21 Dec 2008
Dec. 21 (Bloomberg) -- China offered 130 billion yuan ($19 billion) of loans for Taiwan companies operating on the mainland as the ruling parties of both governments laid out proposals to boost financial ties.
Beijing would provide the financing over three years and also purchase $2 billion worth of flat-panel displays from the island's companies, Wang Yi, director of the Taiwan Affairs Office, said at the conclusion of a weekend forum.
The meeting between officials of Taiwan's ruling Kuomintang and their Chinese counterparts sets a blueprint for further government-level talks after a nine-year suspension. Taiwanese businessmen have invested an estimated $150 billion in China and are clamoring for the island's financial firms to be permitted to offer services to ease access to funding and capital.
"These measures are concrete and surely will help boost Taiwan's economy and stock market," said Susan Chang, chairwoman of state-owned Taiwan Financial Holding Co., the island's largest financial group by assets. "At a time demand for flat panels is falling because of the financial crisis, purchases from Chinese firms surely will be a strong boost."
Consensus was also reached that the two sides should establish a financial supervisory mechanism and provide a currency clearance system, said Tseng Yung-chuan, Kuomintang vice chairman. That would effectively permit Taiwanese banks to offer financial services in the mainland.
Taiwanese banks and securities firms can currently open only representative offices, which aren't permitted to offer any financial services.
Government Talks
The proposals will form the basis of a formal memorandum of understanding between the governments that's expected to be signed sometime in the first half of next year.
"The consensus reflects the expectation from people from the two sides and will have an active influence over the policy- making of the governments of both sides," said Jia Qinglin, a Chinese Communist Party Politburo member.
Ties between Taipei and Beijing improved significantly after the Kuomintang's Ma Ying-jeou took office in May and dropped the pro-independence stance of his predecessor, Chen Shui-bian.
The forum is the fourth annual summit since Chinese President and Communist Party leader Hu Jintao met former Kuomintang Chairman Lien Chan in 2005, ending more than 60 years of hostility between the two political parties.
Beijing and Taipei held their first official talks since 1999 in June, when they agreed to open direct weekend charter flights and allow mainland tourists to visit Taiwan. Almost 1 million Taiwanese already live and work in China.
China will also support participation by Taiwanese companies in public construction projects, strengthen cooperation in new energy development, electronics and Chinese medicines, and allow Taiwanese lawyers to work in the mainland, Wang said.
