The local government of Fujian province is striving to develop the cross-Straits currency settlement mechanism for cross-border trade in Pingtan county, a senior official from the province said.

"The Fujian provincial government is working on the program that will allow yuan and the new Taiwan dollar settlements conducted in Pingtan to further strengthen the financial cooperation between the mainland and Taiwan," said Zhou Lianqing, deputy to the National People's Congress and director of the Fujian Provincial Economic and Information Technology Commission.

Zhou made the remarks at a panel discussion during the annual session of the congress.

The government of Fujian province is encouraging more Taiwan-funded securities firms, insurance companies and other financial institutions to set up offices in Pingtan, Zhou said.

Zhou said it is essential to carry out cross-Straits currency settlement and clearing business in Pingtan, given its proximity to Taiwan and the increasing people-to-people and trade exchanges between the two areas.

Pingtan county, an area of 324 square kilometers, is the nearest place on the mainland to Taiwan, being just 68 nautical miles from Taiwan's city of Hsinchu.

The marine route between Pingtan and Taiwan's Taichung was launched in late 2011, while the Pingtan-Taipei route followed in late 2013. Both take two-and-a-half hours to travel from the county to Taiwan.

In November 2011, the State Council, China's cabinet, approved a plan to establish a comprehensive experimental area in Pingtan. Under the directive, the central government would channel funds into the county to attract Taiwan investment and create a "paradise" for both Taiwan and local people to live in.

To date, more than 130 Taiwan-funded companies have already started operations in Pingtan. Statistics show the total trade volume between Pingtan and Taiwan reached more than 2 billion yuan ($326.26 million) by 2013.

Last November, the first Pingtan-Taiwan Commodities Trade Fair was held in the county, which resulted in a turnover of about 14.5 million yuan and the signing of contracts worth 1.03 billion yuan.

"When the cross-Straits currency settlement is conducted in Pingtan, the county will add a new link between Taiwan and the mainland, namely, the capital link, to the current three links (trade, transport and postal connections), making a breakthrough for cross-Straits exchanges," said Dai Shugeng, a professor of economics at Xiamen University.

The benefits of such cross-Straits currency settlements for cross-border trade are apparent, Dai said.

"It would make cross-Straits trade and investment more convenient because most of the time the trading parties have to exchange new Taiwan dollars into US dollars and then into renminbi," he said, adding it also effectively reduces the risks posed by exchange rate fluctuations.

The authorities in Pingtan have been simplifying business registration procedures and will offer Taiwan compatriots who come to invest and work in the county a series of preferential policies, including a tax-related policy and free schooling for their children, Zhou Lianqing said.

"The province aims to build Pingtan into a frontrunner in cross-Straits cooperation and a common home for people of both sides," Zhou said.

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(China Daily 03/11/2014 page16)