Wednesday, April 12, 2006

What Does Economics Have to Do with the Taiwan Issue?

Taiwan independence (or reunification, depending on which side is speaking) may seem like an issue of international law and politics, but what is often left out of the polemics is the fact that business and development ties between China and Taiwan are strong--and growing.

Excerpt from: Taipei calls for tourism and flights deals with Beijing
Financial Times, April 12, 2006

Taiwan on Wednesday called for a deal with China within six months on tourism and non-stop charter flights as its independence-minded government sought to pre-empt weekend talks between the opposition Kuomintang and the Chinese Communist leadership.

“We demand China complete negotiations with us within six months on admitting Chinese tourists to Taiwan and on regular passenger and cargo charter flights,” said Joseph Wu, the head of the cabinet-level China policy body.

Mr Wu added that Taipei’s move was aimed at clearing up “the misunderstanding that China is handing out goodwill all the time and we are blocking all the time.”

Delegates mandated by the government have been in contact with Chinese counterparts over potential deals on tourism and regular direct flights since last summer.

Taiwan had committed itself last year to letting up to 1,000 Chinese citizens in once it and Beijing have readied a regulatory framework. Taiwan also proposed a long time ago that regular cross-Strait charter flights for passengers and cargo should be established, with up to one flight a day on the cargo side.

China is more eager to see frequent passenger flights because it believes that increased contacts will make the Taiwanese people feel more positive about eventual unification, while Taiwan views cargo flights as more important because they are commercially attractive to its transport industry.

Officials said it is likely that charter flights will start this year, with more frequent one-off deals, and will then be gradually expanded into scheduled charter flights.

Chinese and Taiwanese airlines have offered one-off non-stop charter flights over Chinese New Year before. Such events are likely to occur more often now over the Dragonboat Festival and the Mid-Autumn festival, officials said. Separately, one-off cargo charter flights could be organized.

Taipei also hopes to expand the scope of cargo flights under any eventual agreement to nearly double the level of its earlier proposal.

It is known that Taiwan investment in China accounts for as much as half of all FDI in China. The economic gains from trade with China is something that the pro-independence camp in Taiwan have not overlooked at all. As the above report shows, there are times when Taiwan officials would like to claim credits for fostering stronger economic ties with China--as it is generally believed in Taiwan that it will help growth in domestic economy.

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