Taiwan, China aim to sign FTA-like deal in 2010

TAIPEI, July 13 (Reuters) - Taiwan and China could sign a free-trade style agreement later than expected, a top Taiwanese official for cross-strait affairs said. His comments prompted the island's stock market to drop sharply on Monday.

Taiwan's main TAIEX share index was down more than 3 percent by mid-morning after the head of Taiwan's Mainland Affairs Council Lai Shin-yuan said the two sides could sign an Economic Cooperation Framework Agreement next year.

This was later than some market expectations for significant progress on the issue later this year, which had helped boost China-related financial and tourism stocks earlier this year.

Lai told the Taiwanese community living in New York over the weekend that the agreement, known locally as the ECFA, would put Taiwan on equal standing with other economies that have already signed free-trade agreements with China.

Taiwan and China have been administered by separate governments since the Nationalists fled China in 1949 after they were defeated by the Communists.

China considers Taiwan to be part of its territory and has threatened to take it back, by force if necessary, should the latter declare independence.

However, relations have warmed considerably under the year-old administration of President Ma Ying-jeou, who was elected on a platform of closer economic ties with China.

Taiwan's stock market is the world's second-best performer this year, ranking behind China, among 30 share indexes tracked by Thomson Reuters, as investors bet that closer ties could lead to greater Chinese investment on the island and more business opportunities for Taiwanese companies. (Reporting by Argin Chag; Writing by Kelvin Soh; Editing by Chris Lewis)