Taiwan-China talks hit headwinds

Taiwan and China unexpectedly nixed 1 of 4 deals during economic talks this week. The setback comes as Taiwan's China-friendly government is losing support – and has produced a rap video to try to win it back.

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Ma's party, the Kuomintang, did poorly in local elections earlier this month, which some saw as a repudiation of his China-friendly policies. A recent poll by one pro-KMT television station found that 52 percent thought Ma's policies "lean toward China too much," with only 27 percent "satisfied" with his performance.

Government tries a new tone

Faced with such numbers, Ma's government has shifted its tone to appear stronger on defending Taiwan's sovereignty.

"He's already blamed by many for pushing too hard too fast, and not getting enough in return," says Liao Da-chi, a political scientist at Taiwan's National Sun Yat-sen University. "This view is prevalent in Taiwan, and I think he got this message."

Taiwan official Chiang Pin-kung told Chinese officials and the media that the numbers of tourists and direct flights were below expectations. He chided China for failing to repatriate any white-collar Taiwanese criminals, as required by an agreement signed in May, and for failing to compensate Taiwan firms seeking damages from melamine-tainted Chinese products. [Editor's note: The original version misspelled Mr. Chiang's name.]

Taiwan's top official on China policy Lai Shin-yuan told China's negotiator that the hundreds of Chinese missiles deployed across from the island made Taiwanese "uncomfortable."

The government has even released a new, pro-Taiwan rap video, with such catchy lyrics as "The Republic of China [Taiwan's formal name] is a sovereign, independent country / Taiwan's fate will be decided by its 23 million people."

Cross-strait ties aiding economy

But Standard Chartered Bank economist Tony Phoo says that Taiwan had benefited from cross-strait deals, even if the change is slow.

"Cross-strait routes are beginning to become an important source of revenue for airlines," he says. “And Taiwan tourism is one of the few [markets] in the region where we still see growth in overall arrivals – and that's very much thanks to mainland Chinese tourists."

More than half a million Chinese tourists have visited Taiwan since a tourism deal was inked in June 2008, generating about $1 billion, according to government figures.

Some 270 cross-strait flights now take off weekly. And since a ban on Chinese investment was lifted in June, Taiwan has approved 22 cases totaling $37 million, according to the island's Investment Commission.