Yiin was addressing opposition fears that the ECFA would lead to dumping by China, as the agreement would allow for sharp reductions in import tariffs in trade between the two sides.

Taiwan and China are expected to sign the ECFA, a trade deal that would liberate cross-strait trade, in the first half of next year.

Speaking at a cross-strait seminar in Taipei on business mergers and equity funds, Yiin called for closer Taiwan-China economic cooperation, which he said would sharpen the competitive edge of both Taiwan and China in the global market.

Yiin said the formation of the "ASEAN (Association of Southeast Asian Nations) plus China" arrangement next year will leave Taiwan at a disadvantage, as its exports to China will be subject to an average tariff rate of 8.9 percent, while exports from ASEAN countries will be tariff-free.

However, Ying said, a 4.6 percent or higher appreciation of the Chinese yuan would offset the ECFA's impact on Taiwan. The yuan recorded an annual appreciation of over 4.6 percent in the past two years.

In addition, Japan and South Korea are entering negotiations with China to sign separate bilateral free trade agreements (FTAs), which poses an additional trade threat to Taiwan, Yiin said.

For example, he added, South Korea, which exports 40 percent of its goods tariff-free under the terms of its TRA with several countries, will see that figure rise to 60 percent if it signs an FTA with China. Currently, only 0.2 percent of Taiwan's exports are tariff-free.

Xiung Yen, president of the China Beijing Equity Exchange, said at the seminar that Taiwan and China enterprises stand a great chance of breaking into the international arena if they could join hands.

He said that China's vast market and abundant capital and Taiwan's excellent management expertise and talents would be complementary in international business mergers.

(By Feng Chao & Bear Lee)