Facing Mainland China

8/13/2019 Facing Mainland China

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Facing Mainland China: Taiwans Future ChallengesThe topic I picked for my speech today is Facing Mainland China: TaiwansFuture Challenges. Actually, Taiwan has faced challenges stemming from theMainland for a long time, actually for more than six decades. But the challenges

today and in the future are more complex and consequential than ever before.The choices for Taiwan will be difficult, and it is important that they be made well.To avoid making choices is also a choice.

Actually, its a bit presumptuous for an outsider to try to give advice to thecitizens of another country, particularly a democratic country, on the challengesthey face and how to face them. In a profound way, that really is their business.

And I readily acknowledge that my own country is having great difficulty meetingits formidable challenges. But my ties to Taiwan were first formed almost fortyyears ago, and have only grown over time. I care very much what happens to thisisland and its people. So I hope you will permit me to make a few observationson my topic. I wont talk for too long, because I want plenty of time for questions.

To begin, it is worth noting that Taiwan would face some difficult challenges evenif China were not such an important factor. That is because Taiwan, like someother places in East Asia, has entered a transition in its social and economicdevelopment that requires new policy models. Even if China did not exist, thesechallenges would press Taiwan.

In addition, Taiwans economy is increasingly post-industrial and is finding itharder to remain both competitive in the global economy andprovide good jobs

and good wages for all. Income inequality is trending upward. The unemploymentrate was higher in this past decade than it was in the 1990s (1-3 percent). Thecentral government budget has been basically flat over the last few years,government debt is growing, but the tax burden of Taiwan citizens is fairly light(58th among a group of 65 more advanced countries). The island has alreadybegun to move, correctly, to a knowledge-based economy, but there a still alarge number of small, inefficient, family operations. And for a knowledge-basedeconomy, its companies will need people with the right kinds of skills, whichprobably requires reform of the education system.

If these challenges werent enough, demography makes them much moredifficult. Taiwans total population will peak relatively soon, probably in 2025. Theworking age population will decline from 74 percent of the total today to around67 percent in 2025; the elderlys share of the population will increase from 11percent today to 20 percent. That means that smaller numbers of workers will besupporting more and more old people. By 2060, half the population (workers) willbe supporting 40% of the population (retirees). To make this specific, thestudents in this room will have to pay for the pensions and health care of your


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professors after they retire. And as long as young people either dont get marriedor dont have children, that situation will continue.

So even if China did not exist, Taiwan would face tough choices as a society:choices between economic prosperity on the one hand and social welfarefor

the old and the youngon the other. But China does exist. It provides Taiwanwith opportunities, to be sure. Many of you young people may work on theMainland. But China is a source of insecurity for Taiwan, and so an addedchallenge. So the task for the islands leaders and citizens will be to balance theirdesire for security, prosperity and welfare.

Let me turn now to the various challenges that Mainland China poses for Taiwan.

The first and fundamental challenge is Beijings ultimate objective regardingTaiwan, what it calls peaceful unification under the one country, two sys temsformula. In effect, it wishes to have Taiwan become a special administrative

region of the Peoples Republic of China, with a status essentially the same asHong Kong and Macau.

Now Taiwan has always said no to one country, two systems (1C2S), and thereis little public support for it. Its important, however, that Taiwan people have asubstantive foundation for their opposition rather than be opposed foroppositions sake. To my mind, there are at least two reasons. The first that thereare a serious conceptual differences between Beijing and Taipei over whetherTaiwan is a sovereign entity in two important respects: first, the islandsinternational role, and second, cross-Strait relations. Essentially, this is the issue

of the Republic of China, and there is a broad consensus here that the ROCdoes exist, while Beijings formal view is that the ROC hasnt existed since thefounding of the PRC. For Hong Kong and Macau, 1C2S granted a high degreeof autonomy but not sovereignty. Beijing remains the exclusive sovereign. To mymind, this disagreement over sovereignty is rather fundamental.

