Taiwan, China expand trade ties as global slowdown starts hurting

Hard core economics has achieved what politics could not. Taiwan and Mainland China have agreed to expand bilateral trade and allow flights and shipping links across the Taiwan Strait, setting aside decades of mutual distrust and hostilities.

Chinese envoy Chen Yunlin and his Taiwanese counterpart Chiang Pin-kung signed the agreement to increase the number of flights between the countries and start direct shipping services.

''Both sides have grasped a rare historic opportunity,'' Chen said, adding, that future talks should deal with finance.

''We face a global economic slowdown, and uncertainties have increased in the environment. The financial turmoil is more severe than the 1997 Asian financial crisis," he said. ''The conditions pose severe challenges to both sides and highlight the importance of financial and economic cooperation," Chen said.

The two countries also agreed to hold high-level talks every six months and focus on building closer financial ties in the next round of meetings.

The agreement, which becomes effective in 40 days, will more than triple the number of weekly flights to 108 and allow planes to take off from a total of 21 cities in Mainland China. Nearly 60 cargo flights will also be allowed between the two countries each month.

Taiwan, which banned direct flights and shipping with China for several decades in the past, fearing China might attack with bombers and warships disguised as civilian vessels, had in July began relaxing restrictions on flights.

The two sides decided to raise the number of weekly flights to 35 from five mainland cities.

While, in the past, ships had to sail to the Japanese island of Okinawa before going to the other side, the latest agreement allows them to sail directly across the Taiwan Strait.

''With each cruise they save about 16 hours and cut costs by between 15 and 30 per cent," Cheng said, adding, ''The direct shipping will finally help Taiwan become a transport hub in Asia and better explore the mainland market."

Direct shipping links will trim shipping costs by $30 million annually while the air links are expected to save the airlines about $60 million a year.

Chiang said the two sides are planning to allow banks to set up branches on each side. They would also set up agencies that would help resolve trade disputes, he said.

The agreement also includes increased cooperation on food safety and better exchange of information.

The warming in relations began after Ma Ying-jeou was elected Taiwanese president in March. Ma's Nationalist Party has long supported eventual unification with China. Ma, however, has promised not to pursue unification talks or move the island toward independence.