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February 27, 2011

Update on Taiwan and China relations and Asia free trade

1. Taiwan is set to relax controls on investments from China in high-tech companies

* Chinese companies will be allowed to own up to a 10 percent share in Taiwanese semiconductor and flat-panel manufacturers

* Chinese firms will also be allowed to own up to a 20 percent share in the less-sensitive tech sectors such as mechanical and metallurgical industries, as well as the medical equipment industry.

* Chinese companies will also be permitted to set up joint ventures with Taiwanese technology firms, with shares capped at 49 percent in such ventures



* Accumulated Chinese investment streams to Taiwan are less than one-thousandth of the money going from Taiwan to China

2. The cross-Taiwan Strait Economic Cooperation Committee (ECC) , a group that will steer the future course of a landmark Taiwan-China trade (ECFA, Economic Cooperation Framework Agreement) pact, held its first regular meeting in Taoyuan Tuesday

Now that the ECFA is in place, cross-strait exchanges will not be limited to just talk, as the ultimate goal is to achieve sustainable trade opportunities

Another issue will be the vast government procurement market in China. In recent years, the scale of the market has grown by double-digit figures annually, reaching US$100 billion so far.

China's government procurement system has long been criticized by foreign businesses as lacking openness and transparency and tending toward protectionism.

Taiwanese small-and medium enterprises, which have had difficulty tapping into government procurement projects in other countries because of language barriers, will have a chance in China, and the Taiwan government should make it a priority in helping them seize this opportunity

3. Australian Prime Minister Julia Gillard has set a goal of achieving an expanded Pacific region free trade zone by the end of the year.

Ms Gillard said she would work with NZ Prime Minister John Key to bring more nations into the Trans-Pacific Partnership (TPP) fold.

The TPP currently involves Chile, Singapore, Brunei and New Zealand, which have binding agreements on free trade.

Four other nations - Australia, South Korea, Peru and the United States - are formally examining how they can take part, while Vietnam is an associate member and Malaysia, Japan, Thailand and Taiwan have expressed some interest.

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