China has pledged billions to help Taiwanese firms. Bloomberg says (emphasis mine):
China offered 130 billion yuan ($19 billion) of loans for Taiwan companies operating on the mainland as the ruling parties of both governments laid out proposals to boost financial ties.I love that construction there in the third paragraph -- the Party to Party talks provide a framework for "government-level" talks. Bloomberg recognizes that the Party is above the government in both nations. As that last sentence shows, it's just a matter of time before we're flooded with Chinese workers here on the heels of all the Chinese construction companies. China has already agreed to recognize Taiwan qualifications, according to the article -- so Taiwan will probably recognize theirs. This is normal practice between nations -- so it will be interesting to see whether the mutual recognition of qualifications contains even a hint of separate sovereignty -- and whether the Taiwanese will give a damn when it does not.
Beijing would provide the financing over three years and also purchase $2 billion worth of flat-panel displays from the island’s companies, Wang Yi, director of the Taiwan Affairs Office, said at the conclusion of a weekend forum.
The meeting between officials of Taiwan’s ruling Kuomintang and their Chinese counterparts sets a blueprint for further government-level talks after a nine-year suspension. Taiwanese businessmen have invested an estimated $150 billion in China and are clamoring for the island’s financial firms to be permitted to offer services to ease access to funding and capital.
“Cooperation at this time is especially meaningful as the global financial crisis will soon spread to the manufacturing industry,” said Schive Chi, chairman of the Taiwan Stock Exchange. “As both China and Taiwan have few foreign debts and both have high savings ratio, we should really actively use up the huge savings to help boost our economies.”
The Industrial and Commercial Bank of China and the Bank of China would provide 50 billion yuan each, while China Development Bank will offer 30 billion yuan in addition to a previous offer of 30 billion yuan, Wang said.
Taiwanese firms with operations in China have suffered falling profit margins on rising labor costs and falling demand amid a deepening global recession. Access to financing and capital has been difficult in China, where Taiwanese banks and securities firms can only maintain representative offices, which aren’t permitted to offer any financial services.
Consensus was also reached that the two sides should establish a financial supervisory mechanism and provide a currency clearance system, said Tseng Yung-chuan, Kuomintang vice chairman. That would effectively permit Taiwanese banks to offer financial services on the mainland.
“Once the planned agreement upgrades their offices to branches, Taiwan banks can cooperate with us to jointly provide financing to Taiwan businesses on the mainland as we can control risks then,” Wu said.
Taiwan’s First Commercial Bank, Hua Nan Commercial Bank and Chang Hwa Commercial Bank are among the seven Taiwanese banks that have set up representative offices in China.
China will also support participation by Taiwanese companies in public construction projects, strengthen cooperation in new energy development, electronics and Chinese medicines, and allow Taiwanese lawyers to work in the mainland, Wang Yi said. China will also support its businesses participate in Taiwanese public construction projects, Wang said.
Financial Times has a good thumbnail analysis of the bail-out:
Alas, it is easier to see China's largesse back-firing rather than giving Taiwan a boost. First, the numbers are small: $2bn represents maybe 6 per cent of Taiwan's annual panel sales. Ordering China's banks, which are essentially domestic lenders, to make loans overseas will undoubtedly tax their risk-assessment skills; and any bad loans will hardly cement relations. Chinese aid is no cure-all, as evidenced by Hong Kong's closer economic partnership arrangement – styled by Beijing as a "win-win" deal that turned out to bring very limited benefits to the territory. It beats bellicose rhetoric, of course, but Taiwan should hardly expect something for nothing.
It's the shock doctrine at work. Gobsmacked by the crisis, the talks on "aid" will be used to shock the Taiwanese into accepting permanent concessions on sovereignty for temporary aid for the crisis. The loans also serve China's drive to "internalize" its annexation of Taiwan -- present the Taiwan issue as an "internal" issue of China, whereas the democracy and independence side here wants to "internationalize" the issue.
UPDATE: Feiren notes in the comments below that Taiwan qualifications may be recognized, but may not be fully used...
The fine print in important. Taiwanese lawyers who pass the Chinese bar exam will be allowed to practice in China but apparently will not be able appear in court for litigation.[Taiwan]