Page last updated at 18:32 GMT, Thursday, 29 May 2008 19:32 UK

Regional rivals reach across strait

By Caroline Gluck
BBC News, Taipei

Taiwan ruling Kuomintang (KMT) Chairman Wu Poh-hsiung (L) is greeted by a Chinese official as he arrives in Beijing on 27 May 2008
Rosy outlook? Things appear to be looking up for Taiwan-China ties

News that semi-official talks between Taiwan and China will begin next month - for the first time in a decade - have sparked high hopes the heat will be taken out of one of the region's most critical potential flashpoints.

The two sides now appear poised to sign key agreements in June, which could see direct weekend charter flights and more Chinese tourists visiting Taiwan by July.

China's Association for Relations Across the Taiwan Strait (Arats) has invited officials from its counterpart, Taiwan's Straits Exchange Foundation (Sef), to take part in talks from 11-14 June in Beijing.

The two organisations were set up by the two governments as channels for negotiations in the absence of formal ties.

But talks were abruptly suspended a decade ago because of political disagreements.

'Very positive'

"It's very positive," said Wang Kaocheng, director of the Graduate Institute of International Affairs and Strategic Studies at Taiwan's Tamkang University.

"And the public welcomes [the flight and tourism] deals because they will benefit Taiwan economically."

Two Chinese students display posters to welcome the Taiwanese delegation in Nanjing on 27 May 2008
Welcoming committee - but the two sides have had decades of mistrust

The agreements are pledges that President Ma Ying-jeou made as he campaigned for the March presidential election.

He promised voters a less confrontational relationship with China and closer economic ties - which would help to boost the island's own economic performance.

His newly-installed government has just announced unpopular price rises for gas and electricity; and signing important agreements with China could help to mitigate their impact.

Time and money

In the first stage, the direct cross-strait charter flights are likely to take place at weekends.

Eventually, Taipei would like to see daily charter flights, moving on to the final step - an agreement on normal, scheduled flights between the two sides.

Direct flights were banned when the Kuomintang, or Nationalist Party, fled to Taiwan at the end of the Civil War in 1949.

Passengers currently have to travel indirectly, normally via Hong Kong or Macau, adding time and money.

Local businesses and international companies based in Taiwan have long lobbied for direct flights, saying the lack of direct links seriously impedes Taiwan's economic competitiveness.

Some analysts have predicted that normalising economic relations with China could add at least 3 percentage points to Taiwan's GDP growth.

Taiwan ruling Kuomintang (KMT) Chairman Wu Poh-hsiung (L) waves to the press while visiting the National stadium in Beijing on 28 May 2008
Mr Wu is the first head of a ruling party in Taiwan to visit China

Taiwan has also long lobbied China to permit more of its citizens to travel to the island.

In 2007, Taiwanese citizens made 4.6m trips to China; but only 270,000 Chinese were allowed to visit Taiwan.

President Ma has said he would like to see a deal that would first allow up to 3,000 Chinese tourists a day - equivalent to more than 1m arrivals a year - as Taiwan builds up its tourist infrastructure.

The government estimates that for every 25 new tourists, one new job could be created.

Dictating the agenda?

Negotiations on these issues had begun several years earlier, under the administration of former Taiwanese President Chen Shui-bian.

Despite some early optimism, following agreements to allow special charter flights between the two sides on major Chinese holidays, Taipei later complained that Beijing was setting new political obstacles to delay wider progress.

"China didn't want to give Chen Shui-bian the credit," commented George Tsai, an expert in cross-strait relations at the Chinese Culture University in Taipei.

"They wanted to give credit to the KMT because over the years they have established some kind of mutual understanding and common ground with the Chinese Communist Party; and now, to the government of President Ma to give him more authority to improve relations with China."

Taiwan ruling Kuomintang (KMT) Chairman Wu Poh-hsiung (L) is greeted by Chinese President Hu Jintao at the Great Hall of the People in Beijing on 28 May 2008
Better ties with China could boost Taiwan's GDP

News of next month's talks came a day after KMT party chairman, Wu Poh-hsiung, held talks with China's President Hu Jintao - the highest level contact between the two sides in nearly 60 years.

Mr Wu is the first head of a ruling party in Taiwan to visit China.

And that has raised some concern among opposition politicians in Taiwan about whether the KMT or the Taiwanese government is in charge of setting the momentum and parameters for any deals.

Early signs

"What we see so far seems to be a very strong flavour of the party dictating the agenda for the future government to negotiate. And that worries us," said Lin Chen-Wei, head of the international affairs department at the Democratic Progressive Party, now in opposition.

"That would reverse the democratic trend."

It will no doubt boost both of economy. The future lies in the EAST
Zhong Guo ShengLi, Beijing

While news of the talks has raised hopes about a general improvement in cross-strait relations, some analysts are urging caution.

"I would say don't be too optimistic," warned veteran China-watcher, George Tsai.

"These (deals) are the easiest parts. When you go to the real economic issues, tensions will be more difficult."

The first signs, though, appear to be good.

President Ma has said his early focus will be on normalising economic relations with China, which could benefit all Taiwanese - putting more contentious political issues on the backburner.

And that could still take some time, after decades of mistrust.

The thaw in relations has begun. But the ice will take much longer to melt.

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