Breaking the China-Taiwan Impasse

By Donald S. Zagoria; Chris Fugarino | Go to book overview

CHAPTER 1

Cross-Strait Relations and the United States

Robert A. Scalapino

Relations between mainland China and Taiwan are presently marked by a seeming paradox that has become more pronounced in the recent past. On the one hand, economic intercourse between the two parties has grown explosively. On the other hand, the political impasse continues, with the December 2001 elections signaling the likelihood that the deep political gulf is likely to remain for the foreseeable future.

Certain details concerning this situation are warranted. Investment in China from Taiwan now totals some U.S. $60 billion, and certain sources regard the accurate figure as being larger. Approximately one-half of Taiwan's business establishments are now engaged in production in China. Moreover, cross-strait trade was nearly U.S. $15 billion for the first six months of 2001, and although that represented a 6 percent decline from the previous year, it is still a major factor in the Taiwan economy, since some 50 percent of gross domestic product comes from exports, with the information technology (IT) industry accounting for 35 percent of all exports.

The great bulk of Taiwan's economic activity on the mainland has been concentrated in the coastal regions and especially Shanghai. In the latter region, it is estimated that there are presently 250,000-300,000 Taiwan residents. Symbolic of the trends is the agreement between the government-owned oil companies of the two sides to undertake a joint venture in gas and oil drilling in the strait that began in early 2002, upon approval by the Taiwan Mainland Affairs Council.

The change in the official Taiwan government exhortation regarding cross-strait economic activities from “go slow, be patient” to “active opening, effec-

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