China is giving Taiwan everything it wants in a landmark trade deal and asking little in return, as it seeks to charm the island with economic sweeteners in its quest for a political deal to end decades of hostility. But with both sides having very different expectations of what the economic cooperation framework agreement (ECFA) will achieve, coupled with deep-seated military suspicions, quick movement on political talks is unlikely. “Beijing is clearly aware of where and how deep the resistance is to closer cooperation among a certain segment of Taiwan's population, and it would appear that some tariff decisions were made with this in mind,” said Ralph Cossa, president of the US think tank Pacific Forum CSIS. “The real winners will be the people of Taiwan whose economy will get a boost and who are getting a better deal than they could have anticipated if politics were not a factor.” China and Taiwan have been ruled separately since defeated Nationalist, or KMT, forces fled to the island at the end of a civil war in 1949. Beijing claims sovereignty over the island, and insists it must eventually be reunified with the mainland. Ties have improved radically, however, since the China-friendly Taiwan President Ma Ying-jeou won election in 2008, and ECFA is the most significant and wide-ranging agreement yet between two sides who once stood poised for war. China, now the destination for around 40 percent of Taiwan's exports, has gone out of its way to be nice to Ma, a man it much prefers to his pro-independence opposition party predecessor Chen Shui-bian. The ECFA is case in point. Beijing is going to lower import tariffs on 539 items versus 267 by Taiwan when the two sides formally sign the deal next Tuesday in the gritty southwestern Chinese city of Chongqing, so giving far fewer economic advantages to Chinese firms. China appears to care more about helping Taiwan's export-led $390 billion economy, hard hit in the global downturn, and so hopes to impress the island's staunchly anti-Communist public and keep Ma's Nationalist Party in power. The cuts on the Taiwan items are valued at $13.84 billion and those from China $2.86 billion. A private research body in Taiwan has previously estimated that ECFA could create some 260,000 jobs in Taiwan and lift GDP by around 1.7 percentage points a year. Such strong deliverables from the deal would help Ma's party survive tense Nov. 27 local elections seen as a barometer for the 2012 presidential race against the anti-China opposition that Beijing so detests. Politically, though, China and Taiwan have very different goals when it comes to ECFA. “The Chinese intend this to be a step forward towards something of a political solution,” said Steve Tsang, an expert on China-Taiwan relations and professorial fellow at St Anthony's College, Oxford University. “The Taiwanese intend this to be a step forward to having free trade agreements with other countries in Asia and perhaps beyond. Ultimately the Chinese have a political agenda which is not shared by the Ma administration.” Many in Taiwan still fear Communist China is using the deal to make an unwelcome push for political unification. Some point to Beijing's comment last month that it would not allow Taiwan to sign free trade deals with major world economies as a worrying sign the island may not get the kind of benefits it is hoping for. “If investment gets no boost, nothing changes, we're still struggling with Taiwan stocks mostly down, then it's going to be tough for the administration,” said Raymond Wu, managing director of the political risk consultancy e-telligence in Taipei. There is also little sign that thorny political talks might start anytime soon, something neither side seems willing to push at the moment, preferring to “deal with the easy first, and difficult later,” as Chinese politicians put it. Military suspicions remain deep, with Taiwan and especially China continuing to ramp up their forces. Taiwan estimates that China has more than 1,400 missiles aimed at the island. “Not to our knowledge,” Andrew Yang, Taiwan's deputy defense minister, said last week when asked if there was any indication China had redeployed these missiles in a sign of goodwill. “There's no indication that they have done so.”
