"These remarks are groundless and made with a specific political stance," said Ma Xiaoguang of the State Council of China's Taiwan Affairs Office here.
"They aim to disturb cross-Strait cooperation by inventing and spreading a sense of threat," he said.
Ma made the remarks when asked whether the setting up of free economic zones on the island would open doors for mainland funds, labourers, service industries and goods, enabling the mainland to "buy out" Taiwan, that was separated from China in 1949.
"Economic cooperation will bring mutual benefits and win-win results, and there is no issue of 'who is manipulating whom' or 'who is eating up whom'," state-run Xinhua news agency quoted Ma as saying.
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He defended the controversial service trade pact signed in June last year between the two sides as mutually beneficial, saying it has served the interests of medium and small businesses across the Strait.
As a follow-up to the 2010 Economic Cooperation Framework Agreement, the service trade pact aims to open up 80 of the mainland's service sectors to Taiwan and 64 Taiwan sectors to the mainland.
"The mainland has been restrained on its capital entering the island," Ma said.
Only about USD one billion has been invested since mainland enterprises were first allowed to invest on the island in 2009, while Taiwan authorities put the figure at more than 800 million, the report said.
"How could such a small number impact Taiwan's service sector and medium and small businesses," Ma said.
He dismissed speculations that mainland companies will elbow out their Taiwan counterparts, saying if the service trade pact is brought into effect in the future, mainland companies will still "dance with chains".