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Machiavellian moves on Cross-Strait
links
By Laurence Eyton
TAIPEI - Machiavelli once said that a statesman
should never lack a good reason for breaking his word.
Of course that reason didn't have to be true, just
serviceable. Which is pretty much what lies behind
Taiwan President Chen Shui-bian's latest bizarre
about-face concerning direct links across the Taiwan
Strait.
Let us review the story so far. In 1949
Chiang Kai-shek's government, having fled to Taiwan,
banned direct cross-Strait commerce, transportation and
communications until it had successfully "reconquered
the mainland".
After the lifting of martial law
in 1988, Taiwan started to allow visits and commerce
with China, but only via third countries.
After
the Tiananmen incident in 1989, foreign interest in
investing in China nose-dived. China went all-out to woo
Taiwanese investors. And there began a relationship in
which China has absorbed about US$100 billion of
Taiwanese investment and now accounts for about 25
percent of Taiwan's exports, this year having overtaken
the United States as Taiwan's biggest export market. The
1949 ban, however, is still in place.
The
problem with lifting the ban is that each side of the
Strait has overestimated the need of the other to get it
lifted.
In the early 1990s, post-Tiananmen China
faced a temporary drying-up of foreign investment.
Taipei calculated that Beijing's communists, who
desperately needed to fuel growth to keep in power,
badly needed cross-Strait trade, and would be prepared
to trade major concessions for it. Those that Taipei
demanded were Beijing's recognition of the Taipei regime
as having equal status and its renunciation of the use
of force to solve the unification issue. These
conditions were and still are unacceptable for Beijing.
There was no deal.
In the past two years,
however, the boot has very much been on the other foot.
China appears to prosper. Taiwan has been in recession
since mid-2000, experiencing negative gross domestic
product (GDP) growth for the first time ever last year.
With the United States in recession and regional
economies still suffering from the financial catastrophe
of 1997-98, Taiwan's business community looked
increasingly to China as an area for growth.
But
expansion into China usually means using that country's
cheap workforce to make commoditized goods, where the
name of the game is always low prices, often using
Taiwan components. In this situation the extra cost
imposed on producing in China by the direct-links ban,
which means everything has to be shipped somewhere else
and transshipped into China, is simply not acceptable.
Another idea current in Taiwan's business
community is that a post-industrial Taiwan can become a
center for finance, marketing, design and know-how to
the vast hinterland of central China, something like
Hong Kong's relationship with Guangdong province. For
Taiwan to fill this role direct links are a must.
No wonder then that, when Chen convened a
meeting of Taiwan's business and political elite in
August last year to come up with a road map out of
recession, the No 1 priority, he was told, was direct
links with China. Even before the conference was held,
Chen had promised that he would implement its
resolutions as soon as possible, including that
concerning the opening of direct links.
But
opening direct links is not something that Taiwan can do
unilaterally. Opening direct transportation between the
two sides needs talks on routes, approved carriers,
customs procedures, quarantine measures and immigration
procedures. These are usually matters to be negotiated
between states. But Beijing and Taipei have not talked
to each other officially for 53 years. Even their
"non-official" representative organizations, set up in
the early 1990s to bridge this gap, have done little
more in the past seven years than send each other
sharply worded faxes.
China had also said,
however, that it simply was not prepared to open the
necessary discussion on cross-Strait links until Taiwan
accepted its "one China" principle. What this principle
is exactly is open to debate - Beijing has at least two
different versions and China's supporters in Taiwan have
a third. But it basically comes down to Taiwan admitting
that it is part of China to be unified, not an
independent sovereignty. Beijing's attitude could be
summed up by saying "surrender, then we'll talk". This
was an offer Taiwan had to refuse. Result: stasis.
At least until the middle of this year, anyway.
In May, Taiwan was deep into renegotiation of its air
links with Hong Kong (see Taiwan: Something's in the air, May
16). Hong Kong's government has the same attitude to
Taipei as does its master in Beijing. As a result, air
links, which would normally be negotiated between the
two territories' transport ministries, are in fact
negotiated by commercial organizations representing the
carriers involved on each side. Government officials do
in fact participate, but the fiction is that they are
moonlighting as "advisers" or "negotiators" working for
the two commercial groups.
While these
negotiations were going on, Chen suggested that they
might be used as a model for talks with China on direct
links. Such an arrangement would skirt thorny issues
such as Taiwan's demand for equal status and Beijing's
insistence on "one China" and allow progress to be made.
At first China seemed to dismiss the idea,
unless it could choose whom, from Taiwan, it was going
to negotiate with and unless the government signed up to
"one China" irrespective of its not officially taking
part in bilateral talks.
