A tall order
Despite a rosy start, there is no shortage of risks in the new cross-strait relationship
Steven Xu
May 19, 2008
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Taiwan's presidential election in March turned out exactly as mainland Chinese leaders had hoped. The opposition Kuomintang party's candidate, Ma Ying-jeou, who is from a mainland family and was born in Hong Kong, won in a landslide victory, with more than 58 per cent of the vote. As Mr Ma prepares for his inauguration tomorrow, the consensus view is that cross-strait tensions will be largely eliminated during his term.
Don't bet on it. There is no shortage of risks in this relationship, and the one most optimists overlook right now is how well Beijing will respond to Mr Ma's not-so-secret view that the mainland needs to accelerate its political reform to reassure Taiwanese.
To be sure, the Communist Party and the KMT see eye to eye on many more things than the party and outgoing Taiwanese president Chen Shui-bian's Democratic Progressive Party (DPP). For one, both the Communist Party and the KMT adhere to the so-called "1992 consensus" that affirmed the principle of "one China" but allowed different interpretations of what that means in practice.
Most mainland Chinese also believe the civil war between the communists and the KMT during the first half of the 20th century was really a quarrel between brothers. In contrast, the distrust between Beijing and the pro-Taiwan independence DPP has become so entrenched that any compromise, much less a consensus, is unthinkable for either side.
After Mr Ma's victory, Beijing immediately made a goodwill gesture. Vincent Siew, Mr Ma's running mate and a KMT veteran, was invited to the Boao Forum, mainland China's version of the World Economic Forum's annual powwow in Davos, Switzerland. He was greeted by President Hu Jintao , who also invited Wu Poh-hsiung, the current KMT chairman, to visit Beijing. But how long will the cordiality last after Mr Ma assumes office? Will everything be plain sailing, or are there unexpected storm clouds ahead?
Take economics, for starters. Despite the on-and-off tensions between the two sides, economic integration is deepening. The mainland is Taiwan's largest trading partner. More importantly, Taiwan is increasingly reliant on mainland demand. Based on mainland statistics, Taiwan derived about US$78 billion in trade surplus from the mainland last year (although much trade flows through Hong Kong and does not show up on bilateral statistics). Today, more than half a million Taiwanese live and work on the mainland.
And the cross-strait human traffic may be about to get a lot heavier. The two sides have already opened a discussion about making direct flights between the mainland and Taiwan a regular occurrence. After that, Taiwan may open doors to mainland tourists who want to indulge their emotional and romantic sentiment towards their brotherly island, which has been coveted by so many foreign powers (including the Dutch and Japanese).
However, plenty of existing barriers continue to obstruct further economic integration. For example, Taiwan does not recognise education certificates from the mainland, even though more and more Taiwanese are being admitted to a wide range of mainland schools, from kindergartens to MBA programmes. Taiwan's official policy also bans large direct investment in the mainland, forcing its businessmen to set up offshore entities. (But again, in a sign of impending change, Taiwan is moving to allow mainland Chinese banks to set up a presence on the island on the assumption that the mainland will reciprocate.)
If Taipei remains nervous about too fast a rapprochement, the biggest problem with Beijing may be its belief that Taiwan needs the mainland more than the other way around. This is why it is unlikely to make any other significant concessions beyond more frequent cross-strait flights. That said, given the long history of interaction between the communists and the KMT, the mainland government is less likely to be provoked by any unfriendly noises Taipei makes under Mr Ma.
Indeed, Mr Ma will hardly be a compliant partner for Beijing. Because of the deep-rooted doubts many islanders have about the KMT's loyalty to Taiwan, he will not silence a lively debate about independence. Mr Ma, who is arguably Taiwan's cleanest politician, will also not shy away from challenging Beijing on democracy. He has even said that a redefinition of the 1989 student movement in Tiananmen Square should be a precondition for any talks on unification. What Beijing might not realise is that a key aspect of Mr Ma's cross-strait strategy will be to try to occupy the moral high ground.
Beijing, therefore, had better be prepared to deal with a self-righteous Ma administration - for perhaps as long as eight years. Unfortunately, judging by their reaction to the recent Tibet controversy, neither the mainland government nor its people seem very attuned to external views and expectations about their country.
To win back Taiwan, as well as a big segment of the international community, the mainland must be willing to take a more critical look at its recent past and pursue a more enlightened nationalism.
Steven Sitao Xu is the Economist Intelligence Unit Corporate Network's director of advisory services in China
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