Taiwan allows more China investment

Taiwan will relax long-standing investment restrictions between the island and rival China in a bid to bolster the economy, an official said on Thursday.

Taiwanese brokerages will be allowed to invest up to 20 percent of their net worth in China, doubling the previous ceiling of 10 percent, said Susan Chang, a deputy chairwoman of the Financial Supervisory Commission.

International financial institutions will be allowed to invest more in Taiwan's stock markets while investing in Chinese funds at the same time, Chang said.

The measures, approved at a Cabinet meeting Thursday, will enable Taiwan's securities firms to expand their global exposures and attract Chinese and international funds into the local markets, she said.

"We will encourage any (investments) that can help with the stock market and overall economic development" in Taiwan, Chang said.

The measures were the first adopted by the new government of President Ma Ying-jeou to bolster investment across the Taiwan Strait.

Taiwan and China split amid civil war in 1949. Former President Chen Shui-bian, who stepped down in May, sought to bar closer trade and investment ties with the mainland, fearing they would allow China to gain economic and political control of the self-ruled island.

But Ma has called for more friendly ties with China, hoping a flood of Chinese investment could help stimulate Taiwan's lackluster economy.

Taiwan's Central Bank also announced on Thursday that local banks will be allowed to exchange Taiwanese and Chinese currencies next week to meet the needs of travelers.

A person can exchange the equivalent of 20,000 Yuan or 88,000 New Taiwan dollars (US$2,912) at one time, said Central Bank official Lin Sun-Yuan.

About 4 million Taiwanese are visiting China a year. Under a new agreement between Taiwan and China that will take effect next month, an estimated 1 million Chinese tourists could visit Taiwan a year.