This restriction was equally applicable to foreign flags as well as to Taiwanese flags and Chinese flags. Ships that violated these restrictions were subject to expensive fines. To satisfy the regulatory requirements, shipping companies had to use feeder services and arrange separate bills of lading to cover the separate legs of the journeys. It used to be common practice to switch bills of lading in the cross-trade services between Taiwan, Hong Kong and China and, inevitably, this generated a substantial amount of litigation. But the restrictions have certainly been liberalised in recent years.
Direct trade can now take place between Taiwan and certain designated Chinese ports.
Taiwanese ships still can't fly the national flag on entry to port, and this problem is mostly overcome by using flags of convenience. Evergreen, for example, flies the Panamanian flag. But money speaks louder than politics in investment-hungry China, and the Chinese government can neither stop nor restrict commercial activity. Public-listed companies' investments are, for instance, closely regulated and monitored. Investment in some industries is prohibited and others are subject to approval by the Taiwanese government.