Taiwan, China sign pact to open service sectors, further deepening their economic ties

TAIPEI, Taiwan – Taiwan and China signed a wide-ranging agreement Friday to open up their service sectors, another milestone in the ever-closer trade and economic ties between the political rivals.

Following two years of negotiation, the two signed the agreement in Shanghai to liberalize their markets.

Effective later this year, China will allow Taiwanese firms to conduct online shopping and offer medical care, transportation, tourism and other services on the mainland, Taiwan’s Straits Exchange Foundation, a semi-official group handling trade talks with China, said on its website.

For its part, Taiwan will allow mainlanders to run businesses like cargo transport, beauty shops, and morgues, and build dock facilities on the island, it said.

The market-opening moves will allow each side to further develop its service industry, benefited by an influx of capital and talents from the other side, Taiwan’s top negotiator Lin Join-san said.

Taiwan and China split amid civil war in 1949. But trade and cultural exchanges have boomed amid an easing of tensions in recent years.

The two signed a partial free trade agreement in 2010 that cut tariffs on hundreds of industrial goods, and another pact in 2012 to allow banks to set up branches in each other’s territory.

Most noted in the new pact is China’s partial opening of its lucrative online shopping business to Taiwanese companies.

China will continue to block Taiwanese online shopping sites on the mainland as it does to other foreign sites. But it will allow Taiwanese to set up shopping sites in the southern Chinese Fujian Province with mainland partners, allowing the Taiwanese to own up to a 55 per cent equity share.

For years, Taobao Marketplace, China’s equivalent to eBay, has attracted numerous Taiwanese consumers.

Taiwanese have invested more than $150 billion in the mainland — much in high-tech assembly line production. Taiwan has only approved $7 billion of mainland investments on the island since a longstanding investment ban was eased in 2009.