WTO membership will enhance China's trading and investment system reform. China should amend foreign-related laws and regulations in light of WTO requirements, opening wider to foreign investment in service sectors ranging from banking, insurance, to tourism, commerce and trade. In order to cope with the competitive pressure from trade liberalization, China have revised the ”Foreign Investment Guidelines”, encourage the projects using high technologies and sophisticated technologies that can improve product quality, enhance the technological and economic performance of enterprises. For Taiwan investors, WTO membership will reduce uncertainties in the Chinese business environment. This change will encourage more investment from medium to large enterprises in Taiwan, but under the administrative reforms and transparent environment, the many special privileges enjoyed by Taiwanese investors could be gradually or phased out. Taiwanese investors will find their edge in the mainland under growing assault from global competitors. If their products lack an inherent price, quality or quantity advantage, they are bound to lose their ability to compete in Chinese market. For the government, the ”Active Liberalization, Effective Management” policy, will be helpful to make use of the market and resources in China, but whether Taiwan economy can benefit from the policy, depends on the degree of upgrading in the technologies and competitiveness, and the ability in managing risks associated with investments in China.