Will Taiwan Open to Chinese Investment, or Will Protests Derail the Deal?
TAIPEI (TheStreet) -- A blockade of Taiwan's parliament and clashes between protesters and police Monday threaten passage of a trade pact that would open the investment-hungry island to investments from the economic powerhouse of China.
Banks, tour operators and health care firms from the world's 26th largest economy must wait indefinitely -- likely until at least August -- for ratification of a China-Taiwan deal that would liberalize the service sector.
The deal was signed in June with ratification expected by the end of 2013, but postponed because of disputes in parliament. The fresh delay this month has already disappointed markets, with Taiwan's financial and insurance sub-index down 2% since Wednesday.
"In the short term, share prices are going to be affected," says Shih Hsiao-chi, economist at SinoPac Securities in Taipei. "If this situation at the legislature keeps going on goes on, share prices will be more heavily affected and foreign investors will start to waver."
The trade pact would open 80 service categories in China and 64 in Taiwan, allowing Taiwanese firms to expand into their biggest market, where two-way trade surpassed $100 billion for the first time in 2010.
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