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Conflict analysis on unification issues between China and Taiwan
Noam Haas
10/21/2002



1. A Brief History and Background Information

As WWII drew to a close in Asia with Japan’s surrender, the island of Taiwan was retroceded on October 25, 1945 to the Republic of China, which was under the rule of the Nationalist Party (Kuomintang or KMT). Soon afterwards, civil war broke out in China between the Communist People’s Liberation Army and the KMT government. This war ended with a decisive victory for the Chinese Communist Party (CCP) headed by Mao Zedong, who founded the People’s Republic of China on October 1, 1949. The KMT army led by Chiang Kai-shek retreated to Taiwan. Hence, the era of two separate Chinas or a divided China began and continues to this day. One is commonly known as Mainland China or the People’s Republic of China (PRC) or Communist China; the other is often referred to as Taiwan or the Republic of China (ROC).

Over the years, despite political turmoil and economic reforms on both sides, the two entities across the Taiwan Strait have been regarding the other side as part of its own perceived China; that is, both sides each hold a policy of “One China” in terms of national sovereignty and territory. From the 1950s to the 1960s, with its internal political purges and closed-door or “self-reliance” policy, Mao’s China did not reach out to the international community, with the exception of a few third-world countries. Backed by US support, Taiwan, on the other hand, was representing China on the world stage. But things took a dramatic turn on October 25, 1971, when the UN General Assembly voted to seat representatives of the People's Republic of China and Taiwan’s delegation was effectively ousted.

In 1979, when the U.S. Government under President Jimmy Carter formally established diplomatic relations with the People’s Republic of China in common opposition to the Soviet Union, Taiwan began to lose steam in international politics, and now only 28 countries still maintain official diplomatic ties with Taiwan. Despite these diplomatic disappointments, Taiwan marched on with major reforms on two fronts: political reform for democracy and acceleration of economic growth through high tech industry. Both initiatives have proven highly successful. In the year 2000, the election of President Chen Shui-bian marked the first peaceful and democratic transfer of political power in 5,000 years of Chinese history.

Over the past few decades, the PRC has also embarked on a certain degree of economic reform and has opened its doors to foreign investment and tourists. The PRC’s steps toward a market economy, however, have stumbled recently due to unpredictable policies by the Communist dictatorship, lack of a rule of law, and a tremendous unemployment rate. Beijing’s deteriorating human rights record also remains a serious concern to the international community and is a source of fear and anxiety for the people in Taiwan.

With its recent entry into the World Trade Organization (WTO), the PRC will be drawn into the global economy, but some have predicted that playing under freer trade rules could lead to fallout in China’s domestic industry and cause major social unrest. It is thought that China’s domestic products will have trouble competing with better quality imports and the means of production will change from mass manual labor to modern machinery. Indeed, such technological changes have already shut down thousands of factories and altered traditional farming methods, resulting in tens of millions of laid-off workers and sending farmers and migrant workers crowding into the urban areas.

Attracted by its relatively cheap labor and land, hundreds of investors from Taiwan have set up factories in the PRC, which has now replaced the US as Taiwan’s largest export country. Taiwan is tiny compared to Mainland China -- compare a land area of 13,969 square miles and a population of 22.42 million people in Taiwan versus its neighbor’s 3,706,566 square miles and population of 1.27 billion people. Despite its size, Taiwan is wealthy. In April 2002, the per capita GNP for Taiwan was US$12,941 compared to only US$840 in the PRC. Taiwan’s annual foreign trade is US$ 230.1 billion – almost half of the US$ 509.8 billion of the much larger PRC -- due to its favorable political and economic climate. While trade and commerce exchange expand, real political dialogue has yet to take place between the two entities. Instead, critical rhetoric continues to be fired across the Taiwan Strait. In recent years, Beijing has begun a new wave of propaganda on the issue of unification, and it has proposed an initiative called “One Country, Two Systems” modeled after the political system in Hong Kong and Macao. The Taiwan government, which has been under pressure from the business community for greater access to the market in the PRC, has rejected Beijing’s offer, but it needs to come up with alternative strategies to respond to the mounting pressures both from Beijing and from its own business community.


