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3 Hong Kong, Taiwan wilt in the
Dragon's glare By Chietigj
Bajpaee
As Hong Kong marked 10 years since
its reversion to Chinese rule and Taiwan suffers a
string of losses on the international stage, it is
a time for reflection, for both entities to
question their identity, their relationship with
the mainland, and their role on the international
stage.
Hong Kong's and Taiwan's destinies
were once joined at the hip as "one country, two
systems" became the mantra and model for both
entities' eventual reintegration with the
mainland. Hong
Kong's return to Chinese rule
was meant to pave the way for Taiwan (and Macau).
However, the prospects for this roadmap
soon faded as the pro-independence Democratic
Progressive Party (DPP) under the helm of Chen
Shui-bian assumed the presidency of Taiwan in 2000
and rejected any notion of reunification with the
mainland, while pushing a separate Taiwanese
identity.
The fact that the people of Hong
Kong and Macau had never really been in charge of
their own destinies, with their fates being
determined in London and Lisbon respectively, made
them more passive about reverting to rule by
Beijing. But in the case of Taiwan, the people had
a taste of self-rule and democracy since their
first direct presidential elections in 1996 and,
as such, were less willing to be ruled by Beijing.
However, Hong Kong and Taiwan continue to
face a similar dilemma about their identity with
regard to the mainland. Both have come to the
realization that their economic future is
intertwined with the mainland. After initial
trepidation, Hong Kong went whole hog into
integrating with the mainland through such
initiatives as the Closer Economic Partnership
Agreement and the Individual Travel Scheme for
mainland tourists.
Hong Kong financial
institutions have been allowed to conduct yuan
business, with the special administrative region
(SAR) integrating with the Pearl River Delta and
Pan-Pearl River Delta regions. These initiatives,
while rescuing Hong Kong from the Asian financial
crisis in 1997 and the SARS (severe acute
respiratory syndrome) epidemic in 2003, have also
led to the fear that Hong Kong will be swallowed
up by China economically.
The opening up
of China's markets to foreign investment, the
growth of a Chinese middle class, and the rise of
new financial, logistics and transshipment hubs in
the Pearl River and Yangtze River delta regions
have led to a debate within Hong Kong over whether
it can retain its status as a gateway to China.
To be sure, talk of Shanghai and Shenzhen
overtaking Hong Kong as a regional financial
center is overstated given the infancy of the
mainland's judicial system, rule of law and
intellectual-property rights and Hong Kong's
well-educated and multicultural
workforce.
Nonetheless, the high cost of
living and deteriorating air quality in Hong Kong
have fueled concerns over the sustainability of
its status as "Asia's World City". In many ways,
Hong Kong has gone from being the world's gateway
to China to China's gateway to the world as
Chinese companies list in Hong Kong as a potential
precursor to listing in New York or London. And
China's currency now has limited convertibility in
Hong Kong, as a potential test case for eventual
full convertibility.
In Taiwan, there is
also a growing realization that it will become
economically marginalized unless it integrates
with the mainland. While there have been a limited
number of initiatives promoting trade and
transport links such as the "three mini-links"
between the mainland and outlying islands of
Quemoy (Kinmen) and Matsu as a potential precursor
for full mail, trade and transportation links
across the Taiwan Strait, there has continued to
be a fear that economic integration will undermine
Taiwan's separate identity.
While the DPP
has managed to keep Taiwan at arm's length from
the mainland, it has also kept the rest of the
world away as well, as Taiwan has been excluded
from regional forums such as the East Asia Summit
and Association of Southeast Asian Nations (ASEAN)
Regional Forum and regional multilateral
free-trade initiatives such as that of ASEAN + 3
(including Japan, China and South Korea).
Countries such as the United States have
also been reluctant to enter bilateral free-trade
agreements (FTAs) with Taiwan, given the lack of
appeal in using Taiwan as a bridge to mainland
China given the political hostility between both
sides of the strait and restrictions on
cross-strait investment, trade and travel.
The conclusion of the US-South Korea FTA
in May served as a wake-up call for Taipei given
the similarity in income levels and industrial
structures between Taiwan and South Korea. So far,
Taiwan has only secured or is in the process of
securing FTAs with seven of its diplomatic allies
in Latin America, although these states account
for only 0.22% of Taiwan's foreign trade. [1]
Furthermore, Taiwan has been fighting a
losing battle to gain diplomatic recognition on
the world stage. The loss of Costa Rica brings
Taiwan's diplomatic relations to 24 countries,
compared with 169 for China. This is down from a
peak of 67 in 1969 after the United Nations
shifted recognition from Taipei to Beijing in
1971.
The effort to have Taiwan admitted
to the World Health Organization (WHO) and UN as a
full member under the name "Taiwan" appears to be
a chimera and demonstrates Taiwan's unrealistic
foreign policy. Taipei's policy of pumping aid
into a handful of small and often corrupt regimes
to retain their diplomatic allegiance has also
reduced Taiwan's standing, alienated its few
allies, and undermined its credentials as a
supporter of democracy, human rights and the rule
of law.
For instance, Taiwan's relations
with Australia have soured after Taipei's
escapades in the South Pacific, while Taiwan's bid
for full
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