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2017 Forecast: Foreign Policy

US-China Power Reshuffle Chills Cross-strait Ties


US-China Power Reshuffle Chills Cross-strait Ties


Taiwan’s role in the power struggle between China and the United States means that it must be prepared for difficult times ahead. Not only is Taiwan unlikely to benefit from trade, the cross-strait stalemate is sure to continue.



US-China Power Reshuffle Chills Cross-strait Ties

By Rebecca Lin
From CommonWealth Magazine (vol. 612 )

Since Taiwan’s President Tsai Ing-wen took office in May, cross-strait ties have remained in a frosty “cold peace” state.

Political observers generally believe that cross-strait relations will continue to deteriorate and entail plenty of uncertainty in the coming year. The two major causes of uncertainty are the policies of newly elected U.S. President Donald Trump and intensifying political jockeying in China ahead of the 19th Party Congress.

“After president-elect Trump takes office, the co-opetition relationship between China and the United States will be an important variable in assessing the coming year,” says Chao Chun-shan, professor at the Graduate Institute of China Studies at Tamkang University and an important cross-strait policy advisor to former President Ma Ying-jeou. The United States has always been the most important external factor influencing cross-strait relations, and Trump’s policies will also affect the Asia-Pacific situation and U.S.-China relations, a scenario from which Taiwan, right in the middle of it, cannot extricate itself, says Chao.

No one can accurately predict how the entire situation will develop. As the world scrambles to adjust to Trump’s pace, we can expect nothing but chaotic times.

U.S.-China Trade War Bad News for Taiwan

Taiwan could very well end up as a sacrificial lamb in the looming trade war between China and the United States. During his election campaign, Trump advocated trade protectionism, threatening to slap punitive tariffs of 45 percent on Chinese imports to the United States. After the election, the president-elect declared that he would announce his nation’s withdrawal from the Trans-Pacific Partnership (TPP) free trade agreement as soon as he takes office in January.

Against this backdrop, the road to Tsai’s declared goal, stated in her inaugural address, to have Taiwan participate in the TPP will not only be rocky but probably even a dead end.

“Originally, TPP participation was a strategy for extricating Taiwan from Beijing’s economic control. Now the pathway to breaking the siege is probably no longer there,” says Lin Cho-shui, a former legislator for the ruling Democratic Progressive Party (DPP). While Washington’s target for sanctions will be China - should Trump follow through on his protectionist threats - Taiwan is bound to suffer significant collateral damage.

During the 2008 financial crisis, Taiwanese exports to the United States still continued to grow slightly, but Taiwanese exports to China kept shrinking on a widening scale, from a 10-percent decline to a more than 30-percent decline. This shows clearly that if U.S. consumers don’t buy Chinese products, Taiwanese manufacturers who assemble products in China for export are equally affected when exports slow down.

“Taiwan will not only be unable to benefit from the situation; it will be even more miserable because it won’t be able to rely on China even if it wants to,” says Lin in analyzing the triangular relationship between China, Taiwan and the United States. “Should the U.S. and China start a trade war, Taiwan will have a hard time,” he says.

In terms of regional security, Taiwan is in an even more disadvantageous position. Trump charged in his campaign that outgoing U.S. President Barack Obama failed to effectively implement his “Rebalance to Asia” policy and called on U.S. military allies in the Asia-Pacific region to shoulder a higher share of common defense costs. The jury is still out on whether these statements mean that the United States will gradually reduce its military presence in the Asia-Pacific region, “but his stance could certainly cause problems,” says Chao. “For instance, will the Asia-Pacific allies change their past stance of striking a balance between the United States and China?” 

The de facto situation is that countries in Asia such as Malaysia, the Philippines and Vietnam have begun to bolster their relationship with China. The possible changes in the U.S. military alliance system in the Asia-Pacific region resulting from these countries’ shift toward China will not only affect Taiwan’s New Southbound Policy, but Beijing will also “closely watch” Washington’s attitude toward Taiwan.

An Olive Branch that Might Wilt

What Taiwan also cannot afford to ignore is the changing political situation in China.

“To date, no one has been able to determine what Xi Jinping stands for. Is he an autocratic dictator or is he a rather democratic-minded reformer?” says a high-ranking DPP politician who is also a long-time observer of Chinese politics. No one knows, he says, whether the 19th Party Congress in the autumn will mark the beginning of autocratic rule in China or act as a watershed in terms of more predictable, cyclical leadership change in the CPC.

“China is entering a stage of power structure reshuffle before the 19th Party Congress,” notes the politician, who did not want to be named. “At this point in time, we can only dispassionately wait and see; there is no chance for truly meaningful dialogue. Even if we hold out an olive branch it would just be treated like garbage,” he says.

In other words, both the United States and China are entering a period of political realignment. “The Tsai administration and the DPP don’t have the problem of choosing sides," says Chao Tien-lin, director of the DPP’s Department of Chinese Affairs, noting that Taiwan’s interests absolutely come first. “After Trump assumes office, we will continue to work for regional free trade integration and cooperate with other countries, and we still hope to develop a peaceful and stable relationship with China.”

Before that, the “cold peace” situation across the Taiwan Strait will continue, and ties might remain frosty until after the 19th Party Congress, when dialogue might eventually be relaunched. “When cross-strait [ties] ought to be cold, let them be cold. These are inevitable opportunity costs,” the high-ranking DPP politician says. He further explains that Washington and Beijing are currently readjusting their course, and predicts that, once Taiwan has completed internal reforms by the end of next year, “it will probably be time to put some serious stuff on the table when spring blossoms in 2018.”

Chao, however, still has misgivings about such a “cold peace.” He is concerned that, without a basis for mutual trust between China and Taiwan, any sudden event could trigger conflicts as the current stalemate escalates into outright confrontation. The best way to prevent such a scenario would be reopening the door for negotiations and propose a new wording for the implied content of the “1992 Consensus” to defuse mutual tension. “We need to prevent misjudgments resulting from the lack of communication,” he says.

Translated from the Chinese by Susanne Ganz