Dialogue  July-September  2009, Volume 11 No.1

New Winds Across Taiwan Straits – Implications for the Region

D.S. Rajan

Two extraordinary events have taken place in the recent period, symbolising the fast growing warmth in relations between Beijing and Taipei – Taiwan’s participation (Geneva, 18-27 May 2009) as an observer under the name “Chinese Taipei” in the World Health Assembly, the executive arm of the World Health Organization (WHO), with firm blessings from Beijing and the Chinese Communist Party (CCP) chief Hu Jintao’s congratulatory telegram (27 July 2009) to the newly elected head of Taiwan’s ruling Kuomintang (KMT) Ma Ying-Jeou. While the former has thrown open the possibility of Taiwan increasing its international space by joining other global organisations in a similar manner, the latter, first such contact between the two regimes in 60 years, has raised expectations of a face to face meeting between Hu Jintao and Ma Ying-Jeou.

    To assess how the Beijing-Taipei thaw can develop further, a pre-requisite would naturally be a correct understanding of the situation in bilateral ties that is unfolding ever since Ma Ying-Jeou took over as President of Taiwan in May 2008. A key question would be what has been the root cause for the turn around in the ties between two sides. Without any doubt, the main instrument, which brought out a change, has been Ma Ying-Jeou’s policy platform, central to which is the “Three-Nos” principle – no negotiations on unification with the mainland, no independence and no use of force. On the basis of the 1992 consensus, it conceives an idea of  “one China”, but with “each side having rights to have its own interpretation”, for the purposes of resuming Cross-Straits talks and eventually signing a peace accord with the mainland. The credit for the change should go in equal measure to Beijing also. China’s principal interest has been to check the influence of Taiwan independence forces; when it saw in President Ma’s policy a firm departure from the pro-independent line followed by the preceding Democratic Progressive Party (DPP) regime, it lost no time to sing in tune with Taipei (for e.g. Hu Jintao’s six-point proposal of December 2008). 

     Practical steps taken so far under Ma’s policy framework need attention. The resumption of dialogue (26 May 2008) by Taiwan’s Straits Exchange Foundation (SEF) and the mainland’s Association for Relations Across Taiwan Straits (ARATS) has been important.  Marking the first visit to Taiwan to be made by a mainland high-ranking dignitary, ever since 1992, ARATS chairman Chen Yunlin came to Taipei to continue negotiations with his Taiwanese counterpart, Chiang Pin-Kung on November 3-7, 2008. Important agreements were signed on the occasion as a result of which direct daily flights and postal and shipping services between Taiwan and the mainland started since January 2009. Taiwan’s subsequent permission to journalists from China to operate in the island has been yet another symbol of an improved Cross-Straits political climate.

     Most important measure has however been Taiwan’s announcement of an initiative to sign an “ Economic Cooperation Framework Agreement” (ECFA) with the mainland. As Taiwan visualises, the ECFA can be reached with the help of negotiation mechanisms that can be set up to discuss with the mainland issues of products, services etc; it will have no political bias and will not symbolise a “one-China” market. Beijing, without mentioning the ECFA, has given approval to the proposal to promote “bilateral commercial relations” (Hu Jintao’s statement in Dec 2008).

     The setting up of a Mainland-Taiwan communication channel, ‘Cross-Straits Forum’ in addition to the existing ARATS-SEF mechanism, also needs to be noted while considering future prospects of the mainland-Taiwan ties. It is a version of an old unofficial set up, but a new name has been given to it now. In the Forum’s session held in the mainland (11 and 12 July 2009) China’s top officials as well as members of the government and opposition in Taiwan were represented, conveying a message that Beijing-Taipei communications have moved to a new level. President Ma has described the Forum as “all encompassing”.

      As pointed out above, Beijing’s changing perceptions on the Taiwan issue, have also been responsible for the present comfort level in the Cross-Straits relations. China has concurred with Taiwan’s “one China” principle, but is avoiding so far any reference to Taiwan’s wish to allow “own interpretations by each side”, as a signal to the persisting gap in the positions of the two in this regard. Also important are other features in Beijing’s formula - promoting ‘peaceful development’ of mainland-Taiwan ties, allowing Taiwan’s “reasonable participation in global organisations” and negotiating a peace accord with the island. (Hu Jintao’s six-point proposal, December 2008). They are especially pertinent to crucial aspects like China’s use of force to recover Taiwan and Taiwan’s representation in the world bodies. Unmistakably, China is showing some amount of flexibility on these aspects.

