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Thaw in China-Taiwan Relations

Amidst China’s territorial assertiveness that has strained its ties with neighbours, there seems to be a thaw in its relations with Taiwan, which Beijing considers its renegade province, and continues to threaten to integrate the island with the mainland China, if need be, by use of force. The government-to-government meeting by ranking officials between Beijing and Taipei on 11 February in Beijing, the first since the brutal civil war ended in 1949, signals Beijing’s dream of possible unification by peaceful means. It also raised the prospect of the possibility of holding a presidential summit, though there could be no indication whether or when such a top level meeting can take place. But the optimistic view is that during Taiwan’s Minister for Mainland Affairs Wang Yu-chi’s meeting with his Chinese counterpart Zhang Zhijun in Nanjing, the possibility of holding a meeting between President Ma Yin-jeou and China’s President Xi Jinping was discussed. Taipei holds the view that such a meeting can be held at an appropriate setting and under appropriate conditions.

Unofficial contacts

During the meeting with Zhang, Wang raised the issue of consular visits to Taiwanese detained on the mainland, health insurance for Taiwanese students studying in China and fair treatment of Taiwanese journalists working there. Beijing is to host the next Asia Pacific Economic Cooperation (APEC) forum’s annual top-level meeting in October and that occasion could provide the appropriate setting. Wang, however, was cautious in clarifying that there could be several steps to make a summit meeting possible and hoped that each step will be a steady one.

Until recently, it was inconceivable in Taiwan even to think that a summit would be possible. Beijing has been objecting Taiwan’s representation at the Presidential level at the APEC summit and therefore Ma has kept away from it and had to send an economic official or a retired politician on his behalf. Now with the improvement of relations across the Taiwan Strait, for Ma to travel to Beijing in October is no longer inconceivable.

The historic talks in Nanjing, China’s capital under the Kuomintang or Nationalists led by Chiang Kai-shek before their defeat and fleeing to Taiwan, now the elected government, was actually more symbolic than substantive. The meeting came after decades of hostility following a bitter war that ended 65 years ago in 1949 with the Nationalists retreating to Taiwan with two million people, thereby leaving Mao Zedong’s victorious Communists to rule the mainland. After decades of dictatorship, Taiwan held its first democratic presidential election in 1996. Though non-governmental representatives from Taiwan such as former Kuomintang (KMT) Chairman Lien Chan have met Chinese Presidents in the past, no formal political talks have been held. The Communist Party of China and the KMT have never reached a peace agreement ending their conflict in 1949.

In fact, ruling KMT Honorary Chairman Lien Chen met President Xi for the second time in as many years when he visited Beijing in the third week of February 2014. Lien, Chairman of a foundation on cross-Taiwan Strait peaceful development was leading a delegation composed of representatives from various sectors in Taiwan to exchange ideas on their mainland Chinese counterparts. Lien was the first top KMT leader to visit China since 1949 when he led a delegation to the mainland China in April 2005. Since then he has maintained warm relations with top CPC leaders, including Xi’s predecessor Hu Jintao. {1}

Irreconcilable Differences

Though both claim that they are the rightful and legitimate rulers of all of China, Taiwan must have realised by now that it is no match to the mighty China and therefore making peace with it is the best possible option. On its part, China has not changed its stated position that Taiwan is a renegade province and has not renounced the use of force to assert its claims over Taiwan. Beijing occupies almost all posts in international bodies and has largely blocked Taipei’s representatives from taking part.

Since being elected to power in 2008, Ma adopted a conciliatory approach towards China and pushed through a number of cooperative policies.{2} In order to deepen economic ties, Taiwan entered into a landmark free trade agreement, the Economic Cooperation Framework Agreement in 2010. The negotiations were carried out by semi-official bodies such as Taiwan’s Straits Exchange Foundation and China’s Association for Relations across the Taiwan Straits. A follow-up agreement to the trade accord to lift barriers on cross-strait trade in services remains pending because the Taiwanese legislature could not agree on a decision during debates on the possible effects that such an agreement on services would have on Taiwanese companies.

