Study On The Relationship Between Taiwanese Direct Investment In Mainland And The Trade Structure Of Cross-strait

Study to date of cross-strait economic and trade relations, Taiwanese Direct Investment in Mainland (TDI) and Cross-strait trade constitute the two main aspects of economic and trade activities. The distribution of TDI in the mainland is directly affected by Taiwan's industrial structure. Manufacturing industry in TDI is the major industry in mainland; service industry and agriculture occupy low proportion in investment. The objective of industrial upgrading in Taiwan call for the island's marginal industries transferred to mainland China, but the imports of mainland from Taiwan reflect the structure of Taiwan's change in industrial structure. TDI will affect the commodity structure of imports from Taiwan. The impact of TDI in mainland to the structure of export to Taiwan occurred primarily through enhancing the industrial structure of mainland, upgrading technology and changing the elements of the role of abundance. Generally speaking, the import structures of mainland from Taiwan and TDI in mainland have interaction, while TDI would affect the structure of exports of Mainland to Taiwan.From the empirical test, Taiwan's industrial structure adjustment promotes the industrial manufacturing sector, especially capital-and-technology-intensive industries continue to move to the mainland. There is inverse relationship between TDI and mainland's import from Taiwan, and this will encourage more TDI flowing into the mainland. The effects of TDI to export structure from mainland to Taiwan are mainly in the following aspect:TDI promote the exports of manufactured goods, capital and technology-intensive products and export of high-tech products. Therefore, TDI has positive effects on optimizing the commodity structure of exports to Taiwan.The impact of TDI on cross-strait trade, especially the promotion of Taiwan's industrial structure upgrading and optimizing the export structure from Mainland to Taiwan, is a market selection and cross-strait political and economic environment results. Allocating resources through investment and trade under the guidance of the invisible hand, reducing the impact of adverse factors on cross-strait trade and promoting cross-strait economic and trade development is to formulate the principle of cross-strait economic and trade policies. In the current warming cross-strait political relations, the coordination of cross-strait investment and trade policies, agreement signed by the establishment of cross-strait economic cooperation mechanism will be the future official cross-strait negotiations'subject.