Taiwan's Mainland Policy

Taiwan's Mainland Policy: Normalization, Yes; Reunification, LaterAuthor(s): Jean-Pierre CabestanSource: The China Quarterly, No. 148, Special Issue: Contemporary Taiwan (Dec., 1996), pp.1260-1283Published by: Cambridge University Press on behalf of the School of Oriental and African StudiesStable URL: http://www.jstor.org/stable/655524 .

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Taiwan's Mainland Policy: Normalization, Yes; Reunification, Later

Jean-Pierre Cabestan

Since 1949, the spectre of the People's Republic of China (PRC) has constantly dominated Taiwan's political stage. The PRC was considered until the mid-1960s by Chiang Kai-shek, then President of the Republic of China on Taiwan (ROCOT), as a part of the country to be reconquered from the Communist bandits (gongfei). And since the United States' de-recognition in 1979 the reunification with mainland China has remained one of the key official objectives of the Nationalist regime.

Yet Taiwan's mainland policy has gradually changed since Washing- ton established diplomatic relations with Beijing and the PRC adopted an open-door policy and economic reforms. Taipei's international isolation forced the Kuomintang (KMT) to instil some flexibility in its "one China policy." For example, in the last years of Chiang Ching-kuo's rule (1982-88), Taiwan started to accept reluctantly the name "Chinese Taipei" in several international organizations where the PRC represented China.' In other words, in Taipei's view, mainland China turned into a grey area controlled by some Chinese Communist authorities (zhonggong dangju) which, though not recognized as a national government, were considered as administering a separate entity.

But it was the democratization of the ROCOT which constituted the biggest changes in Taiwan's mainland policy. Of course, one can argue that sooner or later, because of the PRC's growing economic and political influence on the world scene, the ROCOT would have been compelled to adopt a mainland China policy similar to the one it claims today; nevertheless, initiated by Chiang Kai-shek's son in 1986, the democratization of Taiwan transformed its attitude towards the mainland and made it more complicated.

In the first stage of change, in late 1987, the Taipei government authorized ROCOT citizens to travel to mainland China through a third country or area (mostly Hong Kong). This drastically changed mainland China's image on Taiwan: every year, many Taiwanese cross the Strait (1.53 million visits in 1996). At the same time, the KMT liberalized indirect trade and economic relations with the PRC: in 1996, two-way trade reached US$22 billion and Taiwanese investments on the mainland were estimated at over US$30 billion. On the diplomatic front, soon after Lee Teng-hui succeeded Chiang Ching-kuo, the Taipei government quietly moved to a de facto "dual recognition" policy.2 However, until 1991, for the ROCOT authorities, the Chinese civil war remained unfinished:

1. Such as the International Olympic Committee since 1982 and, under the name "Taipei, China" the Asian Development Bank since 1988.

2. In 1989, for the first time, the ROCOT established diplomatic relations with Grenada without requiring this country to sever its official links with the PRC. Conversely, in 1990, when Saudi Arabia recognized Beijing, Taipei did not close its embassy in Riyadh before China forced the Saudi government to do so.

@ The China Quarterly, 1996



Taiwan's Mainland Policy 1261

Taipei continued to adhere to the "one China principle" and claimed to be the only legitimate representative of China.

Lee Teng-hui's decision in May 1991 to put an end to the "Period of Mobilization for the Suppression of Communist Rebellion" dramatically changed not only Taiwan's mainland China policy but also the ROCOT's domestic polity and international posture. Though the Taipei government still pays lip service to the "one China principle" and does not officially recognize the PRC, it acknowledges - and claims - the co-existence of two Chinese political entities which after a planned transitional period and under certain conditions are due to unify. The German unification in 1990 and the end of the Cold War have certainly encouraged President Lee to make these moves. But the Tiananmen crackdown in 1989 and lingering ideological and strategic confrontation in East Asia have forced him to remain more than cautious.

The aim of this article is on the one hand to show that the main short and mid-term goal of Taiwan's mainland policy is not the reunification of China but a gradual normalization of its links with the PRC. On the other hand, it assesses the domestic and outside constraints exerted on this policy.

The Main Goals of Taiwan's Mainland Policy: From Reunification to Normalization

Taiwan's democratization has greatly widened the gap between the two Chinas and, in spite of the PRC's booming economic development, has clearly made impossible not only a German-style unification of the Chinese nation but also the successful implementation of Deng Xiao- ping's "one country two systems" formula: the overwhelming majority of the Taiwanese are opposed to any unification with the PRC and, more dependent upon its public opinion, the Taipei government has no choice but to express and defend this view. However, Taiwan's democratization has also favoured fast-growing human and commercial links across the Strait. This new situation has forced the ROCOT government on the one hand to frame a comprehensive and updated discourse on its relations with mainland China and unification and, on the other, to set up channels of communication and negotiation with the PRC.

Taiwan's Changing Discourse on the Relations Across the Taiwan Strait

Taiwan's mainland China policy is presented in three major statements: the 1991 Guidelines for National Unification, the 1994 White Paper and Lee Teng-hui's six-point speech in 1995. Although one can perceive some nuance and a gradual clarification of Taiwan's intention from the first to the third text, the common denominator of these statements can be summed up in the formula in the title of this article: normalization, yes; reunification, later.

The Guidelines for National Reunification (March 1991). The PRC's constant pressure and propaganda over the "one country two systems"



1262 The China Quarterly

formula has forced the ROCOT to reframe its mainland China and unification policies. In late 1990, Lee Teng-hui convened a National Unification Council, officially representing the political society though appointed by himself, which adopted in February 1991 a three-page text entitled "Guidelines for National Unification" (tongyi gangling). These Guidelines were approved by the Executive Yuan in March 1991.3

Drafted by the KMT, this short statement reasserts the ROCOT's commitment to the "one China principle," unification and to "establish a democratic, free and equitably prosperous China." And for the first time it defined a unification process divided into three distinctive stages. However, the conditions mainland China have to meet to move from one stage to another are so difficult that the Guidelines give the impression that Taiwan militates for a long-term peaceful co-existence of two Chinese governments and relegates the eventual unification of the country to the distant future.

For instance, to move from the first stage, which Taiwan considers to be current, and which is defined as "a phase of exchanges and reciprocity," up to the second one - "a phase of mutual trust and co-operation" - not only should both sides of the Strait end the state of hostility and respect each other in the international community, but the existence of Taiwan as a political entity (zhengzhi shiti) should not be denied and in the mainland area "the expression of public opinion should gradually be allowed, and both democracy and the rule of law should be imple- mented." And it should be recalled that it is only in the second stage - medium term - that direct postal, transport and commercial links should be allowed and that "mutual visits by high ranking officials of both sides should be promoted." Moreover, to move from the second to the third stage - "a phase of consultation and unification" - mainland China and Taiwan "should have established official communication channels on equal footing" and "assist each other in taking part in international organizations and activities."

Finally - and this point is stated in a clearer way in the White Paper - in the Guidelines China is already defined as a geographical rather than political reality divided into two areas (diqu): "mainland China and Taiwan are parts of the Chinese territory" (Zhongguo lingtu). And, the unification process should "first respect the rights and interests of the people in the Taiwan area" and be achieved under the principles of "parity and reciprocity."

The White Paper: Relations Across the Taiwan Strait (July 1994). However, until 1994 Taiwan's new mainland China policy remained rather vague and ambiguous. Although in August 1992 the National Unification Council published an authorized explanation of the "one

3. Taipei: The Executive Yuan, Mainland Affairs Council, 1991.




China" concept,4 no comprehensive statement on Taiwan's relations with mainland China existed. Meanwhile, the ROCOT government, in April 1993, decided to launch a bid to return to the United Nations. It was the publication of Beijing's White Paper on the Taiwan issue which triggered the drafting by the Mainland Affairs Council (MAC) in July 1994 of a long text entitled "Relations Across the Taiwan Strait."'