2. Parties Involved

The Chinese Communist Party (CCP) headed by Jiang Zemin wants Taiwan to return to the Mainland China under the terms of its “One Country, Two Systems” unification model. Taiwan’s President Chen Shui-bian, on the other hand, has deemed such a proposal unacceptable. An important third-party player in this conflict is, of course, the United States. Despite the fact that Washington withdrew official recognition of the Taiwan government in 1979, the U.S. has maintained “unofficial” relations with Taiwan under the 1979 Taiwan Relations Act. This law mandates U.S. military protection of Taiwan in defense of its independence from China while at the same time not disputing Beijing's claim that Taiwan is merely a province of China.


3. Issues & Positions in Conflict

From Beijing’s perspective, Taiwan is a breakaway province from Mainland China, and so it has a long-standing “One country Two Systems” policy toward Taiwan. This policy includes the following fundamental items: 1. There is only one China; Taiwan is part of China; the Central Government is in Beijing—these are the premises used in resolving Taiwan issues. 2. The PRC is against “Two Chinas”, and/or “One China, One Taiwan”, and/or “One Country, Two Governments”, and/or “Independence of Taiwan.” 3. The “One Country, Two Systems” policy allows Taiwan to become a “Special Administrative Region (SAR)” modeled after the political system installed for Hong Kong and Macao after they were returned to the PRC by the governments of the U.K. and Portugal. Beijing will not give up the option of using military force to “liberate” Taiwan, and it opposes solving the Taiwan issue along the lines of historical issues derived from WWII such as the two Koreas and two Germanys. The impact of Beijing’s proposal is significant for the Communist Party because it will consolidate the Party’s dictatorship and power base by championing the cause of patriotism and nationalism, thereby gaining much-needed support from the public. In addition, such a unification would bring Taiwan under its control as part of the PRC and territorial integrity would be observed.

Taiwan holds a different view on the issue of unification. Taipei believes that the Republic of China has been a sovereign state since its founding in 1912, while Communist China established the People’s Republic of China in 1949. China has been a divided nation with each part ruled by a separate entity. Taiwan holds that neither Taipei nor Beijing has exercised jurisdiction over the territory of the other since 1949; thus neither can represent all of China. Instead of speaking of “One China,” Taiwan would like to consider it “one divided China” in recognition of the division of the Chinese nation as the Korea is now. President Chen Shui-bian continues his predecessor President Lee Teng-hui’s position that Taiwan will continue its pursuit of unification, that China must be reunified under the conditions of democracy, freedom, and equitable prosperity, and that Taiwan is willing to dialogue with Beijing to build mutual trust and improve relations step by step.

Taiwan, to this day, sees Mongolia as part of China and argues that Communist China shamefully gave away this land in the 1950s due to pressure from the Soviet Union. Taiwan’s President has rejected Beijing’s “One Country, Two Systems” policy as an attempt to eliminate the Republic of China and to turn Taiwan into a mere province, a local government, of the People’s Republic of China. President Chen has claimed publicly that this is something that the 23 million Taiwanese cannot accept. The unspoken mood in Taiwan is that the people and the government in general want to have a share of the economic pie of the PRC, but also remain a separate entity as it is. The impact of this position is they are often defensive and vague in discussing issues of unification and the “One China” policy.

The position of the United States toward this issue is that it will fulfill its obligations outlined in the Shanghai Communique, signed with the PRC in 1972 between Nixon and the PRC government, while honoring its commitment to the Taiwan Relations Act. The U.S. holds that there is one China and unification of China should be approached and solved through peaceful means and collaborations from both sides across the Taiwan Strait. The U.S. opposes solving the issue through the use of force by Beijing. On August 26, 2002, US Deputy Secretary of State Richard Armitage made a remark that the U.S. neither supports nor opposes Taiwan independence. The impact is that despite Beijing’s criticism of Washington’s stance as being controversial, the U.S. must keep its military and democratic ally—Taiwan -- as a deterrent to Beijing’s expansion of influence in the Asian Pacific region.


