Ma has taken big steps to cooperate closely with the Mainland.

In fact, we've already seen him follow through on agreements to increase direct air transportation and postal links. There are now 108 direct flights from the Mainland to the island each week, which has greatly improved travel and bilateral exchanges and trade between the two nations. It has cut my traveling time from Taipei to Shanghai in half.  

More recently, we saw another big move, as China and Taiwan are agreeing to let the other region invest in its economy. On June 30, Taiwan's Ministry of Economic Affairs announced what areas it was permitting Chinese businesses to invest in, including 64 manufacturing sectors, 25 service sectors and 11 public infrastructure projects. And over the next week, the two nations' policymakers are meeting to discuss investments in each other's financial sectors.

These are incredible developments considering the history between China and Taiwan.

A Winning ETF for Big Steps Forward

We are likely to see more steps taken to strengthen ties between the Mainland and the island in the upcoming months and years — both nations' economies will benefit from a closer relationship. Taiwan, in particular, is likely to see its economy recover faster than other countries around the world due to its economic ties to mainland China.

So over the long-term, I am still bullish on Taiwan's economic prospects, and I think the renewed cooperation between China and Taiwan will definitely be a long-term positive for the island's economy. Investors are already catching on to this trend, as Taiwan's benchmark Taiex index has jumped 39% so far in 2009.

And I think that the best way to profit from the strengthening ties between Mainland China and Taiwan is with an exchange-traded fund that allows you to play the whole Taiwan market at once — iShares MSCI Taiwan Index (EWT). The ETF has already jumped 33% this year, and you're not going to want to miss out on the next surge higher.

For Robert Hsu's latest advice on EWT, and the best China stocks to buy now, join China Strategy risk-free today.