The two sides closed deals on direct air, shipping, and postal links, further integrating Taiwan with China's booming economy, after on-and-off talks dating back to the early 1990s. But political negotiations have been put off until next year at the earliest.
The progress on trade, but not political, ties reflects the island's ambivalence toward China: Polls show that a majority of Taiwanese see China as "unfriendly" and oppose unification. But a majority also back closer commercial links.
Taiwan's President Ma Ying-jeou took office in May on the promise of cross-strait detente, after a decade of defiant Taiwan nationalism. Mr. Ma had won with a convincing majority and soon initiated talks with Chinese representatives. By June, the two sides had signed an agreement on charter flights and tourism. But since then Ma's approval ratings have plunged along with Taiwan's stock market, a victim of the global financial crisis. His popularity has also dropped as some fear he's moving too quickly on China.
For its part, China sees self-ruled Taiwan as its territory and has threatened war to back up its claim. But since Ma took office, it has responded to efforts to build closer ties.
China's top cross-strait negotiator, Chen Yunlin, arrived in Taipei Monday for a week of talks, the highest level Chinese Communist Party figure ever to visit Taiwan. On Monday night, Chinese and Taiwanese negotiators rubbed shoulders with the island's business elite at Taipei 101, the city's landmark skyscraper.
His delegation is slated to discuss cross-strait finance on Wednesday, and to formally present two pandas to the Taipei Zoo on Thursday as an expression of goodwill. For years Taiwan had rejected the animals because they were considered part of China's efforts at reunification. (China will receive endangered goats and deer in return.)
For many pro-independence Taiwanese, the two sides are getting too close for comfort. They accuse Mr. Ma of selling out Taiwan and eroding its sovereignty. He's already made too many concessions to China, they say, such as removing Taiwan's national flag from sites on Mr. Chen's itinerary to avoid embarrassing him.
But with their numbers in the legislature too small to block Ma's agenda, the pro-independence party can only step up street protests. It mobilized hundreds of thousands in Taipei on Oct. 25, and has planned rallies and activities all week.
"We would rather be poor than be governed by China," said independence supporter Vera Chang, outside the legislature Monday night. "Direct links only help rich businessmen, they don't help most Taiwanese."
Deals will help Taiwan's businesses
Tuesday's agreements scrap cross-strait barriers erected in 1949 by rival Chinese regimes that refused to recognize each other's existence. The deals extend cross-strait passenger flights and shorten travel times. Before, all flights had to go through Hong Kong airspace.
Direct cargo flights will make it easier for Taiwan businesses to ship equipment and components to the mainland. Direct shipping links will remove the previously needed stop at Hong Kong or another intermediate port. "It's going to save a lot of transportation costs for Taiwan businesses," says Wu Chung-shu, dean of the college of management at Taiwan's National Dong Hwa University. "They're happy to see the government have a more open attitude."
Still, cross-strait links may not much blunt the global downturn's impact on Taiwan's export-dependent economy. "Improving cross-strait links will not totally insulate Taiwan from the current downside risks of a US recession," wrote Standard Chartered's Taiwan economist Tony Phoo in a report earlier this year. "Taiwan remains one of the most exposed in the region to a US-led global slowdown."
Chinese envoy: a lightning rod for grievances
Taiwan's government has ramped up security for Chen's visit, deploying thousands of police officers and tightening access to the airport and hotel where Chen is staying. Two weeks earlier protesters had roughed up a Chinese official, Zhang Mingqing, visiting the island. Independence supporters have slammed the security measures as excessive, even a throwback to Taiwan's authoritarian past.
Chen has become a lightning rod for a range of grievances, gossip, and political grandstanding in Taiwan's turbocharged media. Tibet independence supporters shadowed Chen's motorcade from the airport where he landed into Taipei, waving a Tibetan flag from their vehicle.
One hard-line Taiwan independence group has offered an NT$10,000 (US$300) reward to anyone who can hit Chen in the face with an egg.
And Taiwan's media have focused on Chen's "airplane head," or bouffant hairdo – with some hinting darkly that he deliberately gave it extra lift in order to tower over his Taiwanese counterpart.
Meanwhile, ex-President Chen Shui-bian has been whipping up anti-China and anti-Ma sentiment, though some observers say his efforts may be a cynical ploy to deflect attention from his legal woes. Mr. Chen is under investigation on suspicion of embezzling and laundering millions in public funds while president.
A Taiwanese official said Tuesday morning that the next round of cross-strait talks may be held next spring in Xiamen, China. As with the current round, the agenda will be strictly economic, possibly including deals on cross-strait banking and protection for Taiwan businesses in the mainland.
"The two sides still need some time to resolve differences in the economic field first," says Li Peng, assistant director of the Taiwan Research Institute at China's Xiamen University. "Then we can go to the political field."