Economic interdependence and political divergence: The emerging pattern of relations across the Taiwan Strait

Economic interactions between Taiwan and mainland China have grown at an astounding speed since the Taipei government began to relax restrictions on indirect trade with the mainland in the late 1980s. A growing flood of cross‐border investment and trade has created an economic interdependence. However, intensified economic exchanges have not spilled over into political recognition of the legitimacy to each other or even ameliorated hostility across the Taiwan Strait. Growing economic interdependence has been a function of political power and political choice. This paper examines the emerging pattern of the relations across the Taiwan Strait and attributes the discrepancy between economic and political relations to significant disparities across the Taiwan Strait, which has worked as both integrative and disintegrative forces.