First, about the security problem stemming from Taiwan's increasing economic dependence on the mainland market, as a resultof the "three direct links." The fact is that the mainland and Taiwan each has its economic advantages, which may supplement eachother's needs. In the process of inter-Straits economic exchange and cooperation, the Taiwan economy has gained impetus for growth from the rapidly economic growth of the mainland, which has provided favorable conditions for Taiwan's industrial restructuring and given its enterprises new room for development, thus stimulating its economic development. This has been fully proved by the facts of the past two decades. In the upsurge of economic globalization and regional economic cooperation, if and when the "three direct links" is realized, and each side's merits are well developed and the two sides are linked closely together economically, this will facilitate both sides in their efforts to prevent economic and financial risks and achieve common prosperity.This conclusion can be readily drawn if one views the question in the light of the interests of the Taiwan compatriots and the needsof Taiwan's economic development.
Second, about the "three direct links" accelerating Taiwan's industrial shift to the mainland, thereby resulting in the "hollowing out" of Taiwan's industry. Industrial "hollowing out" generally refers to the decline of the proportion of manufacturingindustry in the total economy, as well as the decline of its productivity and international competitiveness. The research results from relevant departments in Taiwan show that the investment of Taiwan enterprises on the mainland increased rapidlyfrom 1990 to 2001. During this period, the export share of Taiwan products in the global market did not decrease, but instead it increased from 1.96 percent to 2 percent. It did not cause a drop of the total productivity and competitiveness of Taiwan's manufacturing industry, or the so-called "hollowing out" of Taiwan's industry. On the contrary, the "three direct links" will help Taiwan enterprises to rationally allocate and use their essential production factors and resources. Through division of labor and cooperation, Taiwan can bring into play its economic advantages, increase its development potentials and competitiveness, and effectively avoid the industrial "hollowing."
Third, about Taiwan enterprises' investment on the mainland resulting in increased unemployment in Taiwan. The fact that the rate of unemployment in Taiwan has increased in the past few yearshas been caused mainly by a decline of the enterprises' will in investment. In fact, one of the main reasons is that the current leader of the Taiwan authorities sticks to the separatist stance of "Taiwan independence," undermines the cross-Straits relations and impedes the "three direct links," which have dealt a blow to the confidence of Taiwan and overseas investors. At the same time,the rising unemployment rate is also due to its structural unemployment. With the increase of investment and production costsin Taiwan, labor-intensive industries there have further lost their competitive advantages, and investors have had to look elsewhere for low-cost areas for continued development. By investing on the mainland, such enterprises can regain their competitiveness, and use the profits they make on the mainland to increase their investment capacity in Taiwan, so as to support thesustained development of the emergent industries in Taiwan, and greatly increase their exports to the mainland. All these have played an important role in increasing Taiwan's employment, upgrading its industries and stabilizing its economy.
