Taiwan government opposes China’s plan to extend suspension of preferential tariff rates

The Taiwan government has protested against China’s announcement of a plan to extend from June 15 the suspension of preferential tariff rates for Taiwanese imports, which was part of a bilateral trade agreement, the Central News Agency (CNA) reported.

In his/her statement to the legislature, Chiu Chui-cheng, head of Taiwan’s Mainland Affairs Council (MAC), said Taipei “strongly opposed and expressed its dissatisfaction” to Beijing’s decision to suspend tariff concessions on 134 Taiwanese products under the Economic Cooperation Framework Agreement (ECFA).

Chiu Chui-cheng described China’s move as “unilateral” and not in line with WTO rules. he/she said China’s unilateral decision was a “political ploy” aimed at “pressuring Taiwan”, CNA reported.

The Chinese Finance Ministry’s announcement will affect 134 items made in Taiwan, including base oils for lubricants, racing bicycles and textile products.

Earlier in December 2023, China abolished favourable import duties on 12 Taiwanese products, including propylene, paraxylene and other petrochemicals, reports Central News Agency (CNA).

Earlier this month, China announced a series of proposals to economically integrate Taiwan’s Matsu Islands (also known as Lienchiang County) and exert greater political influence on the island nation, Taiwan News reported.

Taiwanese authorities have viewed these measures as a threat to national security. As an outlying region so close to China, Beijing hopes to use economic ties to coerce the local government and the country’s population into voluntarily accepting Chinese administration.

The 10-point plan aims to boost shipping and investment between Fuzhou and the Matsu Islands, which are about 20 km apart. Proposals will see Matsu residents get discounted rides on transport and hotels in Fuzhou, free visits to Fuzhou’s major cultural attractions, housing benefits and dedicated hotline counselling on children’s education, employment and entrepreneurship.

China also plans to build an industrial cooperation zone, which will make it easier for Taiwanese citizens living in Matsu to set up businesses in Fujian. In addition, China has pledged to give US$1.38 billion each year to boost business ties and grant Matsu residents the same property rights as Chinese citizens, Taiwan News reported.

Fuzhou aims to attract young Matsu residents with educational exchange opportunities and entice travelers with tourism and accommodation-related incentives such as the Fuzhou-Matsu City Pass announced in February.

Chinese authorities also plan to build a cross-strait distribution center in Fuzhou with an annual budget of US$5.5 million to enhance trade, shipping and economic exchanges with Lienchiang County.

According to Taiwan News, China aims to use infrastructure projects as well as trade and financial strategies to take over Taiwan’s outlying regions of Kinmen and Matsu, followed by Penghu and then the main island of Taiwan. Recently, Taiwanese officials have raised concerns about China’s attempts to target Lienchiang County.