4. Interests & Alternatives

Beijing has, in recent years, begun more actively pursuing unification with Taiwan under its “One Country, Two Systems” proposal for a number of reasons. With economic reform in progress, the CCP has become increasingly aware that the need for greater freedom of conscience and expression comes with a market economy as a package, and this poses a threat to the CCP’s dictatorship. To consolidate the CCP’s control, Beijing is seeking to use nationalism to rally the populace behind its dictatorship, as this strategy proved to be a success in the case of Hong Kong and Macao. Such a patriotic initiative can also direct the public’s attention away from its current economic recession and social ills such as corruption and high unemployment rate to a nationalistic issue—unification of China and Taiwan. Beijing frequently conducts military exercises across the Taiwan Strait to show off its muscle. Because Taiwan is an island rich in natural resources and it also has a developed economy, Beijing has wished to claim it for both economic interests as well as territorial integrity. Moreover, Taiwan is a strategic location for monitoring the traffic in the Pacific Ocean.

With a global anti-terrorism campaign underway, Beijing is finding it is a good time to seek US help in its bid for unification because whether or not it will lend its support to America’s war against terrorism has become a bargaining chip. It is clear to Beijing that this unification is unlikely in the near future because its stiff terms will not be accepted by Taiwan, but this does not seem to matter as long as Beijing has demonstrated its zealous efforts to the Chinese public that unification is the CCP’s priority and that this effort is patriotic. Beijing will not likely back away from the stiff terms of the “One Country, Two Systems” policy it has proposed. Consequently, Beijing has proposed another “Three Links” offer, that is, direct trade link, direct transportation link, and direct postal link. Taiwan has responded cautiously that it needs time to study the proposal. Beijing’s best alternative to a negotiated agreement (its “BATNA” in negotiation-speak) is to persuade the U.S. to give up its commitment to the Taiwan Relations Act. Without US backing and protection, Taiwan would probably have little choice but to yield to the PRC’s pressure and demands for unification under Beijing’s terms.

The government of Taiwan is not interested in unification at the moment. It is concerned about the likely negative consequences of a takeover by a Communist dictatorship, such as loss of democracy, human rights, a capitalist free market, rule of law, and other freedoms of a civil society. The government of Taiwan also fears for the loss of Taiwan’s wealth and relatively high living standards. To Taipei, the best thing would be to maintain the status quo - two separate entities with some limited economic trade. But Beijing’s aggressive diplomacy and Taiwan’s domestic economic conditions pressure Taipei to formulate a more transparent policy on this issue. Beijing continues to squeeze Taiwan diplomatically by pressuring all other nations to publicly support Beijing’s “One China” policy and to denounce any move Taiwan makes toward two Chinas or toward Taiwan independence.

At the same time, Taiwan’s businessmen and investors who have factories in the PRC want to be able to travel there without having to go through a third country such as Hong Kong as they are required to do now. Because of the higher cost of labor and land in Taiwan, Taiwan’s business community has found the PRC to be an ideal place for manufacturing and also a market to sell their goods. The ease of sharing the same common language and a similar culture has made investment in the PRC favorable to many Taiwan businessmen, despite the rampant corruption and insufficient legal system. Maintaining a “wait and see” attitude, Taipei seems to be hoping that the issue of unification will go away until the day the PRC makes remarkable changes in its political system and economic environment. In Taiwan, however, there is in fact a grass-roots cry for Taiwan independence. President Chen Shui-bian, who rode on the popular vote for an independent Taiwan, recently made public comments regarding “One Side, One Country,” which drew heavy criticism from the PRC accusing Chen of committing the crime of splitting China. The PRC has threatened to resort to force if President Chen declares independence. With this threat forever looming, the Mainland Affairs Council in Taiwan was forced to provide an explanation that President Chen’s remark to “go its own way” referred to the “path of democracy, freedom and human rights and peace.” The Council felt compelled to add: “Any interpretation that goes beyond such meaning is not the true intention of the President.” Taiwan’s leaders frequently make comments that imply their intention for independence to find out how Beijing will react. But such an act must be calculated because Beijing could potentially use these words as an excuse to attack Taiwan if it encounters a difficult domestic crisis. Taiwan’s BATNA is to maintain strong support from the U.S. to maintain security and the status quo because the PRC will not likely attack Taiwan if the U.S. is determined to protect Taiwan militarily.

