China and Taiwan to cooperate on financial supervision

The countries agree to build a RMB-NTD clearing system, while specific MOUs for securities investments, banking and insurance will be discussed in Taipei later this year.

In the third meeting between Chen Yulin, chairman of China's Association for Relations Across the Taiwan Strait, and Chiang Pin-kung, president of Taiwan's Straits Exchange Foundation, which took place in Nanjing on Sunday, representatives of the two parties signed an agreement to cooperate on financial supervisory matters.

The deal comes 12 months after Taiwan president Ma Ying-jeou won the presidential election in Taiwan on March 22, 2008, on a pledge to revive the economy through the normalisation of relations with mainland China, after eight years of isolationism policies under his predecessor Chen Shui-bian.

The new deal will allow financial regulators from either side of the strait to assume official dialogue on supervisory cooperation. Under the new directive, China and Taiwan's regulators will begin discussing further MOUs covering: banking, investment and insurance industries; cross-strait securities investments; and possibly a special qualified domestic institutional investor (QDII) and qualified foreign institutional investor (QFII) channel for inward and outbound investments from China.

The two parties have set a schedule to finalise details of these MOUs in the next round of talks which will be hosted in Taipei in the second half of this year. 

The signing of the cooperative agreement in Nanjing included a commitment to start building a joint RMB-NTD settlement mechanism to facilitate cross-strait trading, as well as to encourage mainland enterprises to actively take up strategic investment opportunities in Taiwan. Taiwan's representatives say they will welcome mainland companies to visit Taiwan to develop further cooperation opportunities.

Representatives have also agreed to normalise cross-strait flights from the current chartered status to regular flight services, a move that will certainly undermine Hong Kong as a transit hub.

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