Sep 25, 2015
As the Sept. 25 meeting between US president Barack Obama and Chinese president Xi Jinping approaches, the US Federal Reserve has not raised interest rates as anticipated, which can be read as a goodwill gesture for China’s economy, which is on the verge of a crisis.
In such an atmosphere, it is expected that lengthy talks between China and the United States to sign a bilateral investment treaty (BIT) could see major progress.
While China-US trade and economic links are expected to see an important breakthrough, Taiwan should pay attention to the development of China’s friendly trade and economic relationships with the US and the European Union and should be prepared to open the doors of its market fully, while holding trade talks with the US under the Trade and Investment Framework Agreement (TIFA) between the two countries.
China and the US have been discussing the BIT issue since 2008, but did not exchange negative lists until June, when they held their 19th round of negotiations. The result signified a big step forward toward the trade and economic globalization of the Chinese market.
As the world’s two largest economies are expected to sign a BIT soon, the deal is expected to accelerate China’s economic and trade reforms and to draw foreign funds into the Chinese market to stimulate economic momentum.
The signing is expected to relax restrictions on US investment in China and with the opening of its market to US enterprise, the mainland can introduce technology from the US and promote technology cooperation for reforms in the services industry.
The BIT comes at a crucial moment, when China needs advanced technology as it is adjusting its economic structure to meet the goal of upgrading Chinese industry under the "Made in China 2025" initiative.
Facing the expected changes in China-US economic and trade relations, there is no time for Taiwan to wait in promoting its economic and trade globalization. If the US and China make a major breakthrough in their BIT, there should also be a breakthrough on the US-Taiwan bilateral investment agreement (BIA) during talks between the two countries under the terms of TIFA, scheduled for October.
Currently, whether or not the Taiwan-US BIA can be signed relies on whether Taiwan’s legislature can pass an amendment bill on the Statute For Investment By Foreign Nationals, so that the restrictions on foreign investment in Taiwan are further relaxed to meet US requirements.
Compared with China’s BIT with the US, the BIA with Taiwan is not a top priority for Washington, because the market scale on the island is much smaller than that of China. However, it is vital for Taiwan to maintain economic cooperation with the United States and to take part in economic integration in the Asia-Pacific region.
While China is actively promoting its economic and trade globalization, Taiwan should do the same, but should be more aggressive, otherwise it won’t be able to attract business when its investment environment is not as attractive as that of the mainland. Time is tight on the Taiwan side.
No matter who gains victory in Taiwan’s presidential election in 2016, the first thing the new president must deal with is legislative efficiency and the issue of Taiwan’s economic and trade globalization.
Source: Want China Times