DPP’s upcoming leadership transition

l  Two major issues have—and will continue to—dominated Taiwan’s domestic politics in recent weeks, both related to the opposition Democratic Progressive Party (DPP).

 l  The first concerns the DPP’s election for the next chairperson on May 27. At the moment, former Premier Su Tseng Chang remains the frontrunner, and the race is essentially Su’s to lose.

l  The second issue relates to the ongoing signature drive—in the Legislative Yuan (LY) and around the island—to petition for a presidential pardon of former President Chen Shui-bian (CSB).

l  Since early this year, CSB has been experiencing acute coronary syndrome that led to a cardiac catheterization procedure last month. A number of pro-independence groups have since publicly called for a full presidential pardon on the former president to ease inter-party tensions, and a petition drive followed that will likely gather momentum and increase pressure on the government.

Interested in subscribing ETRC reports and services?

Please contact us at: etrc.group@gmail.com

Continue with the “economics first, politics later” approach

l  The Boao Forum, particularly the meeting between China’s Vice Premier Li Keqiang and Taiwan’s Vice President-elect Wu Den-yih, headlined cross-Strait developments in early April. This was the second time since 2008 that Taiwan’s vice president-elect was invited to attend the Boao Forum.

l  In the hour-long meeting with Li, Wu pronounced another 16-word phrase that conveyed two important messages from Taipei: (1) maintaining cross-Strait peace and stability remains the top priority, and (2) “economics first, politics later” will continue to be the preferred approach in managing cross-Strait ties.

l  Though Wu’s 16-word phrase did not offer anything new, it clearly signaled to Beijing that cross-Strait political talks are not a priority and Taipei has no plans to initiate such a dialogue anytime soon.

l  We do not expect that Beijing and Taipei will formally launch political negotiations for a peace agreement, but certain politically sensitive issues, particularly Taiwan’s international space, will invariably come up in future cross-Strait negotiations.

Interested in subscribing ETRC reports and services?

Please contact us at: etrc.group@gmail.com

Beyond the “one country, two areas” controversy

l  Expectedly, the “one country, two areas” formula, proposed by Kuomintang (KMT) Honorary Chairman Wu Poh-hsiung late last month in Beijing, has stirred up heated debates within Taiwan.

l  Since Wu’s proposal came amidst the US beef controversy, many believed it was a government attempt to divert attention away from possibly the most divisive issue in US-Taiwan relations in over a decade.

l  Moreover, since President Ma Ying-jeou has reiterated that he will adhere to the “no unification, no independence, and no use of force” position and not to initiate political talks with Beijing, it seemed odd that Wu, whose proposal was supposedly pre-approved and sanctioned by government, would make such a proposal that obviously contradicted the president’s longstanding position on cross-Strait political dialogue.

Interested in subscribing ETRC reports and services?

Please contact us at: etrc.group@gmail.com

Cross-Strait financial exchange and cooperation

l  One area that Taiwan would like to accelerate cross-Strait is financial services. In fact, Taiwan plans to invite China's top banking official—Shang Fulin—to attend the first biannual meeting between the financial regulators from both sides in the first half of this year.

l  As the chairman of China’s Banking Regulatory Commission (BRC), Shang is expected to lead a delegation of Chinese financial regulators to share their experiences and “discuss issues of mutual concern.” In addition, the two sides will explore the possibility of holding cross-Strait seminars and allowing cooperation in areas such as personnel training.

l  Meetings between banking regulators of China and Taiwan first began last year after the cross-Strait financial memorandums of understanding (MOU) was signed in 2009.

l  Besides setting up liaison offices in Taiwan, Chinese financial regulators have not been encouraging their banks to invest in Taiwan. The reasons are simple: (1) the mutual investment protection agreement between China and Taipei has not yet been signed, and (2) the current limitation on equity stake that Chinese banks can hold—at 10% total, and 5% each—in Taiwan is simply too low.

Interested in subscribing ETRC reports and services?

Please contact us at: etrc.group@gmail.com

Attracting More Japanese Investments to Taiwan

l  Despite the recent change of Taiwan's official representative to Japan, Taipei expects to have more breakthroughs in bilateral economic relations this year. Moreover, trade and investment promotion efforts have been taking place at the local level too, including those by New Taipei and Kaohsiung Cities since early March.

l  All these promotional efforts by Taiwan’s local administrators were designed to attract more foreign investments to Taiwan and hence avert a disproportionate dependence on China and its domestic market.

l  With equal emphasis on growth and diversification, Taiwan would certainly want to have closer economic ties with Japan following the major breakthroughs in bilateral relations last year. In fact, the government is hopeful that Japanese investment in Taiwan can again post a double-digit year-on-year increase this year.

Interested in subscribing ETRC reports and services?

Please contact us at: etrc.group@gmail.com