China-Taiwan Ties in an Election Year

l  Taiwan will have two consecutive islandwide elections--legislative and presidential--in the next fourteen months. Neither Beijing nor Taipei, therefore, really knows how bilateral relations will evolve in the Year of the Golden Rabbit.

l  However, since both China and Taiwan had agreed earlier to place economics above all else, the focus of cross-Strait relations, at least in the first half of the year, will likely remain on: (1) post-ECFA negotiations on, among other things, mutual investment protection and dispute resolution, (2) travel by individual Chinese tourists to the island, and (3) the number of Chinese tourists--in groups of at least five--per day, excluding individual travelers, will likely be increased from 4,000 to 5,000.

l  Since Taiwan opened its doors to Chinese tourists in July 2008, they have injected a total of NT$91 billion, or roughly US$3.1 billion, into the local economy. According to the Mainland Affairs Council (MAC), approximately 1.82 million Chinese tourists have visited Taiwan between mid-2008 and the end of 2010. These Chinese nationals have, in turn, created NT$91 billion in foreign exchange benefits and commercial opportunities, particularly in retail, transportation, hotels, and tourism-related businesses.

l  Nearly 1.2 million Chinese nationals came to Taiwan as tourists last year, which was an increase of 98 percent from 2009, and another 450,000 Chinese citizens came to Taiwan for business and other reasons last year, bringing the total number of Chinese tourists to approximately 1.65 million and a year-on-year growth of 68 percent.

l  Meanwhile, the government's initiative to simplify entry procedures for Hong Kong and Macau residents, launched last September 1, has already paid dividends. During the four-month period from September 1 to December 31, 2010, 208,342 people from Hong Kong and Macau obtained a Taiwan entry permit online, which was 105.24 percent more than in the last four months of 2009. Largely because of de-escalation of cross-Strait tensions and the increasing interest on Taiwan, nearly 700,000 people from Hong Kong and Macau visited Taiwan in 2010, which was 10.5 percent more than the number in 2009.

l  Noting that Taiwan passport holders were granted visa waivers for the Schengen countries after January 11 this year, Taiwan government officials, particularly those at MAC, have openly urged Hong Kong to grant Taiwanese passport holders a similar privilege. Though there appears to be enough interest and support in the former British colony, the ultimate decision on granting visa-free privilege to Taiwanese passport holders will have to be made by Beijing in the context of overall cross-Strait relations, with or without considerations for the upcoming elections.