For helpful comments, I wish to thank Thomas Christensen, Stephen Haggard, Chad Rector, Xu Xin, and the anonymous reviewers.Google Scholar

1. See, for example, Chen, Tain-Jy and Chu, C. Y. Cyrus, “Cross-Strait Economic Relations: Can They Ameliorate the Political Problem?” in Alagappa, Muthiah, ed., Taiwan's Presidential Politics: Democratization and Cross-Strait Relations in the Twenty-first Century (Armonk, NY: M. E. Sharpe, 2001), pp. 215–235; Sutter, Karen M., “Business Dynamism Across the Taiwan Strait: The Implications for Cross-Strait Relations,” Asian Survey 42, no. 3 (2002): 522–540; Clark, Cal, “Growing Cross-Strait Economic Integration,” Orbis 46, no. 4 (2002): 753–766; Bolt, Paul J., “Economic Ties Across the Taiwan Strait: Buying Time for Compromise,” Issues and Studies 37, no. 2 (2001): 80–105; Zhao, Quansheng, “Beijing's Dilemma with Taiwan: War or Peace?” Pacific Review 18, no. 2 (2005): 238; Wang, Qingxin Ken, “Taiwanese NGOs and the Prospect of National Reunification in the Taiwan Strait,” Australian Journal of International Affairs 54, no. 1 (2000): 111–124; Mastel, Greg, “China, Taiwan, and the World Trade Organization,” Washington Quarterly 24, no. 3 (2001): 45–56.Google Scholar

2. Bolt, , “Economic Ties”; Chen, and Chu, , “Cross-Strait Economic Relations.” Google Scholar

3. Clark, , “Growing Cross-Strait Economic Integration.” Google Scholar

4. In his April 2004 testimony on Taiwan before Congress, former assistant secretary of state James Kelly emphasized that “in the absence of a political dialogue, we encourage the two sides to increase bilateral interactions of every sort. Clearly, there would be economic benefits for both sides by proceeding with direct aviation and shipping links. The increasing people-to-people contacts may also ease tensions.” Comments online at www.state.gov/p/eap/rls/rm/2004/31649.htm. In January 2006, a State Department spokesman summarized US policy as follows: “We support expansion of transportation and communication links across the Strait aimed at increasing political, economic, social and cultural exchanges with a view to increasing mutual understanding and diminishing the chances of miscommunication or misunderstanding.” See Taipei Times , February 1, 2006, p. 1.Google Scholar

5. Oneal, John R. and Russett, Bruce, “The Classical Liberals Were Right: Democracy, Interdependence, and Conflict, 1950–1985,” International Studies Quarterly 41, no. 2 (1997): 267–294; Oneal, John R. and Russett, Bruce, “Assessing the Liberal Peace with Alternative Specifications: Trade Still Reduces Conflict,” Journal of Peace Research 36, no. 4 (1999): 423–442; Oneal, John R. and Russett, Bruce, “Clear and Clean: The Fixed Effects of the Liberal Peace,” International Organization 55, no. 2 (2001): 469–485; Russett, Bruce and Oneal, John, Triangulating Peace: Democracy, Interdependence, and International Organizations (New York: Norton, 2001).Google Scholar

6. Mearsheimer, John J., The Tragedy of Great Power Politics (New York: Norton, 2001); Ripsman, Norrin M. and Blanchard, Jean-Marc F., “Commercial Liberalism Under Fire: Evidence from 1914 and 1936,” Security Studies 6 (1996/97): 4–50.Google Scholar

7. Waltz, Kenneth N., Theory of International Politics (Reading, MA: Addison-Wesley, 1979).Google Scholar

8. See, for example, Gowa, Joanne, Allies, Adversaries, and International Trade (Princeton: Princeton University Press, 1994).Google Scholar

9. See, for example, Barbieri, Katherine, “Economic Interdependence: A Path to Peace or a Source of Interstate Conflict?” Journal of Peace Research 33, no. 1 (1996): 29–49; Barbieri, Katherine, The Liberal Illusion: Does Trade Promote Peace? (Ann Arbor: University of Michigan Press, 2002); Keshk, Omar M. G., Pollins, Brian M., and Reuveny, Rafael, “Trade Still Follows the Flag: The Primacy of Politics in a Simultaneous Model of Interdependence and Armed Conflict,” Journal of Politics 66, no. 4 (2004): 1155–1179.Google Scholar

