US-China Relations Remain Stalemated Over Taiwan

TAIWANESE PRESIDENT TSAI ING-WEN‘s stop-overs in the United States en route to and from two of Taiwan’s few remaining diplomatic partners, Guatemala and Belize, are not her first. She lasted visited the United States in a similar way in 2019. 

The format allows Washington to claim that visits by senior Taiwanese leaders are ‘transits’, not official visits. This pretext has become increasingly endangered as Beijing has peeled away Taiwan’s Caribbean and Central American allies. Last month, Taiwan lost Honduras when Tegucigalpa switched its diplomatic recognition to Beijing.

This trip has inevitably gained the ire of Beijing, especially Tsai’s forthcoming meeting at the Ronald Reagan Presidential Library, just outside Los Angeles, with US House Speaker Kevin McCarthy and some 20 other US lawmakers, now confirmed for April 5, which it described as another provocation against which it would hit back. 

After McCarthy’s predecessor Nancy Pelosi visited Taiwan last August, China launched its most extensive live-fire military exercises encircling Taiwan. Taiwan officials say that more than a dozen Chinese aircraft have crossed the midway mark of the Taiwan Strait since the start of Tsai’s trip.

McCarthy had considered making a similar trip to Pelosi’s. However, a California meeting was decided on as a less inflammatory alternative, with bilateral relations having sunk to a new low following the downing of alleged Chinese spy balloons in February.

However, Xu Xueyuan, charge d’affaires at the Washington embassy, said the United States risked ‘serious confrontation’ regardless of where US officials meet Taiwanese leaders.

In next year’s elections, Taiwan’s voters will have to choose between holding fast to the ties to the United States that Tsai’s Democratic Progressive Party has promoted or re-embracing the Beijing-friendly stance of the Kuomintang, the party of former President Ma Ying-jeou who recently made an unprecedented 12-day trip to the mainland, ostensibly to visit his ancestral family hometown, but during which he unofficially met Chinese officials.

Taiwan’s Economic Setback Should Be Short-Lived

UNLIKE ON THE other side of the Taiwan Strait, Taiwan’s GDP shrank 0.9% year-on-year in the fourth quarter of last year, taking 2022’s full-year growth to 2.4%, a marked deceleration from 2021’s 6.5%

The fourth quarter was the first year-on-year quarterly contraction since the first quarter of 2016 and the largest since the global financial crisis in 2009.

Inflation, interest rate hikes and the dip in tech demand in Taiwan’s Western markets are suppressing demand for exports from the trade-dependent island. At the same time, Beijing’s zero-Covid policies, only abandoned during the fourth quarter, continued to disrupt business operations and suppress consumer demand on the mainland, which takes a quarter of Taiwan’s goods exports.

The 8.6% fall in total exports knocked 2.6 percentage points off GDP growth, muting the stimulative effect of a 3.1% increase in public spending in the fourth quarter.

The revival of China’s economy in 2023 should give Taiwan a strong boost, especially in the second half of the year, assuming the mainland’s Covid waves pass without significant economic mishaps and stimulus measures kick in.

The economy should return to growth in the first quarter, although the risks are to the downside.

There is still roughly a year before Taiwan’s next presidential and legislative elections, so that should be ample time for the economy to recover.

With Taiwan’s ruling party picking a self-described ‘political worker for Taiwanese independence’, William Lai, as its next chairman, thus putting him in line to be its candidate to succeed the term-limited President Tsai Ing-wen, the economy is unlikely to be the primary election issue.

Taiwan Is Not A Small Ukraine

THE UKRAINE CRISIS has drawn inevitable — but ill-founded — comparisons with Taiwan.

More strident nationalist voices in China are calling on Beijing to mimic Moscow’s ‘liberation’ line and take the opportunity of the West’s diverted attention to reclaim the island by force. They interpret the United States’ unwillingness to send troops to Ukraine as a systemic weakness that would mean Washington would similarly not intervene on Taipei’s behalf.

