The Reasons Of The Main Market Of China's Taiwan Transferring From The U.S. To China's Mainland (1979-2008)

During past30years, the relation of the trade and economy between the twosides of the Taiwan Strait is rapidly expanding and deepening. In1992, China'smainland replaced the U.S. as China's Taiwan's largest source of trade surplus.China's mainland replaced the United States to become Taiwan's largest exportmarket in2002. In2003, the mainland became Taiwan's largest trading partner. Sincethen, China's mainland has replaced the U.S. to become Taiwan's largest tradingpartner, largest export market and largest source of trade surplus. In this process, thedependent degree of Taiwan's export on the mainland continues to rise, while thedependent degree of export on the U.S. continuously reduces. Taiwan's main foreigntrade relations have undergone a major shift, and the past situation in which it highlydepended on the U.S. market for a long time was changed. Focusing on thisphenomenon, this dissertation analyses reasons why the major market of Taiwan'sforeign trade transferred from the United States to the mainland mainly from fouraspects: the mainland's policies toward Taiwan since its reform and opening up, theevolution of the U.S.-Taiwan trade, Taiwan's internal environment, and theinternational economic environment.This dissertation consists of five parts, that is four chapters and a conclusion:The first chapter reviews the close trade ties between the United States andTaiwan started by the U.S. economic assistance to Taiwan in1950s and1960s, andanalyses the profound impact of the U.S. aid on the U.S.-Taiwan economic and traderelations, as well as the investment and trade between the United States and Taiwan.Then this chapter also discusses the situation of across-strait's trade and investmentafter the main market of Taiwan's foreign trade shifted from the U.S. to the mainland.The second chapter discusses the impact of the mainland's policies of politics,trade and investment on transferring of the major markets of Taiwan's external tradesince the reform and opening up. First of all, this chapter reviews the mainland'spolitical policies toward Taiwan, and formulation and adjustment of the mainland'strade and investment policies toward Taiwan. In this context, it examines the changes of Taiwan's official policies of politics and trade policies toward the mainland, and thetransformation of Taiwan's foreign trade relations. The mainland's political policiestoward Taiwan are the dominant factor of transformation of the across-strait relationfrom isolation to interaction, and also are the political prerequisite of the developmentof the across-strait's trade exchanges. The mainland's trade and investment policiestoward Taiwan start and lead the development of the across-strait's re-export andindirect investment, and they are the determinants of trade exchanges of theacross-strait. Because of the stimulating of the mainland's preferential policies, thetrade of the across-strait started in the late1970s, and has begun to take shape in thelate1980s. From the late1980s, a series of mainland's preferential policies towardsTaiwan's businessmen caused the rapid growth of Taiwan's investment in themainland, and at the same time the Taiwan authorities limitedly relaxed the provisionsof the businessmen's investment in the mainland. In this case, the Taiwanesecompanies gradually expanded their bases of overseas production to the China'smainland, this change led to the reduction of direct export to the United States and theincrease in the exports of semi-finished products and machinery to the mainland. Theexpansion of Taiwan's exports to the mainland accompanied the decline in its exportsto the United States. Therefore, drived by the Taiwanese's investment in the mainland,the size and the amount of indirect trade between the two sides of the traits rapidlydeveloped, and eventually in2002the mainland replaced the U.S. to become Taiwan'slargest export market.The third chapter examines the evolution trajectory of the U.S.-Taiwan traderelations from1979to2008, and analyses the reason for the shift of the major marketof Taiwan's foreign trade from the angle of the United States, and then concludes:Although the total trade volume and scale of the U.S.-Taiwan on the whole continuedto expand, but the degree of the closeness and dependence of their bilateral trade aredeclining, the proportion of the U.S.-Taiwan trade in their respective trading patternshow a steady downward trend. Taiwan's foreign trade has changed the past situationin which it relied on the U.S. market only.The fourth chapter mainly examines the changes of Taiwan's internal environment and international economic environment. This chapter, from theperspective of economic growth, explores the impacts of Taiwan's internal political,social and economic transformation as well as those of the international economicenvironment on the shift of Taiwan's main foreign market from the U.S. to themainland. Frequent political transformation and social movements caused Taiwan'seconomic development to be increasingly disturbed by non-economic factors. A stablesocial environment helpful for economic development no longer exists. Economicrestructuring has also increased the difficulties of economic growth. Rapiddevelopment of regional economic intergration, trade protectionist pressures of thedeveloped countries, competitions in the world market of developing countries makeTaiwan to face increasingly serious challenges in the international market. The rapiddevelopment of the economic and trade relation of the across-strait in a timely mannerbecame a new growth point of economic development of Taiwan, and its importancefor Taiwan is growing. With the increasingly close economic and trade cooperationpattern of the across-strait continues to expand and deepen, the mainland's marketeventually replaced the United States' market to become an important power source ofTaiwan's economic growth.The last section summarizes the reasons why the main trade partner of Taiwantransferred from the United States to the China's mainland during the past threedecades, and analyzes on the impact of reinforcement of economic and trade relationsacross-strait on future political unity of across-strait, and further points out thatTaiwan's economic destiny lies in the mainland.