Commerce Narrows the Taiwan Strait

Murray Fromson, a professor of journalism in the USC Annenberg School of Communication, is a former CBS news correspondent

Leaving this dynamic city and China for the fifth time in recent years, an old Asia hand who covered the worst days of the Cold War cannot avoid a startling conclusion. Either the Bush administration is operating on another planet or what is emerging here is a China-Taiwan relationship that will catch Washington policymakers flat-footed once again.

After more than two weeks of traveling in six cities, the recent political bluster over Taiwan seems strangely at odds with the economic and social reality on the ground.

Americans may believe that the U.S. 7th Fleet will continue to be the ultimate enforcer of the status quo between China and Taiwan. But the tension that grew out of the Cold War and Mao Tse-tung's victory in the Chinese civil war 50 years ago actually is subsiding.

Forget the worn-out images of Chiang Kai-shek and his beleaguered Nationalist armies plotting to recapture China. Instead, Taiwan has managed to invade the mainland successfully with money and not missiles, and its businesspeople have established a beachhead that has all the appearances of a permanent presence. What's more, these entrepreneurs could not be pouring billions of dollars into China's economy without the tacit approval of their own government, no matter what it says for public consumption.

The scope of Taiwan's economic investment in China is growing each month. The Taiwan Times and some economists estimate it to exceed $100 billion, making it the fourth-largest investor in the country. About 50,000 Taiwanese companies are employing millions of Chinese workers. While many of the products are for export, they also are targeted at China's small, but emerging, middle class.

Taiwanese are investors in real estate, shopping centers, spiffy restaurants, hotels and even baseball teams. Two American-born USC graduates, longtime Taiwanese residents, are among them. The baseball teams, playing in seven Chinese cities, are the brainchild of Ronnie T. Hei, who for years lived in Taiwan but now calls Shanghai home. According to Hei, his league schedules games with Taiwan. But Hei says for his league to become a reality required several years of negotiations in 370 different meetings with Chinese officials.

Rick Wang owns the China-wide franchise for the Athlete's Foot and has just opened his 40th store, carrying New Balance, Nike and Adidas. Most of the footwear is manufactured at the world's largest shoe factory, located in the city of Dongguan, where U.S. labels are produced faster than noodles. There, where 40,000 Taiwanese run the assembly lines at this factory and othbers, the Taiwan Businessmen's Assn. has opened an elementary/junior high school for 750 children of its members. The curriculum is from Taiwan. So are its 32 teachers. All of this has been approved by Beijing's Ministry of Education, and the government of China has contributed $2.4 million to the school's construction.

Telephone traffic between Taiwan and China is growing. Nearly half a million Taiwanese travel to the mainland every year to see relatives, explore opportunities for business and even the possibility of retiring in China. The travelers include residents from Quemoy, the Taiwan-controlled island that was a focal point of the Cold War and which the U.S. Joint Chiefs of Staff once considered defending by using nuclear weapons against China.

The fact is that both Taiwan and China are changing and, both privately and informally, they are talking about accommodation. Last month, Chinese television broadcasted a news conference attended by Taiwanese journalists in Beijing, questioning key officials about bilateral relations. The stickler continues to be the issue of "one China." Talk of independence for Taiwan could prove to be a bargaining chip in determining the long-term relationship between Beijing and Taipei.

The other reality, of course, is that while Taiwan is a burgeoning democracy, China is not and is not likely ever to be one, regardless of who is in charge. But a better-educated population is flocking to the Internet in record numbers. This inevitably will lead the Chinese people to be freer and better informed than they have ever been, thereby bringing unavoidable changes in the way they are governed.

That will not happen overnight, perhaps not even in our lifetimes. But the U.S. has to learn to be patient and live with that.

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