This White Paper is a useful clarification of the mainland policy presented in the Guidelines. However, the former tends to go further than the latter: it emphazises the interests of Taiwan and the necessity, before any unification can take place, of a gradual normalization of relations between the "Chinese entities," after a formula close to the German model agreed upon by Bonn and East Berlin in 1970.

For instance, "one China" is for the first time clearly dissociated from the Republic of China. Now, "one China" just "refers to China as a historical, geographical, cultural and racial entity."6 At the same time, Taipei's stand remains fairly flexible and open to some sort of compromise:

The ROC government is firm in its advocacy of "one China" and it is opposed to "two Chinas" or "one China, one Taiwan." But at the same time, given that the division between the two sides of the Taiwan Strait is a historical and political fact, the ROC government also holds that the two sides should be fully aware that each has jurisdiction (tongzhiquan) over its respective territory and that they should co-exist as two legal entities in the international arena. As for their relationship with each other, it is that of two separate areas (fenlifenzhi zhi liangqu) of one China and is therefore "domestic" (yiguo neibu) or Chinese (Zhongguo neibu) in nature.7

In other words, Taipei proposes that Beijing put aside the unsolvable sovereignty (zhuquan) question but that each side should respect the other's jurisdiction (guanxiaquan). Moreover - this point is often misun- derstood - the ROCOT government accepts the fact that relations between the two sides of the Taiwan Strait are domestic and not international "in nature." Here is an obvious space for compromise if other conditions are met.

Nevertheless, Taipei cannot approve the "one country two systems" formula:

In essence, the relationship between the two systems is one of principal and subordinate: one system represents the centre and the other the local authority. Under this arrangement, Taiwan will be forced to give up its freedom and democracy, and to accept entirely the system prescribed by the CCP (Chinese Communist Party) regime.8

4. "Guanyu 'yige Zhongguo' de hanyi" ("Interpretation of 'one China"'), in Tai'an liang'an guanxi shuomingshu (Explanation of the Relations Across the Taiwan Strait) (Taipei: Xingzhengyuan dalu weiyuanhui, July 1994), pp. 47-48.

5. Ibid. pp. 13-40; English translation, Relations Across the Taiwan Strait (Taipei: The Executive Yuan, Mainland Affairs Council, July 1994).

6. Ibid. (English version), p. 12. 7. Ibid. p. 14. 8. Ibid. p. 13.




And does not show any hurry to unify:

Both sides of the Taiwan Strait should adopt moderate unification policies; it is inappropriate to be too impatient as more haste will only mean less speed.... Once the ideological, political, economic and social gap between the two sides is bridged as result of our joint effort, the unification will come naturally....For the time being, the two sides of the Taiwan Strait should intensify their exchanges and resolve conflicts by means of negotiations on functional matters. Only when a certain amount of experience has been accumulated and certain successes achieved through such negotiations will it be possible for the two sides to start political contacts and talks.9

This statement underlines the importance that Taipei assigns to the non-governmental talks with Beijing initiated in 1991. But in this negotiation, the ROCOT government has become a clear advocate of the interests of the people on Taiwan:

A consensus has gradually been formed among the people of Taiwan that we are "all in the same boat" and that Taiwan is a Gemeinschaft, or community (shengming gongtongti). This belief in a Taiwan community does not by any means imply that Taiwan's 21 million people are indifferent to Chinese history or that they have abandoned the ideal of a unified China, it simply means that their future welfare and security are closely bound up with the fate of Taiwan. Another manifestation of this feeling of community is the way in which public opinion plays a guiding role in government policy-making. In the course of formulating its mainland policy, the ROC government must periodically consult a wide range of public opinion. As democracy matures in Taiwan, public opinion will necessarily become the government's most important reference for formulating policy.'0

Does this utilization of political democracy and the identity and interests of Taiwanese society hide a de facto independence policy? In a sense, yes. Though the concept of nation is not used, the KMT acknowledges today that all Taiwan residents share a common destiny. This stand has contributed to bring closer the mainstream of the Nationalist Party and the Democratic Progressive Party (DPP) while sharpening the conflicts between Lee Teng-hui's followers on the one hand and the non-mainstream faction of the KMT and the New Party on the other.

In the main, the White Paper concludes that "cross-Strait interaction is no longer a game which one side can win outright, it is a 'win-win' contest in which both sides must be prepared to compromise and both can use to further their own interest."" This is a quiet statement that Taipei renounces the "three nos" policy (no contacts, no negotiations, no compromise) advocated in the 1980s.

Lee's six-point answer to Jiang Zemin's eight proposals (April 1995). Jiang Zemin's 1995 Chinese New Year overture was the occasion for Taipei to air more specific views on a number of issues. In a six-point address to the National Unification Council made in April 1995, Lee Teng-hui not only replied to some of the CCP General Secretary's eight

9. Ibid. pp. 14-15. 10. Ibid. p. 25. 11. Ibid. p. 16.




proposals but also presented a few new (and unexpected) ideas which follow one single goal of "normalizing bilateral relations" between both Chinas.12

Lee welcomed Jiang Zemin's proposal to boost cultural and economic exchanges between the two sides of the Taiwan Strait. Probably influenced by his own academic and professional background, he offered to assist mainland China agricultural development, an initiative highly emphasized by the Taipei authorities. In order to transform Taiwan into an Asia-Pacific Regional Operation Centre (APROC), an idea reactivated in December 1994 by Vincent Siew (Hsiao Wan-chang), the then MAC chairman, Lee for the first time contemplated the possibility of establish- ing direct maritime and air links with mainland China. Though preferring to meet the Chinese Communist leaders "very naturally" in an international setting, he did not directly exclude the possibility of seeing them in Beijing or in Taipei "in an appropriate capacity," as Jiang's speech put it.

However, Lee's reply remains largely adamant. He agrees to negotiate an end of the state of hostility with Beijing but refuses to start such a negotiation formally before mainland authorities renounce the use of force against Taiwan (though he indicates that in the meantime his government "will carefully study and make plans concerning issues connected with ending the hostility"). Moreover, the ROCOT is clearly not willing to increase its level of economic links with mainland China: it is ready to "assist the mainland in developing its economy and upgrading the living standards of its people on the basis of its existing investments and trade relations" with this country. This will be made clearer by Lee in August 1996: today Taiwanese businessmen are openly discouraged from investing in the PRC.

Finally, in cauda venenum, Lee's sixth point is a bold proposition to share with the PRC the responsibility of Hong Kong and Macau's future after their return to China:

Continued prosperity and life under freedom and democracy are the common aspiration of the people of Hong Kong and Macau; they are also a major concern for Chinese around the world as well as all countries. What is more important, they are a responsibility both Taiwan and the mainland cannot shirk.

Lee Teng-hui's visit to the United States in June 1995 and the subsequent "missile crisis" which occurred between the PRC and the ROCOT that summer and again in March 1996 did not modify Taipei's new mainland policy. Since September 1995, when the CCP reaffirmed its January overture, Taiwan has sent some conciliatory signals. For instance, Lee invited Beijing leaders "to come [to Taiwan] to take a look for themselves.""3 And in late February 1996 when tension in the Strait was growing again, he appointed for the first time a mainlander known to

12. Zhongyang ribao (Central Daily News), 9 April 1995, p. 1; English translation, The China Post, 11 April 1995, p. 5.

13. Zhongguo shibao (China Times), 4 September 1995, p. 1; China News, 25 September 1995, p. 1.




defend a moderate attitude towards the PRC, Chang Ching-yu, as chairman of the MAC and, partly in order to diffuse his rivals' criticism, promised to sign a peace treaty with Beijing.14 However, Beijing's growing military pressure has apparently not changed Taiwan's mainland policy. On the contrary, March 1996's events - Beijing's bullying and provocative missile tests in the vicinity of the island, the United States' subsequent move of two carrier groups in the area and the landslide victory of Lee Teng-hui in the presidential election (54 per cent of the vote) - have encouraged Taiwan to stick to a firm mainland policy.

