China and Taiwan's Plane Diplomacy

For Taiwanese businesspeople living in China, trips home can be a full-day slog. Despite the proximity of the island to the mainland, sensitive Taiwan/China relations means there are virtually no direct flights. Travelers are forced to transit an intermediate airport, usually the one in Hong Kong, adding hours to what ought to be a relatively quick trip.

But since March, when Taiwanese elected Ma Ying-jeou as President, China and Taiwan relations have been improving. Case in point: on June 13, a landmark agreement was reached in Beijing that clears the way for direct chartered flights to the island and back every weekend — and businessmen keen on developing ties to the mainland are breathing easier. "The direct flights would save us a whole work day when we travel," says Samuel Chiu, a Taiwan-based business development manager at electronic instrumentation manufacturer Agilent Technologies. "That's the biggest cost benefit. Traveling to Shanghai will only take two hours now."

The agreement is significant to more than the convenience of the estimated 5 million Taiwanese who traveled to China last year, or to the 1 million who now live and work on the mainland. It is expected to aid Taiwan's economy and ease tensions across the combustible Taiwan Strait, the 112 mile (180 km) wide body of water separating mainland China and Taiwan. The direct-flight deal was reached by two semi-official bodies representing Beijing and Taipei in their touchy diplomatic contacts: Taiwan's Straits Exchange Foundation and China's Association for Relations Across the Taiwan Straits. The two sides hadn't met since 1999, when Taiwan's then-President Lee Teng-hui's offended China by referring to their relations as "state-to-state." China considers Taiwan to be a breakaway territory and bristles at any reference to it as a sovereign government. "The resumption of talks is always encouraging," says Andrew Yang, head of the Taipei-based Chinese Council of Advanced Policy Studies. "Now a brief encounter between the two sides unveils a new historical chapter for cross-strait relations."

Ma, who was elected by 58% of voters in March, made improved ties with the mainland a key platform of his campaign. The direct flights agreement represents the first major step his administration has taken to meeting that pledge.

Direct flights were halted after the end of the Chinese civil war in 1949, when Mao Zedong's Communists took control of the mainland and Chiang Kai-shek's Kuomintang fled to the safety of the island. In recent years a limited number of direct flights were allowed during four Chinese holidays. Under the new agreement, 36 direct flights will be permitted each weekend beginning July 4. In addition, the number of mainland tourists allowed to visit Taiwan will increase from 1,000 daily to 3,000.

The number of flights could increase based on demand, according to a report by Xinhua, China's state-run news service. The Straits Exchange Foundation and the Association for Relations Across the Taiwan Straits also agreed to conduct regular meetings and set up offices in Taipei and Beijing.

The agreement is expected to give a modest boost to Taiwan's economy. More cross-strait tourism will boost annual GDP growth by .6% to .8%, according to a report on tourism in Taiwan by Goldman Sachs. "The implementation of these policies would support a recovery in sentiments and domestic demands ... and should help Taiwan offset the negative external shock from slower U.S. demand and higher energy prices," wrote Goldman Sachs analyst Enoch Fung.

Benefits could extend beyond the economy. China has threatened to invade Taiwan if it declares formal independence and has installed hundreds of missiles along its southern coast near Taiwan. The U.S. military, which could be drawn in to defend Taiwan in the event of a conflict, considers the Taiwan Strait to be one of the most dangerous flashpoints in Asia. Easing tensions will require more than a deal on tourism, Yang says, but he notes that Friday's agreement could help reduce provocative military maneuvers. "Both China and Taiwan conduct training exercises in the Taiwan Strait. To avoid miscalculation, to avoid accidents, those exercises have to be constrained," he says. "Whether Beijing or Taiwan have a willingness to eliminate exercises and training, that remains to be seen. But that would be conducive to assurance of safety corridors [for]normal charter flights." When the skies between the two sides are crowded with passenger aircraft, it's that much harder to fill them with missiles and fighter jets.

—With reporting by Natalie Tso/Taipei