A Taiwanese official said the government would keep its promise to allow more technology companies to transfer manufacturing plants to China, particularly in the LCD and chip packaging industries.

The pledge came in reaction to accusations from a legislator that the government is moving at a "painfully slow pace" that may undercut the competitive advantages held by Taiwanese firms.

Taiwan's government restricts certain investment in China, which it views as a political and economic rival as well as a very real military threat. China has viewed Taiwan as a "renegade province" ever since the two sides concluded a civil war in 1949.

Gradually, the island's government is letting some of its more sensitive industries invest in China, but under tight guidelines. For instance, IC manufacturers can only open 200-mm wafer facilities in China after they have built and operated a 300-mm wafer fab in Taiwan.

The Ministry of Economic Affairs official, Vice Minister Yiin Chii-ming, said earlier this week that the government wouldn't back away from loosening the rules on investment in China. He noted, however, that only low-end test and assembly of chips and TFT-LCD plants manufacturing panel sizes of 4 inches or less would be able to make the move.