Taiwan's Siew pushes Chinese common market

By CNN's Geoff Hiscock, Asia business editor

SYDNEY, Australia (CNN) -- Taiwan's former premier Vincent Siew has repeated his call for a common market with China as the basis for eventual political integration.

Siew, premier from 1997 until May last year, is now chairman of the Cross-Straits Common Market Foundation and vice-chairman of the opposition Kuomintang (KMT) political party.

Speaking to a meeting of business leaders in the Australian city of Sydney Monday, he said he wants Taiwan and China to set up a common market modeled on the European Union, with a staged process of economic integration.

But he declined Monday to specify a timeframe for political union, stressing that any integration of China and the island it regards as a renegade province would be a "long-term process".

Threat of force

China insists that it retains the threat of force to bring Taiwan into the mainland fold -- a stance that irks the administration of President Chen Shui-bian, who came to power in Taiwan in May 2000.

But Chen says he is committed to achieving a better relationship, and has been easing some of the restrictions on cross-Straits ties.

With Taiwan's stock market and currency in decline, Chen is under pressure to get the domestic economy moving, even if it means a more conciliatory line towards investment in China.

Siew, who visited China in May to explain his common market concept, said he envisaged "a lot of breakthroughs" after both China and Taiwan are admitted to the World Trade Organization -- something that is likely to happen in early 2002.

Siew told the Sydney meeting it was time for Taiwan to adjust its old "siege mentality" policies in trade and economic relations with China.

Willingness to invest

"I believe that Taiwan and mainland China should return to the 1992 consensus on 'One China, separate interpretation'," he said.

"This can be the starting point for reducing political differences and strengthening economic cooperation."

Siew's comments come as figures show an increasing willingness among Taiwanese business groups to invest in China.

In part, this is driven by cost pressures.

Taiwanese computer and IT-related companies such as Acer, Asustek, Yageo and Hon Hai Precision have been moving their manufacturing operations to southern China -- particularly to the provinces of Fujian and Guangdong -- to take advantage of lower labor, plant and material costs.

Recently, some of these companies have been adding marketing and research & development functions to their mainland operations, based mainly in the east coast city of Shanghai.

Growth outlook

Another factor behind Taiwanese eagerness to invest in China is the recognition that China's faster-growing economy is creating a domestic market of immense potential.

While Taiwan's economic growth rate this year languishes at less than 3 percent, China is reporting growth of almost 8 percent.

Even allowing for overstating by the Chinese authorities, the contrast between the two economies is marked.

Already, up to 50,000 Taiwanese companies operate in China. The vast majority are sole-trader businesses, but total Taiwanese investment in China is worth more than $50 billion.

Siew said harmonizing the two economic systems and setting up a cross-Straits free trade area eventually could lead to "comprehensive economic integration", including a currency union and tax-system collaboration.

On the timing of future political union, Siew told CNN that "we can anticipate economic integration more than political integration".