From the US perspective, it is imperative to not give Beijing any reason to coerce Taiwan, and it is also important not to encourage Taiwan to declare independence. The current cross-strait status quo serves American strategic interests. The carefully crafted Shanghai Communiqué and the Taiwan Relations Act embody a policy of “strategic ambiguity” toward the issue of China’s unification. Although this US policy has also become the single most irritating element in the US-PRC relationship, American values and interests determine that Taiwan is a strategic partner in the Asian Pacific region. The BATNA for the U.S. is a political change from Communist dictatorship to democracy in the PRC or the PRC gives up or changes its current policy of “One Country, Two Systems”.


5. Legitimacy & Relationship-Building

There seems to be no standard of legitimacy relevant to this conflict. In fact, Beijing is so stuck on its policy of “One Country, Two Systems” that it refuses any comprises. Despite efforts by Taiwan to approach this unification issue in the same way as the case of the two Koreas and two Germanys, Beijing has flatly rejected such attempts. The government of Taiwan once proposed a confederation model, whereby the states under a central government would have relative autonomy, as an objective standard to be used, but that was also rejected by Beijing. There seems to be no room at this point to find an international treaty or resolution as a fair standard to model after in order to resolve this conflict. Beijing still expresses an interest in talking, but on its own terms only.

Relations between the Chinese Communist Party in the PRC and the ruling Democratic Progressive Party (DPP) have been more than antagonistic. Newsweek has called President Chen “Beijing’s worst nightmare” because of his pro-independence leanings. However, in a gesture to show it wishes to improve cross-strait relations, the government of Taiwan has replaced the “Go Slow, Be Patient” policy toward investment in the PRC with an “Active Opening, Effective Management” policy. Taiwan has also allowed financial institutions to set up representative offices in the PRC, it has allowed more PRC products into Taiwan, and has also allowed PRC journalists to be stationed in Taiwan. These measures have reduced hostility to some extent. In 1991, the semi-private Straits Exchange Foundation (SEF) was set up in Taiwan as a medium to informally have contact with the PRC. The PRC in turn set up its counterpart, the Association for Relations Across the Taiwan Straits (ARATS), to hold meetings regularly with the SEF. So far their discussions have been limited to the repatriation of hijackers and illegal entrants and ways to resolve fishing disputes. However, such semi-official, informal meetings have been productive and they may have laid the groundwork for future low-level official meetings.

The U.S. as a third party has been maintaining relatively balanced relations with both Taiwan and the PRC. Madame Wu, President Chen's wife, just visited the US and was greeted by US State Department’s Undersecretary of State John Bolton, despite the fact that the U.S. and Taiwan do not have official diplomatic ties. Taiwan’s first lady was also given a medal of honor for democracy by the National Endowment for Democracy (NED) while she was in Washington, D.C. On the other hand, President Bush has invited PRC leader Jiang Zemin to his Crawford Ranch in Texas. Whenever possible, the U.S. declines to comment on the cross-strait issue to avoid being seen as in favor of any particular side. The U.S. does not wish to see escalating tensions across the Taiwan Strait, and so it must continue to walk this tightrope between the PRC and the ROC for as long as it can.

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