ABSTRACT
The aim of this chapter is to provide an overview of economic integration between the two sides of the Taiwan Strait over the past 20 years. The development of cross-Strait economic relations may be seen as a classic example of state autonomy wrestling with capital’s imperative to compete in a globalized world. The governments of the two sides have made great efforts to either exploit or resist the wave of capital restructuring. This is also a paradoxical case, in that economic integration has not yielded much of a spillover effect, that is, there has been no push toward political integration. In Taiwan, pro- and anti-integration forces have been in a state of constant confrontation with each other within a shifting political climate, and this issue continues to divide Taiwanese politics. In the meantime, China’s state-orchestrated economic transformation is changing the world economy, giving China greater economic and political leverage over its neighbors, including Taiwan. It is odd how long-term political hostility and tension between the two sides of the Taiwan Strait have coexisted with increasing economic integration. Rarely do we see such an entanglement of economic interests, national security, and identity politics as exists in this case (Chu 1997).
