Points of agreement What the talks accomplished

IN SOME WAYS, it seemed more like a casual encounter between old friends than a formal negotiating session. The venue was a large, rococo banquet hall in the aptly named Peace Hotel on Shanghai's famous Bund. The two Chinese, both octogenarians, shook hands cordially for the media cameras and then sat down at a round table to drink tea, together with their wives. Their aides shared tables at a discreet distance.

The pair had met five years ago on the neutral ground of Singapore under similar circumstances and expectations. This time, the guest was Koo Chen-fu, Taiwan tycoon, Kuomintang (KMT) stalwart and chairman of the semi-official Straits Exchange Foundation (SEF). His host: Wang Daohan, former mayor of Shanghai, mentor and close confidant of Chinese President Jiang Zemin and head of China's Association for Relations Across the Taiwan Strait (ARATS). In short, Koo's mainland counterpart.

After two days of discussions, interspersed with much sightseeing in China's largest city, the two issued the text of an agreement on Oct. 15. The main points themselves were hardly earthshaking. The most important were that the two sides, through the SEF and ARATS, would continue and expand their dialogue on economic and political issues, and that Wang would visit Taiwan at an appropriate time. "We will wholeheartedly wait to see you in Taipei," said Koo to his host.

Even so, the meeting was historic. It was the first such session since China broke off talks in 1995 following Taiwan President Lee Teng-hui's groundbreaking visit to the United States. The next year, tensions reached a climax when the mainland lobbed ballistic missiles near the island's waters. Above all, though, the Shanghai engagement was the first such high-level contact on Chinese soil since the end of the Civil War in 1949. Moreover, Koo went on to meet with Jiang for over an hour in Beijing - another milestone. But the discussions themselves underscored the deep differences between China and Taiwan.

The two sides hardly limited their conversations to pleasantries and technical matters - how to retrieve lost registered mail, for instance. In a Beijing meeting with Vice Premier Qian Qichen, Koo suggested that Taiwan might participate in the U.S.-led program to build two nuclear-power plants in North Korea, designed to prevent Pyongyang from developing atomic arms. The proposal seemed to catch Qian by surprise. His initial reaction, reportedly, was simply to say that the project was a matter for Washington and "not of much use." But a couple days later, the mainland apparently decided that Koo's idea was an unacceptable ploy to raise Taipei's international profile. Beijing ruled out any Taiwan participation because the plants accord, it insisted, was one made between sovereign states.

Koo and Qian had sharp exchanges over other fundamental issues. Qian restated Beijing's well-known "one-China" position, and seemed to brush aside Koo's complaints that the mainland was thwarting Taipei's efforts to gain more "international space." Koo said the emergence of democracy in China was a precondition for reunification. In making the assertion, it seems, his intention was less to strike a bargaining position than to reflect political realities in Taiwan.

To be sure, China's leaders are acutely aware of the growth of democracy on Taiwan in recent years and its impact on prospects for eventual unification. Indeed, the island is only two months away from an important election to decide the composition of the legislature as well as the mayoralty of Taipei. The polls could lead to sizable parliamentary gains for the opposition Democratic Progressive Party (DPP), which formally supports independence for the island. And if the DPP candidate, incumbent Chen Shui-bian, wins the mayor's contest, he would be well placed to gain the presidency in 2000, when Lee Teng-hui's term expires.

Despite their party's official position, DPP leaders are realistic enough to know that most of Taiwan's people, including opposition supporters, may not push for independence if they thought it might lead to armed conflict with China. Even so, some analysts believe that the prospect of rapidly rising DPP influence in the island's politics over the next few years may be one reason Beijing was willing to re-open the cross-strait dialogue.

In fact, China's leaders have extended cautious overtures to the opposition party, agreeing, for example, to mainland visits by its members. But there are limits. Former DPP chairman Kang Ning-hsiang was in Koo's delegation, but he was not allowed to meet Jiang. The DPP, however, cannot oppose the mission outright, since it knows that most Taiwan people support some kind of cross-strait dialogue.

Wang Daohan, head of China's semi-official Association for Relations Across the Taiwan Strait, will visit Taiwan at an appropriate time.

The two sides will continue to hold meetings on matters of mutual interest in both economic and political spheres.

More exchanges will be arranged between leaders at different levels, from both the commercial and political worlds.

There will be more two-way coordination regarding livelihood issues, such as protection of property and the security of visitors.