Barun Roy: Strait of good hope

The opportunities arising from China-Taiwan trade ties have the potential to render their political differences irrelevant

Chinese all over the world are used to receiving red Lai See envelopes from their elders every lunar New Year, containing gifts of money. But not the kind of Lai See that mainland China’s billionaire philanthropist Chen Guangbiao started handing out on the streets of Taipei on a visit last January.

Chen, obviously, was in his best philanthropic mood. When the Taiwanese authorities intervened to stop his roadside charity spree – it’s said he gave out the equivalent of some $250,000 – he offered to spend his entire fortune on building an undersea tunnel and high-speed railway across the Taiwan Strait.

It was, perhaps, just another flash of Chen’s flamboyance for which he is well known. But it certainly shows a thawing of old hostilities between the two sides and an effort to reach out. Very soon, Chinese mainlanders will be able to travel to Taiwan as individuals, not necessarily as package tourists. A top Beijing negotiator, Chen Yunlin, led a business delegation to Taiwan last month, and Taiwan’s north-eastern city of Keelung has established a tourism office in the mainland city of Xiamen.

History has indeed passed a long way since the Kuomintang (KMT), under Chiang Kai-shek, fled the mainland in 1949 and dug their heels on the island, claiming it as the only China on earth. That set off a long period of confrontation, with the US siding with the KMT and the Chinese regularly shelling Kinmen (Quemoy) and Matsu, two Taiwanese islands close to the mainland, giving the impression that Beijing was ready to risk war to reclaim Taiwan.

But in January 1979, things took a surprising turn. The shelling suddenly stopped and Beijing officially called on “compatriots” on the island to end their hostile confrontation and ease tensions across the strait. That, significantly, was the year China embarked on its momentous journey of economic reforms and began to look at the world in a less jingoistic way. Though hot words and gestures have been exchanged from time to time, and US naval ships have been drawn occasionally into the area, fears about Beijing’s motives have abated. Turn a friendly face, do business together, let people from both sides mix and mingle, and integration will be ultimately achieved — that seems to be Beijing’s changed thinking on how to solve the Taiwan question.

Beijing’s hope is bolstered by another calculation. Taiwan no longer enjoys the same priority with the US as before and its diplomatic ties are down to only 23 nations. In the new global situation where China’s economic rise is a major factor, Taiwan’s independence has hardly any takers. Public opinion in Taiwan is increasingly aware of this, too, which is obviously why they voted Beijing-friendly Ma into office in 2008, after eight years of Chen Shui-biang’s futile pro-independence rule.

Ma is keen to get re-elected in 2012 and China is equally keen that he does. The two sides have signed a Cross-Strait Economic Cooperation Framework Agreement, which came into effect this January and aims to reduce to zero tariffs on bilateral trade. The mainland is now Taiwan’s largest trading partner and export market ($116 billion in 2010).

There are Taiwanese banks in the mainland and mainland banks in Taiwan. Many Taiwanese have bought apartments in the mainland city of Xiamen. Mainland students study in Taiwanese colleges and universities. Kinmen is no longer a frontline fortress, but a popular tourist attraction. A Macau company has been retained by Taiwan Tourism Bureau to scout for operators to run an integrated casino resort on either Kinmen or Matsu, with mainland gamers in mind.

Last year, Taiwanese investment commitments in the mainland amounted to $13.3 billion, up 120 per cent from a year ago, including a $3 billion proposal by AU Optronics for an LCD plant. Since then, Taiwan’s Formosa Plastics has announced a $300 million investment to set up a synthetic rubber factory at Ningbo, in China’s Zhejiang province. At the same time, Taipei has decided to allow mainland firms to invest in Taiwan’s semiconductor and LCD panel manufacturers.

For the mainlanders, procurement is a growing area. A delegation from Nanjing, where over 2,700 Taiwanese enterprises have invested some $6 billion so far, visited the island recently with a $1 billion shopping list, mainly for computer-related items. China Telecom wants to procure 60 million units of telecom equipment from Taiwan this year, 33 per cent more than last year. The Guolian Group, a big mainland power conglomerate, has ordered gearboxes for wind turbines from Formosa Plastics.

In all this, both sides stand to gain. As Taiwan’s mainland connection grows, its isolation in the international community will wane; and as business renders the political issue between the two irrelevant, China will have another economic star in orbit around it (like Hong Kong and Macau) and the world should have new opportunities to take advantage of.

rbarun@gmail.com