Taiwan passed a bill Tuesday to crack down on swindlers committing crimes overseas following a spate of deportations of Taiwanese fraud suspects to China from countries that do not recognise the island's government.

Taipei has accused Beijing of "abducting" Taiwanese citizens suspected of committing fraud abroad and taking them to China amid criticism that the island's own judicial system has failed to bring such swindlers to justice due to legal loopholes.

Analysts see the deportation cases as a Chinese bid to pile pressure on Taiwan's new Beijing-sceptic leader Tsai Ing-wen, who took office in May, as relations between the two sides worsen.

But Beijing insists that Taiwanese fraud suspects should be sent to China to face trial because their telecom fraud crimes largely target mainland Chinese.

Chinese officials blamed Taiwan for condoning cross-border fraud after a group of Taiwanese suspects deported by Malaysia back to the island were set free in April.

Taiwanese authorities have also faced criticism at home for handing out light punishments to swindlers, including suspended sentences or a fine in lieu of jail time.

Prior to Tuesday's legislation, the island's laws prevented prosecutors from pressing charges on fraud suspects caught abroad.

Lawmaker Hsu Shu-hua, who proposed the bill, said in a statement Tuesday that the legislation would help Taiwan avoid "the embarrassing situation (when there is)... no law in place to prosecute our nationals implicated in cross-border fraud after they are deported back to our country".

The legislation allows local prosecutors to pursue suspects accused of committing "aggravated fraud" overseas. Aggravated fraud involves posing as civil servants to swindle money or committing online crime.

Since 2011, nearly 2,000 Taiwanese fraud suspects have been arrested abroad, including in Southeast Asia, Greece, Egypt, Armenia and Kenya, but there is no data on the financial losses involved, according to Taiwan's Criminal Investigation Bureau.

In Taiwan, a total of 10,831 telecom fraud cases were reported last year involving $7 million in losses, the bureau said.

Relations between Taiwan and China have grown increasingly frosty since Tsai came to power.

China insists that self-ruling Taiwan is part of its territory, even though the two sides split in 1949 after a civil war.