Taiwan turning point

Taiwan turning point

For both political and security reasons, the Taiwanese
government for years has kept strict official limits on trade and
investment between it and the mainland. And for their own
business reasons, Taiwanese companies consistently have found
ways around the rules.

Now it appears Taipei is about to recognize this reality and
scrap the rules or at least rewrite them substantially. If it
does, and mainland China reciprocates, important cross-strait
changes will be on the way. And their impact on Hong Kong would
be significant.

The changes include establishing the so-called three links
with the mainland, allowing direct trade, transport and
communications between them. They also include scrapping Taiwan's
"no haste, be patient" policy on business investment in China,
which in theory limits the value of any single Taiwanese project
to US$50 million or less. And there seems to be an effort to
return to a form of the one-China policy first reached by Beijing
and Taipei in 1992 but since shelved. Under its terms, the two
sides agree there is only one China, but carefully avoid drafting
a common interpretation about what that means.

Meantime, various advisers in and out of the Government want
to bring back some version of the 1992 one-China agreement to
encourage progress on economic and other issues.

Much depends on Beijing. It has opposed closer links unless
Taipei accepts a stricter definition of one-China, but that could
change. Flexibility might erode Taiwan's deep suspicions about
getting too close to the mainland, provided the Jiang Zemin
government can be more innovative.

In the short term, Hong Kong could be the loser because so
much trade and investment would no longer be channeled through
the SAR. But over time, direct connections should promote
economic growth throughout Greater China, with gains for all
regions.

-- South China Morning Post, Hong Kong