Since the Xiamen Special Economic Zone was officially established in 1981, the city has become an important staging post for economic and cultural communication between Xiamen and Taiwan, due largely to their geographic proximity.

Xiamen overlooks Taiwan across the Straits. It is only around 10 km from Xiamen to the Taiwanese island of Jinmen and some 400 km between Xiamen and Taiwan's capital, Taipei.

Taiwan is Xiamen's third largest trading partner. In 2008, the city's trade from the island increased by 25.4 percent year-on-year to $3.83 billion. Duty-free fruits and marine products imported from Taiwan through Xiamen account for more than a half of the mainland's total.

The Dadeng-Taiwan Small Goods Free Trade Market, opened in 1995, is the only Taiwan-oriented small goods market on the Chinese mainland. It is planned to extend its size from 0.08 sq km to 0.83 sq km in the near future.

Xiamen is now one of the most attractive destinations for Taiwan investors. According to a survey by the Taiwan Electrical and Electronic Manufacturers' Association in 2009, Xiamen is number 12 on the list of the best mainland cities for Taiwan-based companies to invest in. This ranks it as the highest in Fujian province. Among the four State-level investment areas for Taiwanese investors, three are located in Xiamen - Haicang, Jimei and Xinglin.

By the end of 2008, Xiamen had attracted 3,315 enterprises from Taiwan, representing a total contract investment of $9.3 billion. At present, the output value of Taiwan enterprises in the area contributes 40 percent or so to the city's total industrial output value annually. In 2008, the industrial output value of Xiamen reached 304.23 billion yuan.

Taiwan enterprises in Xiamen mainly focus on industries such as chemical fiber, electronics, information technology, rubber, construction materials and machinery.

Xiamen plans to strengthen cooperation with the island in other industries, including software, manufacturing, finance, tourism, shipping, mail business and agriculture.

There are now 39 Taiwan software enterprises in Xiamen with an annual output value of 1.76 billion yuan. The city aims to raise the number of Taiwan software enterprises to 100, with an annual output value exceeding 10 billion yuan, by 2011.

The output value of the optronics industry in Xiamen reached 40 billion yuan last year, with Taiwan enterprises contributing one third of the total. It is estimated that the output value of the industry will reach 100 billion yuan in 2010.

Xiamen is also striving to boost cooperation with Taiwan in the financial sector. Commenting on the plan, Liu Cigui, the mayor of Xiamen, said: "We are trying to persuade more financial institutions from Taiwan to set up securities firms, insurance companies and funds in our city. They are also being encouraged to buy shares in Xiamen's local financial institutions. We hope to build Xiamen into an experimental area for financial cooperation with Taiwan."

In recent years, Xiamen has been playing a leading role in financial cooperation between the mainland and Taiwan. In 1998, Bank of China, for the first time on the mainland, permitted exchange business between the renminbi and the new Taiwan dollar to begin in the city.

In December 2008, the Fubon Financial Holding Co bought 19.99 percent of the Xiamen City Commercial Bank through its subsidiary in Hong Kong, making it the first Taiwan-based financial institution to invest in the mainland.

In the same year, the first insurance company jointly backed by the mainland and Taiwan - the King Dragon Life Insurance Co Ltd - was established in Xiamen.

(China Daily 11/16/2009 page7)