Will China Bullying Hurt Taiwan’s Economy?

Although relations across the Taiwan Strait are entering a new ice age, cooperation at a working level is likely to continue, with Beijing not wanting to alienate the taishang, the hundreds of thousands Taiwanese doing business with or in China.

Nonetheless, pressure on Taiwan isn’t going away, and both sides must play a careful game to avoid real calamity. China has been gnashing its figurative teeth since May 20, when Taiwan’s new president, in her inauguration speech, refused to acknowledge the “92 Consensus,” a cryptic version of the “One China” principle.

This week, Beijing increased the pressure by suspending government-to-government relations with Taipei. That follows a departure into China’s orbit of The Gambia, which recently withdrew diplomatic recognition for Taiwan to align with Beijing. The World Health Assembly in Geneva also recently issued a statement calling attention to the One-China policy, an indication it would not accept separate membership for the island. Taiwan has been further embarrassed by several countries that deported Taiwanese fraud suspects to China instead of Taiwan.

All of these twists and turns obviously have been engineered by China as it tries to bully Taiwan back into line. That said, China has done itself no favors over the past several months, given its pressure to make the littoral nations of the South China Sea accept its so-called “nine-dash line” that extends Chinese hegemony over the sea far inside their own traditionally accepted exclusive economic zones. Beijing was also embarrassed when one of the five Hong Kong booksellers who disappeared last year resurfaced in Hong Kong on June 16 to say he had been kidnapped in the Chinese city of Shenzhen and was forced into a confession of “illegal trading.” The booksellers activities are legal in Hong Kong but apparently angered Beijing because they sold anti-mainland titles.

The chill in relations arrival comes a little over six months since the historic handshake by Chinese President Xi Jinping and Tsai’s China-friendly predecessor, Ma Ying-jeou in Singapore that was billed as the launch of a new era in cross-Strait relations. The decision to suspend communications came on the day Tsai embarked on her first state visit, to the inauguration of the refurbished Panama canal.

“The suspension of cross-strait communication is aimed at intensifying pressure on Tsai as she travels to Central America via Florida,” said Jean-Pierre Cabestan, a professor at Hong Kong Baptist University, in an interview with Asia Sentinel.

“It is also an indication that Beijing’s Taiwan policy is paralyzed,” Cabestan said. “They are waiting for a signal from Xi, who is adamant so far and wants to force Tsai to abide by the so-called 92 consensus.”

Cabestan believes, however, that the Straits Exchange Foundation and the Association of Relations Across the Taiwan Strait – Taiwan’s and China’s respective cross-Strait negotiators – will continue to communicate and cooperate because of the economic stakes involved.

Steve Tsang, director of the University of Nottingham’s China Policy Institute, regards Beijing’s move to suspend communications as a display of perplexity rather than something that is strategically sound. Tsang pointed out that while Tsai has not explicitly endorsed the “92 Consensus,” she indirectly gave it the nod by using other phrasings that signal her adherence to the idea that Taipei’s Republic of China includes both Taiwan and mainland China.

“Though not entirely surprising, the suspension was unnecessary as Tsai had acknowledged the existence of the 92 consensus and has not repudiated it, and it will not deliver the results Beijing wanted,” Tsang said. “I have seen no evidence that Tsai wants a fight with Beijing, so she will try to ignore that and just carry on, which is likely to be what most people in Taiwan would want.”

There are bleaker assessments by other avid Taiwan watchers. John F. Copper, the emeritus Stanley J. Buckman Professor of International Studies at Rhodes College in Memphis Tennessee, sees the suspension of official talks as just one of many steps by China to pressure Tsai and her party, the anti-unification Democratic Progressive Party (DPP).

“Taiwan’s economy is headed toward recession and reducing commercial ties with China will certainly push it further in that direction,” Copper said. “Taiwan is also helpless to cope with Beijing’s moves to further isolate Taiwan diplomatically; Beijing can easily reduce Taiwan's formal diplomatic partners to single digits [from 22 currently] if it so chooses, especially since Taiwan’s weak economy means it does not have money for foreign aid.”

Copper believes that the suspension of communications is part of Beijing’s plan to deepen the split between the moderate Tsai and the more radical DPP base. Tsai has been drawing flak from within the DPP, as well as from the ideologically close New Power Party, for wriggling around the 92 Consensus as opposed to explicitly rejecting it.

“The DPP base ... is unhappy with Tsai's moderate line vis-à-vis China,” Copper said. “The DPP has always had a problem with factionalism, and the party’s national congress next month will expose deep divisions over keeping its pro-independence charter, the Resolution of Taiwan’s Future and the Normal Country Resolution.”

Jens Kastner is Asia Sentinel’s Taiwan correspondent. He can be reached at kenslastner@googlemail.com.