Abstract
This chapter examines the composition and motives of cross-border merger and acquisition (CBMA) between China and Taiwan and explores the implications of CBMA across the Taiwan Strait. It also explains that the number of CBMAs between Taiwan and China increased over the period of time when the political environment between these two countries was unfriendly. Furthermore, the motives behind CBMA deals by China and Taiwan are found to be different. After 2008, the political environment for direct investment across the Taiwan Strait became friendly. The rivalry between China and Taiwan, also known as the Taiwan Problem, has persisted from 1949 to the present. The political tension between China and Taiwan has historically dominated their economic relations. Recent changes in Taiwan's inward investment rules and the increasing motivation and readiness of China's firms to invest abroad are expected to bring the mainland's foreign direct investment (FDI) flows to Taiwan in the near future.