Beijing is also trying to woo Taiwan by offering economic carrots to win over the Taiwanese people. Though most Taiwanese would prefer to retain functional independence, it is not sure if Ma’s efforts to forge a closer political tie with Beijing would find many favours among the Taiwanese people. Ma has taken the route of economic integration with the mainland China to achieve his political end. That would be a rather risky way politically. The final say, however, is likely to stay with the people.

According to Alexander Huang, Professor of strategy and war-gaming at Taipei-based Tamkang University, it is “too early to gauge whether the meeting will contribute to better cross-strait relations”. {3} For example, neither side recognises the other’s passport. This is one major obstacle that needs to be overcome if ties between the two are to be normalised. According to Taiwan’s National Immigration Agency, Chinese nationals entering its borders should obtain a special travel document, while Chinese public security authority says inbound Taiwanese should carry a “Mainland Travel Permit for Taiwan Residents”. Under pressure from China, Taiwan athletes have competed at the Olympic Games under the flag of Chinese Taipei. Even Taiwan has been allowed to join the World Trade Organisation as Separate Custom Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei). {4}

Policy of Reconciliation

Is Ma navigating a risky path by seeking reconciliation by overly accommodating with Beijing, first by deepening economic links, and may be later paving the way for political resolution to the island issue? Given the mood inside Taiwan, that appears to be the case. If the KMT retains power, Taiwan’s policy towards China would see some continuity. But Ma does not enjoy full support from own party for his China policy. If public opinion is taken into consideration, a majority would not like Taiwan to be merged with China. Opinion survey in late 2013 suggested that over 80 per cent support some version of status quo and this has remained the trend for the past two decades or so. Only 12 per cent opt for either immediate or future unification. This suggests that any hasty move by Ma that does not have public approval could create more chaos than lead to resolution of the issue. This raises the issue of what happens if the opposition Democratic Progressive Party (DPP) captures power in the election of 2016? In all probability, it will result in a spell of uncertainty in China-Taiwan relations. Though the DPP would like to engage with China, its policy platform as a basis of conducting cross-Strait relations is not acceptable to China. It is clear, therefore, that a possible return of the DPP, a staunch defender of Taiwan’s autonomy, would slow down progress towards political resolution of the Taiwan issue, though economic engagement is expected to continue unhindered.

Economic Interdependence

The economic interdependence between China and Taiwan has deepened so much that neither would take any precipitous action as to hurt the other. China is Taiwan’s biggest export destination and enjoys a large trade surplus. “China is central to the supply chains of Taiwanese manufacturers, and 80 per cent of Taiwanese foreign direct investment goes to China.” {5} During Ma’s presidency, cross-strait trade has nearly doubled, reaching $197 billion in 2013 in last five years. About 40 per cent of Taiwan’s exports are bound for mainland China.{6} Compared to the bilateral trade between, for example, India and China or India and Japan or India and South Korea, this figure is indeed huge, especially for a small island to have generated so much of trade growth.

China being Taiwan’s largest trading partner, Taiwanese companies have set up around 30,000 factories in the mainland over past 30 years and invested around $100 billion. Therefore Taiwan’s stakes are high not to jeopardise it ties with the mainland. Foxconn, a technology contract manufacturer, for example, that employs millions of workers in the mainland is the best known firm that caters to the demands of US tech giant Apple and others. Taiwan too has attracted Chinese investment worth some $800 million, though it opened doors only three years ago. The pro-independence lobby is worried that Ma’s policy of political reconciliation could result in a virtual “sell out” of the island {7} as Beijing has carefully crafted an economic policy by shrewdly increasing Taiwan’s economic dependence on China and thereby strengthening its stronghold over Taiwan’s economy.

