Cablegate: The Taiwan Note

The Wikileaks cables have cast light on a range of issues, although to date the insights into East Asia, with the exception of North Korea, have been relatively limited. However, one very interesting point came out of a meeting between Lee Kwan Yew, minister mentor of Singapore, and US Deputy Secretary of State James C. Steingberg in June 2009. In the cable Steinberg asks Lee for his views on China, and the note records discussions of issues such as North Korea, Zhongnanhai’s willingness to move the Chinese economy towards increased consumption, and comments on senior Communist Party personnel.  His insights in all of these areas are fascinating, not least given his longstanding role in East Asian politics and Singapore’s strong ties with Beijing.  


Perhaps most interesting, though, were Lee’s views on Taiwan.  In the note, Lee says that unlike his predecessor Jiang Xemin, current president Hu Jintao is happy to take a slow approach to Taiwan, acting to win over the Kuomintang (KMT) government with an eye to some form of reunification in due course.  Lee said that Hu did not mind if reunification took 10, 20, or 30 years, a stance contrasting with that of Jiang, who is said to want to resolve Taiwan in his lifetime.  Lee added that Hu was happy with Taiwanese president Ma’s position (not raising reunification), since Hu simply did not want Taiwan to move towards independence.  


To some extent Lee stated what has become an analytical consensus.  But what is interesting about this perspective is that Hu’s pragmatic stance appears to be working.  In November, Taiwan held a series of elections to major municipalities.  The result was broadly a draw, with the governing (and more pro-China) KMT winning three of the five municipalities but losing the overall popular vote, which went to the opposition (and pro-independence) Democratic Progressive Party (DPP).  Some analysts have argued that the polls show Ma will win re-election in 2012, while others argue that he is a waning force in the island’s politics. Putting aside the domestic political implications of the polls, though, it was striking that perhaps the least controversial issue raised in what was a hard fought campaign was Ma’s policy of economic rapprochement with the mainland.  


The absence of this issue was notable given that only in July the KMT government pushed the Economic Co-operation Framework Agreement (ECFA), a broad free trade agreement with mainland Taiwan resembling the Closer Economic Partnership Agreement (CEPA) between Hong Kong and China, through the Legislative Yuan.  The move prompted physical clashes between representatives – admittedly a not uncommon event in Taiwan’s robust politics.  In the debate, the KMT had touted the ECFA as a means to catapult Taiwan to the next stage in its development (which is already pretty high – it has a GDP per capita of over US$20,000) through access to the Chinese market, albeit at the cost of some painful restructuring.  By contrast, the DPP argued that the ECFA provided China with a stranglehold over the Taiwanese economy.  


The benefits of engagement with China are already becoming visible, though, in terms of the stock market rise and more broadly in the strong economic performance on Taiwan in recent weeks (with unemployment now under five percent, for instance).  In this context, then, silence in the November polls seems to suggest that both parties are moving towards a consensus on economic ties with the mainland; this would amount to a vindication of Hu’s patient policy.  


Of course, this slow path to reunification is predicated on the continued popularity of the ECFA, which may wane if deindustrialisation proceeds apace in Taiwan.  Furthermore, commerce, as ever, relies on the maintenance of security.  This latter issue is growing in importance as China relentlessly expands military capacity on its side of the Straits, aiming at preventing any formalisation of Taiwanese independence.  Taiwan is starting to fall behind in the race to stand still.  The US plays a key role in this regard: as Taiwan’s security guarantor, by virtue of the 1979 Taiwan Relations Act, which obliges US provision of arms to Taiwan, and also thanks to a less tangible sense of moral responsibility. For instance, any worsening of bilateral relations between Beijing and Washington could lead to the US reassessing its prior sanguinity about peaceful reunification (a notion easy to support when it is unlikely), although no sign of such a shift has emerged from Washington.  The Obama administration’s approval of a US$6 billion arms package in late 2009 was in US eyes relatively uncontroversial, since it excludes next generation F-16 fighter planes, and US posturing in the region hitherto seems to have focused on North Korea and the South China Sea.  Obviously China had its own concerns about the arms sales to Taiwan, which it expressed through the cancellation of military to military ties for some months in 2010, and so the scope for miscalculation remains significant.  But Washington appears to adhere to its broad support for only peaceful reunification.        


The increased economic engagement, travel and improved relations between the two Chinas are a positive step towards resolving one of the main Cold War era irritants in East Asia.  They also mark, though, increased mainland Chinese influence in Taipei, which inevitably amounts to a further step towards greater sway for China in the western Pacific and a reduction of US presence.  The US may need to let this happen if the current trend continues, but any decision to do so would have to take account the needs of other states in the region such as Japan.