Taiwan has further liberalized rules on Taiwanese investment in China's financial sector, permitting investment in China's securities and insurance sector. For its part, China has offered to supply water to a Taiwanese controlled island, Quemoy, that has been a historical flashpoint between the two-governments. A short term thaw in relations is underway. But danger looms on the horizon. The U.S. plans to hand over the first group of F-16 fighters scheduled to be transferred to Taiwan in April, 1997. Coming shortly after Hong Kong day, this will be a major test of post-Hong Kong Chinese policy. Expect a cyclical low in relations by February, 1997.
Taiwan Liberalizes Rules on Taiwanese Investment in China's Financial Sector