Taiwan Political analysis Peter Sutton

Taiwan Political analysis

Peter Sutton Head of Taiwan Research peter.sutton@clsa.com (886) 2 2547 9140

January 2003

Contributors

Christine Loh Civic Exchange, Hong Kong

Byron Weng National Policy Advisor to the President Professor of Public Administration and Policy of the National Chi Nan University in Taiwan

Su Chi Professor, Institute of China Studies, Tamkang University Convener, National Security Division, National Policy Foundation

Flying via Hong Kong Our specialist political speakers at the CLSA Taiwan Vanishing Straits Forum concluded that Taiwan is not going to relent any time soon on direct air links. In fact, if the pan-blue camp stays divided, there will be no pressure on the DPP to move to the centre, and little progress will be made on direct air links. If pan-blue wins the presidential election in March 2004, direct links will happen – but implementation would probably still be slow. Direct links for shipping is far less of a problem than for aviation and could happen quite quickly.

Distinguished speakers at the Forum There were two panel sessions at the forum. The first with participants from Taiwan and the second with participants from the Mainland. Representing Taiwan on day one were Dr Su Chi – Former Chairman of the Mainland Affairs Council, Professor Byron Weng – Political scientist and author and Ambassador Loh ICheng – formerly the minister-counselor at the RoC Washington embassy, advisor to the RoC's UNGA delegation and ambassador to South Africa.

Moderated by Christine Loh, formerly a member of Hong Kong’s legislative council, the panel concluded that direct air links wouldn’t happen soon.

Ambassador Loh – China must change its constitution Loh reminded the conference audience that the Chinese Constitution provides for a state led by the people’s democratic dictatorship observing the ‘Four Basic Principles’ of leadership of the Communist Party of China (CPC), socialism, and Marxist-Leninist-Mao Zedong Thought. The Communist Party must give up its “leading role” before China could reunify with Taiwan.

Professor Byron Weng – security issues in allowing direct air links...... p5 An advisor to the pro-independence DPP President Chen Shui-bian, and from the left of politics, Weng was most concerned about the security implications of direct air links. Inside he gives his perspective on Cross-Straits relations.

Dr Su – If pan-blue divided, then DPP will not change its position .... p10 If the pan-blue camp stays divided, there will be no pressure on the DPP to move to the centre, and little progress will be made on direct air links. If pan-blue wins the presidential election in March 2004, direct links will happen – but implementation would probably still be slow. As a former Head of the Mainland Affairs Commission, with responsibility for ROC policy to the mainland, he brings extensive experience to this issue and represents the KMT view. Inside he writes in detail on Cross-Straits relations.

Survey data shows that a rising percentage of Taiwanese residents identify with a Taiwanese identity rather than a broader Chinese identity.

This has implications for Taiwan’s willingness to accept economic integration into China and the prospects for direct links

The rising trend of Taiwanese identity Both

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Politics before economics

Cross-Strait relations: politics before economics Christine Loh Civic Exchange, Hong Kong

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ust as CLSA was halfway through its Vanishing Straits Forum in Taipei (16 & 17 January), Japanese economist, Kenichi Ohmae predicted that Taiwan and China would unify under a federal system in 2005, which was far more optimistic than the views of panelists Su Chi, Loh I-cheng, and Byron Weng, who have spent most of their lives studying, articulating and establishing Taiwan’s place in the sun.

Despite recent advances in cross-strait relations leading to direct chartered flights over Chinese New Year between Taiwan and the Mainland, the panelists remained cautious in expressing optimism over when reunification might occur. No one denies that a lot of positive and practical things can be done to ease travel restrictions and inconveniences but political reunification is another matter altogether.

Su, Loh and Weng represent the spectrum of Taiwanese views. Su and Loh are KMT old hands. Su was the former chairman of the Mainland Affairs Council - the highest cross-strait policy body, and Loh was a diplomat whose career covered the times from Chiang Kai-shek to Lee Teng-hui. Weng, a distinguished scholar, is a native of Taiwan and now an advisor to the pro-independence DPP President Chen Shui-bian.

Ohmae’s prediction is based on economic considerations. He thinks it does not matter whether reunification took place under some kind of federation, confederation, or commonwealth. His thesis is that with China powering ahead economically at a seemingly fast and unstoppable rate, Taiwan’s prosperity will be increasingly tied to the Mainland as economic exchanges intensify day by day, thus leading to reunification earlier rather than later because Taiwan will see that it is to its benefit to reunify.

