Taiwan's semiconductor companies are encouraged to tap the mainland's booming high-tech sector, which is expecting in turn to access Taiwan's advanced technology and investment.

Calling it a "win-win deal," Chen Yunlin, director of the Taiwan Affairs Office of the State Council, said yesterday that increased economic cooperation across the Taiwan Straits is conducive to upgrading Taiwan's industries.

Addressing a high-tech Taiwan Straits exchange forum yesterday, Chen said the economic link-up can also pave a smooth road for reunification.

However, investment is still capped by a heavy curb on high-tech outflow to the mainland by Taiwan authorities as they fear losing their competitive edge in the field. Taiwan is home to a group of top-notch global semiconductor giants in integrated circuits, motherboards and chips industries.

But a growing number of Taiwan-based high-tech firms, led by Shanghai Grace Semiconductor Manufacturing Corp, have managed to invest in the mainland.

They are lured by cheap land, a huge pool of expertise and a spate of incentives as operating costs in Taiwan rise. And more companies are expected to follow suit as the mainland grows into one of the world's largest high-tech markets, led by the semiconductor industry. Foreign giants including IBM, NEC, Intel and Microsoft have already staked ground.

"Development of the micro-electronics business, the core of information technology, will become a top priority for the mainland in the next 10 years," said Wu Jichuan, minister of information industry.

Wu said incentives in tax, policies and services will be strengthened to bring in more overseas firms, including those from Taiwan, to help upgrade the IT sector, still trapped by technology and capital shortfalls.

The mainland's information technology industry has continued an over 20 percent annual growth over the last three years, becoming the key engine for economic growth.

(China Daily 06/07/2001)