The Taiwan Challenge

Prof. Donald S. Zagoria
Director of the National Committee on American Foreign Policy’s Project
on U.S.-China-Taiwan Relations

New York, March 31, 2004

BACKGROUND

Before I turn to the results of the Taiwan election, I want to begin with the larger picture - that is, the enormous economic and strategic stake that the United States has in maintaining a peaceful, stable and cooperative Asia/Pacific. This is a region which contains the three largest economies in the world, a region which accounts for 60% of the world’s economic output and more than one-third of total U.S. trade. It is a region in which the interests of four major powers intersect and in which the U.S. has 100,000 troops and two alliances. Three major wars involving the United States have begun in this region in the past half-century: Vietnam, Korea and World War II. In geopolitical terms, the United States is the holder of the balance of power in the Asia/Pacific region and all of the countries in the region are well aware of this.

It is in this geo-strategic context that we have to look at Taiwan and the complex relations between China and Taiwan. Taiwan is, and will remain, one of the two potential flashpoints in Asia - along with North Korea - and it has the capacity to bring the United States and China into a conflict that neither wants. Such a conflict would have a devastating impact on the entire region and on the world. To avoid such a conflict, the United States needs to be aware of the dangers and, above all it needs to develop a strategy - hopefully bipartisan - to reduce the gathering tensions without sacrificing either the security or integrity of Taiwan or the promising new and cooperative U.S.-China relationship that has developed since 9/11.

For the past thirty years, since President Nixon went to China in 1972 and President Carter normalized relations with China in 1979, the United States has developed an effective set of arrangements to manage the U.S.-China-Taiwan relationship. These arrangements, which include the three communiques with China, the U.S.’s "one China" policy, and the Taiwan Relations Act, have not pleased everyone in the United States, China or Taiwan. But they have been extremely effective in guaranteeing Taiwan’s security, prosperity and de facto independence, in protecting the development of a vigorous democracy in Taiwan, especially during the past decade, and in providing China with the necessary assurances that, despite all the ambiguity in the U.S.’s "one China" policy, the United States does not actively promote or support Taiwan’s formal independence. These arrangements have therefore made it possible for U.S.-China relations to advance with all their ups and downs over the past 30 years.

U.S. policy, which has been well described as "double deterrence" is that there should be no use of force by China against Taiwan and no declaration of independence by Taiwan. This is a policy that has now been endorsed by every U.S. president since Nixon and it has been very effective in doing the one thing that needs to be done in this complex and dangerous situation - buying time for a solution to the problem that is not now on the horizon.

The solution is not now on the horizon because the overwhelming majority of Taiwan’s citizens have no desire to be unified with an authoritarian China, at least in the immediate future, and because no Chinese leadership could survive if it renounced China’s claim to sovereignty over Taiwan.

The ultimate solution to the China-Taiwan impasse will depend on the prospects for political reform in China, on whether or not China makes its political system more attractive to the Taiwanese people, on economic factors such as the growing economic integration across the strait, and on many other considerations. In the short run, all three sides - China, Taiwan and the United States - should have a common interest in maintaining the status quo and, most important, in demonstrating restraint.

China, for its part, knows that a war with Taiwan would gravely harm its relations with the United States and Japan and thereby threaten the economic development of China that is the number one priority of the regime. Taiwan knows that declaring de jure independence would alienate the United States, Taiwan’s only real friend and protector in the world, and it would run the risk of starting a war with China. That is why a substantial majority of the Taiwanese people still prefer the status quo to either reunification or formal independence. And the United States prefers the status quo at the moment because reunification in the foreseeable future seems impractical and formal independence seems too risky. All of this points to at least one shared interest among all three parties - maintaining the status quo.

ELECTION RESULTS

Now let me turn to the results of the election. Although the election results are still being disputed, the Central Election Commission in Taiwan has certified President Chen Shui-bian as the winner and the United States has recognized him as the winner while recognizing ongoing legal challenges. This very close victory by President Chen and his Democratic Progressive Party or DPP will have profound implications for all three sides - Taiwan, China and the United States. Let me begin with the impact on Taiwan.

