China, Taiwan sign deals on closer economic ties

Officials from the two sides were shown live on television signing four agreements that are potentially worth billions of dollars, after talks that marked a significant warming of ties between the former bitter enemies.

The two sides have agreed to introduce direct cargo shipping and postal services, to add passenger flights and to discuss food security in the wake of health problems caused by poisonous Chinese food imports.

Tourism cooperation was also part of the talks, which took place Tuesday morning in Taipei’s Grand Hotel between Beijing’s envoy Chen Yunlin, head of China's Association for Relations Across the Taiwan Strait, and Chiang Pin-kung, his local counterpart as head of the Strait Exchange Foundation.

Television footage showed the two men shaking hands as they held copies of the signed agreements bound in red silk brocade.

Chiang then presented Chen with a large framed painting with eight Chinese characters, in black on a gold background that read: "Peace agreement for a win-win situation."

Chen reciprocated with a crystal sculpture of a handshake, which he said symbolised peace and cooperation.

The two sides have agreed to treble direct passenger flights to 108 per week and expand services to a total of 21 Chinese cities, up from the current five.

The deals will introduce cargo flights, with up to 60 round trips per month crossing the 180-kilometre- (112-mile-) Taiwan Strait that separates the island from China.

Chiang told reporters after the signing ceremony that both sides were happy to have reached the agreements "as expected".

He said Taiwan’s current government had completed negotiations on air and shipping links begun by the previous administration of the anti-China Democratic Progressive Party (DPP).

Direct air links would cut fuel costs for airlines by 40-50 percent, he said, adding: "It will greatly boost Taiwan’s competitiveness."

Direct cargo links would cut shipping costs by 15-30 percent; he said, with the time of each journey shortened by up to 27 hours, depending on which Chinese port Taiwan’s ship are going to.

Currently flights between the two territories have to pass through foreign airspace. Ships have to traverse another country’s waters.

They also agreed to cooperate on food safety in the wake of a number of international scandals involving toxic Chinese food.

The issue has caused widespread alarm on the island, after a woman and three children were poisoned by Chinese milk, and the industrial chemical melamine was found in dairy products from China, all of which have since been banned.

The agreements, which analysts have said could be worth billions of dollars over the long term, mark a step forward in the relationship between the two sides.

Beijing formally still claims sovereignty over the island, which split from China when the nationalist Kuomintang lost the civil war and fled to Taiwan. The Chinese government has vowed to retake the island, by force if necessary.

The KMT government of President Ma Ying-jeou won office earlier this year on a platform of closer ties with China in order to improve the islands sluggish economy.

The policy has drawn widespread criticism in Taiwan, where many people fear that their island is being slowly drawn into a tight economic embrace by China, which will lead to an erosion of freedoms and lifestyle.

While Ma’s election victory ended eight years of frosty relations across the Taiwan Strait when he beat the DPP’s pro-independence Chen Shui-bian, his popularity has waned in the months leading up to this weeks talks.

He has promised that he is not "selling out" Taiwan to China, but DPP supporters have said they fear closer economic ties will lead to an influx of Chinese who could take their jobs.