National security vs. economic interests: reassessing Taiwan's mainland policy under Chen Shui‐bian

Abstract

Having finished its first term, the Chen Shui‐bian Administration has found itself in deep water in the troubled cross‐Strait relations. Not only has Chen himself been making contradictory remarks, the Cabinet has been indecisive over issues related to China. The most difficult and irritating case for the DPP government has been the handling of the call made by high‐tech industries to allow them to invest in the mainland. The controversy seems to highlight a dilemma for Taiwan: while it needs the mainland market to save it from the current economic doldrums and create yet another potential ‘miracle’ of becoming a global economic powerhouse, it is worried that further economic engagement with its former rival may pose new kinds of threats to its national security. The debate over whether to allow an eight‐inch wafer foundry, the crown jewel of Taiwan's economy, to invest in the mainland market is but one case, albeit a highly significant one, of the difficult relations between the two sides of the Taiwan Strait.