Loh reminded the conference audience that the Chinese Constitution provides for a state led by the people’s democratic dictatorship observing the ‘Four Basic Principles’ of leadership of the Communist Party of China (CPC), socialism, and MarxistLeninist-Mao Zedong Thought. Even though China is becoming more market oriented in its economic policies and with President Jiang Zemin’s ‘Three 2

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Represents’, the CPC now represents all sectors of society including business people rather than just the proletariat, China’s system is still a far cry from that of Taiwan’s. It raises the question of whether China would need to change its constitution before it is possible to reunify with Taiwan.

Both Su and Weng emphasised the fact that the Hong Kong solution of ‘one country, two systems’ would not work for Taiwan because it was already a fully democratic polity. The people have the final say over their future and ‘one country’ is not acceptable. Su stressed that there is a ‘mind vs. heart’ problem for the Taiwanese. Whilst in people’s hearts they feel Chinese and are happy to see many positive changes on the Mainland, their heads tell them this is not yet the time to discuss reunification.

The fact is the issue goes to the heart of Taiwan people’s sense of identity. They are not yet able to identify with China. Their identity is with Chinese civilisation but not the political state of the People’s Republic. Su, Loh and Weng noted it was not in anybody’s interest to stoke or provoke the fire of nationalism on either side of the strait, which once flared could be explosive.

Would the 2004 election become a referendum for reunification? Su’s analysis was that it was too early to say. Much will depend on whether the KMT and other parties with former KMT-links could get together to field one candidate against the incumbent Chen. In any event, the KMT’s position is clear: whilst they say they favour reunification, they have no timetable in mind. Weng put it more bluntly: would any elected president then submit to Beijing to become the Chief Executive of the Taiwan Special Administrative Region?

Over the years, much scholarship has gone into thinking about the form of coming together between Taiwan and the Mainland. Whilst Ohmae does not seem to think it mattered what form the reunification took, the Taiwanese are understandably quite fussy. An entity formed by a number of separate states under a central government is not workable for Taiwan because they cannot accept the leadership of the Chinese Communist Party as stated in the Chinese Constitution. A loose confederation where several states join together, like the EU or the Commonwealth, may be an option to explore for Taiwan but not for Beijing.

The good news is that Beijing seems more relaxed than before about reunification. The first national January 2003

Politics before economics

priority is economic development for the next decade or two. President Jiang’s political address at the 16th Party Congress in November 2002 put meeting the goal to quadruple the country’s GDP by 2020 as the party’s top goal. He stated that the CPC would “strive for a peaceful international environment and a good climate in areas around China”. China’s latest White Paper on national defence was also telling. It listed the three major tasks of the Chinese people: “to continue to propel the modernisation drive, to achieve national reunification of the motherland, and to safeguard world peace.” Reunification is in second place even in the eyes of the military.

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There is one last consideration to note. Would Asian neighbours and the US like to see a rapidly growing China that achieves reunification in 2005? Given that many countries are still undecided about how a strong China would behave in international affairs, they are unlikely to be too eager to see Taiwan and the Mainland become one. Nevertheless, we can expect to see a lot more contacts and exchanges of all sorts across the strait but the strait will not vanish as a political barrier any time soon.

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The 16th CPC Congress

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The 16th CPC Congress & Cross-Strait Relations

although the cohesiveness of the Party Central may be a problem. There are a few points to be made in this connection.

Professor Byron SJ Weng

First, the many new faces among the fourth generation leaders are mainly those of the welleducated technocrats. The 8 new members of the Standing Committee of the politburo (SCPB), as well as Hu Jintao are all engineers by training.

Unless the regime fails to overcome the challenges brought on by Deng’s and Jiang’s reform policies, China will be on course for another five years of “peace and development”. Peace and development is conducive to a relatively moderate policy line on Taiwan.

National Policy Advisor to the President Professor of Public Administration and Policy, National Chi Nan University in Taiwan

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he Communist Party of China (CPC) experienced the first peaceful, legitimate transfer of power from the third to the fourth generation of leaders at its 16th Congress. The Congress also heard a report from the retiring General Secretary Jiang Zemin. Among other things, this may be a point in time for assessing the prospects for improvement in cross-Strait relations.

