The central government has adopted rather flexible policies for handling relations between Macao and Taiwan after Macao's return, which was embodied in the seven basic principles and policies vice- premier Qian Qichen announced last January in that regard, making it possible for Macao to fully tap its advantages to serve as a cross-strait link.

Statistics show that the 1998 trade turnover between Taiwan and Macao exceeded 360 million US dollars and over 800,000 Taiwan tourists visited Macao in 1998. More than 5,000 Macao residents are now studying in Taiwan universities while Macao laborers in Taiwan amount to between 15,000 and 20,000.

Close contacts with Taiwan enabled Macao to serve as a bridge across the Taiwan Straits. Taiwan investors are seeking business opportunities in Macao, using the region as a channel for them to invest in the inland areas of the motherland.

Macao has also been a transfer station in air transportation between the Chinese mainland and Taiwan region after the local airline "Air Macao" joined hands with some Taiwan airlines in 1995 to offer flights linking Chinese mainland cities with Macao, and cities in Taiwan.

However, Macao has always been regarded as an accessory to Hong Kong in the past in facilitating the cross-strait exchanges, since Macao is far from being a rival of Hong Kong in both policy incentives and economic strength.

"Actually, Macao has its own unique advantages as a cross- strait link," said Ambrose So, president of the Macao "One Country Two Systems" Research Center.

In the first place, Macao and Taiwan have been closely connected ever since ancient times and their cultures are very similar in nature. The more than 100,000 Fujian natives in Macao, who have the same ancestor, culture and customs as residents in Taiwan, are serving as a backbone force in cross-strait exchanges, making Macao an important bridge between Taiwan and Fujian province.

"What's more, cost of labor, land and commodities in Macao is much cheaper than that in Hong Kong. Macao's advantageous geological position also makes it a convenient passage for Taiwan capital to enter the Chinese mainland," Ambrose So said.

"Its unique culture also enables it to serve as a bridge for Taiwan businesses to muscle into the European market and even market in Latin American countries," he added.

All these advantages, however, were not made full use of in the past, mainly due to the backward infrastructure and bureaucracy of the Portuguese Macao government.

Macao's return to China will enable it to fully explore its potential, according to an expert on Macao issue. Becoming the masters of their own region is expected to greatly inspire work enthusiasm among the local civil servants, and greatly increase the work efficiency of the civil service. Infrastructure is expected to improve as a result, providing impetus for furthering the economic cooperation between Macao and Taiwan.

According to a trade and cooperation pact signed between Macao and the European Union in 1992, Taiwan investors may set up businesses in Macao as a link for the three markets in the Chinese mainland, Europe and Latin language speaking countries.

There will be much more space for Macao to further its exchanges with Taiwan in many aspects according to the policies the central government announced in January.

However, Macao's role as a cross-strait bridge can only be brought into full play when the policy of "one country, two systems" is effectively implemented. "Only under that prerequisite can we have reasons to believe that Macao will play its role in facilitating the integration of both sides across the Taiwan Strait on the basis of mutual benefit so as to finally achieve the reunification of the whole Chinese nation," Ambrose So concluded.