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Wednesday, 7 November, 2001, 12:51 GMT
Taiwan eases China trade restrictions
Taipei, capital of Taiwan
Economic woes mean Taipei must free up investment
Taiwan has lifted a 50-year ban on direct trade and investment with China in a major liberalisation of economic policy towards the mainland.

Under the new policy, local businesses can directly invest in China instead of via a third country.

The new policy of "aggressive opening and pragmatic controls" includes the scrapping of a $50m ceiling on individual investments in China and the simplification of investment procedures on smaller projects.

President Chen Shui-bian
President Chen may reap election reward for liberalisation
But projects deemed by the Taiwanese authorities to threaten national security will still be banned.

Taiwan banned direct trade and transport links with China at the end of the Chinese civil war in 1949.

WTO entry

The new, vigorous approach replaces the 5-year-old policy of "no haste, be patient" introduced by former President Lee Teng-hui predecessor during tensions with the mainland in 1996.

The investment limits were imposed to try to ensure investment went into building up Taiwan's own economic base.

The move comes ahead of a meeting starting in Qatar on Friday at which both countries are expected to gain permission to join the World Trade Organisation (WTO).

China's entry into the WTO will bring wide-ranging market access agreements with all the WTO's 142 other members.

Economic slowdown

Correspondents say critics are worried that Taiwan could become too dependent on China for trade, but supporters of the policy are anxious for a larger piece of the Chinese market at a time when Taiwan's economy is behaving poorly.

The ongoing global slowdown has hit Taiwan hard, with unemployment hitting record highs and hi-tech exports slumping.

Analysts say the changes could boost President Chen's Democratic Progressive Party (DPP) among moderate voters ahead of the parliamentary elections on 1 December.

See also:

19 Oct 01 | Business
Asia braced for China's WTO entry
13 Aug 01 | Business
Taiwan to free up China investment
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New party to reshape Taiwan politics
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Taiwan denies UN bid threatens China
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Record fall in Taiwan exports
23 Jul 01 | Business
Taiwan's economy worsens
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Taiwan's growth set to halve to 2.2%
30 May 01 | Business
Tech crisis hits Taiwan economy
18 May 01 | Asia-Pacific
Taiwan reaches out to China
06 Aug 01 | Country profiles
Country profile: Taiwan
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