China Offers US$19 Billion Aid to Taiwanese Firms

SHANGHAI, Dec. 22 – Chinese banks will extend almost US$19 billion worth of aid to Taiwanese firms doing business on the mainland.

According to Xinhua, the Industry and Commercial Bank of China and the Bank of China will each offer a lifeline of RMB50 billion to Taiwanese businesses in addition to the China Development Bank also extending RMB30 billion.

The measures were decided upon during a two-day meeting in Shanghai of the Cross-Straits Economic, Trade and Cultural Forum attended by Jia Qinglin, the fourth-ranking leader in China’s political hierarchy, and Wu Poh-hsiung, chairman of Taiwan’s ruling Kuomintang party.

The package of measures also includes participation by Taiwanese companies in public construction projects, cooperation in new energy development, electronics and Chinese medicines, and allowing Taiwanese lawyers to work in the mainland, reported to Bloomberg. Taiwan will start allowing Chinese companies to bid for infrastructure projects in Taiwan.

“The measures are really helpful,” said Norman Yin, a banking professor at the National Chengchi University in Taipei told Bloomberg. “Once Taiwanese banks upgrade their China representative offices, they can cooperate with mainland banks to provide financing to Taiwanese businesses in China.”

Taiwan has an estimated US$150 billion worth of investments in China and its financial firms have been rallying for the permission to offer services to gain access to more funding and capital. Currently, Taiwanese banks and securities firms operating in the mainland are only allowed to have representative offices and not offer other services.

Xinhua quoted Jia as promising that China would help Taiwan if the effects of the global economic crisis continued to deteriorate.

Last week, China and Taiwan inaugurated direct daily flights and shipping services for the first time since civil war in 1949.

Both countries maintain a sensitive “status quo” relationship although recent diplomatic relations between the two have improved rapidly since President Ma Ying-jeou was sworn in last March. China considers Taiwan a renegade province that should come back into Beijing’s political fold following the “One China” policy.

This entry was posted on Monday, December 22nd, 2008 at 3:51 pm and is filed under Economy & Politics, FDI & Foreign Trade. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.