10. See, for example, Ripsman, and Blanchard, , “Commercial Liberalism Under Fire.” Google Scholar

11. For reviews of various arguments linking economic interdependence to peace, see Barbieri, , “Economic Interdependence”; Barbieri, Katherine and Schneider, Gerald, “Globalization and Peace: Assessing New Directions in the Study of Trade and Conflict,” Journal of Peace Research 36, no. 4 (1999): 387–404; Mansfield, Edward D. and Pollins, Brian M., “The Study of Interdependence and Conflict: Recent Advances, Open Questions, and Directions for Future Research,” Journal of Conflict Resolution 45 (2001): 834–859; Mansfield, Edward D. and Pollins, Brian M., “Interdependence and Conflict: An Introduction,” in Mansfield, and Pollins, , Economic Interdependence and International Conflict: New Perspectives on an Enduring Debate (Ann Arbor: University of Michigan Press, 2003), pp. 1–28.CrossRefGoogle Scholar

12. Mansfield, and Pollins, , “Interdependence and Conflict.” Studies that consider different types of contingent effects include Copeland, Dale C., “Trade Expectations and the Outbreak of Peace: Detente 1970–74 and the End of the Cold War 1985–91,” Security Studies 9, no. 1/2 (1999/2000): 15–58; Gelpi, Christopher and Grieco, Joseph M., “Economic Interdependence, the Democratic State, and the Liberal Peace,” in Mansfield and Pollins, Economic Interdependence and International Conflict, pp. 44–59; Papayoanou, Paul A., “Interdependence, Institutions, and the Balance of Power: Britain, Germany, and World War I,” International Security 20 (1996): 42–76; Mansfield, Edward D. and Pevehouse, Jon C., “Trade Blocs, Trade Flows, and International Conflict,” International Organization 54, no. 4 (2000): 775–808.Google Scholar

13. This sort of argument can be found in the works of nineteenth-century commercial liberals such as Richard Cobden (for an overview, see Russett, and Oneal, , Triangulating Peace , pp. 127–129). More recently, the argument is endorsed by Viner, Jacob, International Economics (Glencoe, IL: Free Press, 1951), p. 261. The argument is further developed in Solomon William Polachek, “Conflict and Trade,” Journal of Conflict Resolution 24 (1980): 55–78; and Polachek, Solomon William, Robst, John, and Chang, Yuan-Ching, “Liberalism and Interdependence: Extending the Trade-Conflict Model,” Journal of Peace Research 36, no. 4 (1999): 405–422. The argument appears prominently in work by Russett and Oneal (e.g., Triangulating Peace). For a critical analysis, see Levy, Jack, “Economic Interdependence, Opportunity Costs, and Peace,” in Mansfield and Pollins, Economic Interdependence and International Conflict, pp. 127–147.Google Scholar

14. Papayoanou, , “Interdependence, Institutions, and the Balance of Power”; Gelpi, and Grieco, , “Economic Interdependence, the Democratic State, and the Liberal Peace” Russett and Oneal, Triangulating Peace. Google Scholar

15. Papayoanou, Paul A. and Kastner, Scott L., “Sleeping with the Potential Enemy: Assessing the U.S. Policy of Engagement with China,” Security Studies 9, no. 1/2 (1999/2000): 157–187.Google Scholar

16. On this version of the preference transformation argument, see Mansfield, and Pollins, , “Interdependence and Conflict,” p. 3. Viner (International Economics, p. 261), while declining to endorse it himself, attributes this sort of sociological argument to the Manchester school. Some of Cobden's writings do indeed suggest this type of effect, though constraint arguments are more prominent. See Cobden, Richard, Political Writings, vol. 1 (London: Routledge, 1995), pp. 465–466. On the Manchester school, see Grampp, William D., The Manchester School of Economics (Stanford: Stanford University Press, 1960). Elsewhere, Karl Deutsch emphasizes the importance of social communication as a condition facilitating the formation of security communities. See Karl W. Deutsch and collaborators, Political Community and the North Atlantic Area (Princeton: Princeton University Press, 1957).Google Scholar

