The Pak Banker - - Front Page -

when did the Cold War end? One ob­vi­ous choice: June 1987, when US Pres­i­dent Ron­ald Rea­gan stood in front of the Ber­lin Wall that sep­a­rated com­mu­nist East Ger­many from cap­i­tal­ist West Ger­many and fa­mously chal­lenged the Soviet leader Mikhail Gor­bachev to "tear down this wall." Yet at about the same time as Rea­gan's tele­genic dare, far from the glare of the cam­eras, a less sen­sa­tional but per­haps more sig­nif­i­cant bar­rier was crum­bling: the one sep­a­rat­ing com­mu­nist China from cap­i­tal­ist Tai­wan.

Nowhere, per­haps, was the Cold War bet­ter rep­re­sented than in the division of the Chi­nese na­tion into two blocs sep­a­rated not only by wa­ter but by ide­ol­ogy -- by com­mu­nism and cap­i­tal­ism at their most stri­dent.

Start­ing in 1949, more than a mil­lion main­land Chi­nese re­treated to Tai­wan with Chi­ang Kai-shek, leader of the Western­backed Na­tion­al­ist Party, lead­ing to a lon­grun­ning civil war with the Chi­nese Com­mu­nist Party. Mil­i­tary ten­sions be­tween the coun­tries ran high well into the 1980s. In the cen­ter of Taipei, gi­ant plac­ards pro­claimed the na­tional goal: "Re­take the main­land!"

But start­ing the same year as Rea­gan's mem­o­rable speech, shared eco­nomic in­ter­ests and his­tory would lead to a grad­ual thaw be­tween the two places that would dra­mat­i­cally ac­cel­er­ate China's eco­nomic rein­te­gra­tion with cap­i­tal­ist coun­tries.

It wasn't the Tai­wanese mil­i­tary but rather a po­lit­i­cal de­ci­sion that trans­formed Tai­wan-China eco­nomic and cul­tural re­la­tions. In 1987, Tai­wan's Na­tion­al­ist gov­ern­ment lifted mar­tial law and eased re­stric­tions on contact with the main­land. Many of the ex­iles who helped Tai­wan pros­per and grow had been forced to leave fam­i­lies and friends be­hind when they fled the main­land. As these re­stric­tions were lifted, a mas­sive in­crease in flows of cap­i­tal, prod­ucts and even­tu­ally peo­ple be­tween Tai­wan and China re­sulted.

Po­lit­i­cal de­ci­sions on both sides has- tened the re­union. Tai­wan's com­par­a­tive ad­van­tage in hu­man and ma­te­rial re­sources and Chi­nese de­mand for those re­sources cre­ated strange bed­fel­lows. As China's eco­nomic re­forms ad­vanced in the 1980s, more and more main­land con­sumers de­manded goods -- such as fast food and pop mu­sic -that the Tai­wanese were best able to pro­vide. As Tai­wan's in­dus­trial sec­tor be­came less com­pet­i­tive in­ter­na­tion­ally, its dein­dus­tri­al­iz­ing econ­omy needed to find new mar­kets and its work­ers new jobs.

The profit mo­tive led the way; man­u­fac­tur­ers and busi­ness own­ers fol­lowed. As a con­se­quence, China has since re­ceived more than $100 bil­lion in Tai­wanese in­vest­ment. This has funded tens of thou­sands of projects all over China, even in Nan­chang, the birth­place of the com­mu­nist state. To­day, more than 70,000 Tai­wanese com­pa­nies have in­vest­ments in the main­land. Trade be­tween the two coun­tries now breaks records yearly and has amounted to more than $2 tril­lion since 1987. In 2002, China re­placed the USas the top mar­ket for Tai­wanese goods. This is all the more re­mark­able con­sid­er­ing the size of Tai­wan

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