'Straits bank' may form key link in region-wide common market

What Fujian lacks in power it makes up in potential.

With the Taiwanese rainbow shining directly across the strait, the province is already looking towards several innovations that could dramatically lift its 916.01 billion yuan (HK$1,023.05 billion) gross domestic product.

High on the list is a 'straits bank' that could provide conversion between the yuan and the New Taiwan dollar - facilitating billions of yuan in cross-border trade - and forming a key link in a region-wide common market.

Taiwanese banks have representative offices on the mainland but no actual branches. However, last month Taiwan's Financial Supervisory Commission approved a plan by Fubon Financial to buy a stake in Xiamen City Commercial Bank, the first Taiwanese investment in a mainland bank.

The next step would be an expressway to Taipei, either a tunnel or a bridge linking the capitals of Fujian and Taiwan, which has been discussed for many years. It is 124km from Pingtan Island, south of Fuzhou , to Hsinchu in Taiwan.

'Neither a tunnel nor a bridge is a big technical problem,' said Yang Yisheng of the Development Research Centre of the Fujian provincial government. 'It is a matter of will, and we cannot wait any longer.'

Professor Yang and others also envisage an economic-partnership pact - much like Hong Kong's Closer Economic Partnership Arrangement - between Fujian and Taiwan that would liberalise trade.