Journal of Business & Economic Policy

Economic &Trade Interdependence between Taiwan (ROC) and China (PROC)
Frank Tian Xie, Ph.D; Shu-Chen Tsao

Abstract
There has been extensive research in the areas of and trade relationships, economic interdependence, and national security in fields such as global studies, security studies, international trade, and global economics. The current research draws from several of the related fields and provides empirical evidence in the context of the opposing forces across Taiwan Strait, and examines the unique geo-political interaction between Taiwan (Republic of China) and China (People’s Republic). The study is pertinent during a time when the second power transfer in Taiwan took place and the administration of Tsai Ing-wen faces drastic changes in mainland China and growing tensions between the two. Trade and economic ties between the two entities are becoming even more intriguing as the Unites States, a third party with close ties to both Taiwan and China, is embarking on a new direction under Trump administration and imposing steep tariffs on China. Longitudinal study on trade and investment relationships between 1990 and 2015 presents a shift in interdependency and the intricate nature of the relationship amid geopolitical turmoil. The trends are examined using both trade and investment as parameters and a new measure of integrated bilateral dependency growth rate on the two entities.

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