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The article discusses a bid for Japanese electronics manufacturer Sharp offered by Taiwanese industrial concern Hon Hai. Information is provided on the Taiwanese and Japanese electronics industries and their relationships with computer hardware manufacturers including Apple, statistics on the export sales of electronics from Japan and Taiwan are offered, and Taiwanese government policy concerning electronics companies is scrutinized.

The article examines economic relations between China and Taiwan. Taiwan is allowing significant investment by Chinese firms in industries such as telecommunications which were previously considered too important to national security to be partly-owned by China. There are also negotiations on closer financial ties between China and Taiwan. Taiwan's new policy is an effort to restart economic development.

The article discusses the outlook for banking reform in Taiwan. In all, the island nation has about 45 commercial banks, 14 financial holding companies, and over 300 rural credit co-operatives. The government's involvement has stifled efficiency and innovation. In effect, it controls a dozen banks, including the six largest. With Taiwan losing manufacturing jobs to China, its economy needs services. It especially needs banks that are good and big enough to serve Taiwanese businesses overseas. In October 2004 Taiwan's president, Chen Shui-bian, sought to speed reform by outlining an ambitious agenda to cut the number of state banks by half to six by the end of this year; to see a bank in foreign hands by the same date; eventually to create at least three institutions with market shares of 10%; and to halve the number of FHCs to seven by the end of 2006. A year on, this initiative is floundering. To reform Taiwan's banks successfully, the government will have to drop its numerical targets, privatise more and remove market-distorting measures, such as the ban on organic growth. It should also make the regulator fully independent and explain the need for reform to a sceptical public. All this is politically risky. But it may also be economically necessary.

The article reports on an improvement in relations between China and Taiwan. The author suggests that the fiscal policies followed by Taiwanese president Ma Ying-jeou have been sound and have led to an investment in a Chinese bank. The article examines other banking investments that Taiwan could make on the mainland.