"They hope to influence Taiwanese people by reaching out to the grassroots," said one Taiwan security official with direct knowledge of the matter.
"They hope to influence swing voters who don't have particular political affiliation and would vote for whoever gives them benefits."
It is illegal under Taiwanese law for an election campaign to receive money from "external hostile forces," including China.
The report said the underground banking systems in Taiwan, which are widely known but difficult to regulate, could provide foreign exchange support.
Some Taiwanese have been prosecuted in recent years over receiving illicit support from China in election campaigns.
Persons:
Tsai Ing, China's, Wellington Koo, Tsai, Yimou Lee, Gerry Doyle
Organizations:
Reuters, National Security Council, Chinese Communist Party, Taiwan Affairs Office, Democratic Progressive Party, Mainland Affairs Council, Thomson
Locations:
TAIPEI, China, Beijing, Taiwan, Wellington, New Taipei City