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What's next for Taiwan and
China?
By Tsering Namgyal
Taiwan President Chen Shui-bian's "one country
on either side of the Taiwan Strait" statement almost
pushed Taiwan and China to the brink of a major
confrontation. But the tensions were defused following
clarifications from Taiwan's Mainland Affairs Council,
which sent its chairman Tsai Ing-wen to Washington to
explain Taiwan's unchanged China policy to the US
government.
However, the future of Taiwan and
China is likely to hinge on a range of a highly complex
factors: the most important of which, of course, is
China's economic future. The debate, which started last
year with the publication of an apocalyptic book by
lawyer Gordon Chang,The Collapse of China,
continues to rage in Taiwan.
More optimistic analysts - such as Nicholas Lardy,
a China specialist at the Brookings Institution -
believe that China may continue to grow economically at
a respectable rate, allowing it to absorb the social shocks brought
on by displaced workers of the state-owned enterprises and the
increasing disparity of economic growth between its
commercial coastal provinces and its relatively poor inner
regions. Others, like Chang, are predicting a more
pessimistic future for the People's Republic of China. They
think the banking system may sooner or later collapse,
triggering a meltdown of the economy, with serious global
repercussions. If such a scenario indeed materializes,
then China may be forced to opt for a wag-the-dog
military action against Taiwan. Or so the theory goes.
China-watcher Willy Lam said that several
People's Liberation Army (PLA) leaders had argued, after
Chen's statement last month, that it would be a perfect
time to launch an attack, since Washington would be
reluctant to retaliate against Beijing when it needs its
support at the United Nations for its own military plans
in Iraq. It took great political skill for China's
President Jiang Zemin to rein in the hawks, Lam said.
Lam is not the only alarmist. In a report this
summer, the Pentagon warned that China's rapid military
modernization "may reflect an increasing willingness to
consider the use of force" against Taiwan. Some believe
that Beijing would prefer to gain control of Taiwan
through a "war of paralysis" on Taiwan's command and
control centers with high-tech weapons such as cruise
missiles, electronic warfare and computer viruses.
The clock is ticking
Analysts
believe that although the PLA is working hard to gain
military superiority, it won't overcome Taiwan's edge
until 2010 or 2015. In the meantime, many are convinced
that China is using soft weapons, including economic and
propaganda tactics, to bolster its power.
Nonetheless, the United States was worried
and angered by Chen's comments, his most provocative
since his election two years ago as the first president from
a party favoring independence. Pressed by
Washington, Taiwan's Foreign Ministry issued a clarification
that Chen had "merely restated the status quo" and had
no intention of calling a referendum unless Beijing tried to use
force.
Although the United States is providing
weapons to Taiwan, the dramatic growth of China's
economic power is increasing its defense prowess.
Estimates say that the budget of the PLA is expected to
double over the next three years. Taiwan's slowing
economy and the rising budget deficit means that it may
not be able to afford all the weapons that Washington is
selling.
The PLA has an arsenal of about 350
short-range ballistic missiles on its coastline, within
striking range of Taiwan, and it is adding 50 missiles
every year. It is also purchasing dozens of new
Sukhoi-30 warplanes from Russia, allowing it to overcome
Taiwan's air superiority within the next few years.
Indeed, China's growing economy, its rising military
power, and importantly, its continued cold shoulder to
Taiwan, is sowing the seeds of Taiwan's anxiety.
Chen's real intention
Immediately
following Chen's statement, speculation abounded
in the local press over whether it was intentional.
On August 31, while meeting with local journalists, he
said his statement was well-crafted. Chen said there
were three factors behind his statement.
First of all, Chen said he made the "one country on each
side" remark in an attempt to remind everyone that
the Democratic Progressive Party's (DPP) Resolution
on Taiwan's Future was the main guideline to address
cross-strait relations. The establishment of a Republic
of Taiwan is the DPP's ultimate goal. But the resolution
also states that Taiwan is already an independent
sovereign state and that any change to this status quo
must be subject to the approval of the people through a
referendum.
Second, he said his statement was a
response to repeated campaigning by Taiwanese citizens at home and
abroad for the use of Taiwan as the country's official
title. And to that he, as the head of state, could
not turn a deaf ear. Third, he said his statement
reflected Taiwan's refusal to accept China's precondition
for negotiation on direct transportation links. China
has asked Taiwan to consider direct links as domestic
routes within a single country.
Upcoming
Communist Party meeting
A key event to watch
is the upcoming 16th Congress of the Communist Party
meeting in early November, which is seen as one of the
most important meetings in years. The meeting is likely to
pave way for senior officials to step down, handing
power to the younger generation.
The congress, generally held every five years, usually takes
place in September or October. This year, however, it
has been delayed so that President Zemin, 76, will
still hold that title and that of party chairman when
he attends the Asia-Pacific Economic Cooperation meeting
in Mexico in October and when he visits the United
States. Earlier this year, the succession seemed secure
and Vice President Hu Jintao, 59, was expected to
become both president and chairman of the Communist
Party. Jiang, however, mounted a last-minute attempt to
retain several key positions of power, including
chairman of the party and of the Central Military
Commission.
Observers think Jiang will continue to be China's
patriarch. Singapore Senior Minister Lee Kuan Yew said last
week in an interview that Jiang is likely
to maintain a decisive role even if he steps down from
the presidency. "To the best of our knowledge, Jiang
will always retain a position of influence, whatever the
official position he may hold. No question about it,"
Lee was quoted as saying.
China's real
high-tech invasion?
In the run up
to the meeting, China's reaction to Taiwan
seems relatively muted compared to the past. Perhaps China
is getting increasingly confident over its economic
superiority or believes that Chen is less dangerous and
serious about independence than his predecessor Lee
Teng-hui, whose statements on overseas trips usually
sent Chinese leaders into paroxysms.
Meanwhile,
increasing economic integration is proving to be a
stabilizing force between the two sides by increasing
mutual dependence. This year, China became the top
export market for Taiwan's products, surpassing the
United States for the first time. Taiwanese businesses
have invested more than US$60 billion in China, and an
estimated 500,000 Taiwanese are working in China. In
contrast, Taiwan receives only 4 percent of China's
exports.
Most of the Taiwanese money that
goes into China is not flowing back. Taiwan has invested
nearly US$60 billion - although actual figures could be
higher. And the flight to China
is showing no signs of slowing down. In the first six
months of this year, the number of applications filed by
Taiwan businesspeople for investing in China grew by
8.14 percent from the same period of last year, and the
capital for those investments also increased by 12.86
percent. Of the 975 listed companies in Taiwan, 490 have
invested in China. Although China claims that 70 percent
of more than 50,000 Taiwanese companies in China were
making money, only 27 companies had remitted their
profits back to Taiwan.
Taiwan's investments started from labor-intensive industries, such
as shoes and bicycles, and have now spread to
information technology. And this can perhaps be dubbed
China's real high-tech invasion. Whether Taiwan's government can turn the
tide of capital flow seems to be the most important
question for Taiwan at the moment.
(©2002 Asia
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