Taiwan to review China ban

BBC News, Sunday 26 August 2001, 13:11 GMT 14:11 UK

Taiwan’s President Chen Shui-bian has welcomed calls from a high-level council for a radical overhaul of the island’s trade policy with China.

The president said he was extremely pleased with the council’s three day meeting, and promised that his cabinet would co-operate with the opposition on passing the council’s suggestions into law.

The council’s recommendations:

- Push for direct links with China
- Let Taiwan banks open branches in China
- Let Chinese tourists visit Taiwan
- Allow Chinese investment in Taiwan stocks and property
- End $50m cap on investments in China

If approved, the council’s ideas could lead to a lifting of investment limits and the scrapping of a 50-year ban on direct links between the two rivals.

The council of 120 politicians and business leaders was convened by President Chen to advise on how to kick-start Taiwan’s ailing economy.

Reporting its findings on Sunday, the council said Taiwan’s be patient policy towards the mainland should be changed to one of aggressive opening.

’Three links’

It said a $50m limit in investments in China should be lifted, and Chinese investors should be allowed to buy property in Taiwan for the first time.

It also suggested Taiwan’s government negotiate with China the ending of a ban on direct trade, transport and communications ties across the Taiwan strait, known as the three links.

These negotiations could be held once the two countries become members of the World Trade Organisation, expected later this year.

President Chen, who had already indicated he believed the bans on direct links with China should go, had said he would accept the council’s ideas where there was clear consensus.

The president said his government would announce a comprehensive strategy based on the recommendations within two weeks.


But closer links with China, which still views Taiwan as a renegade province, are contentious.

Tsai Ing-wen, in charge of Taiwan’s China policy, said there was a need for caution.

This is a very complicated issue and must be handled carefully because it has a political aspect and an economic aspect, she said.

Taiwan banned all links with China in 1949 when the defeated Nationalists fled to the island.

But restrictions have gradually eased in the last 10 years as economic ties have increased.

Taiwanese companies are estimated to have invested about $70bn in China since 1987.

With Taiwan’s economy lurching towards its first recession in decades, businessmen are eager to take advantage of China’s cheap production costs and huge market.

But unions in Taiwan fear industries will flee and jobs will be lost.

Others are worried in case Taiwan becomes economically dependent on China, altering the balance of power between the two.