By any measure one examines the Taiwan-China ties one can find that the ties are robust, except that in the political realm, problem remains. After Ma’s assumption to the presidency in 2008, Taiwan eased restrictions on Chinese mainland travellers into Taiwan. As a result, nearly three million Chinese visited Taiwan in 2013 and this constituted the largest single group of visitors to Taiwan. Direct flights between the two territories began in 2008. There are nearly 700 flights between the PRC and Taiwan every week, which characterises the relations between Beijing and Taiwan.{8}

Notwithstanding the economic interdependence and Taiwan Relations Act that allows the US to sell arms to Taiwan and thereby help strengthen its security, Beijing’s strategic influence and stronghold over Taiwan cannot be missed. Taiwan is always within the target of Chinese missiles. China virtually blocks Taiwan’s participation in the international society. China also blocks Taiwan from signing bilateral and other regional economic agreements. The numbers of Taiwanese business peoples in China are constantly under surveillance and are often accused of contributing to election campaigns in Taiwan and investing in Taiwanese media with a view to mobilise opinion against China. These are indirect ways of exerting pressure on Taiwan to toe to its line of thinking. Taiwan feels always strangulated. Even though Taiwan can boast of its vibrant democracy to elicit international support, there is no denying the fact that Beijing is unlikely to loosen its hold over Taiwan and would continue to achieve its ultimate goal of incorporating the island with the mainland.

Presidential elections

The presidential elections in Taiwan will be due in 2016. If the people do not endorse Ma’s policy approach towards China, the opposition DPP which is in favour of declaring independence may capture power. In such a situation, the DPP will not only infuriate Beijing but will also risk economic repercussions if it antagonises its giant neighbour. In his second and final term, Ma has just two years left and it remains unclear how far his opening of window policy towards China progresses. People are getting disillusioned by Taiwan’s slow rate of economic growth and a series of missteps, including a failed attempt to force out the Speaker of the legislature. As a result, Ma’s popularity rating has dropped as low as 9 per cent over 2013. An opinion poll released on 14 January 2014 found that 54.8 per cent of Taiwanese felt China has benefitted more than Taiwan from cross-strait engagement and Taiwanese investment.{9}

Going by this trend, this could rub on the KMT candidate adversely while could bolster the electoral prospects of the DPP candidate. That scenario could vitiate the situation. Beijing has one of the world’s largest military, and if it decides to use force to integrate Taiwan to the mainland should the DPP declares independence after coming to power in 2016, Beijing’s measures would be counterproductive. According to a US Defence Department Intelligence Report, China keeps about 1,200 conventional missiles pointed at Taiwan {10} and threatens to attack if the island declares formal independence or delays unification indefinitely. If China uses military power against Taiwan, the United States bound by the Taiwan Relations Act would promptly intervene and if that happens, the Taiwanese people will feel emboldened to fight for their democratic rights along with the US forces. Such a situation would cause instability in East Asia. The Taiwan issue would continue to remain a potential flash point for some more time.

China’s consideration of Taiwan as a part of its territory that must be reunited remains unchanged. China has reacted angrily in the past whenever any leader has espoused a policy that aims at attaining formal independence. In 1995 and 1996, “it fired missiles into waters around Taiwan ahead of its first democratic presidential election, and it regularly denounced Chen Shui-bian, Taiwan’s independent-leaning president from 2000 to 2008”.{11} However, the first move of what is seen a thaw in cross-strait relations following the high-level meeting, is a dramatic change from Taiwan’s earlier position of “no contact, no compromise and no negotiation” under the “secessionist” (alleged by China) policies of former presidents Lee Teng-hui and Chen Shui-bian. In 2005, China passed the so-called “anti-secession law”, which allows for the use of military force against the island if Taiwan declares independence. Its frequent conduct of military exercises reflecting invasion scenarios must be worrying Taiwan.{12}

