Identifier
Created
Classification
Origin
05TAIPEI4207
2005-10-17 08:07:00
UNCLASSIFIED
American Institute Taiwan, Taipei
Cable title:  

CROSS-STRAIT ECONOMIC ROUNDUP - THIRD QUARTER 2005

Tags:  ECON EINV ETRD EAIR EFIN ETTC PREL CH TW 
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170807Z Oct 05
UNCLAS SECTION 01 OF 03 TAIPEI 004207 

SIPDIS

DEPT FOR EAP/TC
DEPT PASS AIT/W
COMMERCE FOR ITA/MAC/ASIA/MBMORGAN CABLE BOX 4431

E.O. 12958: N/A
TAGS: ECON EINV ETRD EAIR EFIN ETTC PREL CH TW
SUBJECT: CROSS-STRAIT ECONOMIC ROUNDUP - THIRD QUARTER 2005

REF: A. TAIPEI 2950


B. TAIPEI 3408

C. TAIPEI 3454

D. TAIPEI 3717

E. SHANGHAI 3290

F. GUANGZHOU 27348

Summary
-------

UNCLAS SECTION 01 OF 03 TAIPEI 004207

SIPDIS

DEPT FOR EAP/TC
DEPT PASS AIT/W
COMMERCE FOR ITA/MAC/ASIA/MBMORGAN CABLE BOX 4431

E.O. 12958: N/A
TAGS: ECON EINV ETRD EAIR EFIN ETTC PREL CH TW
SUBJECT: CROSS-STRAIT ECONOMIC ROUNDUP - THIRD QUARTER 2005

REF: A. TAIPEI 2950


B. TAIPEI 3408

C. TAIPEI 3454

D. TAIPEI 3717

E. SHANGHAI 3290

F. GUANGZHOU 27348

Summary
--------------


1. The third quarter of 2005 saw several noteworthy
developments in cross-Strait relations on the following
topics:

--Travel Agent Association of Taiwan to coordinate
discussions on tourism.
--Ministry of Economic Affairs recommended liberalization
of export controls on semiconductor manufacturing
equipment.
--PRC approved another Taiwan life insurance company to
establish Mainland office.
--Taiwan industry group continued cooperation with PRC on
IT industry standards.
--Taiwan raised fines for illegal investment in PRC.

End summary.

Travel and Transportation
--------------


2. The third quarter of this year saw several
important steps in cross-Strait transportation and
travel policy, including PRC and Taiwan approval for
Taiwan airlines to pass through PRC airspace on
flights to Europe and the Middle East and steps toward
expanding the "mini-links" to include the Penghu
Islands (refs C and D). In addition, Mainland Affairs
Council (MAC) Chairman Joseph Wu announced on July 28
that the Travel Agent Association of Taiwan (TAAT)
would be designated as the industry association to
coordinate cross-Strait consultations on opening
tourism to Mainland Chinese. TAAT is an island-wide
association made up of the Taipei Association of
Travel Agents (TATA),the Provincial-level Taiwan
Travel Agents Association, and the Kaohsiung
Association of Travel Agents. On September 2, Wu
invited these and other tourism industry associations
to a meeting to discuss how to ensure quality services
and social order with tourism liberalization. Wu also
reminded the associations that they should take care
not to be used as propaganda tools while in the PRC
for trade fairs or other business consultations,

including the September 6 First Cross-Strait Xiamen
Travel Exhibition (ref F). During the exhibition,
TAAT representatives met with officials from the China
National Tourism Administration (CNTA) and, according
to Taiwan press, discussed nomenclature issues in
preparation for more formal consultations on cross-
Strait tourism.


3. Taiwan also made an abortive effort to expand
flight service to Hong Kong. Taiwan and Hong Kong
authorities approved an application from Hong Kong
Express Airways Ltd. (HKEA) to conduct five round trip
charter flights between Hong Kong and Taichung
September 3-7. However, Hong Kong authorities decided
not to approve additional flights. According to
Taiwan press report, Hong Kong authorities felt the
flights had become a political issue in Taichung's
December mayoral election.

Trade
--------------


4. On August 24, BOFT lifted import bans for 25 PRC
products, including cellular phones. In addition,
BOFT has extended the temporary approval for imports
of small-size (less than 14mm) hot press steel and
non-alloy steel rods or bars to December 31, 2005.
However, on September 9, BOFT announced that it would
not extend the temporary approval for seven categories
of mid-size (larger than 50mm) iron and steel plate
imports from the current deadline of September 30.


