Shanghaied? The Economic and Political Implications of the Flow of Information Technology and Investment across the Taiwan Strait

By Michael S. Chase; Kevin L. Pollpeter et al. | Go to book overview

1.
INTRODUCTION

BACKGROUND

For years, Taiwan's world-leading information technology (IT) industry has exploited the relatively cheap labor pool of the Chinese mainland to produce the lower-end items in its product lines, such as keyboards and disk drives. As the Taiwanese economy stumbles, however, more companies are looking to export their production base to the mainland, threatening to “hollow out” the island's leading industrial sector in the view of some Taiwanese observers. Taiwan's leaders have attempted to stanch the flow of production to the mainland, but economic logic and political enticements from Beijing have made the move too attractive for most companies to resist. More recently, Taiwan's President Chen Shui-bian has recommended the relaxation of controls on trade, transportation, and investment, portending an even greater acceleration of Taiwanese investment in and production on the mainland. At the same time, Taiwan has become increasingly important to the success of China's science and technology development, and the combined technology, capital, and labor of the two sides could prove to be a potent force, pushing China into the top ranks of the world's IT powers.


OBJECTIVE OF THIS REPORT

The goals of this report are threefold: (1) to comprehensively analyze the investment and technology transfer dynamics between China and Taiwan; (2) to assess the impact of these developments for relations across the Taiwan Strait writ large, the global semiconductor industry, and the advancement of science and technology development in China; and (3) to evaluate the implications of the findings for U.S. government policymaking, particularly in the area of high-technology export controls.


RESEARCH APPROACH

In the course of the research, we drew information from a wide variety of sources, including Chinese and Western media, company

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Shanghaied? The Economic and Political Implications of the Flow of Information Technology and Investment across the Taiwan Strait
Table of contents

Table of contents

  • Title Page *
  • Preface iii
  • The Rand Corporation Quality Assurance Process v
  • Contents vii
  • Figures ix
  • Tables xi
  • Summary xiii
  • Acknowledgments xxv
  • Acronyms xxvii
  • 1 - Introduction 1
  • 2 - Government Policies and Cross-Strait Flows 3
  • 3 - The Current Cross-Strait Information Technology Dynamic: Statistics and Case Studies 43
  • 4 - Assessment of Key Analytical Questions and Policy Implications 135
  • Bibliography 157
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