Taiwan softens on China trade and independence

Taiwan softens on China trade and independence

TAIPEI (Reuters): Tiptoeing towards an accommodation with Beijing, Taiwan's victorious Democratic Progressive Party (DPP) said on Tuesday it would open debate on dropping its incendiary call for a separate state.

And in a goodwill gesture after presidential elections that swept the DPP to power, parliament voted to end a five-decade ban on direct trade, travel and postal links with the mainland, starting in a limited way through offshore islands.

Chinese leaders, meanwhile, stepped up pressure on the party to abandon its independence stand, although the tone of official statements from Beijing remained moderate in contrast to saber- rattling before the election.

Premier Zhu Rongji was quoted as saying Beijing would never negotiate with a party advocating separatism.

In Beijing, the U.S. ambassador to the United Nations, Richard Holbrooke, said he touched on Taiwan in meetings with Chinese leaders and found their position "very constructive".

A single clause in the DPP's charter calling for a "Republic of Taiwan" has done more than anything to scare Beijing. It also handcuffs president-elect Chen Shui-bian as he tentatively reaches out to the mainland.

DPP lawmaker Chen Zau-nan said the party's top decision-making body would consider on Wednesday a proposal he submitted to replace the clause with a vaguely worded statement asserting Taiwan's existing status as a "sovereign independent country".

In other words, the party would not actively push for independence by changing Taiwan's official name -- the Republic of China -- but simply recognize what most people on the island already consider a reality.

"Relations between the two sides of the Taiwan Strait are sensitive," said Huang Chin-shun, an aide to the legislator. "Legislator Chen wants to lower the temperature."

However, another DPP lawmaker said the proposal was so controversial it probably would be shelved, at least until the new president is inaugurated on May 20. An influential hardcore within the DPP is bent on independence, regardless of the risk of war with China.

Beijing has long threatened invasion to prevent the island from splitting away.

Clearly, Beijing would find any mention of the word "independence" in the DPP's platform unacceptable, but the hope is that subtle word-play might open a window of opportunity for compromise just a crack.

The United States has been scrambling to contain the fallout from Chen's victory, reaching out to both Taipei and Beijing and urging dialogue instead of threatening rhetoric.

Lee Hamilton, a veteran China expert and Democratic ex- congressman, is scheduled to fly into Taipei on Wednesday to meet Chen and incumbent president Lee Teng-hui.

Relief that the first few days after Chen's victory have passed with no violent Chinese reaction sparked a rally on the Taiwan stock market. The index jumped 5.49 percent to close at just over the 9,000-point level.

But many international fund managers were holding back until China's position on Chen became clearer.

Turmoil on Taipei's streets abated. Protests outside Nationalist headquarters demanding the resignation of Lee as party chairman largely melted away after two days of violent clashes with riot police.

Although parliament's vote to allow limited direct trade was largely symbolic, business leaders in Taiwan hailed the move as a breakthrough that would lead to a wider opening soon.

A parliament spokesman said direct links were approved between Taiwan's offshore islands -- including Quemoy, Matsu, and Penghu -- and Chinese cities facing them across the narrow Taiwan Strait, including Xiamen and Mawei.

The heavily-fortified islands are Taiwan's frontline defense against China and have little industry or infrastructure, although a flourishing smuggling trade exists between them and China.

China has long pressed for direct trade and travel links, but the Nationalist government resisted, fearing the island's security could be threatened if its economy became too closely integrated with the mainland.

President-elect Chen has called for a "peace summit" with Chinese leaders and discussions on direct economic links across the Taiwan Strait.

A Chinese Foreign Ministry spokesman said China had noted Taiwan's move but declined further comment.

Much of Taiwan's trade and investment with China are now conducted through Hong Kong. More than 40,000 Taiwan companies have poured over US$40 billion into China since a political thaw began in the late 1980s.

Meanwhile, Taiwan's military said it had seen "absolutely nothing" to suggest large-scale movements by Chinese armed forces following presidential elections.