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Taiwan Expands Economic Opportunities with Mainland China - 2002-08-09

Taiwan opens its real estate market for the first time to investors from China. It also will allow Taiwanese semiconductor companies to invest in China. The moves signal Taipei's intention to foster closer economic ties with the mainland, even as the war of words continues over the island's political status.

Taipei says mainland Chinese companies now can apply to invest in Taiwanese property. Taiwan's Ministry of the Interior said in a statement Friday that mainland investors will for the first time be allowed to buy Taiwanese residential and office property.

Starting next Monday, the Taipei government also will permit Taiwanese semiconductor companies to apply to invest directly in China. Taiwan's Investment Commission says that chipmakers will be allowed to build plants making certain types of chips in the mainland. Taiwan's cabinet approved the measures in March. Three plants will be allowed to set up in China by the end of 2005.

The moves to ease restrictions on investment in China come even as Beijing continues to lash out against Taiwan President Chen Shui-bian. Mr. Chen sparked Beijing's fury last Saturday by describing Taiwan and China as separate countries, and backing a referendum on the island's future.

The Hong Kong edition of the China Daily newspaper Friday says war will be unavoidable between Taipei and Beijing, if the island holds a referendum on possible independence.

Yan Xuetong is head of the Institute of International Studies at Beijing's Qinghua University and an expert in relations with Taiwan. Mr. Yan says Mr. Chen's comments raise tensions across the Taiwan Strait, and dampen hopes for peaceful reunification. He says it is clear that separatist forces on the island have a clear timetable for achieving independence from the mainland. Mr. Yan says the risk of military conflict between the two sides will increase with each new step taken by Taipei toward independence.

Mr. Yan acknowledged that Taiwan and the mainland continue to develop closer business ties. But he says the economic relationship will not bring the two sides any closer to unification, and therefore have no bearing on political ties.

Taiwan regulates investment in the mainland because it is worried about Taiwanese businesses becoming too dependent on their giant, communist neighbor. Still, Taiwanese investors have poured about $100 billion into China since the late 1980s.

China considers Taiwan its territory and has threatened to attack if the island declares independence or resists unification.