Monday, March 24, 2008

New President Of Taiwan Calls For Closer Relations To China

For years the rift between Taiwan and mainland China has grown as the Chinese government asserted ownership of Taiwan and Taiwan called for independence. The Taiwanese government took a hard-line stance and heavily restricted travel and immigration from the mainland out of fear of sabotage or attack, but this has affected trade. Taiwan is now unable to compete with mainland China and other lower cost countries on several exports, and the economy in Taiwan, which was very healthy only a few years ago, is starting to suffer. For this reason, many residents of Taiwan were calling for change from their leadership.

Well, change is on the way. The people of Taiwan have elected Ma Ying-jeou as their new president. Ma is of the opposition party and favors closer relations with mainland China. According to an article in the International Tribune, Ma said in an interview yesterday that, in his first 100 days in office, he hoped to have an immediate effect on the economy by opening up Taiwan to mainland Chinese tourism. After that, Ma has other plans on how to better incorporate mainland China into Taiwan’s economy.

The former leading party of Taiwan, the Democratic Progressive Party, thinks closer relations with China will only result in disaster. If Taiwan can successfully reintegrate China into their economy without major disruption, then Taiwan’s economy should experience a nice surge. If the Democratic Progressive Party is correct in their conspiracy claims against China, and the situation turns ugly, then Taiwan may decline further.

Investors who think that Taiwan and China will live harmoniously should buy into Taiwan now. Taiwan’s tourism sector especially is in for a boost. As an indication of how investors are thinking, Taiwan’s stock market saw a 4 percent jump today in response to the election results. One should remember that certain Chinese leaders deeply despise Taiwan, and not discount the risks in this relationship. The Chinese seem to support Ma, so hopefully the two sides will be able to resolve the issues between them in a peaceful manner.

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