In Taiwan’s domestic politics, the People’s Republic of China (PRC) is not only a significant factor but also a major player. The PRC’s central government in Beijing1 has a clear agenda on Taiwan: to use whatever means necessary to eradicate the ‘Taiwan independence force’. For example, in Taiwan’s 2012 presidential election, the top business leaders’ endorsement of the ‘1992 Consensus’ on the existence of only one China was critical for Ma Ying-Jeou’s victory; most likely, Beijing’s implicit agreement was required for these tycoons to make this claim.2 The government in Beijing, being sensitive to the fact that China’s economic growth had the capacity not only to attract the interested parties but also to remind them of the cost of running away, was clearly employing a cautious strategic approach. How would Beijng fulfill this goal? Beijing’s catchall strategy toward Taiwan says little about whether any specific group will be treated differently, especially when resources are limited. Taiwan’s presidential election is a good example. The outcome of the presidential election is determined not only by the popularity of the two camps, but also by the ‘floating’ voters between them. In this chapter, a two-level game model will demonstrate how Beijing’s strategy plays a decisive role by affecting the vote choices of Taiwan’s nonpartisan voters – it would be inefficient to spend resources on the deep green or deep blue voters, whose vote choices are unlikely to be modified by material interests. The key issue is cross-Strait exchanges. The pro-independence camp wishes to protect their constituencies from being infiltrated by Chinese capital precisely because Beijing has a strong incentive to import goods produced by Taiwan’s primary sector, in which many potential pan-green supporters work. Alternatively, free trade promoted by an anti-independence leader would expose undecided voters employed in vulnerable industries to a greater risk. Nevertheless, Beijing hopes to increase the dependence of Taiwan’s nonpartisan voters on the mainland economy and, by this means, to minimize their support for Taiwan’s independence. The success of Beijing’s strategy depends on the partisanship of Taiwan’s president, which is strongly affected by the structure of Taiwan’s national identity. In the next section, I will review the relevant literature and explain why a revised two-level game model is helpful. A two-level game model will then be

constructed in order to demonstrate the political significance of Beijing’s economic strategy. This will be followed by an empirical test of the propositions. The three case studies presented thereafter will show that the theoretical propositions are, in fact, reflections of reality.