Taiwan’s recent presidential race, which saw the re-election of President Ma Ying-jeou, generated much mutual interest both in Taiwan and in mainland China, where millions reportedly used social media networks to comment on the developments. The Kuomingtang (KMT) party’s control for another four years brings up the topic of “One China” that so often dominates headlines and online chatter.

When I was growing up in China, the party machine heavily promulgated the view of “One China” to its youth. I recall my geography teacher showing us a map of China, which has a striking resemblance to the profile of a rooster. He would tell us, as a matter of fact, that the “little foot” sticking out at the bottom of the map (Taiwan) was part of the bird. Without it, the picture of the rooster, and China, would be incomplete.

Much has happened since that period about 20 years ago. In 1997, we saw a mostly peaceful handover and transition of Hong Kong from the United Kingdom back to China. Meanwhile, Taiwan remains the distinctly independent “Republic of China.” Despite the occasional noise made by politicians on both sides of the Taiwan Strait over the concept of “One China,” economic ties between the two sides have undeniably been strengthened over the years. Taiwan continues to be among the largest foreign investors in China with more than US$150 billion in total cumulative investments. Following the introduction of direct flights between China and Taiwan in 2008 (after 60 long years of standoff over the issue), travel and commerce between the “two Chinas” has flourished.

On my recent trip to China, I was reminded of the power of the economic integration in the Greater China region despite the ongoing political disputes. I met with a few companies during my trip in the beautiful and vibrant southern coastal city of Xiamen, directly across the water from Taiwan. There, I found many Taiwanese eateries and was told that the city has a strong community of Taiwanese expats who contribute significantly to the local economy. Just 2 kilometers off the coast from Xiamen, one can see the small island of Kinmen—an outpost controlled by Taiwan. Once fought over by the two rivals, the island was extensively shelled by the Chinese military as it was considered strategically important. Fortunately, political quarrelling over the island has subsided and it has since become a tourism destination for both Chinese and Taiwanese tourists.

The economic benefits of stable cross-strait relationships are evident. Throughout China, one can find signs of successful Taiwanese expansion into China. With their expertise of developing Taiwan’s market, the firms have been able to introduce solid business practices into China to help facilitate its economic development. During my trip, I visited with several leading consumer companies, all with deep roots in Taiwan.

Although the debate over “One China” will likely continue, stronger economic ties should continue to benefit those on both sides of the Taiwan Strait. As investors in Asia, we will continue to seek out the companies that participate in the growth created by the increasingly integrated ecosystem, regardless of which side of the strait they may call home.

 

 

 

(C) Matthews Asia

www.matthewsasia.com