President Chen’s victory at the polls with slightly more than 50% of the vote - although a very narrow margin of victory - will strengthen Taiwan’s surging sense of identity and separateness. In the past decade, as a result of Taiwan’s democratization and Beijing’s heavy handedness, an increasing number of Taiwan’s citizens have started to see themselves as Taiwanese. The shift towards a Taiwan identity is evident in a poll carried out twice a year for more than a decade by Taipei’s National Chengchi University. When the poll was first taken in 1992, 26.7% of the respondents identified themselves as Chinese, 17.3% said they were Taiwanese, and 45.4% said they saw themselves as both Taiwanese and Chinese. In the most recent poll in June of last year, the percentage of people saying they are Taiwanese had jumped from 7 to 41.5%, while those identifying themselves as Chinese fell from 26% to 9.9%. The number who said they were both Chinese and Taiwanese dropped only slightly to 43.8%.

Numbers such as these helped shape the recent election campaign. The Kuomintang which had earlier held out eventual reunification with the mainland as its goal, was forced to say during the campaign that it no longer believed reunification with China is the only option for Taiwan and that eventual independence could also be considered.

Moreover, a sense of Taiwanese identity appears strongest among the young. Recent election surveys show that President Chen and his independence-minded DPP consistently outpolls opponents in the 20-29 year old age group.

The growing sense of Taiwanese identity takes many forms - cultural, linguistic and educational. Southerners, especially, are reasserting their culture by using the Taiwan dialect instead of the Mandarin Chinese. Teachers and the history books they use are starting to emphasize Taiwan’s own history rather than China’s.

Part of the explanation for Taiwan’s growing sense of separateness has to do with historical factors. Taiwan has not been governed by the mainland for most of the past 110 years. It was ruled by the Japanese in the first part of the 20th century, in the second half of the 20th century, by the Kuomintang, and more recently, by the DPP. The fact that Taiwan has been physically separated from the mainland for such a long period of time, plus Taiwan’s vigorous democratization since the Kuomintang set the stage for free elections in the 1980s, and the rise of the DPP - which affirms Taiwan’s separateness - have all contributed to Taiwan’s new sense of identity.

But Beijing’s heavy handedness has also been an important factor. China’s missile tests near Taiwan in 1996, its continuing efforts to isolate Taiwan diplomatically, its build-up of missiles opposite Taiwan, and, more recently, its anti-democratic moves towards Hong Kong have all encouraged Taiwanese suspicions of the mainland. Opinion polls show that, despite growing trade and investment, most Taiwanese see the mainland as more of a threat than an opportunity.

All of this helps to explain why Chen Shui-bian, who won only 39% of the vote four years ago, received more than 50% in the recent elections.

Given President Chen’s victory at the polls, an important question for the next four years is how he intends to conduct relations with the mainland. Will he pursue a conciliatory policy in an effort to rebuild the trust that has virtually disappeared between the two sides during the past four years? Or will he move inexorably towards formal independence? More specifically, will President Chen try to rewrite the obsolete 1947 Constitution? And, if he does, what form will this new Constitution take and what impact will it have on issues of sovereignty?

Finally, and perhaps most important, what does President Chen see as his legacy for the second term that is now beginning - Taiwan independence or a stable relationship with China while maintaining Taiwan’s autonomy?

Let me turn to the implications for China of President Chen’s re-election. The mainland leaders are bound to be extremely worried by the election results. They had anticipated a victory by the Kuomintang and were reportedly preparing a more conciliatory policy towards Taiwan if the Kuomintang went back to its earlier "one China" position, which it seemed likely to do, albeit in a more qualified form.

The mainland leaders are very suspicious of Chen Shui-bian and his DPP. They know the long history of this party and its consistent advocacy of Taiwanese independence. They have never fully believed American, Taiwanese or Chinese analysts who have argued that President Chen is a pragmatic politician who will use fiery independence rhetoric to win an election but will ultimately seek a compromise with the mainland on the sovereignty issue. Many on the mainland will now fear the worst - that President Chen will use his second term to cement Taiwan’s sovereignty and to draw the world’s attention to it.

In the view of China’s hardliners, the only way to stop this dangerous trend towards Taiwan independence is to continue building up China’s military capabilities in such a way as to pose a credible threat and, if Chen crosses China’s red lines, to employ that force. This dire scenario is not likely to materialize in the very near future. But it can no longer be ruled out. China is increasing its military budget in double digit terms annually and it is focusing like a laser on one objective: intimidating or, if necessary, defeating Taiwan preferably, in such a lightning strike that the U.S. would not have time to intervene.

