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China Praises, Criticizes Taiwan Plan on Economic Ties - 2001-08-29

China has both praise and criticism for rival Taiwan's recent proposal to expand commercial ties with the mainland. An editorial in the official press calls the changes "positive" but complains that Taiwan did not address the key question of political reunification of the two sides.

China's official press says Taiwan is proposing "positive changes" in easing rules limiting the island's trade with and investment on the mainland.

Sunday a Taiwan government advisory committee called for an overhaul of restrictive policies so businesses could have greater flexibility to establish operations in China. Currently Taiwan has a ban on direct trade, transport and communications with Communist China.

But Beijing's first official response to the Taiwanese proposal is also critical. The China Daily editorial complains that Taipei is still not addressing the central issue. The paper says Taiwan must recognize it is part of China. The editorial adds that until Taiwan embraces the so-called "One China" principle, trade links with the mainland will remain uncertain.

But Chris Leung of the Development Bank of Singapore says business will probably go ahead, in spite of China's complaints. "My view is that they will keep saying this and they will be relaxing trade ties with Taiwan," he says. "I think China in fact welcomes [Taiwan President] Chen Shui-bian's more friendly trade policy. Because if you look at Asia as a whole, there is a very clear line drawn between South East Asia and North East Asia. Going forward, there will be competition and China, being the biggest economy in North East Asia will have to ally with Taiwan, South Korea and Hong Kong to compete."

The two territories have been ruled separately since 1949, when Communist forces won the Chinese civil war and defeated Nationalist forces who sought refuge on Taiwan off China's coast.

But despite decades of political tension and economic restrictions, Taiwan companies have invested billions of dollars in China in the last 10 years. Analysts say Taiwan is now looking to expand business relations for a number of reasons, including high costs and a battered economy.