China reached out a hand to Taiwan yesterday, offering Taiwanese investors in China US$19 billion in financing over the next three years, the latest in a flurry of economic diplomacy by Beijing.
Ties between China and Taiwan have warmed since President Ma Ying-jeou (馬英九) took office in May.
Last Monday the two sides opened direct daily passenger flights, new shipping routes and postal links for the first time in six decades.
Taiwanese investors have poured billions into China since a detente began some three decades ago, lured by a common culture and language and cheap Chinese labor.
DOWNTURN
But many Taiwanese companies in China have been feeling the pinch from the global economic slowdown, dependent as they are on customers in Europe and the US and their orders for everything from artificial Christmas trees to computers.
Taiwan Affairs Office Director Wang Yi (王毅) told a meeting with Taiwanese politicians in Shanghai that three banks would provide 130 billion yuan (US$18.99 billion) in financing.
“Compatriots on both sides are part of the same family. We feel the same pain at this current time of economic difficulties in Taiwan,” Wang said.
Industrial and Commercial Bank of China (中國工商銀行) and Bank of China (中國銀行) would provide 50 billion yuan each, he said.
China Development Bank (國家開發銀行) would provide 30 billion yuan, in addition to another 30 billion yuan pledged previously, Wang said.
He provided no other details of the financing.
PURCHASES
China would also buy US$2 billion in flat screen monitors from Taiwanese companies, Wang said.
China would back its firms to invest in Taiwan.
“The mainland [sic] will continue looking at ways to increase cooperation across the strait and take measures hand in hand to cope with the global economic crisis,” Wang said.
Chinese Nationalist Party (KMT) Deputy Chairman Tseng Yung-chuan (曾永權) told reporters in Shanghai he welcomed China’s moves.
“At the time of this global financial tsunami and when both economies are facing a downturn, I feel that these are very strong measures, and this is especially so for the financing available for Taiwanese business in China,” Tseng said.
China also agreed to enhance cross-strait agricultural and fishing cooperation, and initiate negotiations to protect China-bound investments made by Taiwanese businesses while encouraging mutual participation on infrastructure projects in both countries and facilitating the normalization of trade ties with Taiwan and China, among many other consensuses reached at yesterday’s forum, where 400 representatives from both sides attended, Wang said.
China has so far suffered less from the global economic crisis than its neighbors and is presenting itself as a stabilizing force in the region.
Earlier this month Chinese leaders announced a nearly US$30 billion currency swap facility to help stabilize the South Korean won and took part in a trilateral summit to discuss the crisis with South Korea and Japan.
On Friday, Hong Kong said Beijing had agreed to a package of 14 measures to aid the Special Administrative Region, including a currency swap facility, an easing of travel restrictions and the opening of more of China’s services sector to Hong Kong.
In recent years China has used economic assistance to Hong Kong to boost support for pro-Beijing politicians in the territory. Aid to Taiwan could help sway public opinion there toward Beijing’s goal of eventual unification.
The ruling parties also proposed broadening financial links including permitting Taiwanese banks to upgrade their status in China, which would allow them to provide financial services.
A consensus was reached that the two sides should establish a financial supervisory mechanism and provide a currency clearance system, Tseng said at the conclusion of a weekend forum. The meeting will offer a blueprint for further government-level talks after a nine-year suspension.
KMT officials and their Chinese counterparts concluded the meeting, which was held to expand direct financial ties as their economies face a worsening global recession. Taiwanese businesspeople have already invested an estimated US$150 billion in China and have been clamoring for Taiwanese financial companies to be permitted to offer services to ease access to financing and capital.
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