China’s hardliners, however, will have to confront the arguments of more moderate voices on the mainland who will argue that China now needs to change its approach to Taiwan to display the kind of flexibility that China has demonstrated in other areas of foreign policy, and to win the "hearts and minds" of the Taiwanese people if they hope to restrain the independence movement.

China could, for example, drop its opposition to Taiwan’s becoming an observer in the World Health Organization and it could drop its preconditions for dialog with President Chen.

Such overtures could set the stage for a long process of negotiation between the two sides that might eventually lead to a reduction of suspicions and tension.

If, however, China does not adopt a more flexible policy towards Taiwan, and continues the rigid stance it adopted after Chen’s election four years ago, the breach in the Taiwan Straits will deepen and the two sides will increasingly run the risk of a confrontation that will inevitably involve the United States.

As to the implications of the Taiwan election for the United States, the United States will face some very difficult choices in the years ahead. On the one hand, the U.S. will have a very strong incentive to maintain a cooperative relationship with a China that is now becoming a crucial diplomatic as well as economic partner - in the war against terror, in the struggle to prevent North Korea from developing nuclear weapons, and in the effort to maintain peace and stability in Asia. On the other hand, no U.S. Administration can allow China to use military force against Taiwan or to coerce Taiwan into an agreement that is against the will of its own people.

The United States has a clear national interest in preserving the status quo in the Taiwan Strait. It was that interest which prompted President Clinton to send aircraft carriers to the Taiwan Strait to deter China in 1996 and which prompted President George W. Bush, on December 9, 2003, to warn president Chen against making unilateral changes to the status quo - right after Chen ignored private U.S. warnings and moved ahead with his plan for a referendum on Chinese missiles and missile defense.

An important question for the next U.S. Administration will be how proactive a role it wants to play in trying to preserve the status quo in the Taiwan Strait. I would argue that this should be a very important priority. Apart from Taiwan, there is no other issue now on the foreign policy radar screen that has the potential to bring about an unwanted war between two major powers. And the dangers of miscalculation and misperception are very real. Indeed, one of my academic colleagues has recently argued that the impasse in the Taiwan Strait has all the makings of a perfect storm that could eventually lead to a situation beyond anyone’s control. We do not have the luxury to allow things to drift. There are risks in adopting a more proactive policy. But I would argue that there are greater risks in maintaining a benign indifference to what is clearly a growing danger in Asia.

What, then, do we need to do? First, we have to continue to make clear to both sides - China and Taiwan - that the U.S. is against any unilateral change in the status quo by either side and is prepared to take concrete actions to implement that policy, including both positive and negative incentives. Second, we have to do our best to help restart the dialogue between China and Taiwan. Initially this might best be done in private by authoritative meetings. But it should soon take the form of a resumption of the official dialogue that was conducted in the 1990s. Third, we need to make clear to China that its past policies towards Taiwan of military threat and diplomatic isolation have been counter-productive and have only served to increase suspicion and distrust of China. It is in China’s own interests to develop a new policy towards Taiwan that will reduce this suspicion and mistrust and thereby create the atmosphere for a constructive dialog. This policy should include: giving Taiwan more space on the international scene, including observer status in the WHO; muting hardline Chinese rhetoric; and showing greater flexibility on its preconditions for dialog with Taiwan.

Fourth, we need to make clear to Taiwan that although America supports Taiwan’s democracy and will stand by its obligations under the Taiwan Relations Act, those obligations do not involve handing Taiwan a blank check. They must consult with us on any actions or policies that could threaten cross-strait stability, including the revision of the Taiwan Constitution. The process of changing the Taiwan Constitution must be a transparent one. And the views and the cautionary notes being expressed by the United States need to be taken into account. President Chen could, in his inaugural speech in May, repeat past assurances that he would not move towards independence by reiterating the "five no’s," which in effect renounce the pursuit of formal independence, and making clear what he will and will not do in efforts to revise the Constitution.

Fifth, and not least, we need to say to both sides: Take more constructive approaches to cross-strait relations. Use less confrontational rhetoric. Move forward in areas such as trade and transportation links where you have common interests. Establish a dialogue. Think about reciprocal moves that could lessen tension.

