This paper used a multi-sectoral, multi-regional GTAP (Global Trade Analysis Project) model and its fifth database to analyze the impacts on Taiwan's economy after liberalizing investment in China under the WTO framework. Simulation results indicate that if the trade creation effect exists due to the investment, then the division of labor between Cross-Strait industries will be enhanced. Taiwan's industries that have factories set in China will increase their international competitiveness. Taiwan will benefit significantly from liberalizing her investment in China.