Taipei's main goal therefore remains the normalization of its relations with Beijing. As a first step, Taipei hopes that the non-governmental talks with the PRC can be resumed in the near future so that more agreements can be signed (such as on the protection of Taiwanese investments, another proposal made by Jiang in January). Then, as Lee Teng-hui put it himself, Taiwan "will try to forge a national consensus and make a priority of ending cross-Strait confrontation with a peace accord."15 To build this consensus, a National Development Conference was convened in December 1996.16 At the same time, as a show of goodwill (and pragmatism - the transformation of Taiwan into an APROC), Taipei has accepted a gradual and careful establishment of direct maritime links across the Taiwan Strait. But in its view, and in the view of KMT's mainstream faction, these objectives should not jeopardize Taiwan's sovereignty, de facto independence or foreign policy objectives.17 Thus, in spite of the renewed lip service paid to the idea, China's unification is today far from being on the agenda of the Taiwanese leaders. And the 1996 missile crisis could only feed the sentiments on which this strategy is based.

The Implementation of Taipei's New Mainland China Policy: Towards Government to Government Negotiations?

In February 1991, just a month after the establishment of the Mainland Affairs Council, the government agency in charge of planning and conducting mainland policy, Taipei set up the Straits Exchange Foun- dation (SEF). This non-governmental organization was founded to "handle practical issues arising from cross-Strait relations."'" After per- sisting for a few months with its request for CCP-KMT negotiations, Beijing reluctantly decided in November 1991 to set up a sister organization, the Association for Relations Across the Taiwan Strait (ARATS). Since 1992 when they had their first meeting, the SEF and the ARATS have constituted the main channel of communication between the two Chinas. However, because of Taipei's intention since early 1995 to

14. The China Post, 24 February 1996, p. 1. 15. Interview to The Asian Wall Street Journal, 27 March 1996, p. 8. 16. Free China Review, Vol. 47, No. 3 (March 1997), insert, pp. 2-3. 17. Cf. n. 15. 18. Relations Across the Taiwan Strait, p. 11.




involve more government officials in its negotiations with Beijing and the PRC's decision in June 1995 to suspend sine die the SEF-ARATS meetings, other channels of discussion have recently opened which may favour the future establishment of unofficial government-to-government contacts.

The SEF-ARATS talks. The SEF-ARATS talks are well known and often too much has been expected from them. One big difficulty the SEF has had to face from the very beginning is the unbridgable gap between its own objectives and those of the ARATS. On the one hand, the SEF is formally a non-profit-making private organization whose objective is to "promote contacts and exchanges among Chinese from both sides of the Taiwan Strait."19 However, the SEF must abide by rules laid down by the MAC and is mainly financed by the government (80 per cent). Moreover, its chairman, Koo Chen-fu, the fourth richest man on the island, sits on the KMT Central Standing Committee, and its vice-chairman and general secretary, Chiao Jen-ho since December 1993, must implement the mainland policy defined by the MAC and constantly consult this government agency.

On the other hand, working under the direct leadership of the CCP Central Committee Office for Taiwan Affairs headed first by Wang Zhaoguo and since January 1997 by Chen Junlin, the ARATS was set up to promote the "three direct links" (postal, trade, and maritime and air) between Taiwan and mainland China and more importantly to "carry out the peaceful reunification task on the basis of 'one country, two systems'."20 This difference of objectives explains to a large extent the slow pace of the SEF-ARATS talks and the meagre results so far achieved, and more generally underlines the growing distance between the two Chinas' unification policies.

From 1991 to 1996, the SEF-ARATS talks developed into four successive stages. During the first stage (November 1991 to March 1993), the organizations learned about each other. No agreement was signed then, in particular owing to Beijing's desire to include the "one China" principle in an accord related to the control of smuggling and pirating in the Taiwan Strait. It was only in May 1992 that the two sides "agreed to disagree" on their respective interpretation of the "one China" concept and to leave this question aside. This change opened the way for organization of a summit meeting between the SEF and the ARATS.21

Signing of agreements and optimism characterized the second stage (April 1993 to March 1994). Originally planned for October 1992, the SEF-ARATS summit meeting could not take place before April 1993. The SEF, although invited to Beijing, preferred Singapore for this first historic encounter between unofficial representative of the two Chinas.

19. Haixia jiaoliu jijinhui, bashinian nianbao (Strait Exchange Foundation, 1991 Annual Report) (Taipei: SEF, 1992), p. 16.

20. Zhongshi wanbao (China Times Express), 17 October 1991, p. 1. 21. Chiu Hungdah, Koo-Wang Talks and the Prospect ofBuilding Constructive and Stable

Relations Across the Taiwan Strait (With Documents) (Baltimore: School of Law, University of Maryland, Occasional Papers/Reprints Series in Contemporary Asian Studies, 1993), p. 10.




There, Koo Chen-fu and Wang Daohan, the ARATS chairman and a retired Shanghai mayor, met and signed four documents: the joint agreement of the Koo-Wang talks, and agreements on document au- thentification, compensation for lost registered mail, and the establishment of systematic liaisons and communication channels between the SEF and the ARATS. These documents were signed twice, once in original Chinese characters for Taipei, once in simplified characters for Beijing.

The major achievements of the Koo-Wang talks were to break the ice between the two Chinas, to show the world that Taipei and Beijing were actually negotiating and able to reach and sign accords - to date the only ones ever signed by the SEF and the ARATS22 - and to institutionalize the relations between these two unofficial organizations (vice-chairmen or secretaries general should meet at least every six months while emer- gency contacts can be set up at deputy secretary general level). However, there is a blatant discrepancy between the technicality and a narrow scope of the agreements signed by the ROCOT and PRC representatives in Singapore in April 1993 on the one hand, and the impact this summit had not only on the Taiwanese public opinion but also on numerous policy- makers in the Asia-Pacific area and the West on the other. This gap explains the disappointment many felt when in March 1994 the SEF- ARATS talks encountered difficulties.

The optimism caused by the Singapore summit did not last long. In March 1994, the Qiandao lake incident - in which 24 Taiwan tourists were slaughtered, probably by demobilized soldiers at a Zhejiang beauty spot - froze for four months the SEF-ARATS talks, which started again in late July in a much less relaxed atmosphere. When they were sus- pended by Beijing in June 1995, these negotiations had not produced any new agreements.

Soon after the Singapore meeting, conflicting views appeared in Tai- wan on the mainland China policy. The then MAC chairman Huang Kun-huei steadied the SEF's ambition to speed up negotiations with Beijing. Forced to adopt a firmer attitude, Cheyne Chiu (Chiu Ching-yi), the then SEF secretary general, preferred to resign and was replaced by Chiao Jen-ho, a former MAC vice-chairman. However, in February 1994 in Beijing, Chiao and Tang Shubei, the ARATS secretary general, had reached a "consensus" on the three main issues under discussion: the resolution of fishing disputes, the repatriation of illegal immigrants and the return of hijackers. Thus, the Qiandao lake incident substantially slowed down the negotiation process.

Though in August 1994, at the end of Tang Shubei's first visit to

22. Two other agreements had been signed by the PRC and Taiwan before: the first between the Chinese Taipei Olympic Committee and the Chinese Olympic Committee in April 1989 in Hong Kong on the Chinese name of the Taiwanese teams (Zhonghua Taibei and not Zhongguo) - this allowed Taipei's athletes to compete in the PRC; and the second between the two Chinas' Red Cross Associations in September 1990 in Kinmen in order better to organize the repatriation of PRC's illegal immigrants to Taiwan. Both agreements are still in force; cf. Ralph Clough, Reaching Across the Taiwan Strait, People-to-People Diplomacy (Boulder: Westview Press, 1993), pp. 63-65 and 87-88.




Taipei, the above-mentioned issues were solved "in principle," six months later, in January 1995, none of the three accords prepared could be signed. The main reason was disagreement over the delicate phrasing of the respective zones of jurisdiction for handling fishing disputes.23 Yet in early May 1995, Vincent Siew was optimistic enough to launch unilaterally a plan to transform Taiwan, and more precisely Kaohsiung harbour, into a trans-shipment centre for cargo ships sailing to and from mainland China. Beijing's refusal, for both political reasons (to force Taipei to open the three direct links) and economic reasons (to exclude non-Chinese shipping companies from this trade), apparently surprised the ROCOT government which had no choice but to put this project on hold.

