Changing Dynamics in the Taiwan Strait

Over the last fifty years, relations across the Taiwan Strait seem to have undergone a fundamental transformation. If the Shanghai Communique represented the first step in altering the politicostrategic equations, the economic linkages have contributed to reshaping the dominant approaches to the problem. The increasing volume of cross-Strait trade and investment is influencing government decisions in both the mainland and in Taiwan. Economic links are now at the core of the changing dynamics and have played a key role in preventing the escalation of recurring politico-strategic-tensions into a full-fledged crisis. Developments in the post-Cold War era may have also led the way to a wide range of options pertinent to the Taiwan Strait as well as the problem of “one-China†. Over the last decade in particular, both sides have taken incremental but substantial steps so that political differences do not hamper fast developing economic ties. The increasing salience of historical, cultural and civilizational factors in examining the newly emerging issues in the Taiwan Strait such as identity and nationalism, has further opened up new avenues. Prospects for resolving the “one China†issue will depend on how both sides are able to reinforce economic relations with political understanding.