However, they said cross-Straits trade and investment would develop rapidly in the next few years, despite Taiwan authorities' pains to reverse the trend.

The experts called for Taiwan authorities to give up their vain efforts to curb the growth in order to stabilize the island's economic growth.

The Taiwan media reported that a local economic council has decided to replace its "go-slow" policies on cross-Straits trade ties with "active open-up and effective management."

The council, an important advisory body, also agreed to relax its tight control on Taiwan investment in the Chinese mainland and gradually lift its ban on direct trade, postal and communication links across the Straits.

"I don't know whether these announcements are to be depended on or are merely gestures," said Liu Xueqin, a senior researcher with the Chinese Academy of International Trade and Economic Co-operation, a think-tank of the Ministry of Foreign Trade and Economic Cooperation.

Taiwan authorities have declared to call off the "go-slow" policies for four times but have delayed the action four times.

Taiwan still bans direct trade, postal and communication links with the Chinese mainland and Taiwan businesses' investment in the mainland's high-tech industries and infrastructural construction.

Liu said Taiwan authorities were forced to concede this time by economic chaos in the island.

Taiwan's industrial production and trade volume with other countries and regions slumped dramatically, and unemployment soared rapidly.

The island's economy grew only 1.06 percent in the first quarter, the lowest quarterly growth since the mid-1970s, and is predicted to increase by about 1 percent in the second quarter and 2 percent for the whole year.

A gloomy world economic outlook, in particular the slowing down of the US economic growth, and slack internal demand -- due to local residents' weak confidence in the economy -- have had serious negative effects on the island's economy, said Wang Jianmin, a researcher with the Chinese Academy of Social Sciences.

He said the ruling party's unwise decisions, and especially its insistence on curbing cross-Straits trade ties, deteriorated the situation.

Overseas investment is necessary for Taiwan businesses with high labour and material costs, and weak demand, said Liu.

The Chinese mainland -- with similar language and culture, cheap labour and materials, huge market potential, implementation of the 10th Five-Year Plan (2001-05), the strategy to develop its central and western regions, a planned 180 billion yuan (US$21.7 billion) input to host the 2008 Olympic Games and its pending entry into the World Trade Organization -- is a major attraction to Taiwan businesses, she said.

The Chinese mainland is now Taiwan's second largest export market and largest source of the island's trade surplus, official statistics indicate.

"Taiwan authorities are forced to make the gesture because the island has benefited a lot from trade with, and investment in, the mainland," said Liu, "and Taiwan businesses strongly demand them to relax their controls."

She said Taiwan businesses are expected to continue to favour the mainland, even if Taiwan authorities continue to be restrictive and hostile to cross-Straits trade ties.

Taiwan investment in the mainland rose 26.7 percent to US$1.3 billion in the first half of the year but analysts said the actual increase could prove to be more rapid, as Taiwan businesses channel their funds into the mainland via another places to steer clear of Taiwan authorities' restrictions.

(China Daily 08/17/2001)