5. To comply with the latest changes to international
export control standards under the Wassenaar
Arrangement, Taiwan's Bureau of Foreign Trade (BOFT)
revised Taiwan's export controls on September 14.
Among the changes, Taiwan will now permit the export
of semiconductor equipment capable of producing chips
with feature size as fine as 0.18 microns to some
areas not including the PRC. However, MOEA
recommended to the Executive Yuan (EY) that Taiwan
relax such exports to the PRC as well. This step
would allow Taiwan semiconductor foundries to transfer
their 0.18-micron equipment to the PRC, once
investment regulations allow them to build that kind
of factories there with that level of technology.

Finance
--------------


6. On July 28, Taiwan's Financial Supervisory
Commission announced new regulations that would permit
PRC professionals staying in Taiwan over six months
for work-related purposes to apply for credit cards
from Taiwan banks. Although the new regulations will
not affect many PRC visitors, they represent a small
effort by the Taiwan government to make it easier for
PRC employees of multinationals and Taiwan firms to
come to Taiwan for medium- and long-term assignments.


7. The PRC approved on August 2 a request from
Taiwan's China Life Insurance Co. Ltd. to set up a
representative office in Beijing. China Life joined
three other Taiwan insurance companies -- Cathay Life
Insurance Co., Ltd, Shin Kong Life Insurance Co., Ltd.
and Taiwan Life Insurance Co., Ltd. -- that have
established representative offices in the PRC and are
qualified to seek approval for insurance joint
ventures with a mainland partner.

Industrial Standards
--------------


8. After initiating discussion of IT industry
standards with PRC authorities on July 5 (ref B),a
delegation from the Taipei-based Sinocon Industrial
Standards Foundation and Taipei Computer Association
met September 28 with officials from the PRC's
Ministry of Communications to discuss the
establishment of an "MU" card (Multimedia card and USB
insert card) promotion alliance. According to Taiwan
media reports, possible members of the alliance
include China's Lenovo, Haier, and TLC and Taiwan's
Acer, Asus, PowerChip and the Industrial Technology
Research Institute (ITRI). Taiwan industry
representatives were in Beijing for the Eighth
Beijing-Taiwan Science and Technology Forum and
discussed other standards issues related to 3G
cellular phones, radio frequency identification, and
other technologies.

Investment
--------------


9. On August 11, Taiwan's Ministry of Economic Affairs
(MOEA) Investment Commission (IC) announced that the
penalty for unapproved large-scale illegal investment
in the PRC would be increased. Unapproved investments
valued higher than USD 10 million will face a penalty
of 0.5 to 2.0 percent of the invested amount, up from
0.5 to 1.0 percent. The IC will also strengthen its
semi-annual inspection regime for approved investments
to ensure that the amount invested matches the
approved application. To further strengthen
enforcement, the IC announced on September 5 that it
would increase the reward for informants of illegal
investment activities from up to NTD 1 million to up
to NTD 2 million (USD 60,000). Nevertheless, these
efforts appear to have had little impact. In the
first seven months of 2005, the IC issued fines in 281
illegal investment cases with penalties totaling NTD
2.2 million (USD 66,000) compared to NTD 30 million
for all of 2004.

China Helps Taiwan Investors
--------------


10. During September, China made a number of official
efforts to gain favor with Taiwan investors. At a
September 7 meeting in Beijing with the chairmen of
over 100 local associations of Taiwan investors in the
PRC, Vice Premier Wu Yi promised that the PRC would
start to issue 3- to 5-year multiple-entry permits for
Taiwan travelers. She announced that the PRC would
provide five-year loans totaling RMB 30 billion aimed
at attracting Taiwan investors in major infrastructure
and high-tech industries. Wu also agreed that the new
Shanghai school for children of Taiwan investors could
use the term "Taiwan businessmen" (taishang) instead
of "Taiwan compatriots" (taibao),allowing Taiwan's
Ministry of Education to recognize its diplomas and
subsidize tuition for Taiwanese students.

Taiwan Investors Want Progress
--------------


11. On the other side of the Strait, Taiwan Premier
Frank Hsieh met on September 21 with Taiwan investors
returned from the Mainland during the Mid-Autumn
Festival. According to media reports, many
participants were disappointed by the lack of any new
announcements on cross-Strait issues such as direct
links, entry permits for Mainland visitors, or
expansion of international flights to Taichung.
PAAL