By the time you read this, Taiwan will have a new president. It may also have – or be looking to fast-track – a range of mainland-friendly investment policies. Welcome to the post-Chen Shui-bian era.
Chen, Taiwan’s outgoing president and a Democratic Progressive Party (DPP) stalwart, cast his suitably bombastic parting volleys at Beijing, but these were largely overshadowed by some significant steps toward closer cross-strait ties. First, Taiwan’s DPP-led government moved to relax the restrictions on how much local firms can invest in the mainland. Then, a week later, the ban on Taiwan banks buying into mainland lenders was lifted. Banks are now free to purchase stakes of up to 20%.
Officials said that a partial relaxation of Taiwan’s own regulatory regime is next on the agenda, easing the passage of mainland workers and capital to the island.
On top of this, both candidates – frontrunner Ma Ying-jeou of the Kuomintang and the DPP‘s Frank Hsieh – indicated they were ready to sit down at the negotiating table with Beijing. Not only did they talk of reinstating the three direct links (tourism, cargo shipments and passenger flights) between Taiwan and the mainland but also of further economic concessions.
For both Beijing and Taipei, timing is crucial. The DPP approved the investment reforms because it was (as of mid-March) fighting a losing battle to stay in power. Similarly, Beijing has held off on giving ground to the DPP – it is said that a deal on direct links was agreed in principle months ago – because it didn’t want to hand the party a public relations victory.
However, the run-up to Taiwan’s presidential poll (again, as of mid-March) has been notable for the relatively low level of crude political rhetoric. For once, the candidates are in tune with an electorate that is primarily concerned about the economy. And Taiwan’s long-term economic health is dependent on being allied with, rather than estranged from, mainland China.