Taiwan and China agree terms of landmark trade deal

**xinhui** · 28 Nov 10,, 00:57

Taiwan's Relations With China May Improve After Ruling KMT's Election Win - Bloomberg

Taiwan's Relations With China May Improve After Ruling KMT's Election Win
By Janet Ong and Weiyi Lim - Nov 27, 2010 9:02 AM PT

Taiwan’s warming ties with China may further improve after the ruling Kuomintang party won the majority in key local elections, an indication voters support President Ma Ying-jeou’s willingness to cooperate with the mainland.

The KMT party won the mayorships for three out of five cities yesterday with the opposition Democratic Progressive Party taking the remainder, according to the Central Election Commission. The five municipalities together make up about 60 percent of Taiwan’s 23 million people.

“The victory will help pave the way for President Ma to continue his China policy and cross-strait ties may get even closer,” said Chang Ling-chen, a political science professor at National Taiwan University. “Ma’s success in defending the mayoral seats will help ensure his candidacy for the presidential election in 2012.”

The victory boosts Ma, who is midway in his four-year term. The 60-year-old leader has faced resistance from the Democratic Progressive Party, which is concerned he may make concessions for favorable policies and put Taiwan’s sovereignty at stake as he pushes for closer economic ties with the mainland.

The KMT retained the mayorship of Taipei, its traditional stronghold, and the economic and political center of Taiwan, as well as Xinbei and Taichung city. Ma and his predecessors, Chen Shui-bian and Lee Teng-hui, were former Taipei mayors.

Voters went to the poll yesterday, a day after the son of Taiwan’s former Vice President Lien Chan was shot and wounded during a KMT campaign rally.

Trade Accord

Lien in March 2004 lost the presidential race to Chen, who was shot on the eve of the election, which triggered street protests on allegations he may have set up his own shooting to win sympathy votes. Lien Chan, then chairman of the KMT, lost to Chen by 30,000 votes out of about 13 million cast.

Ma is betting that strengthening commercial ties with China, the world’s fastest-growing economy and the island’s biggest trading partner and investment destination, will help bolster its economy.

Taiwan on June 29 signed an Economic Framework Cooperation Agreement, its first trade accord with China to cut tariffs and increase access to services including banking, securities and insurance. Signing the deal opened the door for Taiwan to ink similar deals with other countries. Singapore and Taiwan agreed on Aug. 5 to discuss a free-trade agreement.

Policies to Stay

“Ma’s cross-strait policies will remain intact and his administration will have to do more to show the economic success of ECFA and the liberalization of cross-strait ties,” said Tony Phoo, a Taipei-based economist for Standard Chartered Plc.

Relations between Taiwan and China, separated by the Taiwan Strait, are at the most cordial in more than more than 60 years after Ma took office in May 2008 and dropped his predecessor’s pro-independence stance and made economic relations the priority of his administration.

Tsai Ing-wen, chairwoman of the DPP, opposes the China trade agreement on the grounds it would give Beijing greater influence over the island and costs jobs. Tsai lost the race for mayor of Xinbei city to Eric Chu, a former vice premier in Ma’s administration. Tsai in June rallied more than 10,000 to protest the accord.

The trade accord with China will help create more than 260,000 jobs in Taiwan and boost economic growth by 1.65 to 1.72 percentage points annually, Ma’s administration says.

“To boost domestic employment and salaries so as to narrow the wealth gap, President Ma may have to forge even closer economic and trade ties with Beijing,” said Chang Wu-ueh, a political science professor at Taipei’s Tamkang University.

The two sides are poised to hold the sixth cross-straits talks in Taiwan next month. Since Ma took office, the government has signed 14 agreements with the mainland.

Taiwan exercises de facto independence with its own foreign policy, currency and elected government since Mao Zedong’s Communist Party took over the mainland in 1949 and the Kuomintang fled to Taiwan after losing the civil war.

To contact the reporters on this story: Janet Ong in Taipei at jong3@bloomberg.net; Weiyi Lim in Taipei at wlim26@bloomberg.net

To contact the editor responsible for this story: Bill Austin at billaustin@bloomberg.net Paul Tighe at ptighe@bloomberg.net

**RollingWave** · 29 Nov 10,, 09:39

The KMT won 3 seat, but they lost the vote total by a considerable margin, and they were tied with the DPP in terms of local council seats. (mainly because in the wo seats the DPP won they won by a total landslide)

Another sort of big news in this election was that Chen Shui Bien's son won a local council seat in Kaoshung, in fact he was the highet single vote getter candidate in the whole election (for the council race that is). despite the fact that a scandal involving him was thrown around quite a bit during the race (he reported went out with a hooker and denied... except that he lost all his law suits against those that made such claims)

This election is difficult to read to be honest, I'm sort of baffled by why the difference in the south was so large, in the 3 cities where KMT won, the story isn't too difficult, the overall summery is that the DPP were running a uphill battle but kepted the field on a local level and not on national level issues, and thus were successful to some degree, but still couldn't overcome the home turf advantage as awhole.

