I suppose China can't bad mouth the US (currency, trade, Tibet, South China Sea); Japan (Senkaku islands, WWII grievances); and Taiwan at the same time. So, while the first two are in Beijing's doghouse, it's Taiwan's turn to be rewarded in signing an FTA with the PRC as well as putting off any aspirations for formal independence in the near future. Economic relations are becoming closer as each--can I use the word "country"?--of the protagonists is keen on establishing a financial service presence in the mainland and Taiwan, respectively:
Taiwan's banking authority has given two mainland banks the green light to open offices in the island province Thursday, marking a milestone in financial sector easing across the Straits. The [state-owned] Bank of China and the Bank of Communications are the first two mainland banks to gain approval from the Taiwan Financial Supervisory Commission to set up representative offices.So Taiwanese banks won't be able to lend to PRC national projects, but there should still be plenty to lend to nonetheless. It will certainly be interesting to watch if Taiwanese banks can make more inroads into the Chinese banking system than the Western ones who've always chafed about barriers being placed on their ability to conduct business in the mainland.
Representative offices of the two banks will be allowed to conduct non-business activities including establishing local industry contacts and gathering financial market information. Under the cross-Straits Economic Cooperation Framework Agreement signed in June, mainland banks can apply to set up branches in Taiwan after operating for one year as representative offices.
Last week, the China Banking Regulatory Commission granted approval to four Taiwanese banks to set up branches in the mainland as well. The Land Bank of Taiwan and the First Commercial Bank will establish branches in Shanghai, while Taiwan Cooperative Bank and Chang Hwa Bank are eying locations in Jiangsu Province.
The new market access will provide business opportunities for mainland banks in terms of growing tourism, trade and investment across the Straits, said Guo Tianyong, a finance professor with Beijing's Central University of Finance and Economics.
Taiwanese banks also are keen on entering the mainland market where interest margins are as high as 3 percent compared with 0.8 percent in Taiwan, according to Shen Chung-Hua, finance professor with Taipei's National Taiwan University [this is certainly useful information, but fat spreads surely aren't ideally disclosed in a propaganda outlet?]
Taiwanese banks will also face their fair share of challenges including having to wait for one year after market entry before they can conduct business using the mainland yuan. In addition, the Taiwan university professor asserts these banks probably won't be allowed to engage in lending to large, lucrative public works projects such as railways, roads and airport facilities in China.