[The following statement was presented to the United States and China Economic and Security Review Commission, Washington, D.C., September 15, 2005.]
The overriding objective related to the subject of this hearing has been to advance U.S. national interests in our relations with Taiwan and with the People's Republic of China (P.R.C.)
Six Months of Cross-Strait Activity
Although political dialogue between "unofficial" high-level government representatives of Taipei and Beijing has been frozen since 1999, there have been noteworthy cross-Strait developments over the past year. Trade is lopsided in favor of Taiwan, which has a $51 billion surplus with China. It is in part driven by Taiwan's direct investment in the mainland. China's imports of nearly $65 billion worth of Taiwan goods accounted for 11.5 percent of all Chinese imports in 2004. The mainland is not doing too badly in its efforts to access Taiwan's market, with its exports increasing 170 percent since 2001, from $5 billion to about $13.6 billion. In addition, rapid Taiwan investment in China's service sector is helping provide support for Taiwan manufacturers in the Peoples Republic of China. While realizing the foreign direct investment (FDI) levels fell a bit in 2004 (to $3.1 billion), both sides seem confident that the overall levels will remain positive, especially as Taiwan increases value-added investments in the P.R.C.
Economic integration implies …