While cross-strait relations between Taiwan and the Chinese mainland make some gains in 2005, heavy baggage weighs down further progress
　　
　　Relations across the Taiwan Strait got off the ground last year with direct flights between the mainland and Taipei, though interaction at an official level remained turbulent.
　　The cross-strait relationship, which continues to be an unrelenting focus of government attention, has a complicated background and unclear future, a situation echoed in recent Chinese media reports on topics relating to Taiwan. While seemingly innocuous in subject matter--charter flights, cuddly pandas--the back-story to the headlines runs deep.
　　One story was an apparent heart-warmer in the weeks leading up to the Spring Festival, China’s lunar New Year and most celebrated national holiday. Direct, chartered flights were offered between mainland cities and Taipei, the island’s capital, making it easier for the lucky few with tickets to head home for the holidays.
　　Since the founding of new China in 1949, this was only the third time that such flights--a short jaunt across the narrow strait--have received the go-ahead from both sides. Making it happen was no small matter.
　　Other reports, meanwhile, focused on a tale of two pandas offered by the mainland to Taiwan as a traditional gift. Getting the pandas accepted and over to the island has proved a controversial matter. Turning up the charm, the Chinese Government early this year released biographical details on the animals and held a nationwide contest to name them.
　　Such stories were a far tone from announcements made by top-level Chinese officials in 2005 on the subject of Taiwan--statements that also received widespread attention, but for different reasons.
　　In March, Chinese President Hu Jintao made four suggestions regarding cross-strait relations. Specifically, the guidelines included sticking to the “one-China principle,” never abandoning efforts to seek “peaceful reunification,” never changing the principle of “placing hope on the Taiwan people” and never compromising in opposing “Taiwan independence.”
　　Also in March, the National People’s Congress enacted the Anti-Secession Law, a high-profile law that authorizes the use of “non-peaceful means” against Taiwan if the island formally declares independence.
　　Such remarks were the latest volleys in the longstanding and tense situation of relations between China and Taiwan.
　　
　　Cross-strait flight
　　
　　Direct links in trade, mail and flights between the two sides of the Taiwan Strait, especially a direct flight, are considered critical by the Chinese Government for the development of cross-strait relations.
　　In recent years, the Chinese mainland has made consistent efforts to this end, including a direct flight on a trial basis, Spring Festival charter flights and the partial development of “mini-three links,” direct links between mainland ports and three outlying islands including Kinmen, Matsu and Penghu. However, there have been no major advancements in the development of a normal nonstop flight.
　　May 12, 2005, Chinese President Hu Jintao and People First Party (PFP) Chairman James Soong Chu-yu jointly released the following points in a communiqué: “To boost the successful mode of charter flights in the 2005 Spring Festival, to regularize charter passenger flights during festivals, to facilitate freight transportation stage by stage and to lay the ground for an ‘a(chǎn)ll-round, direct and bi-directional flight’ in 2006.”
　　Promoting a direct flight has become the key target of the Kuomintang (KMT) and PFP, both political parties in Taiwan that lean toward reunification with the mainland, for 2006.
　　The two parties have said they will promote the resolution that Sung Shan Airport in Taipei opens air routes to Hong Kong and Macao, and jointly revise the “Statute Governing Relations Between Taiwan and Mainland China” by adding the direct flight item into the statute.
　　Whether the ruling Democratic Progress Party (DPP), which supports independence of Taiwan, will adjust its policy is considered key for the realization of a direct flight.
　　At present, there are different voices on the “three direct links” topic inside the party. DPP legislative caucus Secretary-General Chen Chin-jun said the DPP should reflect on its cross-strait policy, see the importance of “three direct links” and discard the mentality of close-up so as to win public support. Taiwan “Minister of Economic Affairs” Ho Mei-yueh said on a public occasion that the “three links” is an inevitable trend of further opening-up.
　　While it might be difficult for the DPP to fully launch cross-strait direct flights, the regularization of charter services for passengers and freight during festivals is very hopeful.
　　Currently, the two sides are developing more common understandings on the opening-up of charter services for passengers and freight, while the mainland has made certain concessions. Differences now revolve around whether there should be a package solution or separate arrangements for passenger and freight shipping.
　　At the end of 2005, the aviation sectors of both sides reached an agreement in Macao about charter flights for the upcoming Spring Festival.
