Round The World

New Delhi, 8 July 2008

China-Taiwan Flight

END OF HOSTILITY ERA?

By Dr. Monika Chansoria

Research Fellow, Centre for Land Warfare Studies, New Delhi

The landing of the first direct cross-strait flight from China to Taiwan on the morning of July 4 signaled that the era of hostility was indeed paving way towards warming up of ties between Beijing and Taiwan.

The new flights are expected to connect five major cities in China including Beijing, Shanghai, Guangzhou and Xiamen with Taiwan airports situated in Taipei, Taichung and Kaohsiung. This is the first time that ‘ordinary’ Chinese citizens will be allowed to visit Taiwan as tourists. Earlier, Chinese citizens who were in possession of special permission for business or cultural exchanges were only able to visit the island.

The China Southern Airlines flight, from the southern city of Guangzhou, was the first of 36 cross-strait flights to be launched and the two sides are expected to confer the likelihood of establishing chartered flights across the 100-mile Taiwan Strait.

This landmark development is the latest in a series of events that have taken place in the recent months between the Chinese authorities and the newly-established Taiwanese government under President Ma Ying-jeou of the Kuomintang Party. Thus, raising hopes that this initiative would in fact bolster tourism that would prove instrumental in lifting Taiwan’s jaded economy.

The recent breakthrough in cross-strait relations is largely being attributed to the presidency of Ma Ying-jeou, who has rejected the push for independence by Taiwan. However, Ma, much like his predecessor, opposes unification with China, his election campaign focused primarily on promises of seeking closer ties to Mainland China. Beijing has always maintained that Taiwan is a breakaway province and seeks its peaceful re-unification with the mainland while asserting that it would not hesitate to use force in case Taiwan moves towards formal independence.

Of particular significance was Ma’s emphasis on taking advantage of the benefits of China’s stout economy. Ma’s subsequent election victory thus rests on the platform of building closer trade and political ties with China. This is much in contrast to his predecessor Chen Shui bian, who had acutely enraged Beijing with efforts to steer the island towards independence by proclaiming Taiwan’s distinct identity.

The freshly-elected cabinet of President Ma Ying-jeou approved of reforms allowing greater investment by the island’s financial firms in China and further opening the fast-growing mainland market to its brokerages, all done with a view to revitalize Taiwan’s stagnant economy. Ever since Taiwan has raised fuel prices, battled inflation and seen its stock market go down by nearly 20 per cent, Ma’s commitment at forging closer economic ties with China makes even greater sense.

While taking effective steps to realize the economic measures on the agenda, Taiwan has allowed currency exchange on the island between Chinese yuan and the new Taiwan dollar to ease travel, agreed to Chinese investment in Taiwan’s property market and allowed Taiwanese banks to do retail business in the mainland.

Moreover, the Executive Yuan, Taiwan’s cabinet, announced a plan beginning July to raise the amount of assets that Taiwan mutual funds can invest in China stocks. The Yuan in a statement said that it would raise the percentage of assets that funds can invest in mainland Chinese stocks to 10 per cent from the current 0.4 per cent, and will also allow funds to put 100 per cent of their assets in Hong Kong-listed H-shares and red-chip shares, up from the current 10 per cent.

“The cabinet approved the plan today to help financial companies to expand in markets in China, Hong Kong and Macau,” the statement said. Significantly, Taiwan’s top financial regulator, the Financial Supervisory Commission (FSC), had stated earlier that Taiwan was aiming to allow China’s qualified institutional investors to invest in Taiwan stocks and mutual funds by the end of next year.

Previously, in what could be described as the highest-level contact between the two sides ever since they split in the midst of civil war in 1949, Chinese President Hu Jintao and Taiwan’s Vice President-elect Vincent Siew, met in April 2008. The meeting was an indication that both sides were prepared to undertake concrete steps to build mutual trust and increase interaction. The launching of direct flights is one such manifestation.

China’s official Xinhua news agency quoted President Hu Jintao saying that, “the two sides were facing a historical opportunity, which needed joint efforts from both sides for further progress.” Moreover, Siew described the Chinese President as ‘pragmatic’ and mainly discussed economic issues, making it amply clear that the new Taiwanese government has business up most on its agenda.

However, historical bitterness owing to political discord does not seem to rub out smoothly in that Taiwan still sees a clouded future—one that is overshadowed by the unresolved dispute with China when hundreds of Chinese missiles stand aimed at it across the Taiwan Strait.

Most importantly, Taiwan has always been a potential flashpoint in Sino-US ties given the US security assurances to Taiwan under the Taiwan Relations Act [Public Law 96-8] enacted in 1979, much to the discontent of Beijing. According to the Act, “the Congress finds that the enactment of this Act is necessary to help maintain peace, security, and stability in the Western Pacific and to declare that peace and stability in the area are in the political, security, and economic interests of the United States.”

Beijing appears more at ease with newly-elected President Ma Ying-jeou and the recent breakthroughs between the two sides stand testament to the same. Even though, political constraints and divergences emerge to loom large on both sides, the current progress ought to be viewed with a sense of optimism in that deeper economic ties might just eventually make this volatile cross-strait region lesser prone to conflict.--INFA

(Copyright, India News and Feature Alliance)