       Not to be missed with regard to predicting the future has been Chinese President’s call for military exchanges with Taiwan and setting up suitable mechanisms aimed at lessening military and security concerns of each other. (Hu Jintao’s statement, 1 January 2009, on the occasion of the 30th anniversary of Beijing’s call to reunify the country through peaceful means). Shortly after this, a suggestion has been made by the Chinese government for removal of some of the 1300 missiles deployed against Taiwan once military confidence measures get implemented. Taiwan’s Defence ministry promptly welcomed the suggestion, but suspicions over Chinese intentions seem to continue in Taipei (for e.g., any missile reduction talk by the Chinese would only be a fantasy, says KMT legislator Lin Yufan – Taipei Times Editorial, 6 Jan 2009). 

      What are the motivating factors for Taiwan’s initiatives aimed at arriving at a rapprochement with the mainland? The primary reason appears to be economic. For Taiwan, its ECFA proposal, once materializes, will bring the mainland capital flow and investment into the island. In terms of Taiwanese investment in and trade with the mainland, the ECFA would turn out to be a catalyst for an upsurge (the mainland is Taiwan’s largest investment destination now - US$ 70.42 billion, accounting for 55% of total foreign investment of Taiwan; mainland is also Taiwan’s largest trade partner - US$ 130.2 billion in 2007, accounting for 28% of Taiwan’s total trade). Taiwan would very much like to continue deriving benefits from such an economic interdependence.

     Taiwan’s vision also goes beyond the bilateral arena. It rightly perceives that Taiwan’s trade interests would greatly suffer when the ASEAN + 3 - China Free Trade Area (FTA) agreement with zero tariff stipulatins comes into effect in 2010 and that to avoid the same the ECFA could be a remedy. Many in Taiwan feel that without the ECFA in 2010, it will lose the vast market of over 2 billion people with a total annual GDP of more than US$ 2 trillion and an annual trade volume surpassing US$ 1.4 trillion, all a result of ASEAN + 3 – China FTA. It is assessed in Taiwan that the ECFA – type agreements with the mainland can also lead to similar ones with other nations like the US, Japan and Singapore as well as the EU and ASEAN. In other words, the ECFA, in essence, is considered by Taiwan as a golden opportunity to prevent its international marginalisation and enhance its economic space in the world.  Another motivating factor for Taiwan would relate to the strategic gains for it coming from any relaxation in the military situation across Taiwan Straits.

     As far as the mainland China is concerned, its motivations to get closer to Taiwan are clear. Of course, the benefits to it coming from Taiwanese trade and investment would figure first for Beijing; but China has always a tendency to look at issues from a strategic perspective. Beijing certainly feels that a reduction of tensions across Taiwan Straits, is going to help China in guaranteeing a “peaceful periphery”, an important precondition set by it for the country’s modernisation. The strategic adjustments on Taiwan policy being made by Beijing since the start of country’s reforms in 1978 may prove this point; Beijing shifted its objective from “armed liberation” to peaceful liberation of Taiwan in 1979. Further move came by the end of 1980s, which reset the priority as “peaceful unification”. According to the latest stand of China, the concept of “peaceful development of cross-straits relations” will be followed from now on.

       For Taiwan and the outside world, the significance of emerging trends in China regarding Taiwan should not be lost; they include an apparent reduction in Beijing’s stress so far given to use of force to reunify Taiwan and its rather benevolent view on Taiwan’s entry into international organisations.

      The mainland-Taiwan reconciliation process has implications for the countries in the region and major outside powers like the US. Asian nations like Japan, India and those in South East Asia, especially those having territorial disputes with China, may have to worry about the possibility of China’s diversion of its military strength from the Taiwan front to other regional hot spots.  Secondly, an ECFA with the mainland may create opportunities for other regional nations like Japan, South Korea and ASEAN member countries to conclude similar pacts with Taiwan. Of course, this would be subject to China’s approval. Also, any eventuality of Taiwan’s emergence as a quasi-political entity in the region with representation in regional and global organisations may give rise to a change in the regional geo-politics and create new dimensions to the regional integration process. India, which has launched its Look-East policy, may have to treat Taiwan differently as it moves to build new equations with Beijing. The thaw in Beijing – Taipei relations is also going to influence Washington’s Taiwan policy; the global financial crisis and China’s huge reserves in the US, are already pressurising the US to recalibrate its approach towards China. If Beijing removes its missiles targetting Taiwan and the Beijing-Taipei economic cooperation extends to political levels, can the US think about stopping arms supplies to Taiwan and reducing its military presence in the region? It may be difficult to answer the question at this stage; however if at all Washington takes such actions, the repercussions will be felt through out Asia.

      To sum up, three factors may decide the future pattern of Cross-Straits relations - the KMT- DPP relations within Taiwan, the signing of the Beijing-Taipei ECFA and China’s military strategy towards Taiwan. There is another grey area which can raise questions - is there a consensus within the mainland on China’s Taiwan policy and what is the attitude of the People’s Liberation Army on the reunification issue?