The mainland and Taiwan have agreed to improve economic ties, but the latest snag over the US$2.15 billion sale of Nan Shan Life highlights the growing fear on the island that it will lose control in key industries as a result of the closer links.
It has been nine months since American International Group agreed to sell its Taiwan unit, Nan Shan, to a Hong Kong-based consortium comprising battery maker China Strategic Holdings and private equity fund Primus Financial.
But the beleaguered US insurer has not yet been able to close the transaction and today's deadline for the deal has been extended for another three months to give the Hong Kong bidders more time to convince Taiwan's regulators that they are committed to running Nan Shan for the long term.
However, it is unlikely that a ruling will be made any time soon and there is already speculation that the deal might collapse.
Taiwan's Financial Supervisory Commission said last week that the documents submitted were 'incomplete' and asked the buyers for more information.
As the process drags on, it is becoming clearer that the regulators and politicians are deeply suspicious about the Hong Kong buyers' association with the mainland.
The Taipei Times reported in March that Vice-Minister of Economic Affairs Hwang Jung-chiou told legislators the 'ministry has preliminarily excluded the possibility that the holding company is China-funded'. But if it had reached that preliminary conclusion about the status of the bidders, what explains the government's latest action?