Chinese Investment in Taiwan: A Challenge or an Opportunity for Taiwan?

Abstract

Cross-Strait economic activities are no longer unidirectional. The Taiwanese government opened the doors to Chinese investment in 2009. This paper addresses the following crucial question: What is the impact of Chinese investment on Taiwan's high-technology industrial development? Two further questions immediately follow: Will Chinese investment put Taiwanese industrial development at risk? Will an influx of Chinese investment lead to a turning point for Taiwanese industry? The paper first reviews Chinese investment in Taiwan under the framework of the Economic Cooperation Framework Agreement (ECFA) and then explains why we have chosen to focus here on the high-technology industry in Taiwan. It then outlines the main elements of Chinese outward foreign direct investment (OFDI) before seeking to answer the above research questions. Fieldwork for this paper was conducted from December 2014 to March 2016. Interviewees include Chinese investors, along with consultants from a Taiwanese institute created to promote industrial development.