China-Taiwan move to thaw relations

Scott Tong Dec 10, 2009

China-Taiwan move to thaw relations

Scott Tong Dec 10, 2009


Kai Ryssdal: There’s an old vaudeville joke that goes something like this: How do you dance with an elephant? The answer, of course, is very carefully, which is the way the island of Taiwan is approaching its relationship with China.

Officials from both sides met today to set up a new round of trade talks. A very big deal after 60 years of mutual animosity. But the government on Taiwan is taking this whole detente thing one elephant step at a time. From Taipei, Marketplace’s Scott Tong reports.

SCOTT TONG: At a roadside snackstand in Taiwan, I pick up a favorite local dish: a fried fishcake lathered in sauce. It’s called sweet, not spicy.

That just about captures Taiwan’s nervous hopes for its new economic deal with mainland China. After six decades of Cold War chill, the two sides are cozying up, and Taiwan’s opening its doors to China Inc.

First in: coachloads of mainland tourists. They started coming last year. Today, bus after bus winds through Taroko Gorge, Taiwan’s answer to the Grand Canyon.

So what do the Chinese think of this new detente?

Mainland passenger Jin Ping.

Jin PING: I knew there’d be beautiful scenery and enchanting weather. But my regret is, the trip’s been so rushed I haven’t eaten some of the signature food from Taiwan.

Mister Jin plays a good ambassador. He’s generous with compliments and souvenir purchases. But somehow, Taiwanese cabbie Wang Xiutao forgot to play her role of gracious host.

Wang XIUTAO: Mainlanders love buffet. But they rush in line and take too much food. Other tourists look and shake their heads. The Chinese lack manners. If they’re going to go out into the world, they need to fix that.

She’d better get used to it; ready or not here they come: Chinese tourists, airlines, investors. And a sweeping trade deal next year could bring over mainland students and property developers.

Until now, the whole relationship had been one-way: Taiwan going to China. Big-time.

Taiwanese singer Jay Chou is by far the mainland’s biggest pop star. Taiwan brands dominate China’s bottled tea market. And instant noodles. Not to mention Taiwan-owned factories in China.

Taiwan manufacturer Foxconn assembled your iPhone, and probably your laptop. Last year, Foxconn earned $62 billion. That’s more than Boeing, or Microsoft, or Pfizer.

Taiwan does well in China. But as the door opens the other way, there’s debate whether it’s good for Taiwan.

PHILIP Chao: There’s no way economically you want to turn your back.

On one side: Philip Chao at the Taiwan tourism bureau.

Chao: Truly it’s a global village. We share the same cultural background, language. We have to make our most of this situation.

The “situation” could create 200,000 jobs under a new trade deal with China. That’s according to supporters.

But Taiwan’s former defense minister Chongpin Lin’s smells an economic Trojan Horse. This worries him. Even as he drives to an evening dinner in downtown Taipei.

CHONGPIN Lin: We hear the fear of being bought. Beijing has finally learned the key to unification: it is cheaper and easier to buy Taiwan than to attack Taiwan.

Lin fears Chinese investors could seize control of Taiwanese media, and start muting criticism of the mainland. He thinks Beijing’s trying to sell this message:

Lin: The future mecca of the world is Beijing. Come and worship.

Skeptics also fear Beijing investors could control listed companies in Taiwan, and therefore the stock market. Whether any of that’s true, the economic fact is Taiwan’s GDP is a puny one-tenth of China’s. So it needs to dance carefully, says local economist Chen Li-ying.

Chen Li-ying: If China banks come too quick, our small, medium-sized banks will be squeezed out of the market. If we open too big, it’s like flooding.

This week, Taiwan’s prime minister vowed to protect any Taiwan banks from being acquired by Chinese banks.

On the streets of Taipei, there’s a realization that a go-slow approach could mean any peace dividend will come slowly. Like many countries, this island’s trying to strike a balance with emerging China: opportunity and risk, trust but verify. Sweet, and hopefully not spicy.

In Taipei, Taiwan, I’m Scott Tong for Marketplace.

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