Taiwan Hails Shift Toward Mainland

TAIPEI, Taiwan — This island’s latest big shift in China policy got rave reviews from the stock market and business leaders Monday, though some politicians urged the government to be careful with the new plan to expand economic ties with the mainland.

The reaction came one day after President Chen Shui-bian accepted the advice of a high-powered team of advisors, who urged him to scrap limits on trade and investment with Taiwan’s Communist neighbor.

Since the two sides split amid civil war in 1949, Taiwan has put tight restrictions on investment in the mainland. The worry has been that the small island’s economy might become too dependent on China, which has threatened to use force to bring about reunification.

But on Monday, some business leaders said expanding commercial ties with China will create a window of opportunity for many companies that have been struggling to keep their competitive edge in a global market. In the last decade, Taiwanese have already put about $60 billion in China’s economy, and many are eager to invest more.

“Singapore, Japan and many other Asian countries have all moved to take advantage of China’s booming market and low-cost labor,” said Daniel Chen, vice president of the Industrial Bank of Taiwan. “It is a tide that Taiwan cannot and should not resist.”

China remained mum about the new policy.

Taiwan’s slumping stock market closed 1.7% higher, and some dealers said the new China policy boosted the bourse. But the daily volume remained low, and some analysts said many investors had anticipated the policy change in recent weeks and already made trades based on the news.

“The advisory council’s conclusions haven’t provided much of a surprise,” said Janet Sheng at China Securities.

Labor leaders have opposed the change, fearing it could speed up the exodus of capital to China and further drive up the island’s jobless rate, which stood at a record-high 4.92% last month.

But Wang Ying-chieh, chairman of the Small and Medium Business Assn., said the change will give dying businesses a chance to survive in China.

“An exodus to China will be inevitable, but we still have green mountains and pristine waters and can develop the tourism industry,” Wang said.