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China seeks ‘comprehensive’ economic pact with Taiwan

Bloomberg | 5 March 2009

China Seeks ‘Comprehensive’ Economic Pact With Taiwan (Update2)

By Judy Chen and Janet Ong

March 5 (Bloomberg) — China will push for a comprehensive economic accord with Taiwan and wants to broaden discussions to involve military issues, Premier Wen Jiabao said.

“We will accelerate normalization of cross-straits economic relations and promote the signing of a comprehensive agreement on economic cooperation,” Wen said in his annual report to the National People’s Congress in Beijing today. “We are also ready to hold talks on cross-straits political and military issues and create conditions for ending the state of hostility.”

Taiwan President Ma Ying-jeou has stepped up economic exchanges with China since taking office in May, and direct daily flights, shipping and postal links started in December. China signed a comprehensive economic agreement with Hong Kong in June 2003, waiving tariffs for its imports and preferential market access for the city’s banks, brokerages and insurers.

Taiwanese businessmen have already invested an estimated $150 billion in China and are calling for their financial companies to be permitted to offer services. The governments of China and Taiwan have been administered separately since the end of a civil war in 1949.

“The main issue on the signing such an agreement is the lack of mutual trust,” Liu Bih-rong, a political science professor at the Soochow University in Taipei said. “Taiwanese people are worried that this may be the first step towards an eventual reunification with China.”

Taiwan’s dollar rose 0.3 percent to NT$34.96 as of 2:24 p.m. local time, according to Taipei Forex Inc., after gaining as much as 0.7 percent. The benchmark Taiex index rose 2.1 percent to close at 4,637.20, its highest since Jan. 7.

Revive Economy

Ma is seeking to revive Taiwan’s economy, which slid into recession last quarter, by boosting ties with China, its biggest trading partner. The two sides may sign a Comprehensive Economic Cooperation Agreement to normalize cross-strait economic and trade ties, the Central News Agency reported on Feb. 20, citing Liu Te-shun, vice chairman of the Mainland Affairs Council.

Wang Yu-chi, a spokesman for President Ma, couldn’t be reached immediately for comment. The signing of any economic cooperation framework agreement with China won’t compromise Taiwan’s sovereignty, Yiin Chii-ming, Minister of Economic Affairs said in comments to the legislature yesterday. No timetable has been determined, Yiin said.

 source: Bloomberg