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Relaxation In Mainland China- Taiwan Relations; Limits And Implications

(To be read with C3S Paper No.256 dated 12 March 2009)

Undeniably, there are growing signs of a thaw in the Mainland China – Taiwan relations, particularly since the assumption of office as President by Ma Ying-Jeou of the Kuomintang (KMT) at Taipei in May 2008; but the question whether they can ultimately lead to a complete reconciliation among them, remains very much unclear at this stage. Much would depend on the ability or otherwise of the two sides to arrive at a mutually agreed political formula on the core issue dividing them – unification. If that happens, the cross-straits relations as well as the region’s geo-politics will undoubtedly have its impact; distant South Asia including India will be no exception.

Important developments taking place since Ma took over, confirm the growing cordiality between Beijing and Taipei. The two designated bodies responsible for negotiations – Taiwan’s Straits Exchange Foundation (SEF) and the mainland’s Association for Relations Across Taiwan Straits (ARATS) have resumed talks. Pacts on operation of flights from Taiwan to Mainland, sea and air transport exchanges, food safety as well as postal service have so far been concluded. The next round is to be convened in the Mainland before June 2009.

Also, Taiwan has revealed its plan to reach an “Economic Cooperation Framework Agreement” (ECFA) with the Mainland, which seems to have had Beijing’s blessings. President Ma has been categorical in saying that the ECFA will have ‘no political-bias’ and not symbolize a “One China Market”. However, domestically, the ECFA proposal is meeting opposition from political opponents like the opposition Democratic Progressive Party (DPP), who are insisting on the supervision of the entire reconciliation process with the Mainland by the Taiwanese legislature and citizen participation. Realization of ECFA under the circumstances would very much depend on building a domestic consensus in Taiwan, which at the moment does not appear an easy task.

On China’s part, President Hu Jintao’s six-point proposal (December 2008) has been significant. He has favoured among others the strengthening of commercial ties between the two sides through economic cooperation agreements, negotiating a Peace Agreement and allowing Taiwan’s ‘reasonable’ participation in global organizations. The last one, the first such instance of nod from Beijing, deserves attention for its symbolism – China seems to have given its tacit clearance to Taiwan’s joining the global economic organizations. This could be important internationally.

Not less important is Beijing’s expressed desire to promote military ties with Taipei. President Hu’s proposal included exchanges on military issues and exploration of setting up a military and security mechanism to build mutual trust, which appears to have no precedence. The Chinese state-controlled media have subsequently indicated the possibilities of some such exchanges to start in next few months. Also, military officials of the two sides are scheduled to meet at a security conference at Hawaii, organized by the US Pacific Command in August 2009, marking first such contact in last 60 years. The desire recently expressed by the Chinese Premier Wen Jiabao to visit Taiwan, even if his ‘crawling’ is required, also speaks for the current atmosphere of confidence in Cross-Straits relations. Taipei, on its part, is responding with measures to soften its military posture vis-à-vis the Mainland; a plan has been announced by it to reduce Taiwan’s forces by a fifth by 2014 and a moderate defence approach towards Beijing has been adopted by it in its Quadrennial Defence Review (March 2009). .

In the main, Taiwan’s strategy is apparently aimed at deriving benefits from economic cooperation with the Mainland. The latter has become the largest investment destination for Taiwan (US $70.42 billion accounting for 55% of total foreign investment of Taiwan). Also, Mainland China is now Taiwan’s largest trade partner (US$130.28 billion in 2007, accounting for 28% of total trade), besides being an external factor in Taiwan’s economic growth. Taiwan feels that its export interests would face an imminent threat from tariff exemptions, when a China-ASEAN FTA comes into force by the beginning of 2010 and that the ECFA would act as a remedy in this regard.

Taiwan, in addition, visualizes the chances of ECFA-type agreements with the Mainland leading to similar pacts with more powers like the US, Japan and Singapore as well as the EU. It may calculate that if that happens, great opportunities will arise for it to end its present international marginalisation and expand its space globally. Not surprisingly, with the above factors in mind, Taiwan has recently set up an “ Office of Trade Negotiations” to discuss trade matters with other countries and economies.

On Beijing’s strategic calculations, there had been adjustments in the Mainland’s Taiwan policy over the years (shift from ‘armed liberation’ to ‘peaceful liberation’ in 1979, subsequent shift to ‘peaceful unification’ and the latest position of ‘peaceful development’ as in Hu Jintao’s six point proposal). Beijing’s present formula of a peace accord with Taiwan heralds a new strategic thinking on its part, as against the past stand to use force to take over Taiwan. Possible rationale for the same could be the Mainland’s realization that its policy of not renouncing force to recover Taiwan, if continued, would go to preserve the raison d’etre for the US in supplying arms to Taiwan.

On a close scrutiny, however, the inherent limitations for Beijing and Taipei in getting closer become evident. No doubt, the two seem to broadly agree on the need to promote economic exchanges, but the Mainland is bound to lock horns with Taiwan on other two key issues – unification and granting international space to Taiwan. For Taipei under President Ma, unification is to be based on maintaining status quo, without insisting on independence; Beijing’s position on the other hand is for a political union of the two sides under the “One-China” principle. On Taiwan gaining an international space, Beijing may apprehend that the same can be used by President Ma’s successors, especially the DPP if it captures power again, to pursue independence. Lastly, China may realize the limited potentials of military exchanges with Taiwan; it may recognize the advantages of a reduced cross-straits tension, while at the same time being aware that such exchanges may not lead to an end to US military aid to Taiwan.

Admittedly, the process, which is underway to reduce tensions in relations between Beijing and Taipei , with economic ties as main target, has not crossed an initial stage. How it would develop in future, looks uncertain. What should not be missed nevertheless is that if and when it is taken to logical conclusion, the likely impact from it on the region’s geo-politics looks beyond doubt. Economically, the probable emergence of Taiwan with an enhanced international status, particularly with representation in regional and global organizations, may compel regional powers to follow a pro-active external policy towards Taiwan. That may of course be a delicate task in a political sense as against their declared ‘one-China’ policies.

Strategically, the developing security relaxation across Taiwan Straits may have implications for other rising powers in the region like India and Japan, which have territorial disputes with Beijing and remain wary of China’s growing military potentials. In particular, they may be required to watch for any diversion of Chinese military resources, presently deployed in regions facing Taiwan. In this connection, such nations cannot afford to miss the significance of Beijing’s downplay of its threat perceptions regarding Taiwan Straits, as seen in its latest 2008 Defence White Paper.

Looking from a broader perspective, ‘ China factor’ would always influence the approach of regional powers towards Taiwan. But, as Beijing-Taipei rapprochement progresses steadily, it would be in the interests of such nations to follow a well-nuanced policy capable of dealing with the emerging new situation across Taiwan Straits. It would be advisable in particular for New Delhi to exploit more effectively than before factors like Taiwan’s strategic location as link to Far East and its likely enhanced international status as an offshoot of reconciliation with the Mainland, for the purpose of achieving success in respect of its main foreign policy instrument – the Look East policy. Some may even be tempted to ask a question – Why not a Taiwan-India FTA?

(The writer, Mr D.S.Rajan, is Director, Chennai Centre for China Studies, Chennai, India. Contents are partially based on a paper written by the author for publication in the Pondicherry University’s Annual International Affairs book, Email:

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