Abstract
The Formosa Plastics Group, the largest private industrial concern in Taiwan, announced in 1990 the possibility of investing up to U.S. $7 billion in a petrochemical facility in the Fujian province of Mainland China. The proposed project, which would include an oil refinery and two naphtha crackers capable of producing over one billion metric tons of ethylene per year, was expected to lead many “dovnstream” petrochemical industries into the Mainland as well. Given that petrochemicals account for roughly one-third of Taiwan’s industrial output, the government of the Republic of China (“R.O.C.”) has been reluctant to approve the project. The Formosa Plastics case highlights some of the complicated and challenging issues presented by the growing interaction between the people of Taiwan and the Mainland.
For more than forty years following its relocation to Taiwan in 1949, the R.O.C. government prohibited its citizens from virtually all contact with those under the effective jurisdiction of the People’s Republic of China (“P.R.C.”). Despite this prohibition, Taiwan business enterprises have, in the last decade, increasingly explored Mainland trade and investment opportunities presented by the opening up of the Mainland economy? Correspondingly, the R.O.C. government has come to realize that its insistence on absolute separation between the R.O.C. and the P.R.C. only prevents it from addressing the concrete issues that are emerging from the renewed contact. The R.O.C. authorities have thus gradually adopted liberalizing measures, from the legalization of visitations in 1987 to the establishment of special entities to deal with Mainland affairs in 1991.