International Law

Direct Flights from Taiwan to Mainland China

In the mid-1980s, Taiwanese businessmen, at least those of a cautious nature, were too frightened to participate in the triangle trade ??????. That business moved product under the radar from Taiwan into China, when direct trade was prohibited with major consequences for Taiwanese (imprisonment and fines) and Chinese (who knows? execution, probably).

An American in my 20s?believing myself protected by the shield of my passport and immune by virtue of reckless youth from any potential danger, I floated the idea to friends that I should set up shop in Hong Kong doing precisely that: my Taiwanese friends would source needed electronics, foodstuffs, clothing, etc. on the island and I would move it into the mainland.

The mainland was open territory indeed at that time and a few Americans were already sourcing American product and moving it into China. No Americans I know of at that time were sourcing product in Taiwan to bring into China, although I'm sure there must have been a handful (Hong Kong Chinese were).

Of course, the only problem, aside from the naked fact that Chinese did not have American dollars to purchase the product -- barter was big then -- was that none of my friends was reckless enough to agree to the scheme. I think it probably would have gone far, that is, if KMT authorities and the COCOM nations, did not become wise to it. But now, everything has changed, as we all know.

This is all a rather too lengthy and unnecessarily personal introduction to today's post: the simple fact that, given the rapprochement between China and Taiwan of the past months, direct flights between Taiwan and China will become a fact of life and will only increase. Hong Kong will undoubtedly feel the effect of these direct flights.

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[Editor's translation: according to information provided by the Hong Kong and Macau travel authorities, after direct flights between China and Taiwan, the number of Taiwanese passengers passing through Hong Kong will drop as much as 60%. 150,000 fewer Taiwanese (of the current number of 238,000) will stay in Hong Kong every year, with Macau losing over 30%.]

In other words, rapprochement with Taiwan -- now eagerly desired by a Taiwanese population whose wealth is greatly tied up in China, while it was feared only 20 years before -- contributes to the mainland strategy of replacing Hong Kong with Shanghai as the financial capital of Asia. Not that that strategy will be effective in the end. But the foresight of certain planners a generation ago continues to impress as its adherents implement their vision for dominance.

Full post as published by Asia Business Intelligence on June 13, 2008 (boomark / email).