Taiwan Keeps Its Distance From China

A new public wariness about closer ties with mainland China has cooled the desire to immediately open direct links across the Taiwan Strait and boosted President Chen Shui-bian’s bid to win a second four-year term next year, political analysts here believe.

The shift in mood, they say, stems in part from Beijing’s tough line toward Taiwan during the springtime outbreak of the pneumonia-like SARS illness. Suspicion of the Chinese leadership’s motives in backing a controversial anti-subversion law for Hong Kong, which was shelved last week, further diminished Beijing’s image in Taiwanese eyes.

On another front, an improved economic outlook and rising Taipei stock market index in recent months have taken the edge off the widely held conviction that quickly opening direct passenger, cargo and communications routes with the fast-growing mainland market was the only way to arrest the island’s economic decline.

“A year ago, people were panicked that Chen had to do something fast on the cross-straits issue, but SARS changed things a lot,” noted Hsu Yung-ming, a researcher at the state-financed think tank Academia Sinica. “They have become more conservative. More see China as a threat, a problem.”

Chen’s Democratic Progressive Party backs independence from China, but Chen himself has conspicuously avoided advocating that position since he won the presidency more than three years ago. Nonetheless, he has been shunned by Beijing’s leaders, who consider Taiwan a part of China and dream of reunifying the island politically with the mainland.

Taiwan’s Nationalist Party, which ruled Taiwan for half a century before losing the 2000 presidential election to Chen, supports eventual reunification with the mainland and says it would launch negotiations immediately to open direct trade links with China if the party regained power.

Among the most searing memories here of the SARS outbreak was a comment in May by Chinese United Nations representative Sha Zukang in Geneva after Taiwan yet again failed, amid a major health concern, to win entry to the World Health Organization: “The bid is rejected,” Sha told reporters. “Who cares about your Taiwan?”

Taiwan has consistently tried to break out of a diplomatic isolation that began in 1971, when the U.N. and a majority of its member states recognized Beijing as the legitimate representative of China. Chen’s party immediately picked up on the Sha sound bite, airing it repeatedly in TV campaign spots.

The Taiwan government Web site’s chronology of the SARS scare blames Beijing for the outbreak and refers to Taiwan’s “arduous and lonely fight against the disease.”

The tactic appeared to have had an impact.

“Public opinion has changed,” said Chin Heng-wei, editor in chief of the social issues journal Contemporary Monthly. “Business still supports closer ties, but the public isn’t so eager for fast interaction.”

Mainly because of these developments, Chen’s party appears to be gaining ground on its opponents after trailing badly in opinion surveys earlier this year. One poll conducted late last month and published in the large-circulation daily China Times last week showed Chen had narrowed a gap of 20 percentage points that had separated him and Nationalist-led opposition alliance presidential candidate Lien Chan to just 8 points.

Those tracking the campaign noted that Lien had recently stopped referring to an earlier pledge that he would immediately visit the mainland if elected, while his running mate, People First Party leader James Soong, has gone quiet on his idea of bringing Taiwan into the World Health Organization as a part of China.

“In 2000, the cross-straits issue was Chen’s weakness, now it’s the [Nationalists] and James Soong who are on the defensive,” Chin noted. “They aren’t sure how to get out of this.”

Swift normalizing of relations with mainland China is a pivotal element of the opposition’s recipe to revive an economy that today suffers from high unemployment and a relentless drain of workers and investment to the far larger mainland market. To stay competitive both globally and in the China market, Taiwan companies have ignored the political chill and invested heavily on the mainland, with an estimated cumulative total of about $100 billion.

Two-way trade across the strait hit $41 billion last year, a jump of 36%, according to official Taiwan statistics.

But Taiwan executives complain that the cost of lengthy detours via Hong Kong for goods and people forced upon them by politics is eating away at already shrinking margins.

“I used to have 25% [profit] margins on a notebook computer, now it’s down to 5%,” said Robert Wen, president of Jean Co., a large Taiwan producer of computer and television monitors with more than a decade’s experience of producing on the mainland. “Direct links would save me a lot of money.”

Those close to Chen say he believes normalizing relations with Beijing is an important goal for Taiwan’s economic future, but he is more cautious than his political opponents, eager to maintain Taiwan’s political distance from the mainland.

The government, fearful of the economic consequences of denying its industry such a vital market yet equally worried about allowing too much of the country’s business assets to settle on hostile ground, has in recent years engaged in a policy of halfhearted restrictions. Many businesspeople believe the rules have compromised Taiwan’s vision of becoming an Asia-Pacific hub for global business.

“There’s a big gap between the government rhetoric and reality,” noted Richard Vuylsteke, executive director of the American Chamber of Commerce in Taiwan.

Vuylsteke said restrictions on visas for mainland Chinese also have brought a decline in the number of regional business meetings and conferences held in Taiwan.

Taiwan officials have “missed the boat,” he said.

As the March 20 presidential election draws nearer, Chen’s government seems to be moving on two fronts simultaneously. For show, the Taiwan military last week staged what was billed as its largest-ever live fire exercise to repel a mock invasion from the mainland.

But the real substance appeared to lie elsewhere in less spectacular form as officials at the Mainland Affairs Council talked about preparing for direct transportation links across the strait. Their comments followed a report issued last month setting out the way forward for such a move.

“We don’t expect any response from Beijing until the election is over, so we’re using this time as a preparation phase,” said Jan Jyh-horng, the council’s research and planning director. “The negotiating phase will begin after March 20.”