Being Pulled into China’s Orbit? Navigating Taiwan’s Foreign Economic Policy

Taiwan has had to conduct a foreign economic policy (FEP) within a constricted international space given the island's "contested statehood" predicament. While the dynamic nature of Taiwan's newly industrialized economic development and the government's "resourceful" economic diplomacy strategies have provided Taipei with increasing room for FEP maneuvers, the "mainland China" factor continues to loom large. This paper contends that the People's Republic of China (PRC) exerts orientating gravitational forces upon Taiwan's FEP that are growing in strength. These forces comprise two main aspects. The first concerns the gravitational pull of the PRC economy upon Taiwan's economy that centers on the burgeoning growth of cross-Strait commerce and the ever more palpable transnational economic space this interaction is creating. Here, Taipei must primarily weigh the risks and benefits of further economic integration with mainland China. The second aspect relates to the domain of economic diplomacy, where Taiwan must navigate in a wider international economic system in which the PRC is exerting increasingly powerful economic and political gravitational forces. Discussion on this broad issue is examined in the context of Taiwan's pursuit of economic security in the international system.