　　Aside from the scheduled flight increases, qualified passengers have also expanded from Taiwan merchants and their relatives to any other Taiwan residents with valid credentials. The authorities hope to accumulate experiences and create conditions through festival charter flights, hopefully for the realization of regular charter services for passengers and freight in 2006.
　　
　　Mainland travel to Taiwan
　　
　　In 2005, the mainland launched a series of policy initiatives such as equal fees for Taiwan students on the mainland and broader employment opportunities for Taiwanese on the mainland and tariff exemption on fruits from Taiwan. However, there are also many initiatives requiring policy adjustments by Taiwan, among which the most important and widely concerned is opening up the mainland to Taiwan tourism.
　　As a follow-up, Taiwan approved the trip by a large mainland tourist group to Taiwan headed by the director general of the China National Tourism Administration, which nurtures hope for mainland tourists to travel to Taiwan in the near future.
　　The opening of Taiwan to mainland tourists will become an impetus for the rebound of Taiwan’s economy, which would be widely welcomed by the Taiwan tourism sector and Taiwan residents alike.
　　Currently, a few signs show the DPP is moving in this direction. Besides ratifying the visit of the director general of the China National Tourism Administration to Taiwan, DPP recently announced a plan to set up new nongovernmental organizations as negotiators with the mainland over mainland-to-Taiwan tourism, which will perhaps generate a chain reaction regarding civilian communication, financial and business cooperation.
　　
　　Cooperation in financial industry
　　
　　The development of Taiwan’s financial industry on the mainland and the cooperation of cross-strait financial industries are lagging, mainly because of policy restrictions. Whether cross-strait cooperation in the financial industry will make a breakthrough will be under the spotlight of the business world in Taiwan and the mainland in 2006.
　　Cross-strait currency exchange has been one of the most noticeable problems in financial communication between Taiwan and the mainland. On October 3 and 4, 2005, the Taiwan authorities opened experimental RMB exchange services in Matsu and Kinmen, outlying islands near Taiwan, setting the upper limit of daily exchanges per capita at 20,000 yuan ($2,500).
　　As there are a large number of Taiwan merchants and travelers shuttling between Kinmen and Xiamen, a city on the mainland, the renminbi exchange business is booming, with a total exchange volume of 80 million yuan ($10 million) in two months.
　　Relevantly, the signing of a currency liquidation protocol between the two sides has gradually become the focus in the discussion of cross-strait financial cooperation.
　　The Chinese Government said that in 2006, communication and cooperation of cross-strait financial industries should see a series of new developments, with emphasis placed on Taiwan opening specific sites for renminbi exchange and mainland banks being allowed to establish offices in Taiwan.
　　
　　Taiwan investment in mainland
　　
　　Investments by Taiwanese merchants in the Chinese mainland have entered an era of transformations.
　　First of all, with the change of investment environment on the mainland, Taiwan businessmen are faced with the task of adjusting the structure and layout of their investments.
　　Second, policy restrictions of Taiwan authorities over Taiwan’s investments on the mainland have become a pain in the neck for Taiwan investors.
　　The most annoying hurdle to mainland investment by Taiwanese merchants is that the investment amount can’t exceed 40 percent of corporate net assets or total capital amount. However, after years of development, the cumulative amount of Taiwan merchants’ investment into the mainland has been increasing. As of the third quarter of 2005, the investment structure of 36 listed Taiwan-based companies had breached the limitation set by Taiwan authorities, while many more companies were approaching the limit.
　　The original purpose of the policy was to prevent Taiwan’s capital outflow, encouraging local enterprises to “hold their roots in Taiwan.” The problem is that the policy can’t control the capital outflow, as Taiwan merchants could invest in the mainland through first moving the money to an offshore financial center. Such a mode has become one important way for Taiwan merchants to invest in the mainland.
　　Meanwhile, it also generates negative effects, such as the inaccurate judgment of cash flow and the contrived restriction of the global strategy of Taiwan enterprises, which is bad for the improvement of corporate competitiveness as well as Taiwan’s economic development, sinking Taiwan banks into trouble.
　　At present, voices on the island to revise the policy are growing louder, putting huge pressure on the government. Taking the inland political fight, economic development and long-term running of DPP administration into consideration, the DPP is expected to reflect on its policy of investment restriction in 2006, which raises the possibility of readjustment.
