1. Cross-Straits economic integration between China and Taiwan has
TRADING ACROSS THE STRAITS Will a free trade agreement between China and Taiwan promote peace?
Cross-Straits economic integration between China and Taiwan has
increased since 1987
Despite political tension between the 2 countries, economic integration will
continue because of:
1. Rapid economic development in China
2. Location and close intersection of China and Taiwan economies in the regional production networking
3. Taiwan’s economy maturing and its increasing dependence on China’s growth
4. China’s policy to stimulate economic integration
5. Loopholes for Taiwanese firms

2. TRADING ACROSS THE STRAITS Will a free trade agreement between China and Taiwan promote peace?
“Status quo” of Taiwan’s uncertain legal status will remain in the short to medium
term
China is keen to promote closer economic ties through market forces or official
channels; provided that Taiwan is considered as a customs territory, not as a
sovereign entity
Taiwan government, however, is not interested for economic cooperation
through FTA based on the CEPA (Closer Economic Partnership Agreement
between China, Hong Kong and Macau) framework as a possible bilateral FTA
The peaceful relationship between China and Taiwan must be seen in the larger
geo-political context of Sino-Japan and Sino-US relations

3. TRADING ACROSS THE STRAITS Will a free trade agreement between China and Taiwan promote peace?
** If the US can prevent Taiwan from declaring independence, then China will
not take military action **
Therefore, neither close economic linkages or an FTA can truly resolve the
cross-Straits tension between China and Taiwan
Conclusion:
Peace across the Straits requires stable political relations between China and
the US and sustainable rapid economic development in China
An FTA between China and Taiwan would constitute a major positive
development , but is politically not feasible in the short and medium term