Fujian Province, Increasing Trade Ties with Taiwan

October 24, 2012 Posted by China Briefing Reading Time: 4 minutes

By Yao Lu

Oct. 24 – As the first province in China to implement the policy of “opening to the outside world,” Fujian is one of the wealthier regions in the country. Its economy has posted double-digit growth for 10 consecutive years and in 2011, the provincial GDP reported a 14.4 percent growth, amounting to RMB1.741 trillion.

However, despite this fast-paced economic growth, the region’s GDP per capita remains the lowest among the country’s coastal regions. In response, Fujian Province has set out an ambitious plan to make its GDP per capita close to, or equivalent to, the average level of China’s eastern regions by 2015 as it seeks to establish a moderately well-off society.

Bond with Taiwan

Located on China’s southeastern coast, the Fujian Province directly faces Taiwan. This close proximity grants Fujian a special advantage in the economic integration between Taiwan and Mainland China. In the late 1970s, Fujian was chosen as the first province in the country to engage in economic exchanges with Taiwan and, in 2001, the province came up with the idea to build the Western Taiwan Straits Economic Zone (WTSEZ) to increase the region’s competitiveness when compared with the Pearl River Delta (PRD) and the Yangtze River Delta (YRD) economic zones. The WTSEZ development plan was then proposed by the province in 2004, aiming to expand its market size and attract more foreign direct investment.

Although the province had a head start, it still lags behind its YRD and PRD counterparts. In the first half of 2012, the GDP of Guangdong and Jiangsu tripled that of Fujian, reaching RMB2.62 trillion and RMB2.54 trillion respectively, while this figure stood at RMB798.3 billion for Fujian. Besides, due to its unique geographical advantage and policy incentives, the province used to be the major beneficiary of foreign direct investment from Taiwan, but it has fallen behind Guangdong and Jiangsu since the Chinese central government permitted direct links between Taiwan and other parts of the country.

Comparisons aside, the province has still managed to post a 11.3 percent increase in the first half of 2012, the highest among the coastal provinces. In fact, for the past six years, the province has always been at the forefront in terms of GDP growth and its potential cannot be underestimated, especially taking the “Taiwan factor” into consideration.

Economic Ties

The economies of Fujian and Taiwan are closely related and complimentary – with the current pillar industries of both regions made up of electronics, petrochemicals and mechanics. If this favorable economic factor can be properly utilized, gains from the increasing trade between the two regions can benefit both sides amid the ongoing global economic downturn.

In May of this year, the capital city of the province – Fuzhou – set up an administration office to handle the certification of origin for goods made in Taiwan, expecting to boost trade between the two regions by facilitating the exchange of goods and commodities.

Infrastructure Development

In recent years, Fujian’s inadequate infrastructure has been one of the main reasons driving Taiwanese investment to other destinations in Mainland China. However, steps are being made to remedy this disadvantage, and the local government is now focusing on the construction of a modern transport system by developing expressways, railways and ports. It is anticipated that by the end of 2015, Fujian’s coastal ports will be capable of handling 500 million tons of cargo and the length of roads and expressways will exceed 5,000 kilometers.

In another move, the provincial government has begun allocating RMB10 million each year to facilitate the development of Taiwan-funded enterprises, as well as to promote the necessary facilities and infrastructure construction for Taiwan investment zones at both the State-level and provincial-level throughout the province.

Pingtan Comprehensive Experimental Zone

As the nearest location to Taiwan on Mainland China, Pingtan – Fujian’s largest island – was classified as a Comprehensive Experimental Zone in 2009, highlighting a brand-new model of cross-straits “joint planning, joint development, joint operation, joint management and common benefit.”

In June of this year, China’s State Administration of Industry and Commerce issued 16 new policies to promote the development of the region and strengthen its bond with Taiwan.

The new policies entitle the local office to handle the application of registration and other business-related licenses directly for enterprises funded with overseas capital without going through the Beijing office, thereby making it more convenient for Taiwan enterprises to gain market access. Besides, the new policies allow Taiwan-funded enterprises to use traditional Chinese characters on outdoor advertisements and register a company name with Taiwanese idioms. All these measures aim to reduce the commercial cost of Taiwan-funded enterprises and help to attract more large-scale companies and projects to Pingtan.

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