China-Taiwan

Tiawanese yacht makers like Horizon and Bluewater have helped push the country up the ranking of leading boat makers. The problem is that the whole industry has shrunk as a result of the global financial crisis. The FT’s Sarah Mishkin reports from Kaohsiung in southern Taiwan.

And beyond that, you can see New Zealand

Taiwan has sealed an important free trade agreement with New Zealand – the two countries have no formal diplomatic relationship. It’s a big precedent for an island that almost no nation formally recognises.

New Zealand and Taiwan have agreed to start phasing out tariffs under the deal, signed on Wednesday. It will help boost Kiwi food exporters, but its greatest significance is the political boost it gives Taipei, which often finds its political interactions with other nations stifled by Chinese interference. 

Since 2009, state-owned telecom China Mobile had been trying to get regulatory approval to buy 12 per cent of Taiwan’s Far EasTone operator, in what was the first agreement by a Chinese group to invest in a Taiwanese one.

The problem: In 2009, Taiwan didn’t let Chinese groups invest in its core telcos. The two had hoped that might change, but it hasn’t. So, as of Thursday, the deal is officially dead – at least until Taiwan liberalises more, says China Mobile. 

A televised singing contest from China’s Hunan province is the latest front in the fight between China and Taiwan.

Many Taiwanese TV stations, including some news stations, devoted hours last Friday night to broadcasting the final round of Hunanese show “I Am a Singer”. That has prompted Taiwanese regulators to begin investigating whether any station broke laws covering the broadcast of Chinese programming. 

They don’t call them the “Fishing” islands for nothing, it seems. The territory at the centre of the protracted Sino-Japanese-Taiwanese islands dispute is known as Diaoyu in Chinese, which means fishing, and now Beijing is making sure that Chinese citizens get a taste of the islands – just in time for Chinese New Year when fish is usually high on the menu. 

"Bumbler"?

With Taiwan’s economy sluggish this year and the stock market underperforming many regional peers, it’s easy to find Taiwan bears – including the Economist, which raised hackles locally by calling the president a “bumbler” (the unfortunate Chinese translation was “dumb egg”).

It’s not so easy to find Taiwan bulls, so a recent upbeat report from Barclays analysts is unusual. 

There have been growing concerns in Taiwan that the warming relationship with Beijing is causing self-censorship in the island’s media – so the deal to sell Next Media, which includes the local newspaper Apple Daily, will only fuel the debate further. 

Pacific-rim Chile has long looked to the Far East for trade. Now Banco Santander Chile, the country’s second-biggest lender by assets, is sampling some financial dim sum.

The Spanish-owned bank became the first Chilean bank to raise money in China’s bond market by issuing RMB500m ($80m) in two-year renminbi-denominated paper, dubbed “dim sum” bonds. 

Amid all the talk about Taiwan and China’s improving relationship, not much thought is given to a third party that could lose out on business — Hong Kong, historically the back door for Taiwan’s business dealings with the mainland.

As Schive Chi, head of the Taiwan stock exchange, points out, his own efforts to get companies to list in Taiwan – plus the recent news that Taiwan can begin clearing renminbi itself - will help the island reclaim a slice of Hong Kong’s pie. 

Shares of Taiwanese airlines took off on Tuesday amidst rumours that the US is about to welcome Taiwanese travelers visa-free.

Hilary Clinton is speaking later on Tuesday at a tourism conference in the US, sparking the latest spate of rumours around the long-awaited decision. All in all, it’s been a good year for Taiwan tourism

Wanted: a piece of the action

Governments across Asia have been keen to replicate the success of Macau, the region’s casino hub, where billions have been made from wealthy Chinese gamblers.

Taiwan residents in Matsu, a tiny island that is much closer to mainland China than its parent, have said Yes to gambling. Developers are keen to get started. But given Taiwan’s complicated (to say the least) relationship with mainland China, what are the odds of the plan working? 

The purging of Bo Xilai has been the talk of the town in Beijing for the past week, but back in Chongqing, where Bo was the party secretary, it is business as usual.

Or at least, that was the message that Huang Qifan, Chongqing mayor, and Zhang Dejiang, the man who replaced Bo as party secretary in Chongqing, were keen to send to the western Chinese city’s big investors. 

Over the past decades, Taiwanese businesses have funneled more than $200bn in direct investment into China, but there have only been $270m worth of Chinese investment into Taiwan.

That discrepancy has been a sticking point for the Taiwan government, which on the one hand wants to attract more investments to show tangible economic benefits from mending fences with China, but on the other hand is wary of any criticism that it is letting the Chinese buy up Taiwan’s prized companies and assets. So this week’s move by the government is a significant move. 

Now that Taiwan’s elections are over and a new cabinet has had time to settle in, investors are turning to the question, “What comes next in cross-Strait relations?”

One intriguing possibility emerged on Monday when the China Daily newspaper quoted Guo Shuqing, chairman of the China Securities Regulatory Commission, as saying that Beijing may include Taiwan in its nascent Renminbi Qualified Foreign Institutional Investors programme. 

What to expect from Taiwan’s new cabinet as they begin work this week? To judge by media speculation on the island over the past few weeks, anything is possible, from bringing in new capital gains tax, to further opening to Chinese investment.

Sean Chen, the new premier, has already given himself the rather broad goal of bringing wealth and happiness to the Taiwanese people. Fortunately he has also provided some clues as to what that means.