Business

Taiwan election in focus at key cross-straits meeting

Anti-China demonstrators hold placards during a rally outside a hotel in Taipei.
Image caption Political protests have heated up ahead of Taiwan election.

When party apparatchiks from China and Taiwan meet on Friday for an annual economic forum, business will not be the only item on the agenda.

That is because Taiwan's President Ma Ying-jeou, who has presided over a period of unprecedented warmth in cross-straits relations, is headed to the polls.

The island's officials will be sending the message that Beijing should avoid doing anything to hurt Ma's chances of being re-elected.

"We hope they will be benevolent," Sun Yang-Ming, vice president of the Cross-Strait Interflow Prospect Foundation, a government-linked think tank, says in an interview with BBC News.

"We don't need outsiders' help to win votes, but we hope they will avoid such actions as making threats or conducting military manoeuvres, including test-firing missiles."

Uneasy truce

China and Taiwan split apart in 1949 after a long and bloody civil war.

For years, each side claimed to be the legitimate representative of the Chinese people.

China won that recognition in the 1970s.

Since then, relations have simmered down into an uneasy truce, which could be broken depending on who wins elections in January.

Mr Ma will stand against Tsai Ing-wen, the island's first female presidential candidate.

Ms Tsai fronts the Democratic People's Party, which favours formal independence for the island.

Mr Ma, on the other hand, will be campaigning on a platform of increasing economic integration with mainland China.

In order to win, he must prove to Taiwan's voters that his policy of opening up to China is bringing economic benefits to ordinary people.

"Ma will need to speed up things," says Tony Phoo, Taipei-based economist for Standard Chartered Bank. "He needs to show results,"

Friday's meeting in the western Chinese city of Chengdu may help.

The forum will focus on how to deepen trade and economic cooperation.

More than 400, mostly industrial and business, leaders from both sides will discuss increasing the number of direct flights and allowing Chinese tourists to visit Taiwan without having to join tour groups.

They are also expected to debate increasing market access for Taiwan banks operating in China, and cutting tariffs on a wider range of products.

'Win-win situation'

The meeting comes shortly after China revealed its latest blueprint for economic development.

Taiwan sees some business opportunities, such as selling solar panels to China.

The island is also exploring ways to work with China in developing key industries, such as medical tourism and biotechnology, which are the focus of its own economic growth ambitions.

"We hope for breakthroughs in all areas, to create a win-win situation," says Tsai Chin-lung, a senior member of Mr Ma's pro-China party, the Nationalist Party.

Since Mr Ma swept to power in 2008, the two sides have launched direct flights and shipping links, allowing thousands of Chinese tourists to visit Taiwan each day.

They have signed a landmark trade agreement that lowers or eliminates tariffs on hundreds of products. Taiwan's access to China's enormous market has also widened in several sectors.

The number of Chinese tourists visiting Taiwan has sky-rocketed to 1.6 million last year, or about 40% of the island's total visitors, up from just a trickle in the past.

This has brought millions of dollars in revenue each year to hotels, travel agencies and retail stores.

And early this year, a landmark trade agreement took effect.

Exports to China, Taiwan's biggest trade partner, increased by 14% to $20bn (£12.13bn).

Officials say the trade pact is just the beginning. Taiwan and China are seeking greater market opening and economic integration.

Fewer restrictions

At the meeting in Chengdu, Taiwan is hoping for breakthroughs in negotiations with Beijing in the finance sector.

Taiwan banks are able set up branches in China, but they still face many restrictions.

They are not able to do business in the Chinese currency, or sell financial products such as insurance, securities or mutual funds.

The island also wants Beijing to recognize professional credentials, so Taiwan's lawyers, accountants and doctors can work in China.

And in the entertainment sector, Taiwan wants China to lift investment and sales restrictions.

It also seeks agreements on intellectual property rights and investment protection, as well as dispute settlement.

If Taiwan manages to convince Beijing to open up these sectors of its economy, it could pave the way for other countries to reach similar agreements with China.

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