However, later in May, when Chiao Jen-ho and Tang Shubei met again, they were sufficiently confident to announce a second Koo-Wang summit due to take place in Beijing around 20 July. On that occasion, the three documents under discussion for nearly two years would have been signed and talks on an agreement on the protection of Taiwanese investments in mainland China would probably have been initiated. In the atmosphere of Lee Teng-hui's triumphal trip to the United States, optimism seemed to regain some ground in Taiwan.

But, though late in coming, Beijing's reaction put a quick end to these hopeful moments. On 16 June, the PRC decided to postpone unilaterally and indefinitely the SEF-ARATS talks because of the "poor atmosphere" between the two sides.24 Since then a fourth phase has started in which confrontation seems to predominate over negotiations. Indeed, twice in the summer of 1995 (21-26 July and 15-25 August), the People's Liberation Army (PLA) tested guided missiles some 140 km north of Taiwan and approximately 55 km from Pengchiayu (Pengjiayu), the nearest island under the ROCOT's control. Moreover, Beijing's propaganda apparatus launched an unprecedented attack on Lee Teng-hui and asked Taiwanese society to sweep their president "into the historical garbage dump."25

In the following months up to March 1996, Beijing increased substantially its military pressure on Taiwan both to influence the result of the legislative and presidential elections and to force the Taipei government to adopt a more conciliatory mainland policy. Several military manoeuvres took place in October and in February-March in Fujian, a province facing Taiwan, the Nanjing military region was ostensibly turned into a "war zone" (zhanqu), and through well-chosen Hong Kong newspapers the CCP published a number of alarming invasion or attack scenarios. In

23. Tang Shubei refused to annex to the agreement on fishing disputes the internal regulation concerning the 24-mile zone from China's shore in which PRC courts, police and customs are allowed to settle disputes. Conversely, this accord would mean for Taipei a recognition by Beijing of a similar zone off the Taiwan shores. So, this point would have to be included in the agreement per se in one way or another. Interview with Chiao Jen-ho, 10 February 1995.

24. Xinhua, 16 June 1995. 25. Xinhua, 24 August 1995, Lianhe bao (United Daily News), 25 August 1995, p. 2.




March 1996 the PLA again tested unarmed missiles some 40 km off Keelung and Kaohsiung harbour, which handles 70 per cent of Taiwan's maritime traffic.

However, contacts between the SEF and the ARATS did not stop completely. For instance, in July 1995 the latter sent a message of protest to the former about fishing incidents which had occurred in the South China Sea. Later in the month, after having been hurt in a car accident, Chiao Jen-ho received from Tang Shubei a letter of regards and wishes for a prompt recovery. And the SEF sent a message of sympathy for the victims of a major flood which devastated the Yangzi basin.26 Further- more, telephone communication between the SEF and the ARATS were never stopped.

It is true that high-level meetings between the SEF and the ARATS have not so far been restored. In September Lee Ching-ping, a SEF deputy secretary general, was barred from travelling to Beijing to attend an art exhibition. But lower-level visits took place, in particular before the end of 1995. For instance, in October Ou-yang Shen-en, director of SEF cultural affairs, accompanied Cheng Liang-jen, MAC cultural and educational affairs director, to China in a tour of national museums organized by China's National Bureau of Cultural and Historical Muse- ums. During this trip, Cheng met Sun Xiaoyu, deputy director of the PRC Taiwan Affairs Office.27 And in December, Wu Shu, another SEF director, was invited by the ARATS to travel to Beijing for an art event.28

One may expect that SEF-ARATS high-level negotiations will resume in the near future, possibly after the CCP's 15th Congress in October 1997. The relative softening of Beijing's attitude since the U.S. Navy intervention, together with the triumphal re-election of Lee Teng-hui on the one hand and Taipei's apparent readiness to include political questions such as the "one China" issue in the talks on the other, may be forerunners of a fifth phase of unofficial but probably less technical negotiations between the two Chinas.29

However, Taipei's decision to allow government officials to take part in meetings between these two organizations, which was made as early as February 1995, will probably contribute to diminish the importance of the SEF, officially relegated in late August from the status of "principal negotiator" to a "supportive role."30 Though talks between high civil servants of the two sides will still be organized by the SEF and the ARATS, actually Taipei has quietly questioned its long ban of direct contact with PRC's high-ranking government officials. This trend will probably be confirmed when and if political and security negotiations open.

26. China News, 19 July 1995, p. 1; The China Post, 30 July 1995, p. 12. Funds given by the Taiwanese for flood victims in the PRC were nevertheless much lower than in 1991 (5 million NT$ against 900 million NT$). China News, 11 July 1995, p. 2 and 19 July 1995, p. 1.

27. Lianhe bao, 15 September 1995, p. 1; Zhongguo shibao, 24 October 1995, p. 2. 28. China News, 9 December 1995, p. 1. 29. Zhongyang ribao, 5 March 1996, p. 2. 30. Zhongguo shibao, 29 August 1995, p. 3.




Other channels of communication. Since 1987, both Taipei and Beijing have used various channels to communicate. But since early 1995, these channels have diversified substantially.

Vincent Siew seems to have militated for this policy. One month after allowing the MAC and other ministries' senior civil servants to take part in negotiations, he lifted the ban on visits to Taiwan of chiefs of PRC economic organizations, excluding provisionally minister-level cadres.31 In August, he eased the coming to Taiwan of PRC professionals and though the regulations have not yet been changed, mainland officials holding Communist Party, political or military positions have already been authorized, on a case-to-case basis, to enter Taiwan.32 A month later, PRC financial experts were allowed to visit the island. In late November, the MAC announced specifically that Beijing government vice-ministers would be authorized to set foot on Taiwan.33 And in May 1996, in his inaugural address, Lee Teng-hui announced a further relaxation of restric- tions on contacts between Taipei and Beijing permitting governors, mayors and county magistrates to visit China as private individuals.34

Moreover, in the same period, though consistantly denied by Taipei, secret negotiations have apparently become more frequent. For instance, it was reported in February 1995 that Liu Tai-ying, the powerful head of the KMT economic empire, had met PRC officials several times as an emissary for Lee Teng-hui.35 In April, New Party legislator Yok Mu-ming accused Su Chih-cheng, director of Lee's Secretariat, and Mrs Cheng Shu-min, chairman of the Cultural Planning and Development Council, of having had secret talks with mainland China leaders.36 Besides, it is probable that Taipei and Beijing secretly communicated at the time of the "missile crisis."37 However, Taiwan's democratization does not allow non-transparent channels of communication to play any critical role in cross-Strait relations.

After the "missile crisis," rather than resume formal SEF-ARATS talks, the PRC has encouraged the exchange of visits of business delega- tions. More generally, Taipei and Beijing are gradually moving towards de facto government-to-government contacts and negotiations. It is true

31. Opening Speech of the "Internatonal Conference on Cross-Strait Relations and Policy Implications for the Asia-Pacific Region," organized by the Institute for National Policy Research, Taipei, 27 March 1995.

32. China News, 19 August 1995, p. 16; for instance, in September 1995, a discreet delegation of Research Academy of Ballistic Missiles, headed by one of its vice-presidents, Long Lehao, visited Taiwan. Though under the formal supervision of the Chinese Aerospace Administration, this academy is controlled by the PLA. Zhongyang ribao, 4 September 1995, p. 1.

33. Asian Wall Street Journal, 21 September 1995, p. 9; Lianhe bao, 28 November 1995, p. 1.

34. Lianhe wanbao (United Evening News), 21 April 1996, p. 1. 35. Zhongguo shibao, 20 February 1995, p. 1. 36. According to some reports, Mr Su, a university mate of Lee's son, Lee Hsien-wen, and

Ms Cheng met Zeng Qinghong, the head of the CCP General Office, in Shenzhen in March; Xinxinwen (The Journalist), No. 424 (23-29 April 1995), pp. 15-19.