　　
　　A handshake with gloves
　　
　　There were two high-profile deaths in 2005. Koo Chen-fu, Board Chairman of the Straits Exchange Foundation (SEF), Taiwan’s nongovernmental organization for handling ties with the mainland, died January 3.
　　Almost a year later came the death of his counterpart, Wang Daohan, former President of the mainland-based Association for Relations Across the Taiwan Straits (ARATS). Wang died December 24 in Shanghai at the age of 90, and observers said his passing symbolized the end of the “Wang-Koo Era.”
　　An article in Phoenix Weekly, a Hong Kong-based newsmagazine, noted that “the first Wang Daohan-Koo Chen-fu talks (Wang-Koo talks) were encouraging and inspiring due to their mature realm of thought, while today people still consider the two as symbolic figures for both sides because they blazed a new path from nowhere.”
　　Wang and Koo met for the first time in Singapore in 1993, where they signed several documents, including a common agreement based on their talks and an agreement for future contact and discussion between the two organizations.
　　These talks were the highest-level dialogue between senior officials from both sides of the Taiwan Strait under the name of nongovernmental organizations in the 44 years since the foundation of new China. Though the two men’s encounter was described jokingly as “a handshake with gloves,” their encounter eased tense cross-strait relations.
　　However, in the years that followed, cross-strait relations tightened up. There were no signs of improvement until 1998, when a second Wang-Koo meeting was scheduled. In October of that year, Koo and 12 SEF delegates set out from Taipei to Shanghai, via Hong Kong.
　　At those talks, Wang and Koo reached four points of consensus, among which the most anticipated was “SEF Board Chairman Koo invited President Wang Daohan to visit Taiwan with great hospitality, while President Wang was very thankful about that, and said that he was willing to visit Taiwan at an appropriate time.”
　　Wang was scheduled to visit Taiwan in the autumn of 1999. However, the then Taiwan leader Lee Teng-hui put out the “two states theory” (that cross-strait relations are the relations between two states, at least in a special way, which runs contrary to the Chinese Government’s “One China” policy) in July 1999, which put an end to the visit.
　　The Chinese Government considers cross-strait relations to have deteriorated even further since Chen Shui-bian and his pro-independence Democratic Progress Party came into power in Taiwan in 2000.
　　
　　Expectations for 2006
　　
　　From the start of 2005, the mainland initiated a number of new measures concerning Taiwan, including taking the initiative in proposing charter flights for Taiwan merchants during the Spring Festival and realizing a “bi-directional, synchronal, nonstop” straight flight, especially enabling mainland civil aviation flights to fly to Taiwan through normal approaches for the first time, which would open a new page in the flight history for both sides of the Taiwan Strait.
　　As well, the mainland sent two senior officials to Taiwan to express condolences about the death of Koo Chen-fu and a visit of such a senior delegation has been rare in recent years.
　　On the 10th anniversary of “Jiang Zemin’s Eight Points on Taiwan Issue,” Chinese People’s Political Consultative Conference Chairman Jia Qinglin made a speech in which he said the Chinese Government has a sincere hope to promote cross-strait communication and relations. Meanwhile, Beijing released a series of policies regarding Taiwan.
　　Significant structural changes in cross-strait relations appeared in 2005, forming the basis for further development in 2006.
　　This year, while there aren’t any significant events scheduled, developments in some fields are foreseeable, such as cross-strait direct flights, mainland residents’ travel to Taiwan, and the development of cross-strait financial cooperation.
　　
　　Cross-Strait Relations in 2005
　　
　　Direct air link for businesspeople
　　At 7:40 a.m. on January 29, 2005, Air China charter flight CA1087 took off from Beijing for Taipei, making it the first-ever direct flight from the Chinese mainland to Taiwan in 56 years. Meanwhile, charter flight CZ3097 from China Southern Airlines, which took off at 9:28 a.m. the same day in Guangzhou and touched down in CKS International Airport in Taipei, was the first mainland airplane to land in Taiwan. By February 20, a total of 12 flights from both the mainland and Taiwan had made 48 non-stop round trips, carrying Taiwanese businesspeople and their families for the Spring Festival holiday. Compared to 2003, when the flights had to make stopovers in Hong Kong or Macao and no mainland planes were involved, the cross-strait direct charter flights in 2005 were a great improvement.
