This Paper examines some of the benefits and dangers of Taiwan's deepening economic ties to China.

In brief, the expansion of cross-Strait economic relations has benefited Taiwan economically, but may pose serious dangers to Taiwan's democratic sovereignty. China's rising Comprehensive National Power - which aims to suppress Taiwan's sovereignty and self-government - has been significantly enhanced by investment from Taiwan itself. China's trade policies are directed for political purposes, particularly for drawing the people of Taiwan into a subordinate relationship with the Chinese dictatorship.

China's strategy has already succeeded in imposing self-censorship on many Taiwanese voices, including many businesses and more and more of the media, and in forcing Taiwan businesses with Chinese investments to support Beijing's agenda.

To address the problem, Taiwan should make sure that all trade policy decisions are made with long-term security considerations foremost. With security as the prime consideration, Taiwan should consider the following policy approaches:

* Continue to expand in-bound tourism from China, and follow through on plans to allow Chinese students to study in Taiwan. Both approaches can help the people of Taiwan change the hearts of the Chinese people - a crucial step towards Taiwan's long-term survival.

* Do not expand the list of currently allowed imports of any Chinese products intended for human or animal consumption. The poisoning danger is too high, and no system of inspection can provide sufficient safety.

* Reform the new lobbying law so that it does not prevent face-to-face meetings between Taiwan government officials and non-Chinese foreign business people.

* Take all possible steps to promote trade with Taiwan's non-Chinese regional neighbors. Look for ways to orient Taiwan's Foreign Direct Investment (FDI) away from China and towards India.

* Dramatically reform Taiwan's overgrown regulatory system, which greatly impedes business formation in Taiwan.

* Require that all new Taiwanese FDI in China go exclusively to businesses which allow workers to elect members to a council which will present workers' concerns to the management. This reform may help promote democracy and civil liberty within China, and thus enhance Taiwan's security in the long run.