17. On the effects of commerce on domestic political coalitions, see Rogowski, Ronald, Commerce and Coalitions: How Trade Affects Domestic Political Alignments (Princeton: Princeton University Press, 1989).Google Scholar

18. Solingen, Etel, Regional Orders at Century's Dawn (Princeton: Princeton University Press, 1998); Solingen, Etel, “Internationalization, Coalitions, and Regional Conflict and Cooperation,” in Mansfield, and Pollins, , Economic Interdependence and International Conflict, pp. 60–85. Countries sometimes cultivate economic ties with other states in order to harness a transforming effect. See Hirschman, Albert O., National Power and the Structure of Foreign Trade (Berkeley: University of California Press, 1945); Rawi Abdelal and Jonathan Kirshner, “Strategy, Economic Relations, and the Definition of National Interests,” Security Studies 9, no. 1/2 (1999/2000): 119–156; Skalnes, Lars S., “Grand Strategy and Foreign Economic Policy: British Grand Strategy in the 1930s,” World Politics 50, no. 4 (1998): 582–616; Kahler, Miles and Kastner, Scott L., “Strategic Uses of Economic Interdependence: Engagement Policies on the Korean Peninsula and Across the Taiwan Strait,” Journal of Peace Research 43, no. 5 (2006): 523–541. McDonald, Patrick argues that free trade (low protectionist barriers), rather than trade per se, has the effect of increasing the relative political clout of actors most likely to oppose war: McDonald, Patrick J., “Peace Through Trade or Free Trade?” Journal of Conflict Resolution 48, no. 4 (2004): 547–572.Google Scholar

19. On bargaining models of war, see, for example, Fearon, James, “Rationalist Explanations for War,” International Organization 49, no. 3 (1995): 379–414; Gartzke, Erik, “War Is in the Error Term,” International Organization 53, no. 3 (1999): 567–587; Powell, Robert, “Bargaining Theory and International Conflict,” Annual Review of Political Science 5 (June 2002): 1–30.Google Scholar

20. Gartzke, Erik, “The Classical Liberals Were Just Lucky: A Few Thoughts About Interdependence and Peace,” in Mansfield, and Pollins, , Economic Interdependence and International Conflict , pp. 96–110; Gartzke, Erik and Li, Quan, “War, Peace, and the Invisible Hand: Positive Political Externalities of Economic Globalization,” International Studies Quarterly 47, no. 4 (2003): 561–586; Gartzke, Erik, Li, Quan, and Boehmer, Charles, “Economic Interdependence and International Conflict,” International Organization 55, no. 2 (2001): 391–438; Morrow, James D., “How Could Trade Affect Conflict?” Journal of Peace Research 36, no. 4 (1999): 481–489; Morrow, James D., “Assessing the Role of Trade as a Source of Costly Signals,” in Mansfield and Pollins, Economic Interdependence and International Conflict, pp. 89–95; Stein, Arthur A., “Trade and Conflict: Uncertainty, Strategic Signaling, and Interstate Disputes,” in Mansfield and Pollins, Economic Interdependence and International Conflict, pp. 111–126. On sanctions as costly signals, see also Baldwin, David, Economic Statecraft (Princeton: Princeton University Press, 1985); Drezner, Daniel W., “The Trouble with Carrots: Transaction Costs, Conflict Expectations, and Economic Inducements,” Security Studies 9, no. 1/2 (1999/2000): 188–218.Google Scholar

21. According to official Taiwan statistics (available on the Mainland Affairs Council Web page: www.mac.gov.tw), in 2004, the Taiwan government approved investments in China totaling US$6.94 billion, which represented 67 percent of the island's total approved outward investment in that year, but only 11.5 percent of total foreign direct investment in China (which totaled over $60 billion in 2004).Google Scholar

