Lawyers call for more detail on cross-strait MOU

But a legal adviser working at one of the island's largest firms was more cautious.

“When people come up with a plan, for example if a big bank takes some action, then people will believe it's more real,” he said.

“Taiwan is losing its chips,” added another lawyer, expressing a view shared by many of his compatriots who worry about the potential loss of technical know-how and human capital, both precious commodities for the island, to mainland Chinese investors.

But Jack Huang, partner-in-charge of Jones Day's Taipei office, pointed out that there are already about 1 million Taiwanese living on the mainland, and said Chinese investment onto the island should be welcomed.

“China has a lot of other places to invest,” he said. “There have been enough hurdles already to slow down the process.”

The November agreement paves the way for mainland China banks to establish branches on the island, and Taiwanese banks to upgrade their PRC representative offices to branches or subsidiaries allowing them to accept renminbi deposits. It also allows Chinese qualified domestic institutional investors access to the Taiwan stock market.

The Taiwan stock exchange rose sharply after the signing was announced, but dropped again the next day as realism set in. Despite encouraging words from the likes of Yang Yi, China's Taiwan Affairs Office spokesperson, who was quoted as saying that the MOU marked “a new chapter in the practical financial co-operation between the two sides,” the document is simply not very detailed.

Many commentators have suggested no practical benefits will result from it until the more significant economic co-operation framework agreement (Ecfa) is finalised. This is expected to happen some time in 2010, and should put Taiwanese companies on a more even footing with those from Hong Kong.