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.

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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.

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What’s next for the DPP?

l One month after losing the presidential election, Taiwan's opposition Democratic Progressive Party (DPP) has apparently remained in disarray, from its organization to policy.

l With DPP Chairwoman Tsai Ing-wen set to step down at the end of February to take responsibility for losing the presidential election in January, there seemed to be a “wait-and-see” attitude among the different factions and party leaders, making the rank-and-file unsure of the party’s future.

l As such, it may take months before Taiwan’s largest opposition party reconciles internal differences and recuperates from consecutive losses in presidential election.

l  In the party's post-election report, Tsai had listed more than 20 reasons, including the party's cross-Strait policy, the response mechanism to crises during the campaign, the inefficient--and insufficient--campaign promotion, and the voting behavior of most Taiwanese returnees from China, that were deemed responsible for the party’s election failure.

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US beef controversy resurfaced

l  A controversy resurfaced this week over the US beef imports to Taiwan. In fact, since the signing of the US beef protocol in November 2009, the controversy surrounding the safety of US beef imports never went away completely.

l  Though subsequent media reports have been sporadic, Taiwan's ban on US beef products containing the feed additive ractopamine has hindered progress in bilateral ties, particularly the resumption of high-level trade talks under the Trade and Investment Framework Agreement (TIFA) between Washington and Taipei.

l  An ad-hoc inter-agency task force—including the Ministry of Economic Affairs (MOEA), Ministry of Foreign Affairs (MOFA), Council of Agriculture (COA), and Ministry of Health (MOH)—was subsequently set up in the Cabinet to formulate a strategy.

l  Whether the ban on ractopamine gets lifted or whether a stricter residue level is adopted, the standard will be the same for local and imported meat products.

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Taiwan completes first phase of Cabinet reshuffle

l  The biggest political news in Taiwan during the nine-day Lunar New Year (LNY) holiday was the Cabinet reshuffle. Outgoing Premier, and vice president-elect, Wu Den-yih tendered resignation en masse in late January, and Sean Chen, the former vice premier, was nominated by President Ma Ying-jeou to succeed Wu.

l  Before the presidential inauguration in May, Wu, since he will have no official capacity, may attend the Boao Forum in April to meet with Li Keqiang, who will likely become China’s next premier in spring 2013.

l  The ongoing Cabinet overhaul will be carried out in stages, and the process will not be complete until more personnel changes are made in the National Security Council (NSC), Ministry of Foreign Affairs (MOFA), and Mainland Affairs Council (MAC).

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