Abstract
China has become Taiwan’s most important export and investment destination. This phenomenon is puzzling to realism as concerns for security externalities should discourage commerce between adversaries. Liberalism also has difficulty in accounting for this phenomenon because an absence of facilitative institutions should discourage commerce across the Taiwan Strait. This paper applies recent theoretical development on credible communication to this seemingly baffling situation. Whereas it has been suggested that commercial ties enable states to signal resolve short of military demonstration, I argue that these ties can also be used to credibly communicate reassurance and commitment to peaceful cooperation.