Taiwan drops 50-year ban on trade with mainland

In a further goodwill gesture towards Peking, Taiwan yesterday voted to lift a 50-year ban on direct trade, investment and postal links with the mainland.

Days after the island ended 50 years of Kuomintang rule and elected a new president known for favouring independence for Taiwan, the island's legislature voted to start easing historic restrictions between the mainland cities of Xiamen and Mawei, and offshore islands in the Taiwan Strait known as Matsu, Penghu and Quemoy.

The move is Taiwan's latest attempt to ease the tension that flared across the Strait before last Saturday's presidential election, in the face of threats by Peking of bloodshed if electors moved further towards independence. Chen Shui-bian, leader of the Democratic Progressive Party (DPP), won the vote despite Peking's sabre-rattling, causing a plunge in the stock market and angry protests on the streets of Taipei by disappointed KMT supporters. But the dust began to settle yesterday.

Taiwan's stock market soared 5.49 per cent to close at 9,004 and the United States ambassador to the United Nations, Richard Holbrooke, said two hours of talks with China's Foreign Minister, Tang Jiaxuan, went very well. "The talks were excellent," he said.

Mr Chen has proposed a peace summit, and said he is willing to talk about the "One China" policy with Peking, despite his party's historic opposition to the principle. The Chinese premier, Zhu Rongji, has said the principle of One China must be a prerequisite for any negotiations.

In a further olive branch to Peking, DPP MPs yesterday said they were considering removing an inflammatory call for a separate Taiwan state from the party's charter.