Meeting urges Taiwan's president to ease limits on investing in China

Meeting urges Taiwan's president to ease limits on investing in China

TAIPEI (AP): A group of influential advisers on Sunday urged Taiwan's president to relax limits on commercial ties with rival China, a historic move business leaders say would boost Taiwan's sputtering economy and create a bustling trading zone.

For years, Taiwanese have been arguing about expanding trade relations with China. Critics have warned that further opening up to the mainland would drain away precious capital and jobs and make the island too reliant on its biggest military threat.

But on Sunday, a high-profile group of 120 presidential advisers urged President Chen Shui-bian to relax Taiwan's "patience over haste" policy, which puts a US$50-million cap on single investments in China.

Calling the event "a success," the president said he was "extremely pleased" with the outcome of the meeting, and promised that his Cabinet "would cooperate" with the opposition-controlled legislature to implement the group's consensus.

Chen said that within two weeks, his government will come up with a comprehensive strategy based on the group's recommendations.

Tsai Ing-wen, a member of the group and Taiwan's top official for China policy, said the panel's proposal was "a significant step forward."

"This is a clear demonstration from our side that we are prepared to take the risk and take a positive attitude toward China," Tsai said.

Tsai said that requests to invest more than $50 million should be considered on a case-by-case basis under a new policy of "proactive openness and effective management."

Taiwan broke away from China in 1949 when the Communist Party took over the mainland. Although political relations remain icy and Beijing has repeatedly threatened to invade, business ties are flourishing.

Since Taiwan began loosening restrictions on trade a decade ago, Taiwanese firms have invested an estimated $60 billion in China. About 40 percent of Taiwan's outward investment goes to the mainland.

In the mid 1990s, Taiwan became worried that it was becoming too intertwined with China's economy. Many feared that the communist regime might try to force reunification by holding Taiwanese investments hostage. The "patience over haste" policy was crafted in 1996 to limit Taiwan's reliance on the Chinese market.

In recent years, Taiwanese firms have complained that they are severely handicapped in China's booming market. They have also argued that Taiwan is missing the growing trend of globalization.

The voices have become louder in the past year, as Taiwan's economy began slipping toward its first recession in three decades.

The council did not agree on specific new policies that would end a five-decade ban direct shipping and aviation links between China and Taiwan's main island. The group acknowledged that such a move requires bilateral negotiations - which China has refused to join.

The council also failed to reach a consensus on how to resolve a long-standing dispute with China over Taiwan's political status. China wants Taiwan to agree the island is an inseparable part of China as a precondition for talks. However, the Taiwanese president is wary about accepting Beijing's vague "one-China principle" and wants to discuss it at a summit.

Taiwan's top envoy to China, Koo Chen-fu, was not discouraged about the lack of consensus on the issue.

"The time for us to talk will definitely come," said Koo, a council member.

The council also agreed that Taiwan should:

-allow banks to set up branches or subsidiary offices in China.

-relax restrictions on Chinese investments in Taiwan in accordance with World Trade Organization rules.

-create a flexible mechanism for monetary transfers and direct remittances between the two sides.