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In the mid-1980s, Taiwanese businessmen, at least those of a cautious nature, were too frightened to participate in the triangle trade （三角貿易）. That business moved product under the radar from Taiwan into China, when direct trade was prohibited with major consequences for Taiwanese (imprisonment and fines) and Chinese (who knows? execution, probably).

An American in my 20s，believing myself protected by the shield of my passport and immune by virtue of reckless youth from any potential danger, I floated the idea to friends that I should set up shop in Hong Kong doing precisely that: my Taiwanese friends would source needed electronics, foodstuffs, clothing, etc. on the island and I would move it into the mainland.

The mainland was open territory indeed at that time and a few Americans were already sourcing American product and moving it into China. No Americans I know of at that time were sourcing product in Taiwan to bring into China, although I'm sure there must have been a handful (Hong Kong Chinese were).

Of course, the only problem, aside from the naked fact that Chinese did not have American dollars to purchase the product -- barter was big then -- was that none of my friends was reckless enough to agree to the scheme. I think it probably would have gone far, that is, if KMT authorities and the COCOM nations, did not become wise to it. But now, everything has changed, as we all know.

This is all a rather too lengthy and unnecessarily personal introduction to today's post: the simple fact that, given the rapprochement between China and Taiwan of the past months, direct flights between Taiwan and China will become a fact of life and will only increase. Hong Kong will undoubtedly feel the effect of these direct flights.

港、澳旅游局的资料显示，两岸直航后，过境香港的台湾客将狂掉六成，台湾每年赴港的238万停留旅次中，会流失150万人次；澳门则会锐减三成多。

[Editor's translation: according to information provided by the Hong Kong and Macau travel authorities, after direct flights between China and Taiwan, the number of Taiwanese passengers passing through Hong Kong will drop as much as 60%. 150,000 fewer Taiwanese (of the current number of 238,000) will stay in Hong Kong every year, with Macau losing over 30%.]

In other words, rapprochement with Taiwan -- now eagerly desired by a Taiwanese population whose wealth is greatly tied up in China, while it was feared only 20 years before -- contributes to the mainland strategy of replacing Hong Kong with Shanghai as the financial capital of Asia. Not that that strategy will be effective in the end. But the foresight of certain planners a generation ago continues to impress as its adherents implement their vision for dominance.

As of today, direct ocean cargo shipments between Taiwan and China are permitted,. 經濟日報 (Taiwan's daily business newspaper):

海運直航協議正式生效，兩岸昨（12）日同時公布「海運直航許可管理辦法」、「台灣海峽兩岸海上直航實施事項」。交通部航政司表示，辦法明（14）日生效並發出許可，15日展開直航。台灣公司、船舶證照為兩年期，但大陸為總量管制，船舶證為一年效期。

17 carriers have applied for permits -- 12 of them mainland Chinese, five of them Taiwanese. 18 routes applied for originate in China; eight in Taiwan.

Direct flights, the impact of which I briefly discussed in June and which now occur daily, have come under criticism for ticket pricing.

地下錢莊 (literally, "underground bank") flourishes wherever Chinese borrowers need cash quickly without having to go through the process of a loan application at a formal bank. They are as easy to access as black market foreign exchange in any Chinese city, if you get an introduction. While not always tied to criminal gangs, one never knows whether the poorly dressed man in the watch repair shop is a front for a group of successful, wealthy store owners or potential leg breakers.

Fujian （福建）immigrants to the United States, businessmen who are completely on the level, for example, will often pool assets to lend to the Fujianese newcomer so that he may open his business. This has been a common practice in Chinese communities in the United States since the mid-19th century, e.g. the 同鄉會 (an association of people originating in the same locale). Koreans, as well.

Cash is advanced at terms certain and agreed, usually at a high rate of interest (in one case, I was told, 12% monthly), often with the reversion of certain properties occurring on nonpayment, including the entire business, personal automobile, etc. Sometimes, the parties sign a simple document，much like an IOU, several of which I have seen. Other times, a relationship, family or close friend, serves as the bond sufficiently close to compel either repayment or a transfer of property. Many times, that family or friend, who was the intermediary, is the one who must pay up upon default of the primary debtor.

What happens to those who don't pay? in Malaysia, apparently this. Public ostracism. But this is certainly the easy-out. Among Chinese, as far as I am aware, beatings, leg-breakings and death -- where lender-debtor are strangers, not family or friends -- occur frequently.

An example, which occurred in Taipei. A friend lent a substantial sum of money to an investor. The investor's business failed. Fraud was suspected. My friend arranged for a small-time gangster to visit the investor, but when the gangster returned, he informed my friend that the investor had already been stabbed to death. The investor paid a very high rate of interest, indeed, and my friend's investment was entirely lost. In other words, my assumption is that the deeper truth among Malaysian loan sharks and their debtors is not as 單純 (pure and simple) as the Bloomberg writer, who otherwise wrote a terrific article, makes it out to be.

I've been busy preparing to open a second location for my law practice and have not written much. But let me give you something to read in the meantime:

After 11 years of trial, New Taiwan Dollar/RMB exchange, based in bank branches and open to the public, has expanded to the entire province of Fujian. Very doubtful that this is of much importance to any but the tourist, as, evidently, only smaller quantities of cash may be exchanged, Surely not benefiting Taiwanese manufacturers or investors. However, this appears to be a further indication of the generally positive interaction between government officials in Taipei and Beijing. Perhaps this will put a dent in the black-market operators who often hang out around local bank branches offering slightly better rates of exchange than the branches do themselves.

A Sina.com article here.

Some lovely pictures of Taipei and a top level overview, narrated in a drab voiceover -- why don't they ask me to narrate these?

By the way, if you've any video you'd like a China-focused audience to see, please let me know. Video attracts a substantial number of unique viewers and I'd like to carry more of it.

I've always found it fascinating that the last bastion of traditional Chinese ideas -- as opposed to the militaristic and authoritarian "model" -- has become the most receptive to democratic and cooperative political decision-making.