The difference between “Ou-bama” and “Ao-bama” may sound marginal to western ears. But the varying salutations approved by Taipei and Beijing speak volumes. If they cannot agree on ways to address the visiting dignitary, what chance a satisfactory agreement on cross-strait liberalisation of the financial sector?
Five months after the original deadline, Taiwan and Beijing finally signed a memorandum of understanding late on Monday, effective mid-January. But as investors digested the details, the disappointment was palpable. About $1.4bn, or 3 per cent, was yesterday wiped off the market capitalisation of Taipei's five biggest financial services groups. Two-month futures on the financial sector dropped three times more than the benchmark.
There are limited breakthroughs. Taiwan's banks can now upgrade Chinese representative offices to branches, for example, as well as invest directly in the mainland, rather than having to route through overseas subsidiaries. But the MoU does not provide a platform for Taiwanese banks to operate A-share brokerage services or any form of renminbi banking businesses. The most significant prize – allowing banks to take equity stakes in each other – has been passed off to a separate Economic Co-operation Framework Agreement (ECFA), to be hammered out next month.