That would be a misunderstanding of the United States’ intent, and of the capability of the People’s Liberation Army to deliver a fait accompli by scoring a military victory before US forces arrive.

Nonetheless, earlier in the week, Taiwan’s President Tsai Ing-wen ordered the armed forces to increase their surveillance and strengthen their combat readiness. She also instructed security services to be alert for information warfare.

In this Bystander’s view, covert infowar operations to demoralise Taiwan are more likely than a military assault. So, too, a stepping up of the PLA Airforce flights across the median line in the Taiwan Strait and into Taiwan’s air defence identification zone.

Nor should some action against Taiwan’s small islands near the mainland coast or more distant ones in the South China Sea be discounted. China tried this twice in the 1950s, once successfully, once not.

The islands would be difficult for Taipei to defend, so the costs for China in taking them would likely be low and success more likely.

Geography and meteorology make a military invasion of Taiwan more challenging than an invasion of Ukraine. PLA forces would have to undertake a combined amphibious and airborne landing. Crossing the often storm-tossed waters of the Taiwan Strait would be far more difficult than sending tanks and infantry rumbling across a land border with secure supply lines in their wake, and doubly so for an army that has not been battle-tested since 1979.

The military uncertainty would raise the political risk of an attack on Taipei so close to the Party Congress due in the autumn. Beyond the near certainty that the United States and its allies would come to Taipei’s aid militarily, Western sanctions imposed in response to such an attack would be significantly more severe than those related to Xinjiang and Hong Kong.

President Xi Jinping is walking a geopolitical tightrope over Ukraine. He will likely be cautious and absorb the military and political lessons from how Russia’s invasion plays out.

Once the Congress is passed, and, assumedly, Xi has consolidated his control and secured a third term, an invasion of Taiwan in the medium to long term would become more likely. A favourable and low-cost outcome for Russia in Ukraine or a perceptible weak Western response would shorten the time horizon.

Taiwan Free Trade Deal Would Inch US Closer to China’s Redline

THE POSSIBILITY OF a free trade agreement between Taiwan and the United States has been discussed fitfully for years, if not decades. The recent visit of US Health Secretary Alex Azar, the highest-ranking US official to visit Taiwan since diplomatic relations ended in 1979, has given it new life.

Earlier this week, Taiwan’s President Tsai Ing-wen told a virtual meeting hosted by two US think tanks that it was now a priority for her government.

Taipei would be the primary beneficiary politically and economically from any such agreement. Washington would get little out of beyond it providing another point of provocation with Beijing. The Trump administration has been more supportive of Taipei than its immediate predecessors. However, any promotion of Taiwan’s autonomy takes the Trump administration a step closer to one of China’s ruddiest redlines — and the inevitable retaliatory response.

That would go beyond Beijing’s efforts to block Taiwan’s participation in international organisations, as it is successfully managing against the US-lead effort to re-integrate Taiwan into the World Health Organization, along with chipping away at Taipei’s few remaining official ties with other countries.

At this point, Beijing would stop short of military action, even if it sustains the possibility of it. In May, for example, Premier Li Keqiang omitted the customary word ‘peaceful’ when he spoke of China’s intention to reunify Taiwan with the mainland.

Taipei has just announced a 10% increase in defence spending, regardless. In recent months, the United States and France have approved additional arms sales to the island.

However, there is a risk that the growing incursions by PLA Air Force warplanes into Taiwanese air space will lead to unintended conflict. That might prove challenging to de-escalate while US-China relations remain febrile.

Tsai Sweeps To Second-Term And Beijing Is Bothered

TSAI ING-WEN won a sweeping re-election victory in Taiwan’s presidential election on January 11.

She received a record 8.2 million votes, 1.3 million more than she won first time round in 2016. That translates into a 57% vote share, giving her a secure mandate for the next four years for her firmly China-sceptic stance.

Preliminary results in the legislative election held at the same time give her Democratic Progressive Party (DPP) 61 of the 113 seats in parliament. (Update: The DPP lost seven of its 68 seats in the legislature. The Kuomintang gained three, to take it to 38. The remaining 14 seats went to independents and small parties.)

