China Signals Patience in Goal of Uniting With Self-Ruled Taiwan

TAIPEI, Taiwan (TheStreet) -- The first-ever visit by a ranking Beijing official to Taiwan, a democratic island that his government wants as its own someday, was supposed to move the two sides toward China's unification goal.

But when the minister of China's Taiwan Affairs Office traveled last week to the place he's in charge of, he made few strong statements, listening more than he talked. He kept clear of protesters until Friday night when one group splashed paint on his bodyguards.

"Seeing the spray of paint at the Zhang group, I think I underestimated the violence by individuals," says Leonard Chu, China a studies professor retired from National Chengchi University in Taipei.

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Word around Taiwan is that Beijing sent the visitor, Zhang Zhijun, to analyze that contempt for China and leave a good impression rather than forge ahead with a new initiative to improve relations and then see it shellacked by fresh opposition.

Because hostility remains in Taiwan, Beijing's goal of peaceful unification with the self-ruled, ethnic Chinese island will extend past whatever its private timetable says and Chinese leaders are pragmatic enough to allow more time.

China's increased patience will bring no change to business, including multinationals active on both sides, but will delay new tie-ups that could make investment easier.

Taiwan's biggest banks such as Cathay Financial (CHYYY) and Mega International Commercial Bank  are in China but need more legal clearance to expand. Shippers such as FedEx  (FDX) and UPS  (UPS) work both sides and would get more orders if two-way trade grew past $124 billion last year. China is Taiwan's top trading partner.

China has claimed sovereignty over Taiwan since the 1940s. The two sides, ever distrustful as Beijing flexed military muscle, barely talked until 2008 when Taiwan President Ma Ying-jeou took office. His government has signed 21 deals with China to help the island's export-led economy but declined to talk about politics.

Beijing is using the pro-Taiwan to nudge Ma or his successors into political talks while charming a skeptical public toward unification.

"Ideally, Taiwan could register the message that Beijing must not push for political outcomes Taiwan is not ready for, but Beijing would remain willing to let Taiwan benefit unequally from the cross-Strait economic relationship," says Denny Roy, senior fellow at the East-West Center, a U.S. research institute in Hawaii.

Thousands of Taipei protesters who camped in streets and inside the parliament building earlier this year questioned Taiwan's six years of engagement with China, frustrating Beijing. 

China was on a roll a year ago as it signed a service trade liberalization agreement that would have helped local banks, medical services and tour operators. Then Chinese President Xi Jinping told Taiwan in October the two sides must eventually discuss sticky political issues. China has never sworn off military action, if needed.

But China lost traction in Taiwan with the parliament occupation and broader student-led protests dubbed the Sunflower Movement. Those actions have indefinitely delayed ratification of the service trade pact and put off talks on a tariff cut agreement. Last week's visit to Taiwan was aimed only at reversing that spiral.

The two sides decided little and Zhang went home Saturday after cutting two stops from a four-day schedule to avoid getting painted again.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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Highlights from the analysis by TheStreet Ratings Team goes as follows:

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