22. Gelpi, and Grieco, , “Economic Interdependence, the Democratic State, and the Liberal Peace,” p. 49. See also Russett, and Oneal, , Triangulating Peace; Papayoanou, “Interdependence, Institutions, and the Balance of Power.” Google Scholar

23. Chu, Yun-han, “The Political Economy of Taiwan's Mainland Policy,” in Zhao, Suisheng, ed., Across the Taiwan Strait: Mainland China, Taiwan, and the 1995–1996 Crisis (New York: Routledge, 1999), p. 164.Google Scholar

24. On these dichotomous tendencies, see also Zhao, Suisheng, “Economic Interdependence and Political Divergence: A Background Analysis of the Taiwan Strait Crisis,” in Zhao, , Across the Taiwan Strait , pp. 21–40.Google Scholar

25. Chu, Yun-han, “Making Sense of Beijing's Policy Toward Taiwan: The Prospect of Cross-Strait Relations During the Jiang Zemin Era,” in Tien, Hung-Mao and Chu, Yun-han, eds., China Under Jiang Zemin (Boulder: Lynne Rienner, 2000), p. 205.Google Scholar

26. The DPP has since 1991 officially supported Taiwanese independence.Google Scholar

27. Though the questions asked in the referendum appeared innocuous, Beijing worries that direct referenda on national security issues may set a precedent for future referenda on Taiwanese independence. The referendum failed because it was widely boycotted by Taiwanese voters.Google Scholar

28. Ripsman, Norrin M. and Blanchard, Jean-Marc F., “Qualitative Research on Economic Interdependence and Conflict: Overcoming Methodological Hurdles,” in Mansfield, and Pollins, , Economic Interdependence and International Conflict , p. 315.Google Scholar

29. See, for example, “China's Military Indignant over Taiwan Leader's Remarks,” Xinhua News Agency, July 14, 1999.Google Scholar

30. “Jiang Says Use of Force an Option Against Taiwan,” Agence France-Presse, July 19, 1999.Google Scholar

31. “Taiwan Defence Ministry Report: Threat from Beijing More Serious,” British Broadcasting Corporation Worldwide Monitoring, October 31, 1999.Google Scholar

32. “Lee Tells Taiwan: Don't Worry,” China News , August 12, 1999.Google Scholar

33. Indeed, Su writes that the group responsible for crafting the two-states theory, of which he is highly critical, viewed cross-Strait exchanges—including economic exchanges—as harmful for Taiwan. As such, if the announcement of the two-states argument were to interfere with events such as Mainland envoy Wang Daohan's approaching trip to Taiwan, this would not be a bad thing. See Chi, Su, Weiji bianyuan: Cong liangguolun dao yihian yiguo (Taipei: Tianxia, 2003), p. 85.Google Scholar

34. Taipei Times , September 10, 1999, p. 1.Google Scholar

35. Taipei Times , August 31, 1999, p. 4.Google Scholar

36. See Taipei Times , October 13, 2003, p. 1.Google Scholar

37. The logic here parallels that developed in Morrow, “How Could Trade Affect Conflict?” and in Gartzke, Li, and Boehmer, , “Economic Interdependence and International Conflict.” Google Scholar

38. Xuetong, Yan, “Origins of the Policy to ‘Pay Any Price to Contain Taiwan's Independence.” China Strategy Newsletter , July 20, 2004, pp. 39–42.Google Scholar

39. I thank an anonymous reviewer for making this point.Google Scholar

40. For example, one recent study found that, while 72 percent of respondents support Taiwanese independence if it could be achieved peacefully, 73 percent are opposed if independence would trigger a war with China. See Niou, Emerson M. S., “Understanding Taiwan Independence and Its Policy Implications,” Asian Survey 44, no. 4 (2004): 555–567. Regarding voter unhappiness with Chen's recent policies, one survey found that only 15 percent supported Chen Shui-bian's 2006 decision to abolish the National Unification Council, while 57 percent were at least a little worried that the decision would cause increased tension in cross-Strait relations. Poll conducted by the local TV station TVBS, available online at www.tvbs.com.tw/FILE_DB/DL_DB/sophia_tsai/200602/sophia_tsai-20060209124200.pdf (accessed June 21, 2006). Meanwhile, Chen's approval ratings began plummeting even before the first family became engulfed in scandal allegations. Robert Ross attributes recent public opinion and electoral setbacks for Chen and the DPP, and recent successes by the Nationalist Party (KMT), in part to the KMT's willingness to engage the Mainland (in contrast to Chen's continued provocations). See Ross, Robert, “Taiwan's Fading Independence Movement,” Foreign Affairs 85, no. 2 (2006): 141–148.Google Scholar

