SOAS Research Online

Abstract

Since the beginning of the 1980s, one of the most frequently debated issues concerning the Nationalist Republic of China on Taiwan (hereinafter, Taiwan) and the Communist People's Republic of China on the mainland (hereinafter, China or the PRC) has been investment and trade relationships between the two. Taiwan and the PRC, divided since 1949 and with a background of extreme hostility, both continue to claim to be the sole legitimate government of "China". However, they are de facto two exclusive entities with lawful international personalities which exist separately on either side of the Taiwan Straits. Although the PRC has made continuous efforts to promote direct trade and investment with Taiwan, Taiwan still insists that all contacts should be indirect. According to the government of Taiwan's three-stage unification plan published in March 1991, direct business activities with the PRC can be conducted only if there is an equal, reciprocal relationship between the two regimes. While various scenarios are possible for future relationships, the most likely appears to be a compromise; a co-existence with economic and political co-operation coupled with legal modus vivendi. The purpose of this study is first, to provide an academic analysis of the legal aspects of Taiwan-PRC trade and investment links which also promotes the cause of stronger Taiwan-PRC economic relations unilaterally; Secondly, in the broader context, to stimulate creative discussion of possible solutions for direct mutual exchange of economic activities between the two. The analysis of the legal aspects of Taiwanese trade and investment in the PRC includes an examination of the methods of legal settlement for handling business disputes. This thesis employs the methodology of comparative analysis in approaching the topics it treats. Its theoretical standpoint is based on the argument that the model of former East-West trade and investment, arising from policies of mutual public non-recognition, reveals many close similarities to the characteristics of the Taiwan-PRC relationship where trade and investment are concerned. By undertaking a detailed examination of these similarities, it is hoped that this thesis provides not only a thorough account of the genesis and current state of the problem, but also that it offers realistic pointers to achieving an eventual satisfactory solution. This thesis is made up of seven chapters. It begins with a chapter outlining comprehensively the recent history of China and Taiwan. This first chapter also outlines the goals, sources and framework of the study. The second chapter tackles the main factors involved in the notion of a Greater China, embracing the present territories of the PRC, Taiwan, and Hong Kong. Consideration is given to the true extent and effect of PRC's economic reforms; to the political/economic background of the PRC-Taiwan trade and investment relationship; to prospects for enhancing the triangular economic tie which even now links these three territories; to the patterns of current trade and investment; and not least, to the two bodies deliberately set up to bridge the Taiwan-PRC ideological gap by dealing with practical issues. A conclusion is drawn. The third chapter opens with a brief discussion of the prospects for a reunited country. It then restates in detail the background to Taiwan-PRC economic links, describing the emerging legal framework governing private business relations between the two regimes. The fourth chapter deals with the legal issues in private business contracts for Taiwanese trade and investment in the PRC. These in-depth analyses include several issues arising in the context, and methods utilised in concluding business contracts. The fifth chapter looks at the legal protection of Taiwanese trade and investment in the PRC. Discussion includes existing PRC laws and measures, their legal effectiveness and significance as they affect Taiwanese businesses. The sixth chapter analyses the legal solutions for settling business conflicts of Taiwanese trade and investment in the PRC. It highlights the relative roles of arbitration and litigation in resloving such disputes. The final chapter presents the conclusions that can be drawn from this study, and considers future prospects for Taiwan-PRC relations.