An Assessment of Taiwan's Indirect Investment Toward Mainland China

The economic ties between Taiwan and the mainland China had been restored since 1987. A comparison of Taiwan's investment toward the mainland and the ASEANs shows that the investment size is much smaller in the mainland in terms of money flow; nonetheless, much higher in terms of number of firms. Also, the effects of investment‐induced trade is much stronger in the mainland. Using the 1986 Input‐Output Tables and the data set of officially registered investment volume by industry, this paper simulates the possible linkage effects on output, employment and export shift for both sides.