New economic zone west of Taiwan Straits to broaden cooperation

After five years of preparation, the development of an economic zone west of the Taiwan Straits, recently received backing from the State Council.

Haixi, the new economic zone, is expected to be a platform for improving economic and trade relations across the Straits, but more importantly it will act as a new growth engine for the country. This follows the establishment of the Pearl River Delta in the south, the Yangtze River Delta in the east and the Binhai New Area in the north in the past two decades, with Binhai being developed three years ago.

Haixi, geographically centered in Fujian province, will serve as an experimental zone for comprehensive reforms, according to the State Council.

Everbright Securities, the brokerage unit of China's largest State-owned investment group, speculate that the central government will adopt preferential treatment for the fiscal system, tax and industrial policies of the Straits' economic zone. The policy details are expected to be released next month.

"Every economic zone has its feature in function. The economic zone of the Straits features cross-Straits economic and trade cooperation," Cao Xiaoheng, director of The Institute of Taiwan Economy of Nankai University, said to Shanghai Securities News.

The announcement of the establishment of the zone, comes at a time when mainland and Taiwan have accelerated economic relations.

The meeting between Chen Yunlin, president of mainland's Association for Relations Across the Taiwan Straits (ARATS), and Chiang Pin-kung, chairman of the island's Straits Exchange Foundation (SEF) in June 12, 2008 resumed cross-Straits talks which were on hold for 10 years.

The second meeting between ARATS and SEF in December of 2008 made the "Three Direct Links (links of trade, travel and post between the Chinese mainland and Taiwan)" come true. Their next meeting last month increased the number of agreements on air transportation, financial cooperation and permission to allow capital investment by the mainland.

Fujian and Taiwan have had close trade and economic relations and the investment of Taiwan-funded enterprises in the province in 2008 increased by 18 percent year-on-year, according to Xinhua News Agency.

The investment area has now shifted from manufacturing to scientific research, technical services, leasing and service industry. Statistics from the China Economic Times show that Taiwan is the largest trader and the 8th largest export market for Xiamen, the mainland city nearest to Taiwan.

The trade volume between Fujian and Taiwan in 2008 reached $7.5 billion, up 56 percent year-on-year. Of that, Xiamen's trade volume was $3.83 billion, up 25 percent.

However, the Fujian provincial bureau of statistics said that the poor infrastructure would reduce Fujian's competitiveness for overseas investment.

According to the Ministry of Railways, 10 new railway projects are expected to start this year and hope for a completion by 2015. This will be funded by a 220 billion yuan investment by the central government as part of its efforts to improve infrastructure and investment.

CBW News

(China Daily 05/18/2009 page5)