ABSTRACT
This chapter outlines the historical evolution of the general environment across the Taiwan Strait. It examines the patterns and trends of trade and investment. The chapter analyzes the perceived gains and concerns of expanding relations, especially from the point of view of Taiwan. It evaluates a number of policy issues, ranging from deliberate ambiguity to rule of law, discretionary screening, and global strategy. The chapter suggests some implications for the future. The economic relations across the strait have been strongly colored by political and military developments. When the People’s Republic was proclaimed on the mainland and the Nationalist government relocated to Taiwan in 1949, the preoccupation of both sides was to establish or reestablish a legitimate government of China as a whole. Indirect mainland exports to Taiwan exhibited far slower growth than trade in the other direction, reflecting continued import controls in Taiwan in spite of progressive liberalizations.
