Taiwan Courts Big Brother

Although the re-establishment of high-level political dialogue between China and Taiwan represents a breakthrough after nine years of stalemate, opening the way for closer economic and social integration, the honeymoon does not extend to the military, diplomatic or political arenas.

There the two parties remain far apart and Beijing will not make concessions on issues of sovereignty or reduction of missiles. Beijing is relishing what is clearly its role as top dog in the relationship, especially after having seen the vanquishment of former Taiwan president Chen Shui-bian, who China’s leaders had come to regard as akin to the devil himself. Beijing is determined to keep what it regards as its breakaway province on a short leash, remaining inflexible on anything that touches on sovereignty or implies that Taiwan has a separate identity.

Nonetheless, the progress since Ma Ying-jeou won the presidential race in Taiwan on March 22 has been astonishing. Since then, President Hu Jintao has met four of Taiwan’s top five political leaders – Vice President Vincent Siew, Kuomintang chairman Wu Po-hsiung, its former chairman Lien Chan and Chiang Pin-kung, chairman of the Straits Exchange Foundation, which has agreed to resume regular talks with the Association for Relations across the Taiwan Straits, its mainland counterpart.

“Today was the important day in the history of cross-straits relations,” said Chiang on June 12, when he met Chen Yunlin, the straits association chairman, in Beijing. In July, Chen will lead a delegation for talks in Taipei, the most senior mainland official to visit Taiwan since the Communist victory in 1949.

This dialogue is the most concrete result of the ‘honeymoon’ – giving Taiwan semi-official representation in China and the more than 1 million Taiwanese who live on the mainland a voice to speak for them in commercial, personal and civil disputes.

Beijing cancelled the dialogue in July 1999, after then president Lee Teng-hui put forward his ‘two-state theory’. The next year the Taiwanese elected Chen Shui-bian. Chen quickly antagonized Beijing with his push toward independence and bilateral talks were frozen during his eight years in office.

The other fruits of the honeymoon are the start of 36 direct flights every weekend between Taiwan and China from July 4 and agreement to let 3,000 mainland tourists a day visit Taiwan. Its parliament passed legislation that legalizes conversion of renminbi.

The Taiwan tourism industry expects the mainland visitors to spend at least US$80 each per day during their stay, providing a badly needed boost to the island’s economy. Cities and counties in Taiwan, even those controlled by the DPP, are rushing to arrange exhibitions in the mainland to promote their products and themselves as tourist destination. The direct flights will also be a boon to the overseas Taiwanese who have until now be forced to fly via Hong Kong, Macau, Japan or South Korea. An estimated 70,000 Taiwan firms have put US$150 billion in the mainland, making them China’s largest foreign investor. They are the biggest beneficiaries of the honeymoon.

“Until now, we have been orphans,” said Chiang Wei-nan, secretary-general of the Taiwan Investors Association of Dongguan, which has 6,000 Taiwan companies which have invested US$10.5 billion in the city. “Other investors have embassies to turn to. But our people could only turn to us in times of trouble. Now we will have semi-official representation. It is an important step.”

Taiwanese investors will also benefit from an easing of the restrictions imposed by the DPP government, such as a ceiling of 40 percent of their net value on investing in China and limits on the level of technology they could transfer. The new Kuomintang government will also make it easier for Taiwan companies to send mainland staff to the island for training and allow mainland firms to set up R & D centers there.

One factor in the honeymoon has been the extraordinary response by Taiwan to the victims of the Sichuan earthquake, despite the fact that more than 1,000 missiles are pointed at the island which could be launched at a moment’s notice. The government has donated NT$800 million and firms and individuals over US$2 billion, the largest of any country outside the mainland.

The honeymoon will accelerate the economic and social integration of the two sides – but will not lead to a long-term marriage. It will not solve the military, diplomatic and political differences. Taiwan wants to join regional institutions like ASEAN and international bodies such as the United Nations, the World Bank, the International Monetary Fund and the World Health Organisation: it wants Beijing to stop poaching its shrinking number of diplomatic allies. Here Ma is in line with his predecessor Chen Shui-bian in wanting ‘more international space’.

Beijing is not likely to agree to either.

On June 11, the day before Chiang and Chen were to meet in Beijing, the Taiwan military launched its ‘Han Guang’ (Light of China) exercises, aimed at repelling a possible invasion by the People’s Liberation Army in 2009. The Nanjing military region, the one responsible for capturing Taiwan in the event of a war, was the only military area which did not send soldiers to help the relief efforts for the Sichuan earthquake victims. Beijing has not responded to Ma’s request to remove the missiles targeting the island. Within the two governments, the military on each side is the most suspicious of détente and regards the other with deep skepticism. This limits the policy options of both Ma Ying-jeou and Hu Jin-tao.

Since Taiwan is a democracy, Ma is under greater pressure to show that the honeymoon is producing benefits for his people. As long as the direct flights, influx of tourists and closer economic integration add percentage points to Taiwan’s GDP growth and improve the bottom line of Taiwan companies in China, the romance will continue and the two will go on dating.

But what if mainland tourists refuse to return and commit crimes in Taiwan? What if Beijing refuses Taipei’s demand for entry into international bodies and continues to poach its allies? What if the PLA in Fujian sink a Taiwan fishing boat, by accident or on purpose? Then the honeymoon will end and the DPP will be able to have its voice heard again.