always encouraged! Please keep the discussions on topic – or at least try to – and refrain from mudslinging and 'flaming'.

I'd also like to note that all opinions expressed in the posts on this blog are those of this author and this author alone. The thoughts and ideas articulated here do not necessarily represent the official policies of any past or future employers.

Finally, I’d like to note that I often post things without proofreading them. I reserve the right to make spelling and grammatical changes as I see fit! :)

Under Construction

2008-05-15T20:21:00.003+08:00

This blog is under construction...
Intended launch date is May 20, 2008