Arms, trade and politics cloud Taiwan’s relations with China

THE Chinese government grabbed global headlines, asserting that candidates standing for election as Hong Kong’s chief executive in 2017 must be approved by the Communist Party in Beijing. This has led to mass protests which have closed down Hong Kong's business district, writes Dr James Jay Carafano. Taiwan is not Hong Kong, but China’s assertion of authority could have a major impact on its future – and not in the way Beijing would like. Across the island, economic integration with the ‘mainland’ and Taiwan’s continued interest in autonomy appear at odds, at the very least, politically. Compound this with Beijing’s decision on Hong Kong and the certainty that it will continue to make known its preferences for Taiwan’s forthcoming elections, and you have the formula for a turbulent couple of years ahead for the island’s politics. Security, economic and political conditions in Taiwan are all as unsettled as they have been for years. On the security front, the US administration of President Barack Obama has downplayed US obligations under the Taiwan Relations Act to provide arms for the defence of the nation. The administration has rightly rebuffed efforts by China - whose ultimate goal is to unite the island and the mainland under one government - to enter consultations on arms sales to Taiwan. Washington did honour the second half of an arms package negotiated a decade ago, including air defence systems, maritime patrol aircraft and helicopters, but it has shown no appetite for new initiatives. Taiwanese politics have long complicated military acquisition. But in addition to internal political competition, Taipei has been evaluating its requirements in the light of the expanding military capability of its neighbour across the Taiwan Strait. China’s People’s Liberation Army (PLA) has been modernising aggressively since the 1990s. Its missions include enforcing Beijing’s claims over disputed or potentially separatist territories - including Taiwan. In particular the army has been told to expand its capacity to conduct amphibious landing operations and air and sea blockades. In response, Taiwan now seeks in particular to upgrade its submarine force. After failing to acquire diesel-powered submarines on the international market, it has been pressing the US and Japan to help it develop an indigenous capability to build boats. Some observers in the region are suggesting that Taiwan expand its security umbrella beyond reliance on the US. For example, according to the China Times, retired Japanese admiral Kaneda Hideaki declared that ’Taiwan and Japan should form a semi-alliance against Chinese expansion in the region…’ This is a long-shot, but the very fact that it is being tabled is significant. On the economic front, several issues could complicate cross-strait relations. Taiwan is relatively wealthy, ranking high in per capita GDP (almost US$39,000 measured in purchasing power parity). But it has trade agreements with only a handful of the 22 countries which recognise it diplomatically, and Singapore and New Zealand. Partly due to this diplomatic isolation, the Taiwan economy is becoming increasingly dependent on the mainland. Forty per cent of exports go across the water and 80 per cent of Taiwan’s foreign direct investment is from the mainland. And its economic growth has been decelerating since the late 1980s. It faces the dual challenge of shrinking prosperity and increased dependence on economic integration with the mainland. Taiwan’s politics are also in upheaval. Major local elections are planned for 2014 and national polls for 2016. The faultlines between the ruling Kuomintang (KMT) nationalists and the opposition Democratic Progressive Party (DPP) are well-established, the former committed to one China under the rule of the Republic of China (Taiwan’s formal name), and the latter formally committed to independence for the island. In 2012, the Obama administration clearly favoured the KMT. While Washington’s primary concern is keeping cross-strait relations calm, some experts warn it would be a mistake for the US to appear to again favour one side. With China potentially facing a less friendly incoming administration and renewed Taiwan emphasis on upgrading its defences, Beijing may well seek to stem any drift towards independence or reforms that de-emphasise cross-strait economic activity pre-emptively before the 2016 elections. The next two years could see a bit of a ‘four-way chess match’ with the US, Taiwan, China and Japan. Another round of military sales is unlikely, unless Taipei and Washington both wish to signal a tougher stand against China before the polls. Given China’s recent behaviour, any likely future scenario should include Beijing trying to exert economic and political pressure to influence the outcome of the election and sending very strong signals to Washington, Taipei and Tokyo that the ‘mainland’ will not tolerate a more independent Taiwan regardless of who wins the polls. China will increasingly demand a consultative role in Taiwan’s future defence plans and acquisition. It is likely to be rebuffed.

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