37. Lianhe bao, 22 August 1995, p. 1; according to some officially denied reports, Lee Yuan-tse, the president of the Academia Sinica, met Liu Huaqiu, PRC Vice-Minister of Foreign Affairs, in the United States on 10 March 1996. Ziyou shibao (Liberty Times), 15 March 1996, p. 2; The China Post, 27 March 1996, pp. 1, 14.




that meetings will remain "unofficial" and most of them will continue to be organized, as mentioned above, by the SEF and the ARATS. However, both the ROCOT and the PRC seem to find an interest in moving in that direction, the former because it hopes that this will eventually ease a normalization of its relations with the Beijing government, and the latter because it estimates that this will sooner or later force Taipei to embark on political negotiations. Which country takes the most advantage of this move will depend to a large extent upon the domestic and outside constraints of Taiwan's mainland China policy.

The Domestic and Outside Constraints of Taiwan's Mainland China Policy

A number of factors constrain Taiwan's policy towards mainland China. These factors have changed quite substantially in the last couple of years. Four major inputs have played a key role in that respect: Taiwan's economic dependence upon China, its democratization, the PRC's growing power and the increasing concern of the international community.

Taiwan's Economic Dependence Upon China

Over the past few years, Taiwan's economy has become more and more dependent upon China. Today, the PRC is the ROCOT's third

largest economic partner (after the United States and Japan), second

buyer (US$19 billion in 1996) and probably first investment destination ($2.8 billion in 1995 against $1.8 billion in Thailand and $1.2 billion in Vietnam - and $248 million in the United States).38 Thirty thousand Taiwanese companies are represented and over 100,000 ROCOT nationals live on a permanent basis in mainland China. All this offers the

Beijing authorities a strong lever on the Taiwanese business community which exerts more and more pressure on their government to soften its stance towards the PRC. The expected gradual establishment of the famous three direct links across the Strait underlines the growing influence of business interests on the drafting of Taiwan's mainland

policy.39 These interests will also play a key role in the policy Taipei is

going to develop towards Hong Kong after 1997. Receiving in 1996 23.1

per cent ($26.8 billion) of Taiwan's exports, the PRC's future Special Administrative Zone is about to become, in spite of the 1995-96 "missile crisis," the first destination of Taiwan's sales after the United States (23.2 per cent of Taiwan's exports and $26.9 billion in 1996). In order to keep its intense air and sea links with Hong Kong and, more generally, to become an APROC (though agreements were reached on these matters in

38. China News, 3 February 1996, p. 10 and 17 February 1996, p. 9. In 1996, Taiwanese investment in the PRC reached $3 billion.

39. In April 1996, a group of 80 law-makers (from the KMT, the DPP and the New Party), businessmen and scholars set up an "Association for the promotion of direct transport links across the Strait" (liang'an zhihang cujinhui) to accelerate the establishment of such links. Lianhe bao, 24 March 1996, p. 4; The China Post, 24 March 1996, p. 15.




June 1996 and January 1997 respectively), Taiwan will probably have to accept most of the conditions put by China in the future.

The 1995-96 "missile crisis" has not for the moment clearly dimin- ished this dependence. Of course in 1995 only 490 investments (total capital $1.09 billion) against 934 in 1994 (total capital $962 million) were approved by the ROCOT government, and in 1996 only 383 (total capital $1.23 billion).40 However, since 1994, not only has the amount and duration of each investment tended to increase but the ROCOT government now screens less than half the Taiwanese money poured into the PRC economy.

Moreover, under the pressure of the World Trade Organization, Taiwan has gradually liberalized China's imports (5,000 items in 1996 against 2,900 a year before). The PRC's growing sales to the ROCOT ($3.06 billion in 1996 and $3.1 billion in 1995 against $1.9 billion in 1994) will not only shrink Taipei's major source of surplus - $16.1 billion in 1996, the only surplus able to cover most of Taiwan's trade deficit with Japan ($14 billion) - but also increase its dependence upon Beijing's cheap consumer goods. In other words, Taiwan's economy is increasingly unable to ignore mainland China, a market which provides it with the lion's share of its outside revenues. Taiwan would also suffer from any economic sanctions (such as the suspension by the United States of the Most Favoured Nation clause) taken against mainland China.

The Side Effects of Taiwan's Democratization

Taiwan's democratization has gradually modified both the scope of the debate on mainland policy and the place this debate occupies on Taiwan's domestic scene. It has also complicated the elaboration and the implementation of this policy.

The emergence of diverging mainland policies. Before 1987, Taiwan had just one single mainland policy. It was propagated by the KMT and contemplated the final unification of the Chinese nation in a political system based on Sun Yat-sen's "three principles of the people." Since then, at least three major mainland policies have competed with each other: the Taiwanese government's which is also, as shown above, the KMT mainstream faction's, the DDP's, and the New Party's which is very similar to the policy advocated by the non-mainstream faction of the KMT.41 Taiwan's government has been forced since 1993 to deal with two kinds of pressure: the independence lobby led by the DPP, and what could be called the "conciliation lobby" headed by the New Party and supported to a certain extent by the business community. The most annoying constraint does not necessarily come from the strongest opposition party.

40. The China Post, 3 March 1997, p. 19. 41. Other mainland policies defended by minor parties are not presented here. For instance,

a small party called "The 51st Club" militates for the entry of Taiwan in the United States of America as the 51st state of the Union. Founded in September 1994 and chaired by Chou Wei-lin, this party hopes in so doing to reconcile the mainlanders and the Taiwanese...




In fact, one of the few points on which the Taiwanese government and the DPP disagree is the final stage of the "Unification Guidelines."42 The other aspects of Lee Teng-hui's strategy are not only fully accepted by the DPP but were often initiated by it (such as the UN bid). Moreover, for a few years, under pressure from both the Taiwanese electorate and China's growing threat, several key members of the DPP have admitted in private that if and when their party comes to power, it will neither declare independence nor even submit this question to a referendum. The missile crisis of 1995-96 contributed to make this new policy public. In September 1995 when visiting the United States, Shih Ming-teh, the then DPP chairman, confirmed this change in declaring that Taiwan had been independent since 1949.43 Five months later, though confident of Tai- wan's military capability to defend itself, Peng Min-ming, DPP presidential candidate and so-called "father of Taiwan's independence," reluctantly endorsed this new policy in order to prevent a political disaster." The DPP is severely divided by its March 1996 electoral setback and is now chaired by Hsu Hsin-liang, a key member of the more moderate Formosa faction, so it may soon water down the independence principle enshrined in its charter. This gradual change was in a way confirmed by the establishment in October 1996 of the Taiwan Indepen- dence Party, formed by the DPP's arch-independentists. Thus, PRC unjustified accusations notwithstanding, the DPP and Lee Teng-hui share the same concern for the preservation of the status quo which means in other words the de facto independence of Taiwan.

This view is harshly criticized by the New Party (14 per cent of the electorate) and most of the members of the non-mainstream faction of the KMT, even though ex-KMT non-mainstream faction members such as Lin Yang-kang, Chen Lu-an, the two rebel KMT candidates for Taiwan's presidency in March 1996 and former Premier Hau Pei-tsun, the candidate for the vice-presidency on Lin's ticket, and even New Party leaders such as Jaw Shau-kang and Wang Chien-hsien, endorsed the 1991 "Guidelines." In fact, they are more anti-Communist than any other Taiwanese politicians and they do not contemplate a quick unification. However, afraid above all of "provoking" Beijing, they favour a more conciliatory attitude towards China, and are supported in this by the majority of the business community. Hence they militate for the rapid establishment of direct sea and air links with mainland China and estimate that Lee Teng-hui's mainland and foreign policies have put Taiwan in jeopardy.45 For example, the New Party thinks that any return to the UN should be "non-hostile" to China and under the principle "one country, several seats" (yiguo duoxi); moreover, it proposes to negotiate

42. Another source of disagreement is the opportunity of high-level meetings between PRC and ROCOT leaders. However, on this question, DPP officials are not all opposed to such meetings. The China Post, 4 October 1995, p. 16.

