China has just signed a trade agreement with its rebellious, capitalist province, Taiwan, which has major long term implications for the rest of us. The deal has China chopping import duties on 500 goods from Taiwan worth $13.8 billion, while the errant island nation is doing the same for 267 items shipped from the mainland worth $3 billion. The move is a major step towards more rapprochement between the two former antagonists, and will lead to a further easing of relations. Developments like this are always amazing to me because for most of my life these two states were at each other’s throats, and much of that cost was borne by the US (click here for my last piece on Taiwan). Taiwan will far and away be the biggest beneficiary of the new arrangement, as it takes the country’s highly profitable companies a step closer to becoming takeover bait for its gigantic Chinese competitors. It all point to owning the two Taiwan ETF’s out there, one for the main index (NYSEARCA:EWT), and the other new fund for small caps (TWON). I caught a nice run on (EWT) last year, catching the move from $8 to $13. These two funds also get you long the Taiwan dollar, another good bet. Of course, you don’t want to touch anything that reeks of equity while the world is in risk reduction mode. Better to put Taiwan on you “buy on melt downs” list.