Cross-Strait Economic Relations: China`s Leverage and Taiwan`s Vulnerability

Abstract

Economic relations between Taiwan and China have developed very rapidly due to strong business motivations in both societies. Taiwan`s government worries that Beijing might exploit China`s economic leverage by using economic sanctions to achieve political goals if asymmetric interdependence in China`s favor emerges across the Strait.\r\nThis paper seeks to answer two categories of questions: first, how large is China`s actual and potential economic leverage over Taiwan in terms of imposing economic sanctions, and what conditions or factors would contribute to China`s decision to exploit this economic leverage? Second, how vulnerable is Taiwan to any such imposition of economic sanctions, and what conditions or factors would contribute to the success or failure of these sanctions?\r\nThis paper concludes thatChina has no economic leverage over Taiwan in terms of imposing economic sanctions and that Taiwan`s vulnerability to such a scenario is almost nonexistent.