"On the one hand China reiterated its position that it is willing to use non-peaceful means to prevent Taiwanese independence. On the other hand it promised to explore all diplomatic means available to resolve the dispute," Philippe Sachs said in a telephone interview from Singapore.
Although S&P believes rising Chinese nationalism and moves by Taiwan away from unification could lead to heightened tensions, the passage of the bill will not necessarily result in a worsening of relations in the near term, Sachs said.
"We have to wait and see how Taiwan reacts to the passage of the law ... Will Taiwan react positively to the tempered language in the proposed law or will they react negatively, thus reversing some warming in relations in recent weeks. Regardless, at this point we have no plan to change our ratings on Taiwan in the near future," Sachs said.
The bill's passage is not expected to deter Taiwanese businesspeople from investing in China, Academia Sinica's Wu said.
"The substantial economic and trade exchanges across the Taiwan Strait will never stop in spite of sporadic conflicts in the political arena," Wu said.
As a result, any short-term impact would be from strong emotional reactions from some local groups, which could cause foreign investors to put a hold on investment in Taiwan, he added.
Looking ahead, ABN AMRO's Wu said he expects the TAIEX to climb another 15 percent to 7,000 points by mid-year, boosted by purchases by foreign investors.
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