Beijing’s Taiwan stance unchanged In my preliminary analysis, there is little that is new from the 16th Party Congress where cross-Strait relations are concerned. Jiang’s Report to the Congress devoted section 8 to the topic. It is longer than usual but contains largely the same points well known to all. The basic policy is still “peaceful unification and one country, two systems”. Beijing insists on the one China principle and offered to talk with Taipei on any and all topics. It urges the establishment of the three links—postal, commercial and transporta. It refuses to give up the right to use force, stressing that it is aimed not at the Taiwan compatriots but at foreign forces supporting Taiwan independence. And it says the Jiang 8-points remain the position of Beijing at the present stage. If there is anything new, it is Jiang’s specification that the two sides “can talk about” three questions: the formal termination of hostility; the international space for economic, cultural and social activities for which “the Taiwan region” is suited; and the political status of the Taiwan authorities. The precondition again is that the principle of one China be upheld.

There is really no change in Beijing’s position. What may have changed is the tone of presentation and short term tactics. The missiles are still aimed at Taiwan and pressure continues to be exerted through a strategy of international isolation. In both Beijing and Taipei, efforts are being made to find a way to start negotiations over the three links without invoking the question of Taiwan’s sovereign status, but it is unlikely that Taipei will agree to negotiations with Beijing under the premise of the one China principle.

Nor is the transfer of power likely to lead to any abrupt change in Beijing’s policy regarding Taiwan, 4

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Second, Jiang Zemin’s view on Taiwan will continue to influence policy for some time to come. The new General Secretary is Hu Jintao but in the Central Military Commission (CMC), Jiang Zemin remains as Chairman and Hu is First Vice Chairman. The Party probably still controls the armed forces, but with a twist. Whether Jiang will relinquish his CMC post in March 2003 remains to be seen. Hu Jintao may be nominally number one but Jiang Zemin will look over his shoulder if not give him directions. Jiang will probably claim a right, if not the authority, to interpret the “three represents” theory, now written into the Party Constitution as the new guiding thought. Although it is doubtful that Jiang has what it takes to call a SCPB meeting at his home like Deng Xiaoping did, reportedly, Hu pledged to consult Jiang on important matters and Jiang will continue to receive SCPB minutes.

Third, the cohesion of the central leadership may become a problem and a drastic policy change may be difficult to manage. Hu Jintao is an able man. To be in China’s number two spot for ten years and survive it all to succeed Jiang as number one is no small feat. He is said to have a photographic memory and capable of tough decisions. He gave order (after consultation with the Central) for the Tibetan massacre in early 1989. However, Hu’s power is curtailed under the 16th Party Congress setup. He does not have any of his own in the new SCPB team. Jiang’s cronies dominate. A “Hu core” is not a likely prospect, at least, for the foreseeable future, at least not like the “Jiang core”. Some say that Zeng Qinghong, Jiang’s strategic mastermind, may emerge as the new strong man in due course.

One may ask: Will Zeng become his own man and challenge both Hu and Jiang? What then? For a short period, the SCPB will no doubt do Jiang’s biddings (rather than Hu’s) collectively, but collective leadership without a core can not last

January 2003

The 16th CPC Congress

very long before some factional struggles develop.

Under such circumstances, there is a danger that the frustration-aggression theory might apply, although a rational, calculated drastic policy change about Taiwan is less likely.

Fourth, the paramount principles of one-party rule and of stability over everything else are not likely to yield within the next five years. Hence, the badly needed political reform may remain unfulfilled and unification or â&#x20AC;&#x153;one country, two systemsâ&#x20AC;? will not be an enticing option to Taiwan. The reform-oriented 4th generation leaders can be counted on to carry through the economic reform. Bat it is doubtful that they really know the way a democracy works. None of the nine SCPB leaders have any experience of living in a democratic society. Even the muchheralded intra-Party democracy is likely to be timid and controlled. The Preamble to the amended Party Constitution still insists on democratic centralism.

By that Constitution, in elections, candidates cannot number more than 10 percent above the number of offices to be filled. In fact, Deputies to the 16th Party Congress were given a slate of candidates equal in number to the Central Committee membership. They had their 10 percent choice in the nomination process at the provincial delegation level only. Basic level elections in China may have a chance of being elevated from village to township level under a carefully controlled pace, but any higher-level direct elections are simply not within view yet.

