January 25, 1997
IMMENSE CHINA and little Republic of China on Taiwan do not recognize each other, each claiming to be the only China, but they do an enormous amount of business together. Pretending they don't is a business. China's peaceful reconquest of the British colony of Hong Kong on July 1 threatens to end that. Hong Kong, which provides the subterfuge, will no longer be there. It will be China.
To deal with the practicalities, business leaders from Taipei and China, attended by observers from their governments, met in Hong Kong. They hashed out a deal for direct shipping between Taiwan and China for the first time since the Nationalist government fled to Taiwan before Communist armies in 1949. This is only common sense, but it is also a historic breakthrough. Currently, this trade goes through Hong Kong, which is longer and costlier.
What is not clear is whether the new trade will be limited to Chinese and Taiwanese ship lines, meeting China's definition of internal trade, or ship lines of the world, meeting Taipei's definition of international trade. Shippers have a common interest with Taiwan on this.
China-Taiwan trade was about $20 billion last year. Some 30,000 Taiwan persons and companies have invested some $30 billion in China, mostly in industrial production in coastal Fujian. They go to Hong Kong to make these investments because their own government won't let them do it from Taipei. The goods go out through Hong Kong.
This subterfuge, which is expensive, cumbersome and unbusinesslike, will disappear when Hong Kong becomes China. One container of every eight passing through Hong Kong now is Taiwan-connected. If world consumers can trade with Fujian factories through Kaohsiung instead of Hong Kong, the goods will move faster and cost less.
China will no doubt go on blustering and threatening Taiwan and repealing Hong Kong freedoms in ways to discourage the Taiwanese from accepting absorption into China. But China needs Taiwan's capital, management and entrepreneurship. The shipping deal is in the interest of both Chinas. Unlike their political rhetoric, it deals in reality and not fantasy.
Pub Date: 1/25/97