The problem is that the same thing was true in the South, in this election the biggest point is that neither side really escalted this election onto the national policy stage much, which is strange especially for the KMT, seeing that they should have some advantage now that the economy is recovering well and they could generally play a lot of the DPP's old rheteoric against them in this regard. Kaoshung was a especial disastor for them since the DPP breakaway candidate Yang ended up attracting almost no DPP vote but almost all the KMT votes. where the DPP incumbent fell into a pretty big scandal but still won more votes than last time around... despite a DPP internal split.

My take is still that the DPP played a much better election game than the KMT overall, though they probably screwed up Taipei city a bit by over focusing on the Flora expo too early in the process. And their candidate in the Taipei county (their chairmen Tsai Yin Wen) was simply too weak in election terms due to her complete lack in election experience or local ties and her general distance from the DPP's base ( She's not only a Hakka , but also raised in the heart of Taipei and speaks even worse Taiwanese than Ma Yin Jio, essentially if you take her out of context you'd never suspected that she was DPP supporter, let alone it's chairwomen) cost them a bit there. That and the KMT candidate probably played the best over there as a whole as he swepted the base long before Tsai and made some rather brilliant (if somewhat cheap ) moves with the help of the central government which helped things out a bit... (the DPP focused on attacking the high housing prices and blasted on why the government don't setup a social housing program..... so the KMT immediately flipped the cards and announce that they'll start a social housing program... leaving the DPPs stomping their feet that the KMT actually took their ideas and went along with it)

**mister unknown** · 29 Nov 10,, 09:57

Quick question: Did the assassination attempt against Lien Chan's son have any significant affect on the election?

**Skywatcher** · 29 Nov 10,, 19:46

Rolling Wave: Tainan and Kaoshiung cities were merged with the respective counties of the same name, said counties are also much, much more rapidly pan green than the cities. In fact, I'm surprised the KMT did so well in the Kaoshiung city council elections.

**RollingWave** · 30 Nov 10,, 01:33

sky: yes but in the case of Kaoshong, the DPP won more votes than the last time both county ran for election by a considerable margin.

**xinhui** · 31 Dec 10,, 19:28

China, Taiwan to Start Tariff Cuts Today as Relations Warm
By Chinmei Sung - Dec 31, 2010 8:01 AM PT

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China and Taiwan will lower import taxes on more than 800 products starting today under the first trade treaty between the former civil-war foes, an accord that the island called a “vitamin” for its economy.

China will cut duties on 557 items imported from Taiwan including fish and bicycles, an increase from 539 when the agreement was signed in June, China’s Ministry of Commerce said in a statement on its website on Dec. 29. Taiwan will lower tariffs on 267 items such as tea and cement from the mainland as part of the “early harvest” accord.

Cross-strait tensions have eased since Taiwanese President Ma Ying-jeou took office in May 2008 and dropped the pro- independence stance of his predecessor, making economic relations with the mainland the government’s priority. The island has signed 15 deals with China since 2008, most recently an agreement on medical and health cooperation in December.

“Taiwan’s economic growth is very likely to overshoot in 2011 because of the agreement with China,” Aidan Wang, an economist at Yuanta Securities Investment Consulting Co., said by phone from Taipei yesterday. “More significantly, Chinese tourists and capital will contribute to Taiwan’s domestic demand and help the island to be less export dependent.”

Ma, who described the so-called Economic Framework Cooperation Agreement as a “vitamin” in July, is betting that strengthening commercial ties with China, the island’s biggest trading partner and investment destination, will bolster Taiwan’s economy. The early harvest list includes items that will enjoy preferential tariffs first under the EFCA, a treaty that also includes the opening of industries.

Shares Rise

Taiwan’s benchmark Taiex index has climbed 21 percent since the accord was signed and closed at a 2 1/2-year high yesterday. China’s Shanghai Composite Index jumped as much as 30 percent since the signing and pared the gain to 16 percent after two interest-rate increases, amid concerns the government may impose more measures to ease home prices.

