Taiwan’s Stabilizing Move

Economic ties alone cannot overcome the profound ideological divide that separates Taiwan and China. Taiwan is a flourishing democracy that has shed its recent authoritarian past, which is why Beijing fears its example. But business links can still draw the two countries closer and reduce the likelihood of armed conflict.

Taiwanese President Chen Shui-bian’s endorsement Sunday of a recommendation to drop most barriers to trade and investment with China should help reduce tensions. It was also, however, a concession to reality. Chen campaigned as a fervent champion of Taiwanese independence, but since entering office he has muted his rhetoric. The island’s economic slump has made it imperative for him to reach out to China. In a startling metamorphosis, the Taiwanese president is overturning a decades-old official policy of isolation from the mainland.

To be sure, Taiwanese businessmen have already invested in China and regularly travel to China via Hong Kong. But the proposals by Chen’s presidential advisory panel are far-reaching. Already Chen has said he will jettison a $50-million limit on single Taiwanese investments in China and allow capital to move freely. Taiwan can do this unilaterally. Other steps, including establishment of Taiwanese bank branches in China and permitting Chinese investments in Taiwan, will require Chinese assent. Beijing has not yet responded to Chen’s turnabout.

The panel also recommended opening direct postal and telecommunications links and transportation routes. These would be even tougher to implement, for Beijing has declared that such changes must wait until Taiwan concedes the “one-country” principle--that Taiwan is part of China.

Ties with Taiwan are a two-edged sword for Beijing. Already the bustling entrepreneurial culture of southern China looks to high-tech Taiwan for expertise. What Beijing fears is its old dilemma--that the emergence of a middle class in China would lead to demands for political freedoms. After all, this is exactly what occurred in Taiwan. There are, however, significant advantages for China. Taiwan is slipping from its grasp. The island has steadily gotten more confident in its independence from Beijing and has been upgrading its military. This April, the Bush administration agreed to sell Taiwan a large amount of military hardware. In addition, President Bush has stated he would do “whatever it takes” to defend Taiwan.

Taiwan and China would both realize economic gains from closer trade ties. For their neighbors and for the United States, only good can come of a more stable relationship. Bush and his secretary of State, Colin L. Powell, should encourage both sides in this rapprochement.