China,Taiwan to discuss investment guarantee deal

China and Taiwan will negotiate an investment guarantee deal later this year seen as vital to encourage investment from the mainland, officials and analysts said on Friday.

The political rivals, who signed a free-trade style deal in June in their biggest tie-up after decades of animosity, will meet in Taiwan to discuss and probably sign the investment guarantee pact.

Chinese Commerce Minister Chen Deming said this week that he hoped businesses keen on Taiwan would wait until after an investment guarantee accord was signed, Taiwan's semi-official Central News Agency reported.

Analysts say major Chinese investors, such as financials which would dwarf local counterparts, would hold back until there is a clear set of rules.

"They would hope to develop freely and don't want limitations," said Tigr Cheng, an economist with Polaris Research Institute in Taiwan,.

The free trade-style pact, an economic cooperation framework agreement, will allow Chinese banks to convert Taiwan representative offices to branches within a year. Regulations passed in March limit Chinese banks to 5 percent stakes in Taiwan banks.

Beijiing-friendly President Ma Ying-jeou, since taking office in 2008, has enlisted China to help shore up the island's sagging export-driven economy and keep it competitive in Asia.