The relationship with China dominated the campaign. In her victory speech, Tsai called on China to abandon its threat to reunify the island by force.

That may fall on deaf ears.

Mainland state media have already dismissed the result as a ‘temporary counter-current‘ and the result of anti-Chinese Western powers (i.e., the United States) intervening to contain China. “The historical trend toward a stronger China, national rejuvenation, and reunification cannot be stopped by any force or anyone,” thundered Xinhua in a commentary. The Party’s ever belligerently nationalist Global Times headlined one election report, ‘Mainland experts urge expediting reunification after Tsai’s win‘.

Beijing has been publicly rebuffed. How much its bluster turns into action — and how much it becomes part of the broader US-China conflict — will be Tsai’s preoccupation for the next four years.

Taiwan’s Tsai Looks Set For Unpredictable Second Term

TAIWAN GOES TO the polls on January 11 to elect a president and legislature after a campaign in which China’s social media influence and what the protests in Hong Kong might foreshadow for the island have taken the spotlight.

President Tsai Ing-wen looks set for re-election, her China-sceptic stance aligning well with the two dominant issues of the campaign. Since the protests in Hong Kong have begun, her poll numbers have risen as those for the pro-China opposition presidential candidate Han Kuo-yu have fallen.

Her victory would do little to ease cross-Strait tensions. However, Beijing will likely restrict itself to political bluster over reunification and military posturing, such as further aircraft carrier group passages through the Taiwan Strait, at least until the endgame in Hong Kong becomes clear.

Meanwhile, Taiwan’s international diplomatic standing will continue to erode and its economy will struggle to escape its long-term sluggishness.

The wild card is the US-China relationship.

As part of its confrontation with Beijing, the Trump administration has been more supportive of Taipei than its immediate predecessors. The newly elected US president controversially took a congratulatory call from Tsai in December 2016, throwing into doubt US commitment to the ‘One China’ policy it has pursued since 1979.  More recently, he approved sales to Taiwan of US military equipment including critical fighter jets, and by starting to draw it into US-led regional security arrangements.

Closer alignment with Washington is a two-edged sword. It will leave a re-elected Tsai hostage to the state of US-China relations, relations that under Trump, who faces his re-election in November, will continue to be unpredictable.

Trump Ups The Ante, But What Is The Game?

WHAT HAD SEEMED to be a passing storm in a teacup has blown up into a tempest.

Taking a telephone call from Taiwan’s president, Tsai Ing-wen, was one thing, especially when the US president-elect’s entourage subsequently played down the potential consequences. It did not signal a change of US policy towards China, they insisted.

But then the man himself upped the ante. He suggested that unless Beijing makes concessions on trade, America will consider abandoning the One China policy, the foundation of Sino-American relations since 1979 and which has allowed the world’s sole superpower to develop a working relationship with the world’s aspirant one.

What had been a restrained response on Beijing’s part hitherto, interrupted into anger, albeit channelled through the state-run Global Times, a publication that never misses the opportunity to blow hard about Chinese nationalism.

It has a reason, though, to suspect that there is an organised campaign to restore Taiwan’s a diplomatic status in the United States. Beyond the telephone call from Tsai, John Bolton, likely to be Trump’s assistant Secretary of State, is known as a China hawk, especially over the issue of Taiwan. Our man in New York sends word that Trump and Bolton met shortly before Trump dropped his hint that the One China policy was in jeopardy.

The extent to which Trump understands the ramifications of the United States abandoning the one China policy is unclear. Less so his advisers. They will know that Taiwan is a red line for Beijing. Trump, on the other hand, possibly regards his comments as no more than an opening bid in a trade negotiation.

In this scenario, Taiwan is no more than a bargaining chip. Beijing, however, sees Taiwan as a first domino that must not be allowed to fall.

Its default position is that the Americans are playing a long game, just as it would. If Taiwan goes, then Hong Kong might also be at risk, especially as there would be support from within the former British colony for any advocacy of Hong Kong independence.

