The US-Taiwan Business Council, a group of companies with interests in the island chaired by former US defence secretary Paul Wolfowitz, said the lack of US action was allowing China to shift the balance of power in its favour.

"Given the lackadaisical treatment of the Taiwan relationship since 2008, the US seems willing to roll the dice and let China and Taiwan get on with it," it said in a statement earlier this week.

Taiwan applied to the US government to buy 66 fighter jets in 2007, but observers say Washington has held up the deal for fear of angering Beijing.

China opposes any arms sales to Taiwan, which it considers a part of its territory awaiting reunification, by force if necessary, even though the two sides split in 1949 after a civil war and have been governed separately since.

Taiwan maintains that it still needs a strong military despite improving ties in recent years.

The Chinese military has modernised rapidly in recent years, and Taiwanese experts estimate it now has more than 1,600 missiles aimed at the island.

"By continuing its build-up of missiles opposite Taiwan, as well as in building up its countless other capabilities, China's military is changing the status quo of the cross-Strait relationship," the council said.

"Successive US administrations have argued that they 'support the status quo,' but if so the US should be acting to rectify this imbalance."

earlier related report
Taiwan to relax China high-tech investment limits
Taipei (AFP) Feb 27, 2011 - Taiwan is to relax controls on investments from mainland China in the island's high-tech companies, a senior economic official said Sunday.

The move is yet another sign of fast-warming ties with Beijing.

According to the state Central News Agency, Chinese companies will be allowed to own up to 10 percent of individual semiconductor and flat-screen manufacturing companies.

Chinese companies will also be permitted to own up to 49 percent of subsidiaries controlled by the high-tech firms.

"The proposal to ease the restrictions on investments by Chinese businesses have been approved by the Executive Yuan (Taiwan's Cabinet)," deputy economic minister Lin Sheng-chung told AFP.

"It is due to be announced in the next few days," Lin said, declining to provide details.

Analysts say the measures will help Taiwanese flat-screen makers tap China's vast market.

Taiwan in June 2009 partially lifted a decades-old ban on investment in the island by Chinese companies or individuals amid rapidly improving ties following the election of Beijing-friendly Ma Ying-jeou as president in 2008.

Despite the opening, accumulated Chinese investment streams to Taiwan are less than one thousandth the money going in the other direction.

As of December, Chinese firms had made 102 investments on the island worth $131.83 million, Taiwan's Investment Commission said.

Meanwhile, Taiwanese businesses have funnelled an estimated $150 billion to the mainland since the government eased controls on China-bound investment in 1991, local media have said.

China still regards Taiwan as part of its territory awaiting reunification although the island has governed itself since 1949 at the end of a civil war.

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