| Summary: | The introduction of the Economic Cooperation Framework Agreement (ECFA) signed
between China and Taiwan in 2010 has added a significantly important economic element to
cross-strait relations. Little research has been done on cross-strait integration from an economic
standpoint, and to analyze the potential for successful economic integration between the parties
it is necessary to determine whether their political economies are compatible for integration. In
this research comparative studies of the political economies of Taiwan and China are conducted
with focuses on industrial orientation, market mechanisms, and the motivations driving major
economic actors. This research focuses on Fujian and Guangdong, Taiwan’s closest economic
partners on the mainland and the cornerstones of Beijing’s integration incentives, with a minor
study conducted on Hong Kong-China integration due to similarities of economic integration
mechanisms. This study uses models constructed by scholars on Chinese provincial
protectionism and trade barriers to determine whether Taiwanese integration with the “Common
China Market” will be mutually beneficial for the economies on both sides of the Taiwan Strait.
Economic indicators, trade trends, and economic policy incentives indicate that integration under
ECFA is amplifying trade asymmetries and is stalling real economic growth in Taiwan. Findings
also show that trade liberalization has allowed major trade barrier and protectionism-creating
phenomena that were once limited to the mainland to contribute to cross-strait competition
regime among the economies studied. This research contributes to the fledgling body of
academic research on cross-strait economic integration and its impact on the parties directly
impacted by it. Implications of this study show that it would be beneficial for the speed of ECFA
integration to be reigned in, and for Taiwan to use the trade agreement as a counter to pursue
bilateral regional trade that can ensure its competitiveness.
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