Taiwan Tied-Down?

Written By Brian Hicks

Posted November 14, 2005

As China weaves an international web of trade alliances, the hardest strand to sort out is also its most public foreign policy matter. Taiwan has maintained since 1949 that it is a separate entity from the mainland, which the Beijing government of course refutes. What effect does this tension exert on trade between the two countries, and on each government’s relationship with the rest of the world?

China has successfully waged economic war on Taiwan, which it still considers a renegade state. In doing so, they have attacked the small island with a vast and powerful arsenal, though not militarily.

Taiwan is officially known as the Republic of China (ROC), in keeping with the letter of Beijing’s One-China policy (China is known as the People’s Republic of China, or PRC)

Taiwan’s athletes in events from the Olympics all the way down to the Little League World Series compete under the banner of Chinese Taipei, another euphemism for the semi-independent state.

Fewer than 20 foreign countries operate embassies in Taipei, and apparently mail to them is rejected if it is addressed to Taiwan. The mere recognition of the name Taiwan is diplomatically undesirable, and acknowledgement of Taiwan itself is more and more costly from an economic standpoint, as Senegal demonstrated recently with its defection to Beijing.

Wouldn’t It Be Nice…

Taiwan got off to a rocky start in the western notion of democracy. The 1.5 million mainland Chinese who fled to Taiwan in the wake of the Communist victory following World War II felt the need to remain on war footing, as they foresaw a victorious overthrow of Mao’s Chinese communists.

Decades passed, and martial law remained in force in order to maintain the Taiwanese population in the face of the looming PRC threat.

The Taiwan-China feud even became the centerpiece of United States politics, featuring most prominently in the 1960 presidential election of Nixon vs. Kennedy. The islands of Quemoy and Matsu, just off the Chinese mainland, were being assaulted with missile barrages by Mao’s People’s Army, and they continued until 1995.

Nixon campaigned heavily on the idea that Kennedy would let Communist China take Quemoy and Matsu, though the third Taiwan-held island, Wuchiu, was barely mentioned.

Especially since putting an end to martial law in 1987 and allowing significant freedom to political parties, the press, and individual Taiwanese, the island has played a significant role as the "other China." Frankly, I think this is the China most Americans would prefer to deal with. At least we could sleep better knowing that we support a democracy in the face of autocratic socialism.

But alas, Communist China knows that it can draw more flies with cheap labor costs and low work safety standards than Taiwan can with its fanciful notions of democracy. This is just one of many examples where globalization has led economics to trump ideology in the grand scheme.

Do We Really Have to Choose?

Believe it or not, we often buy in to Taiwan by investing in China. In 1985, Taiwan began to loosen restrictions on Taiwanese companies wishing to invest in mainland China, and since then the "renegade" has fueled much of China’s astounding economic restructuring and growth, coming in second only to Hong Kong and Macau, which of course have been reincorporated into China after a century of European ownership.

Taiwan encourages students from the mainland to come to Taiwan to study, requiring them to learn the Traditional Chinese writing system (the PRC uses a Simplified Chinese standard) and incorporating mainlanders into a highly skilled technical workforce that produces 2/3 of the world’s notebook computers.

As sales of notebook and other personal computers begin to equalize with the desktop market, expect Taiwan and China to engage in competition for both expertise and manufacturing capability. There are already rumblings that China is turning some Taiwanese industrial parks into ghost towns as foreign investment is magnetically drawn to the mainland juggernaut, but Taiwan will not give up easily.

As I have said before, the Asian economic sphere is powered by China, but China is tied directly to Taiwan and the tide of one will affect the other, though not irreversibly.

Inching Towards Each Other

In foreign policy terms, the current situation between China and Taiwan is a perfect example of détente. The two are not officially ready to bury the hatchet, and I do not see that move coming for quite some time. However, if the Chinese are willing to let the Taiwanese go about their business (quite literally) without formally declaring independence, we may see a loose official agreement down the road.

The most probable situation is that China will use the example of Hong Kong and Macau to show the Taiwanese that it is possible to have freedom while being attached to the PRC.

However, Hong Kong has been teetering on the precipice between British-sown legislative democracy and Chinese Party rule since its annexation in 1997. Beijing has given itself until 2047 to institute universal suffrage, which it will do at its leisure. It is doubtful whether Taiwan would voluntarily put itself in the same situation.

However, there are more and more gestures of cautious optimism for a cooperative future from both sides.

This month, Chen Yunlin, Director of the Taiwan Affairs Office of the Chinese State Council, will be the highest-ranking Chinese Communist Party official to ever visit Taiwan. His trip will be under the auspices of an economic forum, and the KMT (Taiwan’s oldest political party, whose members fled China in 1949) will coordinate his arrival and participation in the conference.

There is also news of increased air travel between Taiwan and the mainland, and even rumblings of a tunnel underneath the Taiwan Strait, which could connect the two rivals just as friendly England and France are served by the Chunnel.

Despite or perhaps because of China’s rock-solid stance that Taiwan is a sort of amputated limb that needs to be reattached, China is not taking the island by force. Rather, by banking on economic growth and historical homogeneity among the two countries, China hopes to recreate one undisputed whole from the uneasy parts.


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