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This chapter investigates the evolution of cross-strait economic relations and Asian regional integration and its implications for future development in the region. Trade and investment in Asia is fundamentally market-driven, and cross-border FDI is the major driving force. This investment-induced trade explained the cross-strait economic relations and intensive trade in intra-industry and intra-regional trade in Asia. The rise of China in 1990s with the assistance of Taiwanese firms further accelerated the trend of integration by forming regional production networks. However, after 2000 institutional arrangement like bilateral or plural-lateral FTA emerged to normalize and institutionalize the de facto economic integration. RCEP and TPP have evolved as the two major platforms for Asian regional cooperation with two key players, China and the United States, on each side. We argue that in the long run the win-win solution that the two platforms will further merge into FTAAP, which benefits all participants including China and the United States. However, in the short run, based on its 50 years of developmental experience, Taiwan can play an important role to promote and consolidate Asian regional integration as a technology provider and resource coordinator for the region and a risk buffer for entering Chinese market. We thus propose a roadmap for Taiwan and China to jointly participate in regional integration process. In the intermediate run, Asian economies need to change the structure toward more regional-centered trade in final goods through domestic consumption market in order to reduce the dependence on Western markets and mitigate any loss may arise from external shocks.

The China threat is the first and most obvious answer when it comes to the question of threat perception in Taiwan, but the issue encompasses much more. The ruling elite for years considered the subject population a threat, for example, and even the nature and severity of the China threat varies greatly depending on an individual’s identification. How do those who identify as Taiwanese see the consequences of an attack from China? There is a very different threat perception among the Taiwanese population, who view annexation by China in much the same way as their Mainlander counterparts would see annexation by Japan, for example. Persons self-identifying as Taiwanese do not view themselves as being culturally the same as the people across the Taiwan Strait, having grown apart from them (in a cultural sense) over the past 120 years that they have been separated. Moreover, after Taiwan’s long history of being colonized by one alien power after another – from the Dutch and Spanish, to Koxinga, and then the Manchu dynasty; by the Japanese; and finally by the KMT (for being colonized is how many Taiwanese perceive the ROC period) – finally the inhabitants of the island have the opportunity to chart their own future, and enjoy a newfound sovereignty and identity separate from that of any colonizing power: thus the prospect of being colonized by China is anathema, and therefore a much greater existential threat for them than for Mainlanders.

In his autobiography, Chen Shui-bian (1999, p. 40) condemned the Koumintang's (KMT's) corruption and praised the Democratic Progressive Party (DPP) for being free from money politics and corruption. The DPP fought the 1992 Legislative Yuan election campaign effectively on an anticorruption platform and used the same strategy in subsequent elections. If Chen Shui-bian had criticized the KMT for its involvement with “black gold” politics and had won the 2000 presidential election on his anticorruption platform, why was he and his family found guilty of corruption after his second term of office? The short answer is that even though he had promised to curb corruption, President Chen himself had succumbed to corruption after assuming office. In June 2002, Keesing's Contemporary Archives cited a poll in Taiwan that indicated that more respondents had perceived the DPP to be more corrupt than the KMT (Copper, 2006, p. 14).

The volume concludes by offering a number of policy recommendations that would help to improve morale in the ROC armed forces and make it a social institution that garners more respect from the public. While most such studies focus on strategic recommendations and weapons purchases, what is provided here is essentially about creating a new military ethic, one that makes the military more relevant to today’s society while meeting its purpose of defending against external attack. The ethic and character of the ROC military is very much focused on the ideals expounded by Dr. Sun Yat-sen and the Three Principles of the People. While these are laudable ethical underpinnings for an organization with its roots in China, they are anachronistic in today’s Taiwan, and do not represent the values of modern young people. While there is very little agreement among the nation’s ethnic groups and political philosophies, there is one thing that unites Taiwan people of all stripes, be they Hoklo or Hakka, Mainlander or Taiwanese, and indigenous person or modern urbanite: the land. It is the land of Taiwan that represents home and hearth, and thus the focus of any cultural shift within the organization that is the ROC military should be one that focuses on the military’s purpose of defending this land. All other policy recommendations described in this chapter stem from this paradigm, whether it be how to handle conscription and training, or the establishment of youth programs and ethnic indigenous regiments.