　　At a ceremony to mark the first flight to Beijing of two Taiwan airlines on the evening of January 29, 2005, Zhang Xiaoyan, member of Taiwan Kuomintang (KMT), praised the direct air link across the Taiwan Strait as an event of historic significance. Zhang also pointed out that it was a pity the direct flights were meant exclusively for businesspeople, leaving out Taiwanese students on the mainland.
　　At present, there are about 5,000 Taiwanese students in Beijing and approximately 10,000 in Shanghai. The mainland reportedly sees 3 million visitors from Taiwan every year.
　　“Regular direct flights should benefit all Taiwan compatriots, not just businesspeople,” said Zhang.
　　
　　Policy adjustments
　　In the session with representatives from the Taiwan Democratic Self Government League, the Taiwan Solitary Union and the All China Taiwanese Association during the Third Plenary Session of the 10th Chinese People’s Political Consultative Conference, General Secretary of the Communist Party of China (CPC) Hu Jintao put forward four guidelines for the promotion of cross-strait relations. First, to stick to the one-China principle; second, never give up efforts to seek a peaceful reunification; third, to carry on with the principle of placing hope on the Taiwan people and; fourth, never compromise in fighting the “Taiwan Independence” secessionist activities. The mainland will continue efforts to achieve peaceful reunification of the country and will not tolerate “Taiwan independence” forces’ efforts to separate Taiwan from China in whatever form or name.
　　
　　Anti-Secession Law
　　On March 14, 2005, the Anti-Secession Law was approved by a vote of 2,896 to 0, with two abstentions, at the Third Plenary Session of the 10th National People’s Congress. The law is aimed at curbing “Taiwan independence” and states that economic cooperation, direct mail, trade, and air and shipping services across the Taiwan Strait, exchanges in education, science, technology and culture, as well as communication among people across the strait should be encouraged and promoted, and the legitimate rights of Taiwan businesspeople well protected. The law provides a legal basis for the Chinese mainland to use the military option against the secessionist forces, if required.
　　
　　Party-to-party communication
　　During late April and mid-May 2005, leaders of two major Taiwan opposition parties--KMT Chairman Lien Chan and People First Party (PFP) Chairman James Soong--visited the Chinese mainland successively. The two leaders exchanged views with leaders from the Chinese mainland on a series of important issues concerning cross-strait relations and party-to-party communication.
　　Before these, a KMT delegation, led by its Vice Chairman Jiang Bingkun, visited the Chinese mainland, paving the way for Lien’s talk with Hu. The first direct exchange between high-level leaders of the CPC and KMT after 56 years led to economic and trade exchanges and agricultural cooperation, dubbed “12 consensuses,” across the Taiwan Strait.
　　During his talks with Lien, Hu put forward his “Four Propositions”-to build up mutual political trust, to strengthen economic exchanges and cooperation, to carry out negotiations on an equal footing and to encourage people’s communication across the strait. He said the deadlock in cross-strait relations must be dissolved and mutual trust reestablished for a stable and peaceful relationship across the strait.
　　Soon after Lien’s “trip of peace,” a PFP delegation, led by Chairman Soong, headed for the Chinese mainland and was warmly received. In their talks on May 12, Hu and Soong came up with six consensuses, which included fighting “Taiwan independence,” seeking peace and stability across the strait and promoting the establishment of a peace framework across the strait.
　　
　　Three-way exchanges
　　The CPC has set up a platform for regular exchanges with the KMT and PFP. The visits by Lien and Soong have stirred up a rational consideration of the prospects for cross-strait relations. The Chinese mainland announced that it would remove tariffs on more than 10 of the island’s fruits and also allow more fruits into the Chinese mainland market, ease customs clearance for Taiwan tourists, charge Taiwan students on the mainland the same tuition fees as the mainland students, and relax requirements for Taiwanese job seekers.
　　The first close contact between top leaders of major parties across the strait in more than 60 years has led to a new form of cross-strait exchanges--party to party negotiation and consultation, apart from negotiations between the Association for Relations Across the Taiwan Strait and Strait Exchange Foundation of Taiwan and communications among NGOs.

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