41. See, for example, Wang, , “Taiwanese NGOs.” Google Scholar

42. Chao, Chien-min, “Will Economic Integration Between Mainland China and Taiwan Lead to a Congenial Political Culture?” Asian Survey 43, no. 2 (2003): 285–286.Google Scholar

43. Chao, , “Economic Integration.” Google Scholar

44. Poll conducted for the Mainland Affairs Council (www.mac.gov.tw). The 61 percent who favored the status quo includes both those who say they want to maintain the status quo indefinitely and those who want to maintain the status quo for now and decide sometime in the future which path to pursue.Google Scholar

45. See “Changes in the Taiwanese/Chinese Identity of Taiwanese as Tracked in Surveys by the Election Study Center,” National Chengchi University, Taiwan, available at http://esc.nccu.edu.tw/eng/data/data03-2.htm. Chao, (“Economic Integration”) cites other polls that point to similar trends.Google Scholar

46. Chu, Yun-han, “Taiwan's National Identity Politics and the Prospect of Cross-Strait Relations,” Asian Survey 44, no. 4 (2004): 484–512. Chu notes that members of Taiwan's younger generation are more likely than others to view themselves as both Chinese and Taiwanese: in 2002, for example, 58 percent of those under age thirty-five saw themselves as both Taiwanese and Chinese, compared to 35 percent who identified themselves only as Taiwanese.Google Scholar

47. See note 40.Google Scholar

48. Far Eastern Economic Review (FEER), February 19, 2004, p. 23.Google Scholar

49. Taipei Times , November 13, 2004, p. 10.Google Scholar

50. The poll was conducted by TVBS. See “Business Dissatisfied with Government's Mainland Policy: Legislators,” Taipei Central News Agency, April 25, 2002. In Foreign Broadcast Information Service-China (FBIS-China), April 26, 2002.Google Scholar

51. “Business Dissatisfied with Government's Mainland Policy,” Taipei Central News Agency. The 1992 consensus, supposedly reached in negotiations at Hong Kong, held that there was one China, but each side had its own interpretation as to what “one China” means. Chen Shui-bian's government denies that such a consensus ever was reached.Google Scholar

52. Taipei Times , March 21, 2004, p. 24.Google Scholar

53. See, for example, remarks by Yangda Air Conditioning general manager Zhenlong, Liu, in “Investors Say Close Commercial Ties with China Future of Taiwan,” Hong Kong Agence France-Presse, March 16, 2004. In FBIS-China, March 17, 2004.Google Scholar

54. South China Morning Post , February 10, 2004, p. 6.Google Scholar

55. “Taiwan Presidential Candidate Calls for Closer Business Ties with China,” Agence France-Presse, February 8, 2000.Google Scholar

56. South China Morning Post , March 12, 2000, p. 11.Google Scholar

57. The KMT-centered alliance in Taiwan politics is called the pan-blue coalition because the KMT's flag is blue. The DPP-centered alliance, meanwhile, is called the pan-green coalition because the DPP's flag is green.Google Scholar

58. The Lien-Soong campaign printed a pamphlet for Taishang (Taiwan businesses in China) that had a long list of promises.Google Scholar

59. FEER , July 31, 2003, p. 12.Google Scholar

60. FEER , February 19, 2004, p. 22. The head of the Evergreen Corporation (Taiwan's largest shipping company), Yung-fa, Chang, supported Chen in 2000 but endorsed Lien in 2004. Taipei Times, March 20, 2004, p. 5. Some other prominent Chen supporters in 2000 kept a lower profile in 2004. Author's interviews with officials and analysts, Taipei, June 2004.Google Scholar