More importantly, Tibet might be next; then possibly Xinjiang. America, this theory goes, is trying to pick apart China one province at a time and thus must be resisted from the outset.

What, though, can Beijing do, and especially against a man who isn’t yet president?

Its easiest option would be to stop supporting the yuan, making Chinese imports into the United States cheaper. That would skewer Trump’s accusations that China is a currency manipulator, at least in the eyes of economists, if not, perhaps, in those of the blue-collar Americans who supported him, in large numbers in the rust belt, in the election campaign.

It could also make life a lot harder in China for those American direct investors, particularly high-tech companies, who manufacture there to export back to the United States or to pursue the market share in China itself of which they dream.  China could also go after big-ticket US exporters to China, such as Boeing, by cancelling orders.

The hope that would be on both scores that US companies would apply pressure on Trump at home not to endanger the trade and investment relationship with China by insisting one following the reckless path of abandoning One China policy.

What Beijing has to do first, however, is to figure out Trump’s true intentions. That may be the hardest part of all.

Two Gentleman Of China

WHEN XI JINPING and Ma Ying-jeou meet in a hotel in Singapore for 20 minutes on Saturday, the diplomatic sensitivities require both men to address each other plainly.

Neither man will formally acknowledge the other’s official title at what will be the first meeting between the presidents of China and Taiwan ever and the first between the leader of the Communist Party and the Kuomintang (KMT) since Mao Zedong, at Washington’s prompting, reluctantly met Chiang Kai-shek in 1945  to try to resolve the civil war they had been fighting for 20 years.

Were they to be speaking in English, they would address each other as Mr Xi and Mr Ma.

Their encounter will be a landmark occasion, but its significance lies in the fact that it is taking place at all, not in what might be said or achieved, which is likely little. There will be no agreements signed and no joint statement afterwards. Indeed, the two men will hold separate press conferences.

That said, the meeting is a bigger gamble for Xi than Ma as he is injecting himself into Taiwanese domestic politics. Ma has to step down next year after completing two terms as president during which he has pushed for closer ties across the Straits of Taiwan. Eric Chu, the Kuomintang (KMT) candidate in January 16’s election of his successor, is trailing the pro-independence opposition Democratic Progressive Party’s candidate, Tsai Ing-wen, who is not trusted in Beijing.

The KMT dumped its original candidate, the unpopular Hung Hsiu-chu, barely three months ago in an effort to close the gap with Tsai and Xi will hope his meeting with Ma will boost Chu’s efforts.

The risk is that the opposite happens if Taiwanese voters, who handed the KMT a punishing defeat in last year’s local elections, perceive the meeting as an unwarranted meddling in domestic affairs.

Regardless of the electoral impacts, it looks to this Bystander’s eye that the closer integration of Taiwan and the mainland will slow whichever candidate wins the presidency. Tsai is campaigning to reverse Ma’s policy and Chu has said the even though he favours continuing to increase economic cooperation, he would pursue it incrementally and at a slower pace than Ma.

Every Chinese leader since Mao has wanted to reunify what Beijing regards as its renegade province with the mainland. With the hollowing of Taiwan’s economic base, its brain drain and ever diminishing diplomatic recognition around the world (although the crucial support and protection of the United States remains), doing nothing and saying less might be Xi’s better bet.

Taiwan’s Opposition DPP Recovers Ground

The gains made by the pro-independence opposition Democratic Progressive Party in Taiwan’s local elections at the weekend were an eye-opener for President Ma Ying-jeou’s governing Kuomintang. Its policy of pursuing closer ties with Beijing were an issue with voters. They worry that it will make the island too dependent on China and that opening up to cross-Straits investment and trade risks local job losses, especially in small businesses. The KMT’s handling of Typhoon Morakot also harmed its vote.

Ma himself will face voters in the 2012 presidential election. The weekend’s results boost the DPP’s leader, Tsai Ing-wen, as an increasingly likely candidate to run against him and confirm her party has put its heavy defeats in the 2007 legislative and 2008 presidential elections under disgraced Chen Shui-ban behind it..