From 2008, Ma Ying-jeou has raised the possibility of Taiwan becoming an Asia Pacific financial center. Rather than taking the necessary steps to upgrade Taiwan's capability in finance on a comprehensive basis, the Ma administration has focused predominantly on expanding cross-Strait financial flows. This paper introduces the background and details the process of liberalization in banking, insurance and securities. Implications of such development for Taiwan's economy are explored followed by a review of prospects for the future.

Contrary to expectation, policies such as the ECFA have produced protectionist backlash, not spillover favoring political engagement with China. Using primarily economic incentives and hoping that special interest groups or political parties who benefit from cross-Strait interdependence will help China win over the Taiwanese public may be ineffective in promoting political integration.