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Not a Dream for a Greater China Economic Ring
2004/10/26
Of the 146 members in the WTO, four are from China, namely the Chinese mainland, Hong Kong SAR, Macao SAR and Taiwan Island. The unique and unprecedented situation in which one country holds four seats in one organization is an evolved from the complicated factors in history.

Years ago, there was a call among scholars for a "Greater Chinese Economic Ring" but it died down for some time now. The voice is yet once again heard in recent years. Nevertheless, the author prefers the term of "Greater China Economic Ring". The cornerstone of the ring lies in the cross-strait economic integration and development. Failing that, the "Greater China Economic Ring" would never be there. However, recent years have witnessed many twists and turns along the way of the political relation across the Taiwan Straits and sometimes even at daggers drawn. What's more, Taiwan is up to now still under the rule of the pro-independence Democratic Progressive Party (DPP).

In spite of all this, things seem to bode well for the economic and trade integration of the "Greater China Economic Ring" two years after China's entry into the WTO.

First of all, with the elapse of two years, hostility between China's mainland and Taiwan over the issue of the WTO accession is fading away. Before the WTO admission, China's mainland had once been concerned about any possible disturbance from Taiwan, which would intercept the membership of China's mainland by applying for an exclusive clause to ward off its accession on the pretext of security issue. And Taiwan, on the other hand, was worrying that the Chinese mainland would seize upon the opportunity to outflank it. The fear has by-and-by evaporated into the thin air as the two sides entered into the WTO one after another and basically lived in peace with each other over the past two years. The two sides even went so far as to have bilateral communications and consultations between their WTO representatives in the WTO framework and the atmosphere was described as "friendly and constructive".

Secondly, the Closer Economic Partnership Arrangement (CEPA) signed between the Chinese inland, Hong Kong and Macao respectively is of positive significance to Taiwan's economic development. Given the close HK-Taiwan and Macao-Taiwan trade relationship and their frequent personnel flows, the further economic and trade exchanges between the inland and Hong Kong and Macao will unassailably exert a positive impact on Taiwan's economy.

Thirdly, the westward movement into the Chinese mainland by Taiwan businessmen has for decades been gaining its momentum. The cross-strait economic and trade exchanges have basically remained unruffled by the political uncertainties. Statistics shows that the cross-strait trade has been moving upward on 16 successive years since 1987. The bilateral trade volume came to USD 267.929b from 1978 to 2002. Taiwan's exports to the mainland enjoyed a ceaseless increase of 24 years on end from 1979. A case underpinning the point was a record-high rise of 195.29 percent for Taiwan's exports in 1999 to China's mainland as compared with that of the previous year. However, right in the very year an extreme tension overshadowed the Taiwan Straits, which was the "two nations" theory stirred up by Lee Tung Hui.

Fourthly, more and more multinationals are taking the "Greater China Economic Ring" as a whole when they are mapping out their industrial chains. This is good for the forming of the Ring. Some giant corporations include a "Greater Chinese Region" in their organizational structure, while the headquarters of this "Greater Chinese Region" are differently based with some in Hong Kong, others in Shanghai or Beijing. According to the author's observation, it is a common practice among many multinationals to set up their R&D centers in Taiwan, while taking the advantage of Hong Kong?¯s financial service and setting up manufacturing facilities in the Chinese mainland. Before long, Ford, a prestigious US carmaker, launched a program involving both Taiwan and China's mainland. Under this program, Taiwan will house its design center and car parts supply base while its newly developed autos will be jointly produced by Taiwan and the Chinese mainland.

It is the positive catalyst mentioned above that has forced Taiwan authorities to make concessions thereby foreboding the influx of economic and trade exchanges despite of the political stagnation between the two sides.

On Oct.9, the so-called "Legislative Yuan" of Taiwan passed an amendment draft of "Regulations on the Relations between the People of Taiwan and the Mainland of China" which relaxed restrictions on the economic and trade exchanges across the straits. This amended version stipulates that ships, aircrafts, and other transportation vehicles of Taiwan are allowed to travel to China's mainland on condition that they receive permits from the governing institutions. Relevant approving and management procedures are required to be submitted within 18 months. Any delay is subject to the nod of the "Legislative Yuan". The "Ministry of Transportation and Communication" of Taiwan has expressed their readiness of complying with the rule and working out the approval procedure for Taiwan's ships and aircraft to travel to the Chinese mainland in 18 months time. It is learned that this is the first time for certain agencies in Taiwan authorities to present a specific schedule as such on the issue of direct shipping links across the straits.

There is still a cleft between the revised regulations and the "three direct links" that the Chinese mainland is seeking for. Despite that, it will boost the cross-strait economic and trade relations to some extent. In the meantime, voices calling for the "three direct links" are again heard from among the industrial and trade circles in Taiwan Island.

Pro-independent politicians in Taiwan are pursuing for the "de-China" policy. They refuse the "one China" principle, defer the process of the "three direct links" and economically slip toward the US and Japan by aggressively peddling its "Taiwan-Japan?± and "Taiwan-US" free trade. In despite of all this, the booming of the economic and trade exchanges across the straits is an inexorable trend.

So long as this trend keeps its momentum, the dream for a Greater China Economic Ring is close by hand instead of something beyond reach.

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