China unification by integration
By Sreeram Chaulia
The signing this week of a controversial free-trade
agreement between the People's Republic of China and Taiwan
is a significant milestone in East Asian history. It brings
China and the little anti-communist outpost about 150
kilometers across the Taiwan Strait from the mainland coast
into tighter embrace, generating scenarios of a creeping
velvet remarriage of territories divorced since 1949.
Like South and North Korea, the Taiwan-China problem is a
security sore that has carried over from the early Cold War
in Asia. In August 1945, there had been a brief window of
opportunity when warring Chiang Kai-shek and Mao Zedong met
for American-brokered peace talks in the Chinese city of
Chongqing. Mutual suspicion and ideological divides closed
that window and eventually produced a Taiwan politically
separate from the mainland.
On Tuesday, Chinese and Taiwanese quasi-governmental
associations met in this very same Chongqing to sign an
Economic Cooperation Framework Agreement that progressively
slashes tariffs on commodities and services flowing in both
directions. Far removed from the ego clashes of Chiang and
Mao and their alternative visions of class and social
reengineering in post-colonial China, the Taiwan and China
of today had the political and economic capital to push this
Taiwanese President Ma Ying-jeou was elected in 2008 on an
ambiguous campaign slogan of "no reunification, no
independence and no war" with China. His rapprochement
policies towards the mainland that followed ushered in an
unprecedented thaw via cross-strait tourism, cultural
investment promotion. The free-trade deal
is the icing on the cake of a cumulative improvement of
To his critics, Ma is serving up Taiwan's hard-preserved
independence to Beijing on a platter by increasing the
density of contacts between the two estranged territories.
But Ma reckons that industrially advanced Taiwan's recent
economic woes demand a course correction and realignment
with the booming business environment in the mainland.
Pre-existing restrictions on the amounts that Taiwanese
businesses could invest in the mainland manufacturing
miracle, and limits on outward mainland investment in
financial, real estate and industrial
sectors had been justified by regime after regime in Taipei
as necessary political protection against being reduced into
a satellite of Beijing in all but name.
But once Ma took the helm, soaring unemployment,
inflation and plummeting growth in a
Taiwan that was one of the original Asian Tiger economies
created a dire economic need to loosen controls on
cross-strait economic transactions.
The severe economic downturn facing Taiwan after the global
financial crash of September 2008 re-emphasized the benefit
of freeing the movement of goods and capital to and from the
mainland. That economics underpins Taiwan's bold step to
normalize and supercharge relations with the mainland is
evident from the Taipei government projections that the
free-trade pact will boost national
growth by as much as 1.7%.
For Ma, who rode to power with a promise of restoring Taiwan
to a 6% economic growth trajectory, securing access to the
vast mainland consumer market is a lifeline ahead of
challenging local elections at the end of this year.
The unanimous verdict on the free-trade agreement is that
Taiwan will be by far the bigger beneficiary from the deal.
Beijing will eliminate tariffs on about 500 imports from
Taiwan while Taipei is obliged to cut duties only on a
select list of 267 exports from the mainland. Unlike the
mainland's preferential trade accords with the 10-member
Association of Southeast Asian Nations (ASEAN) and potential
ones with Japan and South Korea, the package for Taiwan is
extremely generous and one-sided in favor of the smaller
It makes rational economic sense for Taiwan, a fact that has
reverberated in Taiwanese public opinion polls, where the
majority has quietly given its green signal to Ma.
The main opposition party has cried ballyhoo about how Ma is
"sleeping with the enemy" and compromising Taiwan's
political freedoms by yoking the island's sovereignty to the
whims of exporter and
investor lobbies, but unlike in the past,
there was enough political cover and economic logic for the
president to conclude the agreement.
Why did the mainland act so munificently and not haggle and
pressurize Taipei for concessions in the trade deal?
President Hu Jintao had issued a directive in 2005 that
Beijing wished for "peaceful reunification" with "our
flesh-and-blood brothers" in Taiwan.
However politically suicidal it is for Ma to admit that
economic integration is a step on the ladder to ultimate
absorption of Taiwan into China, Beijing very much sees it
that way. For a
trading superpower to throw open its
market to Taiwanese enterprises on discount terms is a minor
concession for gaining even greater leverage on the
Taiwanese economy and installing a staunchly pro-China lobby
in Taiwan's elite circles.
The necessity to penetrate and win more allies in Taiwan's
private sector is felt acutely in Beijing because of
continued US armament of
Taipei as a strategic ally in the East
China Sea. Taiwan is a huge pawn in US-China relations, with
Washington determined to militarily equip the island for
self-defense against aggression by the mainland, which
officially labels Taiwan a renegade "province" of the
As reported by Asia Times Online, Beijing is striving
through backroom channels in the US Congress to bargain for
cancelation of the latest US$6.4 billion American weapons
tranche to Taipei. (See
Senator Feinstein's whispers Asia Times Online, June 29,
But given the resolute bipartisan commitment in Washington
to denying the mainland military a decisive advantage to
occupy Taiwan and Ma's own hedging strategy of desiring more
US weaponry for self-defense, Beijing has no option but to
dangle softer instruments like sweetened trade deals en
route to its unification dream.
True to Deng Xiaoping's maxim - "hide your strength and bide
your time" - China can wait until Taiwan is ripe enough
through economic interlinking to fall into the motherland's
lap without firing a shot. The final outcome will depend on
how skillfully Ma and his possibly like-minded successors in
Taipei can maintain the fine balance of US-aided military
preparedness to deter a Chinese invasion on one hand and
sinking into China's economic bosom on the other.
Sreeram Chaulia is associate professor of world
politics at the OP Jindal Global University in Sonipat,