The Taiwanese will watch the influx of Chinese tourists this week with dollar symbols in their eyes.
President Ma Ying-jeou came to power last month committed to improving cross-Strait relations, possibly aware that the political and cultural symbolism of détente was less important to the Taiwanese than the economic opportunities it opened up.
He was quick to relax restrictions. A fortnight ago, Taipei approved measures to strengthen financial links between China and Taiwan, welcoming a historic first wave of Chinese holidaymakers -- who, according to reports, were impeccably behaved and spendthrift. Officials expect larger groups of tourists to begin arriving from Friday as China travel agents clear paperwork.
Ying's measures have breathed life into the island's flagging service sector. Direct China-Taiwan flights are almost all booked until August, according to travel agents.The average occupancy of hotel rooms is expected to grow by 10%. Full inns and planes, even during 'shoulder season', means that previous concerns over security risks, rude behaviour, and potential political disputes, will be quickly forgotten.
Closer transit ties and cultural rapprochement are merely the sideshows in greater cross-strait investment and engagement:
- Opening Taiwan. Further liberalisation is expected, which over time should see Taiwan's financial sector more closely involved with China, and Taiwan's markets more exposed to Chinese capital. For example, Taiwan should now become more open to qualified domestic institutional investors in China, and a second listing in Taiwan of some Hong Kong listed companies will now be encouraged. In anticipation of a rise in tourist numbers, beginning this month, banks in Taiwan will now be able to buy renminbi for Taiwan dollars.
- Opening China. By the end of July, Taipei will also raise the limit barring Taiwanese companies from putting more than 40% of its net assets in China, and lift some restrictions that prevent companies in certain lucrative sectors -- such as high-end semiconductors and liquid crystal displays (LCDs) -- from investing in China. Previously, Taiwanese companies had complained that existing restrictions barring them from investing in China -- the world's technology manufacturing center -- made them less competitive than their Asian counterparts.
- Press pass. Taiwanese authorities will also allow the mainland-based Xinhua News Agency and People's Daily to reopen press bureaus on the island, a decision that led Beijing to declare that the "rude and unreasonable" practices of former President Chen Shui-bian had finally been corrected.
Suspicion and doubt
The new chapter of relative peace and goodwill has not removed important restrictions on trade -- direct cargo flights, much more useful to Taiwanese businesses than tourist flights, are still being blocked by Beijing -- and there are few signs of progress on thorny political issues, such as Taiwan's sovereignty.
Mutual suspicion and doubt also cloud the diplomatic ceasefire and economic engagement. A journalist for the South China Post said that while the two sides were expected to have a friendly engagement in the short-term, political differences could soon sour relations as mainland authorities hope that the increased regular contact could help push their goal of eventual unification. The Taipei Times is even more dour: "the purpose of these measures is to corrode Taiwan's sovereignty and diminish the status of the Taiwanese government. Taiwan's politicians and business people operating in China should be on their guard," it writes.