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Cross-Taiwan Straits economic interaction is a political as well as an economic issue.General trends of economic interdependence and globalization that are weakening the role of the nation state should promote a focus of shared 'civilian governance' between Taiwan and mainland China. WTO entry will provide opportunities as well as challenges for cross-Strait economic relations. In anticipation of this dynamic, the new government in Taiwan is attempting to design a new national security web to guarantee Taiwan's 'economic security' in coping with Taiwan's increasing economic dependence on mainland China. As one key agent of globalization, economic cooperation in the urban areas on both sides of the Taiwan Strait may potentially improve relations between Taiwan and mainland China. As decentralization and privatization on mainland China proceed, major cities have developed closer interaction and systems of accountability with the civil society. From a prudent perspective, developing functional cooperation between Taiwan and mainlandChina at the urban level could be a rst substantial step to con dence building between these two economies.