Cross-strait fever

8 June 2009 By John Foley Follow @johnsfoley

While exports plummet, Taiwan’s stock market has boomed. Closer ties with China are a big factor. But China s buying power alone won t cure Taiwan s trade malaise, and may create unwanted sideeffects: too much hot money, and too little restructuring.

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Taiwan's exports $16.2bn in May, 31% less than the same period last year. The comparable fall in April was 34%, according to data from the Ministry of Finance. Imports fell 39% to $13bn, producing a trade surplus of $3.2bn.

Electronics exports, which make up around a quarter of Taiwan's foreign trade, fell 19%. Exports to the US and China fell 28% and 30% respectively, less heavily than in the previous month.

China and Taiwan announced closer cooperation in financial services, travel and investments following crossstraits talks in April. Among the proposals are an increase in direct flights and a joint regulatory framework for banking.

China claims sovereignty over democratically governed Taiwan, and most countries do not officially recognise the island as a fully independent country. President Ma Yingjeou took office in May 2008 pledging to improve relations with the mainland.

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