Subsequently, however,
China has appeared to warm to the "commercial group"
model. In June, Vice Premier Qian Qichen, Beijing's de
facto Taiwan affairs supremo, said it was a possible
basis for talks. And last month Qian appeared to give
Taipei everything it wanted to get talks under way (see
China reaches across the Strait,
October 19). In interviews with Taiwanese media and
legislators, subsequently given the imprimatur of
official policy by being reported in the state-run
media, Qian made two large concessions. "One China"
would no longer be something the Taiwan government had
to agree to before talks with commercial representative
organization from Taiwan could take place. And
cross-Strait links would not been regarded as domestic
by Beijing - unacceptable in Taipei, because it implies
that Taiwan is apart of the People's Republic of China -
as long as Taiwan did not insist on calling them
international - unacceptable in Beijing for exactly the
opposite reason. Instead they would simply be regarded
as special "cross-Strait" routes, a status that Taiwan
has long sought. "Direct links is an economic issue, not
a political one," Qian said, adding that China "will
treat direct transport as being cross-Strait in nature
and set aside the 'one China' principle when approaching
it."
Full steam ahead for talks, then? Actually,
no. Two weeks after Qian's concessions, optimism that
the long stalemate might be over has been dashed. The
fault lies entirely on Taiwan's side. Chen has now
changed his mind. Direct links cannot be negotiated on
the Hong Kong air-links model after all. Taiwan's
government must negotiate them with its counterpart in
Beijing (and remember that basic to Beijing's stance is
that Taipei is not a counterpart, it is a local
government).
"Any form of direct transportation,
such charter flights, would involve the government's
authority, which can't be replaced by any private body,"
Chen told a group of visiting business leaders on
November 1. "Only when both sides of the Strait sit down
to hold talks can all the problems be solved," Chen
said.
No explanation has been given for Chen's
turnaround. But one factor that has probably played a
decisive role is that more data have become available in
the past few months as to exactly how beneficial
Taiwan's economic relationship with China is. In
particular, a report issued by the Control Yuan,
Taiwan's highest government watchdog, censured the
cabinet in mid-September for not safeguarding Taiwan's
interests effectively in the development of cross-Strait
trade and investment. The most damning statistic
contained in the report was that companies that have
invested in China have repatriated less than 2 percent
of the money invested. The evidence, the report showed,
suggested that once money left Taiwan for China, it left
for good, there was no flow of repatriated profits
making Taiwan wealthier or contributing to its economy.
Another problem is that much of this China
investment has been secured with bank loans or share
issues. Companies are therefore sucking money that could
be invested domestically out of Taiwan's economy,
putting it in China and there it remains. This is not
good. But what is worse is that some companies have
borrowed money to set up in China, in effect closed
operations in Taiwan, and simply repudiated their debt -
a phenomenon know as "invest in China and leave your
debts in Taiwan".
This report has shocked the
government and the ruling party. It has given credence
to the claim by the Taiwan Solidarity Union (TSU), a
small political party of pro-independence ultras, that
China investment is hollowing out Taiwan's economy,
sucking away the island's wealth irretrievably. Why open
direct links, argues the TSU, which can only hasten the
process?
If the economic picture painted by the
report were not enough to give Chen reason to pause for
thought, it has also given heart to dissenting voices in
his own Democratic Progressive Party. The DPP has always
had a large faction suspicious of closer economic ties
with China. Beijng has made no secret of its desire to
use its economic clout with Taiwan to force the island
into talks about unification; this is in fact what
amounts to its unification strategy at the moment and
why it is prepared to make so many concessions to bring
direct links about, deepen Taiwan's economic dependence
and therefore strengthen Beijing's hand politically. DPP
hardliners take exactly the same viewpoint, which is why
they oppose direct links. And with a re-election
campaign little more than a year away, Chen needs the
support of this group, in return for which a slowing of
the rush to direct links is the price.
Where
does this leave the direct links issue? Some points can
be made:
The real concern is that direct links will hasten
what is now seen as an economic drain on Taiwan rather
than as a benefit.
The importance of government-to-government talks is
a political smokescreen while the Taiwan government
ponders economic issues it should have dealt with before
promising to open links a year ago.
Practical measures to allow direct links to go ahead
are still taking place. The legislature is amending the
law governing cross-Strait relations to allow business
groups to negotiate despite the government's apparent
repudiation of the strategy, and the Defense Ministry is
addressing security concerns.
Overall the real
problem is that Chen, too scared simply to ride out the
recession - though admittedly nobody in Taiwan had
experienced a recession for a generation - promised too
much to the business community without a clear
understanding that what was good for individual
businesses, as represented by their bosses attending the
August 2001 conference, might not be good for the
economy as a whole. He dumped the previous government's
restrictions on cross-Strait investment, promising a new
regime of "active opening" to investment in China and
"effective management" to make sure that Taiwan's
interests didn't suffer. The Control Yuan report has
shown, of course, that the government cannot manage
effectively. And direct links will now be on hold until
it can learn how.
There is a price to pay for
Chen's turnaround, however justified it might be. Since
Chen does not want to admit that the reason for caution
is new-found skepticism about economic benefits that
would entail coming clean about breaking a promise he
never should have made, a political excuse is being
manufactured that can only make Taiwan look
simultaneously vacillating and intransigent. Some face
saver!
(©2002 Asia Times Online Co, Ltd. All
rights reserved. Please contact content@atimes.com
for information on our sales and syndication policies.)
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