China shadow over Taiwan debate

By Caroline Gluck
BBC News, Taipei

Businessmen wants direct links with China

A two-day economic forum has opened in Taiwan aiming to chart a course for the island's economic development over the next decade.

The meeting is looking at areas from financial and government reform to balancing industrial growth with environmental protection.

Social problems resulting from a rapidly ageing population and low birth-rate will also be discussed.

But another topic, economic links with China, has raised the most controversy.

Tempers also flared outside the conference venue as labour activists scuffled with police. The government has attached great importance to this meeting, promising to use its recommendations as the basis for future policy.

Officials believe Taiwan's future competitiveness will depend on how it addresses key structural problems facing the economy, from fiscal reforms to environmental protection, reforming the social security systems and improving government efficiency and industrial competitiveness.

The most controversial area though has been Taiwan's trade links with its political rival China, and whether the government should further relax economic restrictions.

Taiwan flashpoint

Heated debates in preparatory meetings failed to reach any consensus. As a result, two of the most sensitive issues - establishing direct transport links and relaxing investment limits for Taiwanese companies operating in China - have been left off the conference agenda.

In the past, President Chen Shui-bian has argued that Taiwan's economy is already overly dependent on China.

But there is strong pressure for change from business groups who argue that the restrictions are damaging Taiwan's competitiveness.

The opposition parties - who also favour closer economic links with China - are not attending the forum, although some officials are taking part in an individual capacity.

But Taiwan's pro-independence party, the Taiwan Solidarity Union, has strongly opposed the changes.

In a newspaper article, the man the party regards as its spiritual leader, former Taiwan president Lee Teng-hui, said investment in China had not improved Taiwan's international competitiveness, but rather resulted in the hollowing out of its industrial sector.