China’s state council (cabinet) has endorsed plans to develop an economic zone in Fujian province, on the mainland side of the Taiwan Strait, thanks to improved cross-strait relations.

The exact limits of the zone have not been decided yet but it is expected to run Guangdong province to Jiangsu province

In addition to favouring Taiwanese investments in the local economy Beijing expects the new economic zone to operate as an experimental area for promoting cross-strait exchanges and co-operation and enable the region to capitalise on blood links, cultural ties and business relationships across the strait.

Cross-strait relations have improved since the election in March 2008 of Ma Yingjeou (pictured) to the presidency of Taiwan after years of acrimonious row between mainland leaders and former Taiwanese ultranationalist President Chen Shuibian. Instead President Ma has refrained from pursuing official recognition of Taiwan’s independence, an option Beijing rejects, and has sought closer ties via direct air, sea and postal links between the two countries, which hitherto had to use Hong Kong as go-between.

Indeed both sides want to increase cooperation and economic integration. Last month Beijing gave approval for mainland businesses to invest in Taiwan for the first time in 60 years.

Also last month Taiwan was asked to send an observer as Chinese Taipei (name it uses in the Olympics) to the World Health Assembly scheduled to open on 18 may in Geneva, a step President Ma described as a milestone in the island’s history, a decision that has also satisfied Beijing because it is predicated on Taiwan giving up its claim to participate by right as an independent state.

Experts have noted that in a recent press conference Ma stressed his “step-by-step approach” to recognition in favour of Taiwan in exchange of giving up (de jure) independence.

Such a strategy gives Taipei an opportunity to break the deadly isolation that was slowly suffocating it (few other states and international organisations recognise the island because of opposition from China which claims the island as a rebel province) as Beijing puts aside plans to retake the island by force, betting instead that it can re-annex it and its 23 million people by a strategy of economic absorption.

This situation has also been well received by Western powers which have had so far to overlook the island in order to maintain ties with the mainland.

As part of this trend of closer involvement Taiwan has decided to recognise mainland academic credentials and admit mainlanders as full-time students to its universities. Most people expect 1,000 to 2,000 mainland students to be admitted this year.

However, the opposition Democratic Progressive Party warned against this decision because mainlanders could take places and jobs from Taiwanese students.