Table: Desperate Straits

The Promise

-- Taiwanese companies no longer see the mainland merely as a cheap manufacturing base but as a market for their products and a place to raise money

-- Taiwan Inc. is pressuring the government to lift a ban on capital-intensive high-tech investments and eventually open direct postal, air, and shipping links

-- Facing a chronic shortage of skilled labor at home, Taiwanese companies are eager to take advantage of the mainland's growing pool of trained engineers

The Peril

-- As the economies of Taiwan and the mainland become increasingly entwined, the Taiwanese risk losing control of both their political and economic destiny

-- With more and more industries moving their production across the strait to China, unemployment in Taiwan, already at a record high, will only worsen

-- By seeking to forge close ties with the mainland, Taiwan risks alienating the Bush Administration, which in recent weeks has tilted away from Beijing

Before it's here, it's on the Bloomberg Terminal.