The Nature and Trend of Taiwanese Investment in China (1991–2014): Business Orientation, Profit Seeking, and Depoliticization

The economic relationship between Taiwan and China has been getting closer due to increasing Taiwanese investment in China (TIC). By examining the data from both Taiwan and China, this chapter argues that TIC has been driven mainly by economic motivations and is barely affected by tumultuous political situations. The depoliticization of business characterizes TIC. Taishang have remained intact despite the political turbulence but been excluded from the domestic policy-making process. In recent years, TIC has been gradually declining due to a deteriorating investment environment. This chapter demonstrates that while the amount of TIC has been generally increasing over the past 25 years, the composition of TIC has radically changed due to both endogenous constraints and exogenous factors. TIC has been heavily influenced by the macroeconomic environment in China and that political struggles between Taiwan and China have not led to the transition of TIC.