After assuming power, Ma changed the earlier policy by accepting the idea of “one China, different interpretations”, which has been Beijing’s standing offer of reunification along the lines of the “one country, two systems” model that applies in the former British colony of Hong Kong, which enjoys rights not available to the people of the mainland. But will Taiwan be willing to accept an arrangement that would make it seen as inferior? That seems to be unlikely. However, due to Ma’s assiduous efforts towards reconciliation, both Beijing and Taipei have expanded transportation links, suspended competition for diplomatic allies and agreed on controlling crime, while working for food safety, tourism and education. As long as Ma is in power, Beijing is likely to push for a political rapprochement. Though his popularity rating is dipping, backtracking at this point would surely seal KMT’s fate in the next presidential elections in 2016. Wang’s assiduous efforts to work for a summit meeting between Ma and Xi at the APEC summit in October 2014 are unlikely to materialise though. But if that happens, it would be an historic moment in the history of East Asia and would be welcome in the US and the rest of Asia.

China’s long term goal

Chinese political leaders are avid with memories when China suffered at the hands of the Japanese colonial rule. President Xi Jinping has not forgotten in reminding the world that the Chinese dream of recapturing the prestige that it lost during “100 years of national shame” remains in intact. China is committed to restore its lost glory. China also remembers that in its devastating defeat to Japan in its war in 1894-95, it had ceded Taiwan and this has left a sense of hurt feeling amongst the Chinese till this day. China equally cannot digest that the KMT with its army and supporters fled to Taiwan following its defeat by the Communists in the Chinese civil war and ruled the island through martial law for four decades before restoring democracy in the late 1980s. The Chinese goal is to get the island back into the fold of the mainland and remains as a principal goal of the Chinese leadership.

After taking over power in late 2012, Xi Jinping remained busy in the initial period in consolidating power. His priority was first to put the economy in shape by more reforms and by launching an internal anti-corruption campaign. Also managing the deteriorating ties with Japan amidst its assertive claims on the East China Sea and Takeshima islands, which strained ties with other neighbours emerged other priority issues. It was, therefore, only recently, Xi has been able to address to the Taiwan issue. Xi sensed that a liberal Ma will be in office for the next two years and therefore he conveyed to the representative from Taiwan attending the APEC office in Bali in October 2013 that both Taiwan and China must make effort for tangible progress towards achieving political resolution to the Taiwan issue.

As expected, the reaction from the US was a happy one. It welcomed the historic meeting. Department of State spokeswoman Jen Psaki welcomed the steps both sides took to reduce tensions and improve relations. What next?

Under the circumstance, it will serve the interests of both if they concentrate only on pursuing economic and other non-controversial deals from which both parties can reap benefit. If political issues are allowed to intervene in bilateral dealings, things would run risk of getting messy. The DPP has already warned the Ma government of “selling Taiwan’s interests to China” and would not remain idle if the perception inside Taiwan grows that the people’s freedom is being mortgaged or compromised in striking a political deal with Beijing. Both China and Taiwan are trading delicate paths. While Taiwan will continue the policy of buying more time and continue to benefit from its economic engagement with mainland China while not losing its political identity, China would be satisfied with incremental progress in its perceived right direction, hoping to achieve its long term goal by pursuing its salami-slicing policy. Any major deviation by either would only create a messy situation, inviting other powers to step in.

Dr. Panda is The Japan Foundation Fellow at Reitaku University, Japan. E-mail:

{1} Lien Chan to meet with Xi during Beijing, 18 February 2014,

{2}Jonathan Sullivanfeb, “Taiwan and China edge even closer”, 17 February 2014,

{3} Quoted in Chinmei Sung and Adela Lin, “Trade Trumps Missiles as China-Taiwan Talks Show Warmed Ties”, 29 January 2014,

{4} Ibid.

{5} Sullivanfeb, n.2.

{6} Sung and Lin, n.3.

{7} “Thawing Sino-Taiwanese Relations”,


{9}The Taipei Times, 15 January 2014.

{10}Simon Denyer, “China, Taiwan hold first direct talks since 1949 split”, 11 February 2014,

{11}Austin Ramzyfeb, “China and Taiwan hold first direct talks since ‘49”, 11 February 2014,

{12}“Thawing Sino-Taiwanese relations”,

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