43. The China Post, 16 September 1995, p. 15. 44. Peng maintained his intention formally to declare independence in the case of PRC

attack. The China Post, 2 February 1996, p. 16. 45. China News, 27 April 1995, p. 2; The China Post, 3 October 1995, p. 20.




with Beijing the establishment of a confederal entity, followed at a later stage by a federation embracing the two Chinese states.46

Nevertheless, domestic political reasons also explain this group's attitude. Its hatred of Lee Teng-hui, who, in its view, is responsible for all the misfortunes of Taiwan, has pushed most of its members (Hau Pei-tsun and a few others excepted) to defend arguments similar to the ones put forward by Beijing, in particular in its July 1995-March 1996 vitriolic attacks on the Taiwanese president.47 In other words, this group seems to be ready to compromise with Beijing in order to prevent at any cost Taiwan's independence. For instance, though its majority initially supported Lee Teng-hui's June 1995 trip to the United States, after Beijing became upset it changed its mind. And in March 1996 Lin Yang-kang, Chen Lu-an and the New Party did not hesitate to oppose the U.S. Navy move in the Taiwan area, considering this decision as an interference in Chinese affairs.48 More generally, the conciliation lobby thinks that Taiwan has not the military capability to guarantee its de facto independence or, because the majority of its members are of mainland origin, refuses to pay the price of this independence and estimates that no country including the United States and in spite of the Taiwan Relations Act, would support Taiwan's cause in the case of war with the PRC.

The conciliation lobby received 25 per cent of the vote in March 1996 (Lin 15 and Chen 10 per cent). Its political influence should not constitute a major constraint to Lee Teng-hui's mainland policy. However, dominated by the mainlanders who were over-represented in Lin's and Chen's electorate and supported by noticeable segments of the business community, this lobby's growing contacts with Beijing49 and unnuanced opposition to the current Taiwan president may become a subject of concern for the security of the country in the future. More generally, the rise of the conciliation lobby underlines the danger of "Finlandization," if not of "Hongkongization," which Taiwanese society is facing today.50

The mainland China policy as a central theme of domestic political debate. Taiwan's unclear international status tends to put the question of the future of the ROCOT and consequently its mainland policy at the centre of the political debate. The strength of the independence move- ment, German unification in 1990, the collapse of the Soviet Union a year later, and the growing political and military pressures of the PRC on the eve of Hong Kong's return to China, have all contributed to putting aside, every time something happens in the Taiwan Strait, most domestic

46. Xindang zhengce baibishu (New Party Policy White Paper) (Taipei: New Party, November 1995), pp. 41-43, 105-108.

47. For instance, in September 1995, Lin Yang-kang urged the ROCOT government to halt its campaign to rejoin the UN and to postpone the military exercise scheduled for October 1995. The China Post, 12 September 1995, p. 16 and 16 September 1995, p. 15.

48. The China Post, 15 March 1996, p. 19; China News, 19 March 1996, p. 1. 49. The meeting between Liang Su-yung, a former Speaker of the Legislative Yuan, and

Jiang Zemin, which took place in Beijing in late April 1996 is probably an example of such contacts which are nothing but encouraged by the PRC authorities.

50. Cf. Jean-Pierre Cabestan, Taiwan - Chine populaire: l'impossible reunification (Paris: Ed. Ifri-Dunod, 1995), pp. 167-68.




political issues. The fact that any party which tried to define itself outside the unification-independence line was quickly marginalized illustrates this specificity of the Taiwanese political debate."

In other words, this debate has become a hostage of the mainland (and foreign) policy. Under such circumstances, it is becoming more and more difficult for the Taiwanese government not to take into account the changing desires of public opinion as far as mainland China is concerned. Today, as the March 1996 presidential election has shown, Taiwanese society mainly supports its government's policy.52 But things may change if, in the future, the economic and financial price Taiwan would have to pay to keep the status quo increases too much. Thus the importance of mainland policy in Taiwan's domestic debate will probably constitute a growing constraint for the ROCOT government's strategy towards the PRC.

The making and implementation of Taiwan's mainland policy: a complex process. In principle, the MAC is in charge of making and co-ordinating Taiwan's mainland policy. However, the growing diversity of contacts influential people in the ROCOT have developed with their PRC counterparts has rapidly complicated the process of decision-making in this area.

First, President Lee Teng-hui plays today a crucial role in the making and implementation of the ROCOT mainland China policy.53 All deci- sions go to him to be given their final approval. However, several key state agencies take, under the co-ordinating power of the Premier, an active part in the decision-making process: not only specialized organizations such as the MAC and the SEF but also, to varying degrees and in their domain of competence (in a probable descending order), the security organs, the National Security Council and the Defence Ministry, political and propaganda bodies such as the Foreign Ministry and the Government Information Office, and economic agencies such as the ministries of economic affairs, transport and communications. Think-tanks such as Chengchih University's Institute of International Relations or the Ever- green-financed Institute for National Policy Research also have an important say. Formal organizations such as the National Unification Council, though chaired by Lee Teng-hui himself, tend to play a rubber- stamp role: they just endorse proposals drafted by Lee's close advisers.

The respective roles of the MAC and the SEF provide a problem which has never been fully settled, in particular because of the ever-moving division of labour between the two agencies. The former organization

51. For instance, set up in 1990 by Chu Kao-cheng, the small Social-Democratic Party never managed to take off. It merged with the New Party in 1994.

52. There is a striking similarity between the outcome of the presidential election and the results of most opinion polls on the unification-independence question. However, at the height of the March 1996 crisis, only 9.5% of the Taiwanese supported independence, 13.5% unification and 56.2% the status quo. Zhongguo shibao, 6 March 1996, p. 3.

53. John Fuh-sheng Hsieh, "Chiefs, staffers, Indians, and others: how was Taiwan's mainland China policy made?" in Tun-jen Cheng, Chi Huang and Samuel S.G. Wu (eds.), Inherited Rivalry, Conflict Across the Taiwan Straits (Boulder: Lynne Rienner, 1995), pp. 137-152.




does lead and control the implementation of mainland policies, especially by other government agencies. However, the failed launching in May 1995 of the Kaohsiung trans-shipment centre proposal clearly shows that there is a lack of co-ordination between ministries involved in negotiations with the PRC. The frustration Vincent Siew, the then MAC chairman, felt at that time explained to some extent his decision to leave the Executive Yuan and willingness to run for a legislative seat in the December 1995 election. In any case, the MAC remains more than ever under the tight supervision of the President and the Premier.

Relations between the MAC and the SEF have never been easy. However, while probably transforming the latter into a convenient but powerless fagade of the former when the Taiwanese government deals with PRC officials, the expected integration of the two organizations may smooth away the constant bickering which the Taiwanese public wit- nessed before July 1995. Moreover, since the beginning o'f that year, some officials have thought that the SEF was not the proper channel to commence more crucial, "political" negotiations with the PRC.54 This does not mean that Koo Chen-fu, the SEF chairman and a KMT Standing Committee member, is not himself influential as far as mainland China policy is concerned. But even in this realm, his power as a business tycoon seems to be more critical than his influence as SEF chairman.

