Taiwan cash boosts China airport

(CNN) -- Taiwan companies have invested for the first time in an aviation project in mainland China.

A ground-breaking ceremony at China's Xiamen cargo airport on Thursday marked a significant step in Taiwan-China links.

The two rivals are slowly reducing trade barriers that were erected 52 years ago when they separated amid civil war.

Total investment in the cargo terminal is about US$27 million (225 million yuan). China's Xiamen Airport Group and Taiwan's TASCO Group own 51 percent and 49 percent respectively.

Taiwan TASCO has indirect backing from China Airlines and Far Eastern Air Transport. It signed a draft agreement with the Xiamen Airport Group this March to jointly found the Xiamen Airport Cargo Transport Co.

The joint venture included international, domestic and transit air cargo transport at Xiamen Airport.

The joint project was approved by the Ministry of Transportation and Communication and the Investment Examination Committee of China's Ministry of Economic Affairs.

According to the "Measures for Permitting Investment or Technological Cooperation in the Mainland Area," investments in the aviation industry on the mainland are regarded as cases requiring special examination.

The investment case must be submitted to the Ministry of Transportation and Communications and the Investment Examination Committee of the Ministry of Economic Affairs for examination and approval.

"This is one step closer to a cross-Straits direct links concept. It also means that Taiwan businessmen expect cross-Straits cargo transport to be profitable," said Hong Kong Chinese University professor Chong Tai Leung.

According to government statistics, the total value of air cargo transport in China is growing at 13 percent annually. In Xiamen, the growth is some 15 percent.

Later this month, a special presidential advisory council is expected to formally propose that the government drastically relax restrictions on doing business in China.

President Chen Shui-bian indicated this week that he is willing to accept the group's suggestions.

Taiwan media reported that a local economic council has decided to replace its "go-slow'' policies on cross-Straits trade ties with "active open-up and effective management.''

The council, an important advisory body, also agreed to relax its tight control on Taiwan investment on the Chinese mainland and gradually lift its ban on direct trade, postal and communication links across the Straits.

The Chinese mainland is now Taiwan's second largest export market.