Taiwan, China Sign Historic Trade Pact

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Taiwan and China set aside decades of hostilities Tuesday, agreeing to expand flights and allow shipping links across the Taiwan Strait — a potential hotspot that has long threatened to become a war zone.

The historic deal highlighted the dramatic improvement in relations in the past half year between the rivals that split amid a bloody civil war in 1949. They also agreed to hold high-level talks every six months and focus on building closer financial ties in the next round of meetings.

After signing the pact, Chinese envoy Chen Yunlin smiled and shook hands with his Taiwanese counterpart, Chiang Pin-kung. They sipped champagne and held up two lines of framed calligraphy that said, "Peaceful negotiation creates a win-win situation."

The drastic warming in relations began after Taiwanese President Ma Ying-jeou was elected in March, pledging to ease military tensions and forge closer economic ties with China.

Ma's predecessor, Chen Shui-bian, was vilified and ignored by Beijing because he leaned toward independence during his eight years in office. China has repeatedly warned that Taiwan has two choices: eventual unification or a devastating attack.

Ma's Nationalist Party has long supported eventual unification with China — a policy that has helped the new president win Beijing's trust.

Tuesday's sweeping pact allows direct shipping links across the Taiwan Strait for the first time since the civil war.

The deal also expanded the number of weekly passenger flights from 36 to 108. Cargo flights would be allowed for the first time, with 60 crossing the strait each month.

The rivals began relaxing restrictions on flights in July when their envoys met in Beijing. They signed a deal that would allow flights from five mainland cities. Tuesday's agreement allows planes to take off from a total 21 cities.