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Taiwan's leader denies falling into China 'trap'

Taiwan softens on high-tech investment in China
Taipei (AFP) March 8, 2011 - Taiwan further relaxed controls Tuesday on high-tech investments in China by local firms, allowing makers of flat-panel television screens to export their most advanced technology to the mainland. The move by the island's economic ministry is another sign of the fast warming ties between Taiwan and its former rival since Ma Ying-jeou of the China-friendly Kuomintang party came to power in 2008. Ma had pledged to beef up trade links and allow more Chinese tourists to Taiwan.

The rule change, which becomes effective next week, came after the ministry gave the green light in December for the island's leading flat panel maker AU Optronics Corp. to invest $3 billion in eastern China's Kunshan city. The approval was conditional, as AU Optronics was allowed only to build a liquid crystal display plant there using the so-called "7.5 generation" technology, or one generation lower than its plant built on the island. AU Optronics' "8.5 generation" plant in Taiwan produces 50-inch panels.

That restriction was aimed at keeping the island's most vaunted high technology at home while allowing its flat-panel makers to tap China's vast market. But calls for easing controls on investment in the mainland have mounted among Taiwan's high-tech businesses, who argue that their competitors from South Korea and Japan have gained the upper hand in China. Taiwan's opposition, which favours independence from Beijing, has repeatedly warned against easing controls, fearing closer economic integration. China still considers Taiwan part of its territory awaiting to be reunified by force if necessary even though the island has ruled itself since their split in 1949 at the end of a civil war.
by Staff Writers
Taipei (AFP) March 8, 2011
Taiwan's President Ma Ying-jeou has rejected criticism that he has fallen into Beijing's "trap" and vowed to press on with a controversial policy of greater economic integration with the Chinese mainland.

In an interview with the Financial Times, Ma dismissed allegations from the Taiwanese opposition that in exchange for trade sweeteners, Beijing will extract political concessions, aiming to make reunification inevitable.

"We will maintain the status quo of 'no unification, no independence and no use of force,'" Ma, who is up for re-election next year, was quoted in the report on Tuesday as saying.

The island is only "a quarter to a third" of the way into opening its economy to the mainland, he was quoted as saying, and "there is still much work to be done", but "there is no pressing need to deal with political issues".

"The most important thing is to defuse and minimise the possibility of conflict," he added, denying that Taipei was on course to become overly dependent on its former bitter rival Beijing.

Ma took office in May 2008 on a Beijing-friendly platform and his government has since concluded more than a dozen deals with the mainland aimed at boosting trade and tourism.

However, Beijing still claims the island as part of its territory to be reunified by force if necessary, even though the two sides have been governed separately since the end of a civil war in 1949.

"We must courageously face the fact of mainland China's rise and calmly respond," Ma told the newspaper.

Despite US military support for Taiwan, Ma said, "We certainly can't rely on weapons alone. We don't have the ability to engage in an arms race with the mainland... We need to employ soft power as well."

The island hopes to strike free trade agreements with Singapore and other Asian countries following the signing of a major trade pact with China last year, he added.

Despite fast-warming ties, anti-China sentiments remain strong in some parts of Taiwan, particularly in the south, the stronghold of the pro-independence opposition Democratic Progressive Party (DPP).

The DPP argues Ma is failing to see that China intends to promote its unification agenda through economic means.

"China intends to use economic integration to squeeze Taiwan's political space and to push for unification but Ma doesn't have the sensitivity to recognise this," said DPP spokesman Tseng Wen-tsang.

"Ma is betting Taiwan's economic future on China and he is making Taiwan more and more dependent on China," Tseng said.



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