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China and Taiwan Economic Ties Grow Closer

Posted by: Dexter Roberts on December 15, 2008

It’s a big day for cross-Straits relations. Ending an almost 60-year-old ban on direct links that date back to the civil war between the Chinese Communists and Taiwan’s KMT Party, beginning today Taiwan and the mainland are allowing direct trade, transport, and postal links—what the Chinese call “three direct links.”

And it’s long overdue: over the last twenty years, economic relations between the former enemies have soared. Today more than 750,000 Taiwanese live and work on the mainland, having invested tens of billions of dollars. Trade is expected to soon reach $100 billion, with Taiwanese electronics components, as well as fruit, vegetables, and fish flowing, to the mainland, and raw materials traveling the other way. The restrictions have forced people and goods moving across the 160-kilometer-wide Straits to make costly diversions through Hong Kong, Macao and Okinawa. Both sides are estimating that direct links will mean around $100 million a year in savings.

I am on the first direct daily flight from Beijing to Taipei. Starting in July they have had several charter flights a week between these two cities, but this is the first that isn’t diverting over Hong Kong airspace, and instead is taking the 1580-kilometer, 984-mile direct route, and thus shaving about an hour and a half off the flight time, and getting me to Taipei in under three hours. I am flying China Air—the Taiwanese carrier. My fellow passengers (the plane is only about half full) appear to be a mix of Taiwanese and mainland business people, as well as Taiwanese families heading home for the holidays.

The trip has a small personal significance for me too: it was 20 years ago this year—in 1988—when I first flew into Taipei from San Francisco. I was fresh out of college and ready to continue my Mandarin language studies in Taiwan, then the most popular option for young people eager to learn Chinese. That visit I spent my first night in an overcrowded YWCA hotel. The friendly staff pushed a ping pong table out a small recreation room to make room for me, and wheeled in a small cot for me to sleep on. This time I have a more comfortable hotel room waiting for me, and am visiting on a reporting trip to better understand the evolving Taiwan-China economic relationship.

Starting from today, China and Taiwan will see 16 daily flights from 21 mainland and eight Taiwanese cities including Beijing, Shanghai and Taipei, but also Hangzhou, Shenzhen, and Dalian, direct shipping between cities including Tianjin, Shanghai, and Kaohsiung and Keelung in Taiwan, and direct postal links between five Taiwanese and eight mainland cities.

The direct links could prove a valuable boost to both sides’ economies, an outcome that would certainly be much welcomed. Already signs of a slowing economy are rampant on the mainland. New shopping malls in the capital have little foot traffic. In the south of China, tens of thousands of export-oriented factories—many of them owned by Taiwanese business people—are going bankrupt as overseas sales dry up and costs rise, throwing millions of migrant workers out of work. And the gleaming new Beijing Airport Terminal Three—the world’s largest—is alarmingly empty. As I wait for the plane in the long terminal, the afternoon sun shines on rows of empty waiting hall seats; and the automated walkways continue to run even without foot traffic.

When we land at Taipei’s Taoyuan Airport, I realize we have a senior mainland transport official on board too; a phalanx of photographers appear, pulling off numerous shots of the disembarking official, all the while doing their nimble back-stepping, flashes popping, in the arrival hall. And on the flight over too, I saw evidence of the perceived importance of the new links—both the Chinese and Taiwanese papers provided led with news of the direct flights, shipping and mail. Now it remains to be seen whether they prove as effective as all the press attention has suggested—and help boost the slowing China and Taiwanese economies.

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Reader Comments

December 15, 2008 10:39 AM

This is the way to eliminate war from this planet. Free trade! The Chinese won't even consider damaging their economy to wage war. Neither should the USA! Check out - it will make your day!


December 15, 2008 12:40 PM

China is evil!


December 15, 2008 02:51 PM

I don't like the claim that someone is hard-wired evil. Everyone needs to deal with their situations to get by. Finger-pointing is not going to render any solutions. We better keep rational conversations going and figuring things out diplomatically.

Peace Builder

December 15, 2008 03:49 PM

Brother & Sisters of China and Taiwan, let's celebrate this monumental moment together!


December 15, 2008 05:48 PM

Taiwan is part of China.


December 15, 2008 10:41 PM

Taiwan is 10000000000 to the power of 99999999999999 times better than China.


December 15, 2008 11:23 PM

Taiwan is definitely not part of China.


December 15, 2008 11:26 PM

Taiwan is China and will remain united with China

Sun Yat Sen

December 16, 2008 12:19 AM

Chinese compatriots should make Love not War.


December 16, 2008 01:35 AM

China is my motherland, we all Taiwanese love mainland!


December 16, 2008 01:36 AM

China is my motherland, we all Taiwanese love mainland!


December 16, 2008 01:36 AM

China is my motherland, we all Taiwanese love mainland!


December 16, 2008 03:10 AM

Hope China can get united ,hope a great China !


December 16, 2008 03:48 AM

If Taiwai is much better than China, Taiwai would be much better off to be isolated.


December 16, 2008 04:09 AM

there is saying,yesterday is history ,tomorrow is a mystery,but today is a gift.


December 16, 2008 04:18 AM

Ok, the previous comments are both immature and incorrect.

