China Builds Trade Links with Taiwan

The ECFA(Economic Cooperation Framework Agreement), signed on June 29, 2010, in Chongqing by Chiang Pin-kung(left) and Chen Yunlin(right).

Many of the restrictions on cross-strait relations have been removed.

While President Obama has been pushing a new trade agreement in the Pacific, which effectively excludes China, China itself has quietly been building trade links across the Taiwan Straits.

For many years, Taiwanese firms have invested on the mainland, often setting up manufacturing subsidiaries in China; but also for many years, political differences have prevented the establishment of a fully mature trading relationship between free Taiwan and the communist People’s Republic of China.

However, since Kuomintang leader Ma Ying-jeou was elected President of Taiwan in March 2008, the cross-strait tensions that go back 60 years have cooled, and economic and cultural ties have been put on a permanent footing.

Many of the restrictions on cross-strait relations have been removed.

Direct aircraft and sea links have been established. Chinese tourists are now encouraged to travel to Taiwan, and direct Chinese investment in Taiwan is now encouraged on both sides.

A high point in the developing relationship was the signing of the Economic Co-operation Framework Agreement in June last year which put the relationship between the two countries, which do not have formal diplomatic relations with each other, on a better footing.

The challenge will be how this emerging relationship deals with the underlying political differences between Beijing and Taiwan. Since the communists took power in China in 1949, they have insisted that Taiwan is just a province of China.

Since taking Taiwan’s seat in the UN, Beijing has sought to enforce diplomatic isolation on Taiwan, by forcing other countries to break ties with Taiwan, and excluding it from not only the UN but all its international agencies as well.

Over recent years, with the thaw in economic relations, China has softened its diplomatic offensive against Taiwan, which has developed into a stable and prosperous multi-party democracy.

Despite the closer economic relationship between Taiwan and China, the Taiwanese people are determined to maintain their economic and political freedoms.

The present government continues to insist that its alliance with the US provides the foundation of its security, and Taiwan continues to have tight restrictions on the import of agricultural goods and industrial products from the mainland, to protect Taiwanese primary and secondary industries.