The second reason is what 1C2S would mean, hypothetically, for Taiwansdemocracy after unification. Hong Kong is important here as well. When craftedthe Hong Kong political system over twenty years ago, through the Basic Law, itskewed the electoral process in ways that made it difficultor impossibleforindividuals and political forces it does not like to come to power. We of coursedont know whether China, as part of a unification deal, would seek to changeTaiwans political system so that it has the same effect as in Hong Kong. If it did,however, the DPP, which today is a significant portion of Taiwan sentiment,would be marginalized.

But that is just my view. Whats important is how Taiwan citizens and leadersthink about this.


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When the results of the 2012 presidential elections were announced on theevening of January 14thlast year, President Ma Ying-jeou said that he wouldsafeguard the sovereignty of the Republic of China with my life. Thats a strongstatement, and I am pretty sure that President Ma knows what he means by it.But I believe that Taiwan as a whole could broaden and deepen its

understanding of the sovereignty concept. In this regard, it would be particularlyuseful for each of the major political parties to come to their own internalconsensus and then work on a cross-party consensus.

So Challenge Number One is Beijings current ultimate goal, unification under1C2S. That option and its an option only creates Challenge Number Two.That challenge is the possibility that as the ROC government negotiates withBeijing today, it may make concessions that undermine its claim of sovereigntywhen it comes to resolving the fundamental cross-Strait dispute. Note that Beijinghas a similar challenge: as it negotiates with Taipei today, it wishes to avoid

making concessions that undermine 1C2S.

This challenge has been around a long timefor both sides. It is one reason thatcross-Strait relations were so difficult from the early 1990s until 2008, to thepoint that the United States occasionally feared that the two sides might slidetoward a conflict that neither intended. This short term-long term problemremains today. Some in Taiwan say that the Ma Administration has damagedTaiwans sovereignty in the way it negotiated various economic agreements likeECFA without specifying exactly how. My own analysis concludes that the Ma

Administration has not negotiated badly and has preserved Taiwans position onthis key issue. But it will become important if and when the two sides begin

discussions on political and security talks, because sovereignty is an inherentlypolitical issue. Which is one reason why those talks are so difficult to start, andmay not start anytime soon.

Challenge Number Three is different. It concerns not the content of cross-Straitnegotiations but how Beijing seeks to promote its goals concerning Taiwan. Herewe need to think abouthow China is pursuing its objectives regarding Taiwan,and I find it useful to distinguish analytically between two different ways orparadigms: the paradigm of mutual persuasion and the paradigm of powerasymmetry, which is different.

Essentially, the paradigm of mutual persuasion is a shared approach ofnegotiation, persuasion, incrementalism, and mutual adjustment. I would arguethat this is the approach that the two sides have followed since Ma Ying-jeoutook office. It is part of what Beijing understands by its concept of peacefuldevelopment. It is in Taiwans interest that mutual persuasion continue (also, Iwould argue, it is in Chinas and Americas interest).


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The paradigm of power asymmetry is different. Here, China would exploit thegrowing power gap with Taiwaneconomic, diplomatic, military, and so onbypressuring Taiwan to accept a resolution of the fundamental dispute more or lesson its terms, and even though many in Taiwan would be unhappy aboutsubmitting in this way. But listen to how one influential PRC scholar of cross-

Strait relations has put the matter: The severe asymmetrical balance of powerbetween mainland China and Taiwan is a fact that no one can change. Moreover,this problem . . . will continue to increase, a situation that Taiwan needs to handlepragmatically and calmly. We can speculate on what the scholar means bypragmatically and calmly.

Why would Beijing decide on a shift in paradigm? First of all, it might do so if itdecided, based on its perceptions or misperceptions, that a future Taiwangovernment was moving towards de jure independence, and if it could not getWashington to restrain Taipei.

