Taiwan Sees New Ties With Mainland

Taiwan took a major step Sunday toward ending its long official isolation from mainland China when a group of presidential advisors called for an “active opening” of trade and investment flows across the Taiwan Strait.

The call was part of a broad set of recommendations from an advisory panel to Taiwanese President Chen Shui-bian that, collectively, signal the beginning of the end of a half-century effort by the island’s leaders to curtail contact with the Communist-ruled mainland.

Although the plan is aimed mainly at helping reverse an alarming slowdown in Taiwan’s technology-driven economic growth during the past several months, increased commercial activity would probably reduce political tensions in one of the world’s most worrisome hot spots, analysts say.

“This is a clear demonstration from our side that we are prepared to take the risk and take a positive attitude toward China,” declared Tsai Ing-wen, chairwoman of Taiwan’s Mainland Affairs Council, the government body responsible for cross-strait ties. “It is a significant step forward.”

There was no immediate response from Beijing.

In addition to lifting or easing restrictions on Taiwan’s trade with and investment in the mainland, the group proposed:

* Establishing mechanisms for capital flows across the strait.

* Progressively opening Taiwan to investment from the mainland.

* Opening direct postal and telecommunications links.

* Actively promoting tourism from the mainland.

* Planning for direct transportation links across the strait.

Although officially these are only recommendations, there are factors that make the package a de facto policy shift. For example, the measures were adopted by consensus by a group of more than 100 leading politicians, businesspeople and academics representing a broad cross-section of opinion, meaning that the agenda is backed by most major constituencies on the island.

In addition, Chen has pledged to implement those recommendations the panel agreed to by consensus.

Government officials indicated that some measures, such as facilitating capital flows and easing restrictions on mainland investments of more than $50 million, could be implemented quickly. Others, such as direct trade and the development of transportation and telecommunications facilities, require negotiations with the mainland and will probably take longer.

Beijing has refused to discuss such direct links until Chen accepts the principle that Taiwan and the mainland are part of a single political entity--a concept known as the “one China” principle.

Among senior members of Chen’s government, there was clearly a feeling that Sunday’s decisions constituted a watershed in the island’s relations with the mainland.

“In 20 to 30 years, we’ll look back at this as the day it all began to change,” said one government official, who declined to be identified.

Sunday’s moves also appeared to end a paralysis among Taiwan’s policymakers, who have seemed unable to decide between remaining true to the island’s ideological past and bending to the imperatives of a fast-moving global economy that threatened to leave Taiwan behind if the government continued to keep its businesses from Asia’s emerging industrial giant.

Increasingly, Taiwanese Ignore Business Bans

Taiwan and mainland China have glared at each other across the 90-mile-wide Taiwan Strait ever since the Nationalist army of Chiang Kai-shek fled to the island after being routed by the Communists in 1949. Although the United States now recognizes the Communists as the legitimate government of China, President Bush has pledged to defend Taiwan against any attack from the mainland.

The U.S. also sells arms to Taiwan, which Beijing considers a renegade province that must be reunited with the mainland, by force if necessary.

Still, drawn by the huge size and rapid growth of the mainland market, Taiwanese entrepreneurs have in many cases ignored the political standoff and their government’s attempts to restrict dealings with the mainland. Instead, they have traded with and traveled to the mainland indirectly, usually via Hong Kong.

These contacts have mushroomed over the past few years, driven by the industrial development of China’s eastern coastal provinces, which face Taiwan. An easing of government restrictions would no doubt accelerate the growth of such contacts. Most political analysts believe that closer commercial ties would also reduce the possibility of either side resorting to military force.

“Starting with economic integration, the two sides can increase their exchanges on other fronts,” said Koo Chen-fu, Taiwan’s top negotiator in dealing with the mainland.

Said Andrew Yang, secretary-general of the Chinese Council of Advanced Policy Studies, a think tank in the Taiwanese capital, Taipei: “It will definitely provide a new stability.”

Mainland Affairs Council Vice Chairman Chong-Pin Lin suggested that strong commercial ties between Taiwan’s powerful high-tech sector and China’s swelling markets will add to Taipei’s security.

“We’re positioning ourselves so Beijing can’t threaten us without hurting themselves or disrupting the global economy,” Lin said.

Despite all this, the question of whether to encourage trade and other links with mainland China remains highly controversial in Taiwan. Trade unions fear that the migration of factory jobs to lower-wage areas on the mainland will only increase, while others worry that too much Taiwanese capital investment in the mainland will provide Beijing with political leverage that could one day compromise the island’s sovereignty.

Souring Economy Leads to a Consensus

Some observers described the ability of such a disparate group of advisors to achieve consensus on such a volatile, contentious issue as little short of a miracle--one made possible only by Taiwan’s rapidly deteriorating economic conditions, which have generated public pressure for swift, radical remedies.

The latest economic indicators show that Taiwan may be headed toward its first recession in nearly three decades.

“It was the economy that brought the consensus,” said the government official who declined to be identified. “Everyone was worried about being blamed if things get worse.”

Noted Tsai: “There is a risk and it’s a real risk, but we cannot avoid doing things because of the risk. In the ‘90s, we were busy developing high tech, and we didn’t need China’s resources. But now we do.”