Taiwan Permits Mutual Fund Investment

At its regular weekly meeting the Cabinet passed the ruling to permit Taiwanese mutual funds to invest up to 0.4 percent of their assets in Chinese shares.

The amendment also permits the funds to invest up to 10 percent of assets in Hong Kong-listed companies registered and based in China and in companies registered in Hong Kong but with most of their assets on the mainland.

Premier Chang Chun-hsiung said the move was necessary to safeguard Taiwanese funds from foreign competitors.

"(It) will enhance the competitiveness of Taiwanese funds against offshore funds and satisfy investors' diversified needs," he said.

The new regulation represents a modest departure for Taiwan's pro-independence government, which seeks to emphasize the island's separateness from China amid a policy of limited economic exchanges.

The two sides were split by civil war in 1949, but China continues to claim democratic Taiwan as part of its territory. It has threatened to attack if the island moves to makes its de facto independence permanent.

Despite government strictures, commercial ties between Taiwan and China are booming.

Bilateral trade this year is expected to exceed US$100 billion (euro70 billion), mostly in Taiwan's favor. Since the early 1990s, Taiwanese companies have invested upward of US$120 billion (euro85 billion) in mainland enterprises.