Coping with China in Hard Times: Taiwan in Global and Domestic Aspects *

This paper argues that in the post‐democratization era, the Taiwanese state devotes itself to creating a comprehensive division of labor with China in favor of Taiwan. Both the Democratic Progressive Party and Kuomintang (the Chinese Nationalist Party) administrations have endeavored to re‐intervene in fields like research and development to strengthen and upgrade industrial competitiveness. The Ma administration tries to adopt a policy of globalization with comprehensive engagements with China. However, political costs come with the efforts in deepening and institutionalizing such a unique relationship. On the domestic front, the redistribution effect of the trade pact buttresses opposition forces to request a halt to further integration. To cope with the rise of China in hard times, the Taiwanese state chooses to adopt two‐track policies to re‐intervene into economic spheres of influence while searching for political compromise with China. From this aspect, the power of the Taiwanese state is not shrinking in the era of globalization. It requires more subtle ways to enhance capacities to co‐exist with social forces on domestic soil, and promote trust with major international players in the region. The state power is thus transformed and readjusted in a more complicated manner.