Facing its worst economic crisis in the postwar era, Taiwan has opted for deeper engagement with the mainland. The government of President Chen Shui-bian has lifted limits on investment in China in an attempt to boost the island's faltering economy. The move was applauded by Taiwanese businesses eager to utilize cheaper labor on the other side of the Taiwan Strait. Others, however, warned that the decision would give China undue leverage over the Taiwanese economy and ultimately threaten the island's security. The threat is real, but judicious investment and a keen appreciation of the risks involved in doing business on the mainland will help fend off any danger to Taiwan's national security.
For all the discussion of military conflict in the Strait, Taiwanese have known that the real threat to their way of life is not missiles but the lure of the Chinese market. Taipei has long worried that unrestrained investment in China by Taiwanese business would afford the mainland excessive influence over island affairs. To head off that danger, the government five years ago adopted the "no haste, be patient" policy that put a $50 million cap on single investments in China.
But grim economic conditions have changed the political calculus in Taipei. The global economic slowdown threatens Taiwan with its first year of negative growth in half a century. After registering 21.8 percent growth last year, Taiwan's exports fell 16 percent on year in October, the eighth straight monthly decline. With legislative elections a month away, President Chen decided to jettison the "no haste" policy.