Taiwan wants 'friendly' China ties amid tilt to South-east Asia

Taiwanese parading with banners demanding Taiwan independence in central Taipei, Taiwan, on Sunday (May 7).
Taiwanese parading with banners demanding Taiwan independence in central Taipei, Taiwan, on Sunday (May 7).PHOTO: EPA

TAIWAN (BLOOMBERG) - Taiwan's premier Lin Chuan said he is not opposed to stronger economic ties with China, even as the administration looks to boost its trade links with the US and South-east Asia.

China is a big market and many industries across the strait complement each other, Mr Lin, 65, said in his first interview with foreign media since he was sworn in almost a year ago. "We shouldn't push it away," Mr Lin said at his offices in Taipei on Friday (May 5).

"As it is a huge market over there in mainland China, it behooves Taiwan to maintain friendly, smooth economic relations," he said. "In doing that, there's no downside for Taiwan.

"So as far as trade and the division of labour are concerned, the cross-strait economic relationship isn't something that should be avoided," he said.

The Cabinet chief's comments come as President Tsai Ing-wen proposes a new model for cross-strait relations with a focus on structural cooperation. It is a careful balance: Some lawmakers in Ms Tsai's ruling Democratic Progressive Party (DPP) criticised her predecessor for a perceived over-reliance on China, which accounted for as much as 41.8 per cent of the island's exports during Ma Ying-jeou's tenure.

While Mr Lin's portfolio includes the economy, relations with China are overseen by Ms Tsai. Mr Lin said Taiwan also wants to foster trade links with other nations to reduce domestic anxiety over a dependence on China. Chinese opposition to such moves could hurt ties, he added.

"He was addressing the objective reality," according to Mr Alexander Huang, chairman of the Taipei-based Council on Strategic & Wargaming Studies. "The high reliance results from the choice of businesses like Taiwan Semiconductor Manufacturing and Foxconn Technology Group, instead of governments."

Tensions between the diplomatically-isolated Taiwan and China have been elevated since Ms Tsai's pro-independence DPP swept the Beijing-friendly Kuomintang from power last year. Ms Tsai, who has angered Beijing by refusing to endorse the "One China" framework, has sought to bolster the island's military and reduce its trade dependence on China.

'LOW-KEY MEASURES'

Free-trade deals are necessary for a small, open economy like Taiwan, Mr Lin said. "We will adopt low-key and pragmatic measures to establish better economic relations with other countries," said the former finance minister and statistics bureau head.

Mr Lin said a US free-trade pact could help enhance the competitiveness of Taiwanese products, though he added it would depend on US interest in having such talks. Taipei could also seek discussions with the European Union, he said.

Ms Tsai said in March that Taiwan and the US should engage in talks on trade as a matter of priority. "Both sides should have frank and substantive discussions and work towards a new bilateral trade agreement," she said.

Ongoing talks under the Trade and Investment Framework Agreement will provide a forum to discuss related issues, American Institute in Taiwan director Kin Moy said in March.

SOUTH-EAST ASIA LINKS

Ms Tsai's administration is also seeking closer ties with Australia, New Zealand, the 10 members of the Association of South-east Asian Nations (Asean) and six South Asian countries.

In the June-March period, inbound visitors from those areas surged 23 per cent on-year to 1.63 million, according to a Cabinet statement.

Still, "China will see this as not just an economic issue but a political one", Mr Lin said, adding "that's regrettable for us".

"China should think these things through more clearly," he said. "If Taiwan establishes better economic ties with other countries, it's not just good for Taiwan, it's good for economic ties across the strait."

Diversified economic relations could help counter domestic objections to economic links with Beijing, Mr Lin said.

"Only when Taiwan has better economic relationships with other countries can Taiwan and China share closer economic ties and more opportunities," he said.