China will also open markets in six service industries starting today, including banking, securities, insurance, hospital services, design services, and civil aircraft repairs, the mainland’s Ministry of Commerce said on Dec. 29.

The seventh cross-strait talks this year will continue to discuss an investment protection accord, Zheng Lizhong, vice chairman of the Beijing-based Association for Relations Across the Taiwan Straits, told reporters in Taipei last month.

Protests

Taiwan’s push for closer ties with China faced obstacles when the opposition rallied tens of thousands of people in the capital in June to protest the trade accord, saying it will damage the local economy and undermine the island’s sovereignty. The agreement also didn’t include a number of items some Taiwanese companies had wanted, such as polyvinyl chloride, or PVC, one of the island’s top exports.

Taiwanese-run factories in the mainland make about a 10th of China’s electronics exports, including iPhones and Playstations, according to the Taiwan Institute of Economic Research. About 29 percent of the island’s overseas shipments head across the Taiwan strait, government data show.

Cross-strait negotiations resumed in 2008 after a nine-year halt. China views Taiwan as part of its territory as the two split after a civil war in the 1940s, and has threatened to invade if the island declares formal independence. The two sides have been ruled separately since Chiang Kai-shek’s Kuomintang, or Nationalists, fled to the island after being defeated by Mao Zedong’s Communists in 1949.

To contact the reporter on this story: Chinmei Sung in Taipei at csung4@bloomberg.net.

To contact the editor responsible for this story: Chris Anstey in Tokyo at canstey@bloomberg.net

**RollingWave** · 03 Jan 11,, 09:32

Here's some food for thought (or laugh)

China's total trade value with Taiwan change over the year (since 2000) (source ROC Bureau of foreign trade)

2010: +49%
2009: -20% (financial crisis)
2008: +8%
2007: +18%
2006: +20%
2005: +20%
2004: +56%
2003: +83% (!!!!!!!!!!!)
2002: +71% (!!!!)
2001: +3% (dot com bubble)
2000: +48% (!!)

Average of growth per year under Chen : 42%

If doing busniess with China is "selling out Taiwan" as stated by the DPP, then I think I see who the biggest sell out of Taiwan is..... :P

Another fun fact... the DPP head of mainland affairs council during that period of epic growth? current DPP party chief Tsai Yin Wen (and most likely DPP 2012 candidate.)

I'll go all in and say that Ma will win a second term barring some epic disastor.

**astralis** · 03 Jan 11,, 13:17

yeah, that's not a risky bet. i'm just a bit surprised the DPP survived chen.

**Skywatcher** · 03 Jan 11,, 19:50

The DPP might not survive if Ma, in a Machiavellian exercise, decides to pardon or commute Chen's sentence and let him free to wreck havoc in Taiwanese politics. I don't think MYJ has that in him, though.

Edit: replaced surprise with survive. Why do I keep on making these typos, I'm a native English speaker, for ****'s sake.

**RollingWave** · 04 Jan 11,, 13:57

Originally Posted by Skywatcher

The DPP might not surprise if Ma, in a Machiavellian exercise, decides to pardon or commute Chen's sentence and let him free to wreck havoc in Taiwanese politics. I don't think MYJ has that in him, though.

Ma is a weird one, espiecally after Lee and Chen.. to see a President ... you know.. actually follow his constiutional rights and not try to side step / back door everything.

**xinhui** · 05 Jan 11,, 05:43

Originally Posted by RollingWave

Ma is a weird one, espiecally after Lee and Chen.. to see a President ... you know.. actually follow his constiutional rights and not try to side step / back door everything.

yeah but...........

**xinhui** · 05 Jan 11,, 05:45

oh contrare, DPP is doing very well in Iraq

**RollingWave** · 05 Jan 11,, 14:55

Originally Posted by xinhui

yeah but...........

You know your presidency is going well when people can only pick on embarrsing moments like this... or in another example... complaining that Ma ate at a local breakfast shop causing the shop to lose money because other customers were scared off by the escorts

**Skywatcher** · 05 Jan 11,, 19:49

Originally Posted by RollingWave

You know your presidency is going well when people can only pick on embarrsing moments like this... or in another example... complaining that Ma ate at a local breakfast shop causing the shop to lose money because other customers were scared off by the escorts

Wait, people actually argue that? Logic should be mandatory in Taiwanese schools.

**RollingWave** · 06 Jan 11,, 03:14

Well removing one's logic is the basic requirement of entry into politics for all democracy :P

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