Study On Taiwan’s Open Policy To Mainland Capital By Using Two-level Game Theory

The cross-strait economic relation is a positive factor to promote the healthydevelopment of cross-strait relations. But affected by various factors, thenormalization of cross-strait economic relation did not come true in past long time.And the imbalance of investments relation of the cross-strait economic relations isespecially serious; the mainland capital has been excluded from Taiwan for a longtime. In2008, Ma Ying-jeou came to the power; the cross-strait relation had a historicpositive transformation. Meanwhile, due the international financial crisis, Taiwan’seconomy was facing a grim situation. Under the internal and external pressures, theTaiwan authorities proposed an open policy to mainland capital, in order to boost theeconomy. This paper attempts to use Putnam’s Two-Level Game Theory to analyzethe Taiwan’s open policy to mainland capital in a two level way. Behind theintroduction of the Two-Level Game Theory, the paper will first sort out itsorigin/process/achievements of the open policy to mainland capital. On this basis, thispaper will study on the driving and restraining factors of the open policy to mainlandcapital according to the Two-Level Game Theory’s analysis framework. At the end ofthis paper, a future development forecast of the open policy to mainland capital willcome out based on the theoretical analysis.From the perspective of Two-Level Game Theory, the key driving or constrainingfactors of the first level game the Taiwan authorities facing are the Mainland Chinaand the U.S. For the second level game, the main rival is DPP (DemocraticProgressive Party) and its supporters. Under the background of international financialcrisis, this paper argues that the U.S./Mainland China and the island are sharing acommon interest on the stability of cross-straits. The three parties all agree with theidea that two sides of the cross-strait should strengthen their cooperation level throughconsultation and dialogue. To consolidate the peaceful development of thecross-straits relation by promote their economic cooperation level is even better. Andin Taiwan, Ma’s open policy to mainland capital received some opposition from theDPP, but it didn’t prevent Ma’s policy’s implementation. The key reason for this isthat the idea to strengthen the economic cooperation with the mainland to deal withthe severe economic situation is a consensus in the island. The DPP’s oppositionfailed to play the decisive role for this policy’s implementation procedure. Thanks tothis favorable decision background, the open policy to the mainland capital becomelogical and success to come out. But due to the island’s unique political ecology and the Cross-Straits reality, the Taiwan’s authorities design the open policy to mainlandcapital very carefully and set up defenses in the concrete measures in case of theshock to the island’s related industries come from mainland capital. The open policyto mainland capital will enjoy a much looser environment in the future, because theinternational financial crisis is not receding, Ma’s success in the re-election and theadvantages of the mainland capital’s investments in the island.