Cross-strait linkage between Taiwan and China may help reduce overhead and somewhat boost economies, but that's just a part of it. Taiwanese people still want independence, and the fear of making China a part of Taiwan [sic] still looms large, especially with non-President Ma at the helm of this ship.

The fact of the matter is, while Taiwanese culture originates from China, these societies are very different. Chinese people still have a long ways to go as a collective society to being respected by other nations. Start the change, and maybe Taiwanese people will want to have something to do with them.

Anyway, with these trade agreements, at least we can get tainted milk products and other fake foods more directly. Wonderful.


December 16, 2008 11:36 AM

We are like family members getting into quarrels, which is to be expected. I expect China and Taiwan to gain better understanding of each other and be more amiable to each other in the coming decade.


December 16, 2008 12:19 PM

china forever looking taiwan.


December 16, 2008 12:20 PM

china forever looking taiwan.


December 16, 2008 02:32 PM

china good taiwan bad
taiwan good china bad
four legs good two legs bad
but in china orwell's banned
so orwell bad


December 16, 2008 05:10 PM

WOW - I wish India and Pakistan could show some of the same maturity...
Both the Taiwanese and Chinese people ought to celebrate this!


December 16, 2008 06:30 PM

Whenever I think of Taiwanese, only one word comes up, "pathetic cheap bast..ds". Mainlanders, just get our 65,000 national treasures back, and sink them!


December 16, 2008 08:35 PM

Pepople in Taiwan is not only consisted of GMT people, there are people were already there long long time ago, such as abriginal tribes, early immergrations. Nowadays, Taiwanese ppl is combined by the culture of China, Abriginal tribes and Janpan.
My grand grand mother is from abriginal tribes, my grand father is half Japaness, and I am the 12th generation of my family. I work in China, but I totally in love with Taiwan.


December 16, 2008 09:08 PM

There is often an issue between which "China" the mainland and Taiwan belong to.

Taiwan is officially the Republic of China in Taiwan. Mainland China is People's Republic of China. There is a difference if one pays attention to the details.

We have two different goverments, military, and passports. Taiwan ROC is a democratic country while mainland PRC is ruled by a communist party.

Open Your Eyes

December 16, 2008 10:27 PM

Above all, it is a game between U.S. and PRC. Those on the Taiwan Irland do not even have the power to gain the right to speak! The only thing speaks in the international community is strength and economic power; that is why Taiwan is isolated - because it is no longer important as it was in the 1960-70s.
Don't forget, in the current Republic of China Constitution, ROC still covers both mainland and Taiwan. Fix your constitution first before yelling. Or, you are contradictory to yourself.
Second, democracy does not promise economic boost. The fact is that "democratic" KMT part ruled China for dozens of years but how did that turn out? And look at what India's democracy has led to recently.
Last, what most suits the current Chinese social and economic development is the optimal system for China. You need to talk to Chinese people before drawing such a subjective conclusion.


December 16, 2008 11:06 PM

This is not only a major milestone for all Chinese people in the world, but also a major step forward for peace and prosperity for Asia.


December 17, 2008 12:21 AM

Taiwan province is not just part of China, it belongs to China!
Taiwan will be nothing without Guomingtang (mainland Chinese) rule for over the last 60 years. Guomingtang took every penny of the China's national reserve (mostly in gold), almost all hard (silver dollar) circulation currency, plus the top 650,000 pieces of national cultural relic from mainland to Taiwan.
Now, there are some in Taiwan who feel they are richer (per capita only), start to have a "superior" syndrome and call for "independence". People in China just want to point the middle f..ger at you, "not even in your dreams"! Taiwanese? What species is that?


December 17, 2008 12:29 AM

Dare someone here mention that Taiwan is a democracy!
People in mainland China, whenever "taiwan democracy" was mentioned, would almostl literally laugh their teeth out! "Taiwan democracy" is a BIG JOKE!
Wity your democracy, the biggest embezzler was elected twice to the office. Almost all gangsters were elected to legislative body......


December 17, 2008 06:26 AM

Chinese and Taiwanse will be nobody if any of them can't cooperate with one another. Chinese can work for forign employers, so can Taiwanese. Chinese can yell at Taiwanese, so can Taiwanese.
Don't Chinese and Taiwanese still get it that no one cares the direct flight or not except of business people? Nationalist or Communist is last decades' point of view. Chinese and Taiwanese want to be united if both sides have mutual business interest. If there is no business interest, who cares Chinese or Taiwanese will be happy or should celebrate this direct flight?
If Taiwan administration Mr Ma can't prove the direct flight is going to lead Taiwanese out of financial downturn and business meltdown, the direct flight means nothing. If Chinese administration can't take the chance to prove it is profitable by direct flight to Chinese or Taiwanese, to lead them out of getting poor or losing jobs, the direct flight meas nothing.
I would say direct communication does have a better positive influence for both sides to understand each others. That is a chance for both sides.


December 17, 2008 02:24 PM

a worth reading article.


December 18, 2008 01:06 AM

From some comments above, I can't help thinking about the similar opinions when Hongkong was turned over to China which only later were proved stupid and became laughstocks worldwide such as "Hongkong's Death"...
From the quick agreement and implementation of direct flight, marine and postal, we will see more closer connections and conveivable peace between the two sides. And peace means development and prosperity...

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BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.

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