True statesmanship consists of leaders looking not only at current problems and challenges, but looking beyond the horizon to anticipate problems that are not yet upon them. The combination of a surging sense of Taiwanese identity and growing Chinese military power focused on Taiwan could in the near future lead to a major conflict in the Straits. American policymakers need to start acting now to head this off.

Q&A

A: I think they are; some of us have just been in Washington and it's my impression that they are trying to work in what I would say is a very constructive way.

A: Well it’s a messy stalemate but there’s a President who has been reelected and there’s an opposition that so far seems to be taking a responsible position, so I think the ingredients are there for an American policy to work. I think it’s on all three sides to maintain the status quo.

A: Well I don’t think that that was a particularly well-advised statement by Beijing. I don’t think that we need lectures by Beijing about how to run elections and I don’t think it’s very helpful.
Moderator: Nor from us perhaps.
I don’t think they need lectures from us either.
Moderator: Well before throwing this open to the floor let me just say that to me the interesting thing is that the economic integration of Taiwan and the mainland is proceeding apace. There are hundred billion dollars invested by Taiwan in the mainland. There are a million and a half Taiwanese living in the mainland, 5% of the entire population living in the mainland.
A: Right, and China is now Taiwan’s largest trading partner, replacing the United States. In addition, Professor Chen Cheng just told me that many Taiwanese students go to the mainland to study because they sense increasing economic opportunity there. Somebody told me that there are now more South Korean students going to the mainland than coming to the United States, which is a major switch. China is becoming Taiwan’s biggest trading partner, Japan's biggest trading partner, in some areas South Korea's biggest trading partner. This is going to have important effects but so far, it has not had a political payoff.
A: As Nick Lardy has been arguing for a number of years it increases the cost of conflict and economic interdependence. This is something that both sides have to take into account. From that point of view it’s a very positive factor.

AUDIENCE:

Q: I’m very skeptical that even if the mainland came to be a perfect democracy, that people in Taiwan would find it politically wise to adhere to a new political system, just from a practical political view. I’d like to take this economic point a little further: What are the implications of having so many people on the mainland, so much trade and investment? How much do we know about the effect this is having on the people from Taiwan who are in the midst of this business development which is so frantic and apparently successful? One of the questions is how much leverage is it going to give Beijing over the Taiwan economy and people 10-15 years down the road? Are people being turned off by the mainland political system, people from Taiwan who are experiencing it up-close by their economic cooperation?

A: The first point I’d make is that the Taiwan community is clearly in favor of reducing tensions and clearly worried about growing tensions and therefore has to play a role in deciding who is running Taiwan. I would guess that Shanghai, which has a big stake in the economic relations, also has many people who play a moderating role precisely for that reason, and all of Fuijian province for that matter. Now the Taiwanese are investing all over China, not just in the coast. I'd say that there need to be interest groups on both sides of the strait that are urging the governments to cool it for this reason. Schumpeter was right that the middles class businesses have interests in peace and to the extent that they are present and active on both sides of the strait, I think that’s positive. In terms of leverage- I'm not sure that the Chinese have so much leverage on Taiwan. First off, the Taiwanese factories on the mainland are employing many Chinese. If you close those factories you’re putting your own people out of work at a time when there is already large unemployment. It doesn’t sound to me like they have that much leverage.

A: I’m glad to hear your opinion. History is replete with great powers being dragged into conflict by junior partners that they don’t want. This is not a position that any great power is going to accept easily. I think that you, as well as the people in Taiwan, need to understand that. The second point I want to make is that two days ago I read President Chen’s interview with the Washington Post very carefully. At least five times throughout the interview President Chen said that whatever was going to be done was dependent on maintaining the status quo… It is not a timetable for independence. He’s heard and is responding to President Bush. I take that as a hopeful sign. It seems to me that we have to distinguish between Taiwan’s security and its pride. Taiwan is now, as far as I can see, secure. Would it become more or less secure if it moved in the direction that you’re advocating? That is the question that I think you need to ask yourself.

Q: I personally believe that security lies in democracy. You probably remember President Chen’s last statements in his interview where he says that he will not give in to expensive military costs. I believe that the power of the people can win the war. Sovereignty and human rights have to be respected. I believe that as Americans we support and honor that.

A: Well there is no country in the world that has done more for Taiwanese democracy, independence, and human rights, than the United States. I don’t think the U.S. has anything to apologize for in that respect. Taiwanese democracy simply would not have been conceivable without American support.

