Election Hints of New Cooperation by Taiwan, China

Taiwan's presidential election ended in victory for the opposition on Saturday, and will likely result in a new era of cooperation between Taiwanese and Chinese technology companies.

Taiwanese companies, which have been part of the global IT economy since the beginning of the personal computer age in the 1970s, face an easier time working in China with the change in power. The victor in the election, Nationalist Party (Kuomintang) candidate Ma Ying-jeou, has pledged to work for direct flights and shipping with China, allow companies to invest more there, and ease technology transfer restrictions.

Ma won 58 percent of votes in the election, compared to 42 percent for rival Frank Hsieh, of the ruling Democratic Progressive Party.

The changes will be big for both sides. Taiwanese companies have invested an estimated US$150 billion in China over the past few decades, and another US$20 billion stands ready to head across the Taiwan Strait thanks to Ma's victory, according to CLSA Asia-Pacific Markets.

In return, Taiwanese companies gain cost advantages due to tax and other incentives to build factories in China, in addition to a huge potential market of consumers that share the same language and a similar culture.

"Ma has received a mandate to improve cross-Strait relations," said Jean-Pierre Cabestan, professor at Hong Kong Baptist University, during a panel discussion on the election results Sunday. The vote was a huge win, and Ma's key campaign message centered on Taiwan working to benefit from its economic relationship with China, he added.

Many Taiwanese have been dissatisfied with the current government because its pro-independence platform has held back potential economic gains from working with China.

"The economy [in Taiwan] has been deteriorating for at least the past four years now as has, arguably, the standard of living," said Cabestan.

Some Taiwanese hope the island one day will reunify with China, while others yearn for independence. Most people prefer the status quo because Taiwan already enjoys a standard of living much higher than China. Globally, tensions between Taiwan and China remain a danger to peace in Asia, akin to hostilities between North and South Korea.

"Don't let Taiwan become a second Hong Kong or a second Tibet," admonished Taiwan's current president, Chen Shui-bian, after voting on Saturday.

China's recent crackdown on Tibet had threatened Ma's potential for victory Saturday by fanning anti-Chinese sentiment just ahead of the poll. China gave Taiwan to Japan in 1895 as part of a war settlement, but took the island back in 1945, after World War II. Civil war in China ended in 1949 with the Nationalists retreating to Taiwan, protected from the mainland by 160-kilometers (100 miles) of ocean and the U.S. Navy. China has vowed ever since to take back the island, by force if necessary.

During Taiwan's first-ever free presidential election in 1996, China fired missiles over the island to warn voters not to elect candidate Lee Teng-hui, who China regarded as a force for independence. The U.S. sent the aircraft carrier USS Nimitz and its battle group to the Taiwan Strait to keep the peace. Lee won by a landslide.

"The most important thing is to love Taiwan, to love your country," said Lee, after casting his ballot Saturday.

Despite the Tibet issue, Saturday's election focused more on economics than independence.

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