ABSTRACT
This chapter provides an alternative perspective for understanding the Mainland-Taiwan economic relationship, one that departs from zero-sum assessments of cross-border competition. This perspective departs from a conventional view of national economies as repositories for clearly defined industries, and industrialization as a linear evolution along an established developmental track. The cross-straits economic relationship mirrors a pattern observable across much of East and Southeast Asia. Economic integration at the firm level - through cross-border supply chains and complex production networks - has proceeded far faster than integration at the institutional and political levels. Contemporary Chinese industrial policy in many ways has a rather schizophrenic quality. Taiwan today undoubtedly faces extraordinary pressures from globalization, particularly given the island's traditional focus on high-end manufacturing. Chinese producers are able to achieve high enough quality and low enough cost to make these manufacturing activities quite unattractive to overseas lead firms.
