Taiwan business welcomes new China policy

Taiwanese have already invested billions of dollars in China

TAIPEI, Taiwan -- Taiwan's business community has reacted positively to the island government's landmark shift to ease curbs on trade and investment in China.

But some politicians have cautioned the government to open up economic ties with China with care.

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

Since the two sides split amid civil war in 1949 and China regarding Taiwan as a renegade province, Taiwan has put tight restrictions on how much companies can invest in the mainland.

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The government had worried that the small island's economy might become too dependent on China, which has threatened to use force to bring about reunification.

But business leaders said that expanding commercial ties with China would create a window of opportunity for many businesses that have been struggling to keep their competitive edge in a global market.

In the past decade, Taiwanese have already put about $60 billion in China's economy, and many are eager to invest more.

Daniel Chen, vice president of the Industrial Bank of Taiwan said Japan, Singapore and other Asian neighbors have taken advantage of China's economic boom and cheap labor.

"It is a tide that Taiwan cannot and should not resist," Chen told The Associated Press.

After Taiwan eases its limits on China trade and investment, Taiwan could develop new high-tech products and manufacturing them in China, he said. So far Beijing, which has welcomed Taiwan investment and pushed for direct trade links, has remain silent about the island's policy shift.

Taiwan's slumping stock market closed up 1.7 percent Monday, dealers say the new China policy boosted the bourse.

But the daily volume remained low and some analysts said that many investors anticipated the policy change in recent weeks and had 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 policy 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 of 4.92 percent last month.

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

It would also force companies that stay there to seek new business opportunities.

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

Taiwan's newest political party, the Taiwan Solidarity Union, gave the new policy a cautious endorsement. The party was inspired by retired Lee Teng-hui, who helped create the old "no haste, be patient" policy that limited China investment.