MercoPress. South Atlantic News Agency

Global crisis brings China and Taiwan closer

The global crisis has its positive effects: Taiwan and China signed a set of new agreements on financial services and new direct flights on Sunday to facilitate business between the two sides, and allowing direct investment from China in recession-hit Taiwan.

On Sunday they announced a framework paving the way for banks, insurers and other financial service providers to invest and do business in each others' markets. They also said they will establish a currency clearing system between the Taiwan dollar and the Chinese Yuan.

Negotiators from both sides of the Taiwan Strait met in the Chinese city of Nanjing at the weekend for formal talks aimed at “normalizing relations” between mainland China and the “rebel province” the two former civil war rivals.

Chen Yunlin, China's top negotiator, said that China “will buy more products from Taiwan and send more tourists to the island, while encouraging more Taiwan enterprises to set up on the mainland”.

Chiang Pin-kung, Mr Chen's counterpart, said China did not rule out the possibility of signing a comprehensive trade pact with Taiwan.

The former enemies also signed an agreement allowing the first scheduled direct flights between the two sides, which once banned air links for security reasons. Scheduled flights replace charters, easing passage for 750,000 Taiwanese who do business in China and for Chinese tourists in Taiwan. The deal also adds six new destinations and should see the number of weekly flights more than double to 270.

Since Taiwan President Ma Ying-jeou took office last May, the China-friendly leader has eased tension with Beijing through trade and transit deals signed during talks last year.

The new policy also paves the way for the signing of a more detailed memorandum of understanding later this year that would allow Taiwan banks to set up branches in China and vice versa.

Taiwan businesses have been one of the biggest sources of foreign direct investment into China, but small and medium-sized companies often have difficulty obtaining finance through China's state-owned banks.

In a joint statement, the two sides said that they faced a “rare and historic opportunity” and that they would “encourage and promote mainland businesses to... invest in Taiwan”.

Taiwan's economy went into recession late last year and both sides said they hoped their agreements would help both sides to weather the economic storm.