Taiwan has restricted investment in China for several years now in an attempt to save its manufacturing sector-especially electronics-from being hollowed out. So, ostensibly, this policy shift just days after Taiwan entered the World Trade Organization seems like a brave move by the government.

But it really isn't.

Taiwanese businessmen have carried suitcases full of cash out the back door for years, routing the money through third countries and then into China.

The decision to adopt a policy dubbed "active opening, effective management" is merely a sign of how much of a nonplayer the government really is.

A more meaningful accomplishment would be the opening of what's known as the "three links"-direct trade, transportation and communication with China. Such connections have not existed since the Chinese civil war ended in 1949.

But there is little chance this will happen any time soon. Sovereignty issues have killed any fruitful dialogue on direct links. Ultimately, Taiwan is the one that suffers from the stalemate. Just a few months ago, Dell Computer cited the lack of direct links as a reason for moving its procurement center to Hong Kong-a mental blow to Taiwan.

In the meantime, Taiwanese businesses continue to invest in China, to the tune of close to $60 billion since the 1980s. And the sum will continue to rise.

Recently, a Taiwanese government official confirmed that no breakthrough should be expected on the three links, saying commercial interests cannot take a front seat to sovereignty concerns. That may be true. But neither should national pride be allowed to undercut Taiwan's need to constructively trade with, invest in and travel to the world's largest developing economy.

Instead of denying what seems inevitable-the loss of manufacturing to China and ever-increasing economic integration with it-the government should shepherd in a decade of developing what China doesn't have: strong R&D.

Taiwan is making small but steady strides toward more value-added innovation. The government and industry need to encourage that. In that way, maybe commercial and national interests could find common ground.