Taiwanese firms get $21bn for helping China build bridges

BEIJING: The Chinese government is offering $19 billion as a "thank you" gesture towards Taiwanese companies operating in mainland China, who have played a crucial role in bringing Beijing close to Taipei in recent years. The move comes within days of China and Taiwan resuming air and shipping links after a gap of 60 years last week.

The government has announced plans under which Chinese banks will extend loans worth $19 billion to these companies while local companies will spend another $2 billion in buying electronic goods from Taiwan. These moves are expected to have a healthy impact on the stock markets in Taipei.

Taiwanese industry keen on developing business links with China are widely known to have played a key role in deflating the pro-independence efforts of former Taiwan president Chen Shui-bian. Chen lost elections in the face of severe charges of corruption paving the way for the new pro-China president, Ma Ying-jeou. Ma's election in May has sparked a process of reversal in the antagonistic relationship between the two sides. China has in the past threatened military action if Taiwan continued on its pro-independence efforts.

China regards Taiwan as part of its own territory and has made every possible effort to ensure that it does not gain credibility as an independent nation and obtain membership of the United Nations.

Wang Yi, director of the Taiwan Affairs Office in the Chinese government, has signed an agreement with the government in Taipei offering sops to Taiwanese businesses operating in China besides allowing the island's banks greater access to the local market.

China will also encourage Taiwanese companies to participate in construction and energy development projects in the Chinese mainland besides involving them in electronics and pharmaceutical ventures, Wang said.

"Cooperation at this time is especially meaningful as the global financial crisis will soon spread to the manufacturing industry," Schive Chi, chairman of the Taiwan Stock Exchange, said at the end of talks between officials from the two sides.

Tseng Yung-Chuan, vice chairman of the ruling Kuomintang party, said that the two sides have also agreed to establish a financial supervisory mechanism and provide a currency clearance system. These decisions would help Taiwanese banks to offer financial services in mainland China.

A total of seven Taiwanese banks including the First Commercial Bank, Hua Nan Commercial Bank and Chang Hwa Commercial Bank have opened representative offices in China. But banking and securities companies from Taiwan face a number of restrictions in operating in China, which are now being relaxed.