But let us assume, purely for purposes of discussion, that the KMT remains inpower, why then might Beijing decide to shift to a strategy of pressure andintimidation? This would happen, I speculate, if it became impatient and decidedthat Taiwan would never move from the status quo to unification. We have seenhints of that impatience in Chinese suspicions that President Mas true objectivewas peaceful separation with a two Chinas or one China, one Taiwancharacter. And recall that one of the circumstances specified in the 2005 anti-secession law is that possibilities for a peaceful reunification should becompletely exhausted.

Now I actually dont think that China will lose patience in the foreseeable future for the rest of President Mas second term, perhaps. I believe that the PRCofficials responsible for the conduct of cross-Strait relations are realistic about theviews of the Taiwan public and the limits that places on the Taipei government.They seem to believe that time is on Beijings side. On the other hand, I dontknow what new thinking Xi Jinping may have concerning Taiwan policy, andrecent statements by PRC officials urge movement on political issues. So itsimpossible to know whether Beijings patience will last indefinitely. No-one shouldassume that it will.

Note that when I talk about a Chinese strategy of pressure and intimidation, Idont mean the use of force or even the explicit threat of force. In a situation ofpower asymmetry, the stronger power need not act overtly to compel the weakerpower. In the Taiwan case, Beijing might conclude the very fact that Taiwan isquite dependent on the Mainland economically and the mere existenceof itsincreasingly robust military capabilities will be sufficient to secure Taipeissubmission more or less on its terms.


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Obviously, a pressure strategy would create a great challenge for Taiwan. Itwould. I think, create intense pressure on Taiwans leaders and turmoil amongthe public. The political system would be under tremendous strain.

So what should Taiwan do about this situation? This is my final challenge, the

challenge of self-strengthening. It is really a set of challenges. And Taiwan isntthe only country that needs to strengthen itself from within. In my view, franklyspeaking, there is a lot that the United States must do to strengthen itself fromwithin in order to rebuild the pillars of national power that have permitted it to playa dominant role in world affairs since World War II.

I have already referred to the first of these self-strengthening challenges. It is tomaintain and enhance Taiwans global economic competitiveness in spite of thedemographic shift. This requires the continued building of a knowledge-based,innovation-driven economy, and all that this implies for education, financialmarkets, and the level of government regulation. It requires that the Mainlandside properly protects the intellectual property owned by Taiwan companies.

But economic self-strengthening also requires liberalizing its economic tieswith all its major trading partners, not just China. To liberalize with China aloneruns the risk of being too dependent on the Mainland. Liberalizing with all majortrading partners will require eliminating some protectionist barriers, but thestructural adjustment that this stimulates will work to Taiwans benefit. In fact, thisis the policy of the Ma Administration.

I have also suggested that n terms of fundamental policy, it is a good idea for

Taiwan to foster a clearer sense of what it means to say that Taiwan or the ROCis a sovereign entity, not just for its role in the international system but alsoregarding cross-Strait relations and the domestic political system. This willensure that if and when political and security talks come, Taiwans negotiatorswill no what aspects of sovereignty are relatively minor and can be conceded andwhich are so important that they must be defended at all costs. One part of thisself-strengthening will be public education so voters understand along withofficials.

Diplomatically, Taiwan should ensure that its relationships with its most importantdiplomatic partners are strong and positive. This includes, of course, the UnitedStates and Japan, but also the principal countries of Western Europe. In thisregard, I am pleased to report that relations with the United States haveimproved in recent years.

Militarily, Taiwan should skillfully enhance the deterrent capabilities of Taiwansarmed forces. By this I mean raising the costs and uncertainties for Beijing if itwere ever to mount an intimidation campaign, which at least implies a willingness


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to use force. Here, I associate myself with the Obama Administration which, inthe words of one official, believes that Lasting security cannot be achievedsimply by purchasing limited numbers of advanced weapons systems. Taiwanmust also devote greater attention to asymmetric concepts and technologies tomaximize Taiwans enduring strengths and advantages.

