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Taiwan Sees Gains in Closer Ties With Mainland China

By Heda Bayron
16 July 2009

The thawing of relations between Taiwan and China over the past year has brought unprecedented economic exchanges between the long-time rivals. But critics say the government is moving too fast in reconciling with Beijing.

For Wallace Kou, chief executive officer of Silicon Motion, warming relations between Taiwan and China promise to benefit his company. Silicon Motion has research and manufacturing sites in China.

"We believe the China region is the most important region for us to grow, for our future," said Kou. "That's because of the people, the population, its internal need and also exports. Southern China is the largest consumer electronics manufacturing site. They are moving to the 3G [third generation mobile phone technology] era, so it becomes a lot of business opportunity for us to grow."

Despite 60 years of rivalry, China is Taiwan's biggest trading partner, and the top destination of Taiwanese foreign investment. This relationship has developed despite restrictions on both sides of the Taiwan Strait on dealing with the other.

Closer ties

The Nationalist Kuomintang fled to Taiwan and established a separate government here in 1949 after the Chinese civil war. Now a Kuomintang-led government is taking a bold move by proposing to enter into an economic cooperation agreement known as ECFA to normalize trade and economic ties with China.

The Taipei government says the agreement will widen the market for Taiwan's exports. And it says the deal makes the island an attractive trade partner for other economies, which could help Taiwan climb out of its current recession.

Over the past year, both sides have established direct air, naval and postal links.

Liu Te-Shun is the deputy minister of the Mainland Affairs Council, the agency in-charge of relations with China.

He says the agreement hopes to bring more Chinese investments into Taiwan, just as Taiwanese capital poured into the mainland in the past.

Outside Schive Chi's office bus loads of mainland tourists disembark to see Taipei 101, one of the world's tallest buildings. Chi is the chairman of Taiwan's Stock Exchange.

"They [the Chinese] like this place, talk the same language and now it's just [a matter of] whether or not you can convince them that ...this place is a safe place for them," he said.

He says enhanced relations have raised both local and foreign investor confidence in the stock market.

"That removed one of the very critical concerns from our local investors' point of view," Chi said.

Moving too fast for reunification?

But many Taiwan residents are unconvinced about the agreement. In May, tens of thousands marched in Taipei against it.

China considers Taiwan part of its territory, which must be reunited with the mainland, by force if necessary. Many, like this demonstrator, fear that ECFA will be the beginning of an irreversible process toward reunification.

"We in Taiwan will not accept China annexing [swallowing up] us," said Chi. "We want self-determination. We want to decide our own name [title]. Our authority is our own to decide. We don't want foreign political powers controlling our Taiwan."

Taiwan's two previous presidents advocated greater independence from the mainland. And opposition parties continue to call policies that foster the island's separate identity.

Hsiao Bi-Khim, director of the opposition Democratic Progressive Party's international affairs department, says the government is moving too fast without adequate public consultation.

"We feel such an agreement would make Taiwan too dependent on China and neither does it guarantee that we would have greater room to engage with other major economies around the world. On the political side, there are many people in our party that feel that too many compromises have been made," said Hsiao.

Liu of the Mainland Affairs Council says the government listens to public opinion and that recent polls indicate most people see the economic gains of warming ties with Beijing.

The DPP wants all of Taiwan to have a say on the issue and has started a campaign for a referendum on the agreement. As Taiwan nears the 60th anniversary of its split from China, talk about its future remains fraught with much debate.

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