The leaders of the business community also play an important if not always consistent role. For instance, in early August 1995, in the midst of the "missile crisis," Kao Ching-yuan, the chairman of President Company and the head of the Chinese National Federation of Industries, called for a halt of investments in mainland China.55 But a few weeks later, he urged Taiwan's politicians to avoid "antagonizing" mainland China, fearing the tension across the Strait would "bring an extremely huge blow to businesses."56 Another example is the initiative taken by Chiayi city officials in June 1995 to negotiate with the Fujian authorities on the establishment of direct maritime links between Putai harbour and Xiamen. Though disapproved of by the Taiwanese government, this initiative was discreetly supported by Vincent Siew, a native of Chiayi, while he was preparing to campaign to represent this city in the Legisla- tive Yuan.57 Indeed, the close links between Taiwanese entrepreneurs and political parties explain the complex influence the former can exert on mainland policy. However, under the opposite pressure of the "security lobby" (such as the military), the government has for quite a long time managed to resist the most daring proposals of the business community (three direct links).58

54. In March 1995, Vincent Siew hinted that an end-of-hostility agreement could not be negotiated by the SEF. The China Post, 10 March 1995, p. 1.

55. Lianhe bao, 11 August 1995, p. 3. 56. The China Post, 30 August 1995, p. 16. 57. China News, 30 June 1995, p. I and 11 September 1995, p. 3. 58. Tse-Kang Leng, "State, business, and economic interaction across the Taiwan Strait,"

Issues and Studies, November 1995, pp. 40-58.




The increasing complexity of the making and implementation of this policy constitutes one of the side effects of Taiwan's democratization. However, facing a highly authoritarian power whose Taiwan policy is very centralized, the Taipei government cannot but see its room for manoeuvre narrowing. That is a common weakness of democracy. But does Taiwan possess the strong points of this system?

The PRC's Growing Power

This section, rather than assessing China's growing power per se, focuses on the Taiwanese perception of it. For some time, the PRC has managed to convince most Western countries and its neighbours that it is a great power. A closer look at mainland China's military capabilities and force projections tends to show that far from being a world power, it is gradually becoming a regional power. Examples of this quest are numerous in the last few years: the incident between a PLA submarine and the American seventh fleet in December 1994 in the East China Sea, the occupation by the PRC Navy of Mischief Reef in the South China Sea in February 1995 and the 1995-96 series of missile tests and military manoeuvres around Taiwan.

The ROCOT, as a close neighbour of the PRC, cannot but be concerned by this evolution. Although most experts estimate that in the next ten years the PLA will remain unable to conquer or even to impose a blockade on Taiwan, the ROCOT's long-term security seems to be already at risk. In a way, the New Party expresses this fear. To a certain extent, the question today is how long Taiwan will be able to guarantee its security and its de facto independence.

Of course the efficiency of Beijing's military pressure should be reassessed. After the 1995 missile tests, opinion polls show that though the percentage of people in favour of independence decreased (26 against 33.2 per cent a few weeks before according to a DPP poll and 12 against 18 per cent according to a Zhongguo shibao survey),59 partisans of the status quo increased to 46 per cent from 34 whereas partisans of unification were weaker than ever (20 per cent against 26).60 This trend was emphasized by the March 1996 missile crisis.61 More surprisingly, in July 1995 some 71 per cent of the Taiwanese declared not having been scared by these missile tests62 and nine months later, 82.5 per cent of them declared that their vote would not be influenced by Beijing's bullying manoeuvres.63 Nevertheless, a few alarming moves did take place during this crisis underlining Taiwan society's uncertainty about its future.

First, the stock market fell dramatically, losing 1,000 points (- 19 per cent) between 19 July and mid-August and around US$3-4 billion left the country in the same period. Though in September the stock market

59. Lianhe bao, 4 August 1995, p. 7; Zhongguo shibao, 28 July 1995, p. 3. 60. Lianhe bao, 22 July 1995, p. 3. 61. Cf. n. 52. 62. Ibid. 63. Ziyou shibao, 11 March 1996, p. 1.




regained half the ground it had lost (5,035 on the weighted index Taiex in early October against 4,503 on 19 July), in February 1996 the Taipei government had to establish a $7.3 billion provisional stabilization fund - of which $2.2 billion was spent (in late April the Taiex reached 6,182).

Secondly, between July 1995 and March 1996 at least $10 billion ($20 billion according to some estimates) left the country, was used to buy foreign currencies or was transformed into gold bars.6 Consequently, the government spent more than $15 billion to keep the New Taiwan dollar below 27.5 NT$ per US$. Foreign reserves which rose above $100 billion in late June 1995 fell to $82.5 billion nine months later. Of course, part of the money spent by the Taiwanese authorities was recovered. How- ever, one can speculate about the economic consequences of a real military crisis in the Taiwan Strait. In any case, Taiwan's economic growth in 1996 has been affected and will be at least 1.3 per cent lower than originally expected.65 More generally, the "missile crisis" has shown that though Taiwan can turn into an APROC in specific sectors, for security reasons it will never be able to become a financial centre such as Hong Kong.

Thirdly, in spite of Taipei government black-out on the figures, appli- cations for emigration to the major host countries (the United States, Canada, Australia and New Zealand) have dramatically increased since the beginning of 1995. According to some unpublished opinion polls conducted in early 1996, in the case of military confrontation with the PRC, 25.6 per cent of the respondents would emigrate and 27.3 per cent apply for a foreign passport.66

Although mainland China cannot invade Taiwan, it is already able to disorganize its economy and increase its society's anxiety.

The Attitude of the International Community

The future of Taiwan's mainland policy is also increasingly dependent upon the attitude of the international community. Today, in spite of the concern showed by many countries at the height of the "missile crisis," this attitude remains far from being supportive of Taipei's security policy and pragmatic diplomacy.

The only country which may assist Taiwan in the case of war with the PRC is the United States. But more and more people on the island have some doubt about American military involvement in such a conflict, including sober strategists such as New Party legislator Lin Yu-fang, who strongly criticized the bestseller August 1995's ideas.67 Indeed, the very

64. The Far Eastern Economic Review, 18 April 1996, p. 76. 65. Less than 5% instead of 6.3%; The China Post, 6 April 1996, p. 11. 66. Interview with Tim T.Y. Ting, Chief Representative of Gallup organization, Taipei,

1 March 1996. 67. Lin Yu-fang, Weixian de yuyan, po "runbayue" de misi (A Dangerous Prediction,

Break the Myth ofAugust 1995) (Taipei: Danjiang daxue guoji shiwu yu zhanliie yanjiusuo, 1995), p. 68ff.; Chen Lanping, Yijiujiuwu runbayue, Zhonggong wulifantai shiji da yuyan, T Day (August 1995, the Great Prediction of the Century: Chinese Communists' Attack of Taiwan) (Taipei: Shangye zhoukan, 1994).




uncertainty of this involvement contributes to protect Taiwan and since the United States' firm reaction to the PRC's provocative missile tests in March 1996 the Taiwanese have felt more secure. However, the United States' growing reluctance to send troops abroad, the ambiguities of its "one China" policy and the need for both the Clinton administration and the American business community to be on good terms with the PRC have led more and more Taiwanese to doubt any American military intervention in the case of war in the Strait.

The 1995-96 crisis has made Taiwan even more dependent upon the United States not only for its security but also politically. In the future, therefore, in order to keep the balance between Taipei and Beijing which it perceives as best for its interests in the region, Washington may exert more pressure on Taiwan's pragmatic diplomacy and mainland policy. The United States may also be tempted to give its support to the more conciliatory policies defended by the New Party (which ironically relies the least upon this country's protection).

Since the 1995-96 "missile crisis," Japan and to a lesser extent the ASEAN have been more and more worried about the prospect of a war in the Taiwan Strait. But these countries have at the same time showed their unwillingness to support Taiwan even politically. Tokyo has since 1994 adopted a more daring policy towards Beijing. After the occupation of the Mischief Reef by the PLA in early 1995, Tokyo showed a growing concern for the security of the sea lanes in the South China Sea and the PRC's increasing defence spending, a move which compelled the Chinese leaders to give Prime Minister Murayama during his visit to Beijing in May 1995 public assurances of their peaceful intentions. And in June and August 1995, Japan did not hesitate symbolically to cut aid to China after this country conducted underground nuclear tests.

