HONG KONG: Fujian province is set to be the experimental locus for much closer ties between the mainland and Taiwan as it steps forward to promote industrial cooperation across the Straits.

A Taiwan Petrochemical Zone has already been outlined near Quanzhou Port. A preliminary agreement was reached last month between the province on the mainland's southeast coast and five Taiwan petrochemical enterprises to develop an ethylene pyrolysis project with an annual production capacity of 1 million tons. The agreement includes 53 additional downstream projects.

The petrochemical projects, involving a total investment of $6 billion, is expected to generate 100 billion yuan annually.

Fujian is inviting Taiwan farmers to move to the province's Agriculture Park, since the two locales share similar natural conditions. Luo Meijuan, a Taiwan farmer who moved to the Park three years ago, said the much lower land costs on the mainland are very attractive.

Aside from low cost, the Fujian government is offering preferential policies. Farmers are permitted to use assets on the mainland as loan collateral. Low taxes attract Taiwan farmers who want to transfer business to the mainland as the island upgrades its agriculture.

Luo expects better infrastructure in hydro, electric and transportation could increase the region's attractiveness.

As an additional effort to facilitate cooperation, Fujian is accelerating its efforts over broad areas from energy to transportation, in the hope of laying the foundation for the future.

Fuqing Nuclear Power Plant, equipped with six sets of 1,000 megawatt generators, is planned to be operational by 2013 and contribute one quarter of the province's total electric power capacity.

"Fujian is not gifted with much energy sources but the region is expanding energy capacity in an effort to undergird its economic development," said project manager Li Zhenyun.

In the meantime, the mountainous province is "clearing the road" with implementation of enormous infrastructure construction projects on highways and railways.

"Transportation has always been the bottleneck for Fujian," said professor Yanzheng, former director of Fujian Academy of Social Science, adding that within four to five years, Fujian could bridge the gap and become a leading province in transportation.

Fujian's efforts fall into perfect harmony with the central government's plan to boost development of the western coastal area of the Taiwan Straits. The measures are the natural extension of warming relations across the Straits.

The Merchants Zhangzhou Development Zone located at the Zhangzhou Port of Fujian is said to be the next Shekou Industrial Zone, a forerunner of China's opening up and reform policy in the 1980s. Both were developed by the China Merchants Group. The Zhangzhou Development Zone began one decade after the establishment of its predecessor - Shekou Industrial Zone - however it did not enjoy the same prosperity as its counterpart in Guangdong province. That was due in part to the hiatus in ties between the mainland and Taiwan.

As cross-Straits relations warm, researchers suggest the West Coast Economic Zone and Taiwan could set up an economic framework resembling the CEPA adopted by Hong Kong and the mainland to boost economic cooperation.

Professor Liu Guosheng, director of Taiwan Research Institute at Xiamen University, said: "Unlike the relationship of Pearl River Delta and Hong Kong, the tensions between the mainland and Taiwan have been a major issue hindering the development of the west coast area of the Straits."

He added that any fall off in cross-Straits relations could drag down the pace of developmental in the region.

(HK Edition 06/19/2009 page2)