Beijing’s unlikely pal

MUNICIPAL elections in Taiwan this month indicate that the Chinese Nationalist Party -- better known as the Kuomintang -- has a stronger than ever chance to return to power after the presidential elections in 2008. Ironically, the political revival of the Kuomintang, which was once the bitter enemy of the mainland’s Chinese communists, threatens to strengthen ties between China and Taiwan at the expense of the United States.

The Democratic Progressive Party has governed Taiwan since 2000. But a continuing scandal involving the wife of President Chen Shui-bian, three members of his presidential staff and $450,000 missing from a secret state fund provided an opening for the opposition Kuomintang.

The party’s electoral success in Taipei -- control of the mayor’s office and City Council -- solidified its hold on the northern half of the island. But it was its near-victory in Kaohsiung, a stronghold of the Democratic Progressive Party, that underscored its remarkable reversal of fortune.

Founded in 1912 by Dr. Sun Yat-sen, the party had consolidated its hold on mainland China by 1928. Led by Chiang Kai-shek, the country emerged victorious from World War II and was awarded one of the five permanent seats on the U.N. Security Council. But rampant corruption within the party and Chiang’s inability to defeat Mao Tse-tung’s communists forced 2 million party loyalists to flee to Taiwan in 1949.

Although confined to an island, the Republic of China prospered. Buttressed by a proclamation of martial law, the Kuomintang invested in banks, investment companies, television stations and petrochemical plants, eventually becoming fully integrated into the island’s economic, political and social institutions. During the 1960s, the Republic of China was more often called Nationalist China, but the good times didn’t last. In 1971, Beijing took Taipei’s seat in the United Nations, and in 2000, the Kuomintang was reduced to minority status after 72 years of continuous rule.

Of course, a lot can happen before the 2008 elections, but the Kuomintang already is acting as if its return to power is preordained. Last year, it sent a trade delegation to China despite lacking the authority to do so. Exploiting an opportunity to sow discord, Beijing rewarded its visitors with the promise of reduced tariffs on Taiwanese imports, a loan program for Taiwanese investors and the gift of two pandas. The ruling Democratic Progressive Party immediately rejected the “poisoned candies,” but the Kuomintang had made its point: Elect us and Taiwan will reap the benefits of China’s booming economy.

Kuomintang leaders insist that the island’s busy factories and trade surpluses can’t mask the fact that Taiwan’s estrangement from Beijing is causing it to fall behind its neighbors. Taiwan’s per capita income of $15,291 is roughly the same as it was in 2000.

“Six years ago, Taiwan’s [gross domestic product] was 30% of China’s,” says Ho Szu-yin, director of the party’s Department of Overseas Affairs. “Last year, it amounted to only 18% of the mainland’s, and in 10 years time we’ll be down to 10%. At 30%, we could afford to keep China at arm’s length, but we can’t go it alone if the ratio keeps declining.”

According to several opinion polls, 30% of Taiwanese want to declare independence and rename their country the Republic of Taiwan instead of the Republic of China. The Democratic Progressive Party supports de jure independence, has proposed rewriting the nation’s constitution and has unsuccessfully tried to negotiate transportation agreements with Beijing on a state-to-state basis.

But the Kuomintang believes that forswearing independence is a fair price to pay for closer economic relations with China’s booming economy. “Instead of pursuing a pragmatic path over the past few years,” Ma Ying-jeou, the party chairman, recently said, “Taiwan has been too ‘idealistic’ for its own good.”

Pro-independence sentiments don’t seem to hurt Taiwan’s economy, which is growing at a rate nearly twice that of Japan’s. The country makes 82% of the world’s laptop computers, 40% of its digital cameras and 70% of the LCD screens. It has more than $70 billion in annual trade with China, with which it runs a huge surplus.

The Kuomintang wants an even bigger slice of Chinese business. To that end, it seeks a rapprochement with Beijing that would result in greater integration of the Chinese and Taiwanese economies. How that would affect U.S.-Taiwan trade, which amounts to $46 billion annually, is unclear. Taiwan is our eighth-largest trading partner and fifth-largest importer of U.S. agricultural products. Most analysts believe, however, that Taiwan can’t look more toward China without turning away from the United States.

The Kuomintang already has blocked the purchase of $18 billion in U.S. arms requested by the ruling party, and it has frozen the budgets of some government departments, rendering them barely functional. Of course, the Kuomintang is not a communist party and can be expected to put its interests ahead of China’s. But a Taipei more closely allied to Beijing could complicate U.S. military options in the region.

Taiwan is a loyal ally that serves as a listening post and tripwire against Chinese expansion. Its intelligence service is a full partner in the war on terror that, unlike Beijing, monitors North Korean maritime shipments. Taiwan’s presence also is critical to the defense of Japan, in that it serves as an unsinkable aircraft carrier from which U.S. forces could be launched.

Befriending a country that has close to 900 ballistic missiles pointed at your capital doesn’t make a lot of sense to President Chen. His concern is shared by the U.S.-China Economic and Security Review Commission, which noted in its report to Congress last month that Beijing’s growing arsenal “puts Taiwan’s ability to defend itself from attack and intimidation in doubt, and that China could impede the United States’ ability to intervene successfully in a crisis or conflict.”

The Kuomintang says it’s looking at different numbers, ones that predict China’s economy will be second only to the U.S. by 2020. At that point, even rigid communists concede that only a war, internal famine or global depression could prevent the gradual introduction of full democracy. If that day ever arrives, the Kuomintang might demand that, as payment for remaining in the fold of “one China,” it be allowed to contest mainland elections. Returning to China as a legitimate player is a Kuomintang dream that refuses to die. The question for Taiwanese is whether it’s worth the price of independence.