On the Taiwan issue also, Japan seems to be reassessing its policy. In November 1994, in spite of the PRC's protests, Japan gave the ROCOT Vice-Premier Hsti Li-teh a visa to attend the Asian Games. In June 1995, for the first time since 1972, it sent an ambassadorial rank emissary, Uchida, to Taiwan to prepare for the November 1995 APEC meeting.68 And at the time of the Taiwan missile crisis Tokyo loudly expressed its concern several times to Beijing. Moreover, in March 1996, highly worried by the impact of PLA manoeuvres on sea and air traffic, the Japanese Navy sent a coastguard cutter close to the test area "as a precautionary measure."69

In fact, Beijing's bullying policy towards Taiwan has re-emphasized the fact that Japan cannot exclude this area from its security perimeter. This idea was specified a month after the crisis in the Clinton-Hashimoto Joint Declaration on Security: "the two leaders agreed on the necessity to promote bilateral policy co-ordination, including studies on bilateral

68. China News, 27 June 1995, p. 1. 69. The China Post, 9 March 1996, p. 1.




co-operation in dealing with situations that may emerge in the area surrounding Japan and which will have an important influence on the peace and security of Japan."70 This statement has discreetly but largely restored the spirit of the 21 November 1969 Nixon-Sato Joint Statement according to which (4th clause) "the maintenance of peace and security in the Taiwan area is a most important factor for the security of Japan."71 However, what Japan would do in the case of war between the two Chinas remains an open question. And for the time being, not ready to embark in a policy too hostile to Beijing, Tokyo would probably also be tempted to use its good connections in the KMT to exert some pressure on Taipei in order to prompt it to adopt a more flexible mainland policy.

Other countries in the region, in particular the ASEAN nations, have also adopted a firmer policy towards the PRC. In the wake of the Mischief Reef incident, ASEAN for the first time managed to force Beijing to accept multilateral talks on the South China Sea issue. How- ever, their timid reaction to Beijing's military provocations against Taipei in 1995-96 showed the growing influence of the PRC in the region. Though often linked to the United States by security agreements, the ASEAN countries have developed a neutral attitude on the Taiwan issue which clearly plays against Taipei's interests.

It is in this context that Lee Teng-hui aired views on the possible establishment of an Asian security system including Taiwan and con- straining, if not containing, mainland China. These ideas were deliber- ately released in late August in Kaohsiung before Japanese and Taiwanese political scientists.72 But here again, on which countries can Taiwan count? Though Japan or even Indonesia would not be totally opposed to such a plan, this question remains today completely unan- swered.

Finally, through the 1995-96 crisis, Europe has shown how distant and aloof it is from the Taiwan issue. Some countries have courageously welcomed Taiwan high officials, such as the Czech Republic which hosted Premier Lien Chan in June 1995. But, anxious to get a bigger share of the China market in order to ease their unemployment problem and unable to play any security role in East Asia (arms dealers included), such major European countries as Germany and France are incapable of following this example. Thus the members of the European Union cannot do more than promote closer economic, cultural and sometimes - if they have not too many commercial interests at stake in the PRC - political links with Taiwan. Although these countries have also expressed their grave concern about China's missile tests, they are unable to provide any support to Taiwan.

70. U.S.-Japan Joint Declaration on Security, Tokyo, 17 April 1996, p. 3. 71. Washington D.C., Weekly Compilation of Presidential Documents, 24 November

1969, pp. 1633-1937. 72. The China Post, 22 August 1995, p. 4.




Conclusion

In the past nine years, Taiwan's mainland policy has changed quite dramatically. From a policy of no contacts with the PRC, the ROCOT has moved towards one the main features of which are the approval of economic and human exchanges with this country and the recognition of the status quo in the Strait. For Taipei, unification remains the official final goal, but because of lingering discrepencies between the PRC and the ROCOT societies and the pressure of the DPP, normalization has clearly taken the lead.

Beijing has not completely opposed this strategy. The SEF-ARATS meetings have suggested that the two Chinas can agree on a number of things, in particular improvement of the day-to-day operating of cross- Strait relations. Nevertheless, the PRC remains adamant in its will to impose the "one country two systems" formula and relegate Taiwan to provincial status. Moreover, the 1995-96 "missile crisis" has shown that some leaders in Beijing apparently want to speed up the reunification process and thus increase the political and military pressure on Taiwan.73

Is Taipei's current mainland policy adapted to these new challenges? Can the ROCOT boost its international status and, in so doing, guarantee its long-term survival? In other words, should Taiwan abandon its pragmatic diplomacy and more generally its ambition to be considered as a true nation-state, as the New Party and KMT non-mainstream faction leaders advocate? Or should it keep the line it adopted in the early 1990s and continue to seek international recognition?

It is too early to answer these questions fully because the menace threatening Taiwan's de facto independence has not reached a level which would compel the government to address the issue directly. However, Taiwan's future will depend upon how powerful the few major constraints are.

First, Taiwan's economic dependence vis-a-vis mainland China remains rather limited and, more importantly is increasingly reciprocal. The current level of dependence (10 per cent of Taiwan's foreign trade and 16.5 per cent of its exports are with the PRC) is much lower than the one which links for instance France and Germany and it will take time before such a level is reached (25 per cent). And global Taiwanese investments in China have been for a few years balanced by roughly the same amount of accumulated investments ($25 billion) in the ASEAN countries.74 Besides, the economic development of the PRC's key provinces (such as Guangdong, Jiangsu, Fujian) relies more and more on Taiwan's products and money, and if the former revives its military intimidations, it will

73. In September 1995, Shaw Yu-ming, the director of the ROCOT's Institute of International Relations, declared that the PRC was seeking to reunify Taiwan within 15 years. Zhongguo shibao, 5 September 1995, p. 2.

74. Gary Klintworth, New Taiwan, New China, Taiwan's Changing Role in the Asia-Pacific Region (Melbourne: Longman, 1995), pp. 142ff.




certainly affect the level of the latter's investments." More generally, economic interdependence does not necessarily jeopardize political independence.

Secondly, beyond the weaknesses of Taiwan's democratic system, the diverging mainland policies advocated by the major parties and the pressure of the companies which have invested in the PRC, there is much consensus on the island not to question the de facto independence and long-term existence of the ROCOT. The 1995-96 crisis contributed to reinforce this consensus and to feed a genuine Taiwanese nationalism shared by most sectors of society. For nearly half a century, Taiwan's residents have been used to ruling their own affairs and do not find any interest in transferring to a remote northern government even part of their powers and competence.

Thirdly, China remains today far less powerful than many perceive. Having to tackle formidable economic problems and having embarked on a difficult succession battle, the PRC leadership appears to some extent as a idol with feet of clay. Moreover, the 1995-96 crisis has not only shown the limits of PLA capabilities but also contributed to a view of China as a major threat to the peace and stability of the Asia-Pacific region and more generally as the new "empire of evil" whose political future remains the biggest question mark of the end of this century.

Finally, this trend has favoured a gradual change of attitude of the international community towards Taiwan. Diplomatically isolated, the ROCOT is however not without friends. Most countries just pay lip service to Beijing's "one China policy" and have long considered Taiwan as a de facto nation-state. And the 1995-96 crisis has forced the island's main political partners and neighbours to make their position clearer and show the PRC the line which it should not cross. The reassertion of the American commitment to Taiwan and Japan, and, to a lesser extent, ASEAN's growing concern for the security of the ROCOT have strength- ened Taiwan's international posture and therefore the legitimacy of its mainland policy.

Thus, in spite of the important constraints on Taiwan's room for manoeuvre, the ROCOT government has no reason to change its funda- mental mainland policy. It will probably in the foreseeable future make a few moves to show its goodwill (three direct links) and try gradually to build up, if not normalization, at least a modus vivendi with the PRC. But, supported by the majority of Taiwanese society, it will continue to defend the island's security and its de facto independence.

75. Cf. statements made in March 1996 by Kao Ching-yuan, the head of Taipei's Chinese National Federation of Industries, and Wu Chang-ming, chairman of the Association of Taiwan Investors. The China Post, 13 March 1996, p. 15 and 19 March 1996, p. 14.



Taiwan's Mainland Policy

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