Finally, there is the question of the political system. Frankly, I believe thatTaiwans political system tends to focus on relatively superficial issues such asthe security of President Mas daughter rather than on the fundamentalchallenges that face the island. Politicians are aided in this tendency by thismass media.

Now, I understand that this is a structural problem, created not by individualpoliticians or media companies but by the nature of competition within both thepolitical and media world. I also believe that Taiwan is better off having ademocratic system than something else, in part because it creates a challengefor Beijingthat if it wishes to achieve its political goals concerning Taiwan, it willhave to satisfy a broad spectrum of public opinion. And I realize that reforming apolitical system is very hard to do. Just look at the similar problems that exist inthe United States. But it is Taiwans political system that will be the mechanismby which self-strengthening occurs in the other areas I have mentioned. So if thatmechanism is not strong and effective itself, everything else will be difficult. Thefundamental question is, are the people of Taiwan being well served by theirpolitical system.

None of these forms of self-strengthening will be easy, particularly in a divided

polity. But they are areas where a broader and deeper Taiwan consensus willbuoy Taiwans psychological confidence and reduce the chances of PRCpressure in the first place. In this regard, young people have a special role toplay, for the simple reason that over the long term, you have the most at stake.On the other hand, for Taiwan to remain divided and forego the opportunity forself-strengthening only increases the islands vulnerability. And it will be youngpeople who have the most to lose.

My final question, Question 8, is what are the implications of all of this for theUnited States?You may have seen the policy brief of mine that Brookings issued

recently, so I will just summarize its conclusions.

First of all, the fact that stabilization has only gone part way and could stallshould allay any American fears that, in effect, Taiwan will abandon America forthe sake of its relationship with China.

Second, it would be unwise for the United States to abandon Taiwan for thesake of its relationship with China. I and other scholars have offered several


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compelling reasons why this is so (as long, of course, as Taiwan desiresAmerican support):

First of all, Although Taiwan has at times been the most important source ofU.S.-China differences, it is not the only one. Frictions over maritime East Asia

and North Korea are examples. So conceding to Beijing on our securityrelationship with Taiwan would not necessarily foster a more friendly China.

Second, U.S. allies and partnersJapan, the Republic Korea, and others notnecessarily in the Asian regionhave much at stake in Washingtons futureapproach to Taiwan. Simply put, a United States that would abandon Taiwancould abandon them too.

Third, whatever China says, U.S. arms are actually not the reason that Beijinghas been unable to bring Taiwan into the embrace of the Motherland. More tothe point, China has not been able to persuade Taiwans government and publicto accept its one country, two systems formula. If China were to make an offer

that was actually to Taiwans liking, Taipei would not refuse that offer because ofU.S. arms sales.

Fourth, there have been points in the past when the United States has acted inways that placed Taiwan in a vulnerable position. Most or all of those occurredbefore the people of Taiwan had any say in their future, as they clearly do now. Ihope that we dont repeat this unfortunate history.

Finally, how a status quo United States and a reviving China cope with eachother will be played out over the next few decades in a series of test cases. NorthKorea, maritime East Asia, and Iran are a few of them. Taiwan is another. Should

the United States concede to China on Taiwan, the lessons that Beijing wouldlearn about the intentions of the United States would likely discourage itsmoderation and accommodation on other issues like North Korea or maritimeEast Asia; in that respect, Americas friends and allies are right. Continuity ofU.S. policy toward Taiwan will not guarantee that Chinas actions in other areaswill support the status quo, but it increases the likelihood that it will. Conversely,a China that addresses its Taiwan problem with creativity and due regard to theviews on the island says something positive about what kind of great power thePRC will be. A more aggressive approach, one that relies on pressure andintimidation, signals reason for concern about its broader intentions. In thisregard, Taiwan is the canary in the East Asian coal mine.

Facing Mainland China

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