The relationship between trade-investment and political unification across the Taiwan Straits, 1987 to 1998

Abstract

Over the past decades, intensifying cross-Strait trade-investment has turned the relationship between Mainland China and Taiwan into a new era. Coming along with tight social interaction and the setting up of trade-investment institutions, integrationalists optimistically think that trade-investment brings about the possibility of political unification between the two sides which are undergoing the process of political unification since 1987. By comparing cross-Strait trade-investment and social integration growth rates, by projecting Germany’s experience in cross-Strait trade-investment institutions, and by examining the past 20 years of economic and political relations, this study found that the trade-investment relationship and political unification between Mainland China and Taiwan are not necessarily causal. The study argues that the sovereignty question becomes the main obstacle in the political unification. Unless the two sides of the Strait make compromise on the issue, political unification will take a long and arduous process to achieve.