A: I agree with you. I agree that both China and Taiwan are going to try to chip away at the status quo and mold it to their advantage. That is precisely why this is a dangerous situation; you’ve identified the problem. That is precisely why I think the U.S. needs to play a little more of an active role and caution both sides. When we see changes in the status quo we’ll know it.

A: First of all it’s not just weapons manufacturers that have an interest in Taiwan, the chip companies (Intel, Motorola) are all in Taiwan. A lot of American companies see the greater China market (China, Taiwan, Hong Kong) as part of one market and most of the Fortune 500 companies are interested in that. I think it’s not right to say that it’s just weapons companies. As far as the military aspect is concerned it is true that the U.S. has taken an interest in the military balance of power in the Taiwan Strait. It’s a perfectly reasonable thing since the U.S., according to the Taiwan Relations Act and according to other commitments, could be drawn into a conflict in the Taiwan Strait and doesn’t want to be. Nonetheless the American military has a perfectly understandable reason for being interested in the military balance of power in the Taiwan Strait. The American concern is that it should not tilt too far in the direction of China. Whether or not we will be able to do that is an open question. There are some scenarios that within the not-so-distant future Taiwan will not be able to defend itself against a Chinese attack. Others have a different view. For the U.S. to be concerned about the military balance in the Taiwan Strait seems to be perfectly reasonable.

Moderator: Can I comment with due respect that we’ve gone a little beyond the implications of the recent election.
A:Well I would just say that’s a question the answer to which I would prefer not to find out. That is, you may be right that China losing a war to the U.S. would threaten the Chinese regime but it would also do tremendous damage to the U.S. and to the whole region. I would prefer to think about how we could avoid such a conflict.

A: I think the answer to that question probably depends on the results of the December elections. That’s going to be the next big battle and both sides are gearing up for it. If the country remains as polarized as it was in this Presidential election then that gridlock in the legislature, which has been there for the past four years, will continue. This will be bad news for all sorts of desirable economic policy changes. If, on the other hand, DPP wins the majority then things might be different. That is the question one has to ask. The prospects however are pretty good for a continued stalemate.

A: It seems to me that Taiwan public opinion polls continue to show as I mentioned earlier that the majority of the Taiwanese people prefer the status quo. Obviously, if independence were without risk they would prefer independence. But there is a risk; you simply cannot weigh that away. People charged with war and peace decisions, in Taiwan, the U.S., and the mainland, have to be pragmatic. (Inaudible), whose book I’m now using in one of my classes, says about diplomacy- if you want conflict nourish a doctrine, if you want peace you’ve got to be pragmatic. The status quo seems to be acceptable to a great majority of the Taiwan people. They have a flourishing democracy, they have prosperity and a much improved standard of living. It seems to me that given the risks involved of pushing in the direction of independence it’s just not worth it for most Taiwanese and I don’t see why Americans have to be more Catholic than the pope.
Moderator: Let me just add a point, on the red-hot issue of whether to have a referendum or not, the Taiwanese, even though the margins between the parties are very slim, basically voted against having a referendum.

A: I couldn’t have planted a better question in the audience than that one and I thank you for it. I just made some notes in the margin. First of all he’s calling to establish a mechanism for negotiation. Then he is saying that in the future when we proceed will do so on the principle maintaining a status quo. "We have not violated the five "no’s" that I pledged on my inauguration speech which is (inaudible) and not moving in the direction of independence. The new constitution will not be an effort to change the status quo. Constitutional reform will not violate the five "no’s". We can talk about one China in the future, a very helpful thing that China can pick up on." There are things in this interview that Beijing will not like very much, particularly when he talks about Taiwan as already an independent sovereign state. However, the Taiwanese leaders have been saying that for some time, they’ve been saying that for 10-15 years. As a matter of fact, they started saying that after they moved away from the idea of the republic of Taiwan. They said we don’t have to go to a republic of Taiwan because we’re already an independent sovereign state. Well if they want to say that they are already an independent sovereign state and that’s a reason why they don’t have to declare independence, fine. Beijing ought to be able to live with that. Beijing is full of pragmatic people who understand things like that. There’s a lot of stuff in here that could constitute the basis for a dialogue. I think that the headline in the Post, which we both saw and talked about, was not balanced and was a misleading headline.