November 5, 2008 / 7:18 AM / 11 years ago

China, Taiwan to target financial services next

TAIPEI (Reuters) - Taiwan and China are aiming for an agreement to open their markets to the other’s banks, insurers and brokers, officials said on Wednesday, in another sign of the new spirit of cooperation and openness between the two neighbours.

The two sides, long bitter political rivals, agreed on Tuesday to more daily direct flights, direct air and sea cargo shipments and early notification of food safety issues as part of the highest-level visit of a Chinese official in 60 years.

China has claimed sovereignty over Taiwan since the end of the civil war on the mainland in 1949. Beijing has vowed to bring the island under mainland rule, by force if necessary.

But ties have warmed rapidly since China-friendly President Ma Ying-jeou took office in May, paving the way for mid-June talks in Beijing, the first in about a decade.

“Both sides hope to negotiate a (financial services) memorandum of understanding as soon as possible,” said Lee Jih-chu, vice chairwoman of Taiwan’s Financial Supervisory Commission.

Lee also said the Bank of China (601988.SS) (3988.HK), China's flagship foreign exchange lender, would like to see a clearing system established as soon as possible for the exchange of China's yuan CNY=CFXS with the Taiwan dollar TWD=TP.

Ma’s administration officially permitted large-scale exchange between the yuan and Taiwan dollar earlier this year but volumes have been light, partly due to the lack of a currency clearing agreement.

Lee was speaking to reporters after a seminar attended by banking officials from China accompanying visiting top China negotiator on Taiwan affairs Chen Yunlin.

She did not give a timeframe for the MOU but Taiwan’s financial regulators have been saying this week they aimed to begin talks on the details before the end of this year.

Currently most activity by banks, insurers and brokerages in the other’s economies is banned or highly restricted.

Additional reporting by Rachel Lee; Writing by Doug Young; Editing by Sonya Hepinstall

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