While issuing a provocative call for independence, President Chen Shui-bian has warned that Taiwan's economy is becoming too interwoven with Mainland trade and investments.
There are at least half a million Taiwanese managers and technicians resident on the Mainland.
In an interview with the dpa news agency, Chen said Taiwan's economy is gradually becoming reliant on the Chinese market.
The Mainland is now Taiwan's top trading partner, replacing the U.S. with 39 percent of Taiwan's exports and 70 percent of its outbound investment. The Taipei Central Bank says Taiwan companies' Mainland investment totals $150 billion, but most observers believe it could be twice that through Hong Kong and other overseas Chinese pass-throughs.
But in the same interview, Chen pointed out the growing relationship is a double-edged sword.
"China wants to use its business influence to play more roles in terms of maneuvering and influencing our politics, but the Taiwan businessmen are also becoming more influential in China," he said.
The growing intricacies are mirrored in growing concerns that the Taiwan luxury real estate market may be a bubble, based on repatriated profits of Taiwanese on the Mainland. Prices have recovered by an average of 60 percent since a 2003 crash, while luxury apartments have spiked by as much as 80 percent.
Property transactions last year were up 28.7 percent compared to 2003, while the central bank says outstanding housing mortgages at the end of last year totaled nearly $135 billion, up 45.1 percent. Low bank savings yields and cheap mortgages have fed the boom, according to Sinyi Realty analyst Chang Hsin-min.