61. Chen, Ming-chi, “Sinicization and Its Discontents: Cross-Strait Economic Integration and Taiwan's 2004 Presidential Election,” Issues and Studies 40, no. 3/4 (2004): 334–341.Google Scholar

62. See, for example, Ross, , “Taiwan's Fading Independence Movement.” Google Scholar

63. Integration into global markets can make threats more credible for reasons other than simply scaring investors. Gartzke, and Argue, Li, for example, that China and Taiwan were able to avoid a military confrontation during the run-up to the 2000 Taiwan elections in part because the US Congress at the time was considering granting China permanent normal trading relations (PNTR) status as China prepared to enter the World Trade Organization. The authors argue that Chinese threats directed against Taiwan at the time would harm China's image in the United States and hence make it less likely Congress would approve PNTR. This danger made the threats more costly and hence more credible to Taiwan. See Gartzke, Erik and Li, Quan, “How Globalization Can Reduce International Conflict,” in Gleditsch, Nils Petter, Schneider, Gerald, and Barbieri, Katherine, eds., Globalization and Armed Conflict (New York: Rowman & Littlefield, 2003), pp. 123–140.Google Scholar

64. Lijun, Sheng, China's Dilemma: The Taiwan Issue (Singapore: Institute of Southeast Asian Studies, 2001); Swaine, Michael D., “Chinese Decision-making Regarding Taiwan, 1979–2000,” in Lampton, David M., ed., The Making of Chinese Foreign and Security Policy in the Era of Reform, 1978–2000 (Stanford: Stanford University Press, 2001), pp. 289–336.Google Scholar

65. For the white paper, “Text of PRC White Paper,” in FBIS-China, February 23, 2000.Google Scholar

66. Xinhua, , October 29, 1995. In FBIS-China, October 31, 1995, p. 71.Google Scholar

67. Tzu-li wan-pao, July 21, 1995. In FBIS-China, July 31, 1995, p. 90.Google Scholar

68. “Official Assures Taiwan Investors of Greater Protection,” Xinhua, September 9, 1999. In FBIS-China, September 13, 1999.Google Scholar

69. Why “green”? See note 57.Google Scholar

70. International Herald Tribune , June 28, 2000, p. 1; author's interviews with officials, Taipei, winter 2001.Google Scholar

71. “Zhang Minqing: Women bu huanying ‘lüse’ taishang,” Renmin Wang , May 31, 2004 (www.people.com.cn/GB/shizheng/1026/2533052.html).Google Scholar

72. “Taiwan Businessmen in Mainland China Not Feeling Heat from Beijing,” Taipei Central News Agency, June 23, 2004. In FBIS-China, June 24, 2004.Google Scholar

73. Taipei Times , June 9, 2004, p. 3.Google Scholar

74. “Chi Mei's Plant in China Operating Normally: Group Spokesman,” Taipei Central News Agency, June 7, 2004. In FBIS-China, June 9, 2004.Google Scholar

75. South China Morning Post , October 22, 2004, p. 7.Google Scholar

76. “Wu Yi Urges Improvement in Cross-Strait Trade, Economic Cooperation,” Beijing Zhongguo Xinwen She , September 13, 2004. In FBIS-China, September 29, 2004.Google Scholar

77. “Pro-independence Investors Not Welcome,” China Daily , June 22, 2004 (www.chinadaily.com.cn/english/doc/2004-06/22/content_341316.htm).Google Scholar

78. Ibid. Google Scholar

79. “China Economist Says Trade War Can Break Taiwan,” Reuters, March 8, 2006. In Taiwan Security Research (http://taiwansecurity.org/Reu/2006/Reuters-080306.htm).Google Scholar

80. See, for example, Zhao, , “Economic Interdependence and Political Divergence,” p. 27. See also Lam, Willy Wo-Lap, “The Business of Reunification,” CNN.com, June 6, 2001 (http://archives.cnn.com/2001/WORLD/asiapcf/east/06/06/willy.reunif).Google Scholar