This paper investigated the foreign direct investment and the international division of labor in chemical industry between Taiwan and China, examined the foreign direct investment and examined the feasibility of vertical and horizontal division of labor through empirical studies, and proposed suggestions for foreign direct investment and international division of labor between Taiwan and China which was indispensable from the globa1 economy, in consideration that China has become the economic hinterland of Taiwan in recent years, and of the status of chemical industry in Taiwan, the convenience that brought by the linguistic and cultural proximities of both sides, and the conflict resulted from political distrust.