By Chinmei Sung and Yu-huay Sun
July 14 (Bloomberg) -- Taiwan will continue to push for an economic cooperation accord with China, Premier Liu Chao-shiuan said today, adding “there’s no delay” in the process.
The two sides expect to finish a joint study on the planned economic agreement before the end of September and complete negotiations this year, Minister of Economic Affairs Yiin Chii- ming said at a business breakfast in Taipei. The island is also working on signing a separate financial deal with the mainland, Liu said at the same event.
The Taiex stock index rose as much as 1.2 percent after plunging the most in a month yesterday on concern accords with China to ease restrictions on trade and finance could be delayed. Taiwan is seeking closer ties with the mainland to support an economy that it forecasts may contract at a record pace this year amid declining exports and business investment.
“Negotiations will take time as an economic agreement involves many facets,” said David Dong, who helps oversee the equivalent of $1.5 billion of assets at President Investment Trust Corp. in Taipei. “The market overreacted yesterday as it is inevitable talks with China will have twists and turns.”
President Ma Ying-jeou’s government wants to sign agreements with China that would waive tariffs and give preferential market access for the island’s banks, brokerages and insurers.
Stock Market
Negotiations for an economic cooperation framework between China and Taiwan should begin this year, with the signing of a deal in 2010, Lai Shin-yuan, chairwoman of the island’s Mainland Affairs Council, said July 12. The comments helped spark a 3.5 percent slump in the share index yesterday.
The Taiex index rose 0.9 percent to 6,592.43 at 10:14 a.m. in Taipei. Shares in Cathay Financial Holding Co., the island’s largest publicly traded financial-services company, increased 0.8 percent and those in Fubon Financial Holding Co. gained 0.7 percent. Taiwan Semiconductor Manufacturing Co. rose 1.3 percent.
The Taiwan dollar advanced 0.1 percent after falling yesterday to the lowest since May 6 against the U.S. currency.
Ties between China and Taiwan have improved since Ma took office in May last year, abandoning his predecessor’s pro- independence stance. The two sides started direct flights, shipping and postal services across the Taiwan Strait on Dec. 15, ending a six-decade ban.
Unemployment Forecast
The jobless rate may climb to 6 percent in June and July, Premier Liu also said today. That would surpass the record 5.84 percent rate reached in May.
Taiwan’s economy shrank an unprecedented 10.24 percent in the first quarter from a year earlier, the statistics bureau said May 21. Gross domestic product may contract 4.25 percent this year, it forecast.
The government plans NT$858.5 billion ($25.9 billion) of spending over four years, equal to about 6 percent of GDP, on infrastructure, consumer grants and tax cuts to revive growth.
Taiwan has earmarked NT$313 billion for economic stimulus next year, the Council for Economic Planning and Development said yesterday.
China and Taiwan split in 1949 after a civil war brought the communists to power in the mainland, forcing the Nationalist Kuomintang to flee to the island. China regards Taiwan as one of its provinces and has threatened to invade if it declares formal independence.
To contact the reporter on this story: Chinmei Sung in Taipei at csung4@bloomberg.netYu-huay Sun in Taipei ysun7@bloomberg.net
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