Challenges for 4th Generation PRC leaders The 4th generation leaders will face a series of urgent and difficult internal challenges.

Preoccupation with these challenges may mean that the Taiwan question will be further put off.

At the 16th Party Congress, Jiang Zemin reviewed events of the past 13 years, not just the five years since the last Congress. He boasted about great advancements and spoke of a period of unprecedented prosperity. What he chose not to address, however, are the many near-crisis developments that will challenge his successors.

According to a study released by the Taiwan Thinktank recently, debt shares of the SOEs amounted to 400 to 700% of their capital worth in 1998. During 2000, various estimates put the open and hidden national debts at 133 to 192% of the GDP; in contrast, central expenditures amounted to only about 6% of the GDP. Non Performing Loans (NPLs) of the state banks stood at about RMB 3,500 billion or 40% of GDP. Were it not for the high economic growth rate, the high saving rate of the

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Chinese people and the injection of foreign direct investments (FDIs), the bubble could have burst by now. If and when the people lose confidence in the banks; if the FDIs stop coming in sufficient amounts; or if the growth rate of the economy falls below 7% per annum, the Chinese bubble may burst. If and when it does, it is likely to be several times more severe and more far reaching in impact than that of Japanâ&#x20AC;&#x2122;s.

The society is polarised and discontent among the people mounting.

Analysts speak of wide discrepancies in wealth, status and attitudes between the few newly rich and the many newly poor. More specifically, they point to the increasing gap between the coastal areas and the interior, between the cities and the countryside, and between the affluent and working classes of the society. In each case, the mood of those less privileged, unemployed, discriminated against or left behind by the reform is becoming more and more restless. It is obvious to any keen observer that the regime fears mass movements in any form not sponsored or approved by the Party. It will go to considerable lengths to nip in the bud any organisation or gathering that is a potential challenge. The treatment of Falungong is but the most obvious example.

The three agricultural problems (sannong wenti, i.e., problems regarding agriculture, villages and peasants) loom larger with each passing day. In agriculture, arable land is shrinking owing to industrialisation and housing construction.

Environmental pollution is widespread and hardly checked. Investment in agriculture is small in comparison to other sectors and does not meet the actual needs. And the WTO impact threatens to render inefficient producers idle. Villages are not only backward but also infested with corrupt officials who not only pocket funds for schools and public services but also staff the village governments with their relatives and friends which, in turn, necessitate higher or new taxes to be wrung from the poor villagers. Excess labour finds few outlets because the town and village industries (TVIs) have not been able to compete in the market and are closing down.

The peasants are suffering not just from inherent disadvantages compared to people in other professions but also from the new unfavourable conditions. Living costs go up but not the price of agricultural products. The peasants tax burden is a lot more than double that of the city folks (RMB90 to 37 per year on the average by a Taiwan

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Thinktank study). Yet, their wages are lower in comparison to most others. The household registration system and the Certificate for Temporary Residence in cities discriminate against them in many ways. Then, when they manage to earn a few yuan and send it home, their relatives often get IOU white slips from the local post office that is depleted of cash. Thus, disgruntled peasants resort to demonstrations and even riots.

In spite of pointed regulations and policies aimed at it, corruption is rampant at all levels and crime rates in the society are high. The problem of rampant corruption is rooted in the undemocratic political system that gives officials undue power without effective supervision and in the transition of the economic system from a socialist to a capitalist one. Communist morality has collapsed but one cannot find any effective code of behaviour it its place. The rule of law is not effective because the Party continues to stand above the law. Important and high officials have been brought to justice, or so it seems, as in the cases of Chen Xitong and Zhu Xiaohua. Still, more have been swept under the carpet, as in the rumoured cases of Jia Qinglin’s wife, the many “princes”, and so on. The sum of money illegally taken through corruption is staggering. Such corrupt practices, generally known, in turn, make the people cynical and prone to act immorally if not illegally. As to lower level functionaries, including petty village officials, their illicit practices affect the behaviour of commoners just the same. It is no wonder that crimes of all sorts are committed in all segments of the society and suicide rates are high. The death penalty has been used so often in China that Amnesty International makes it a special case for attention.

There are more latent crisis problems: unemployment, poverty and the floating population deserve scrutiny, for instance. But enough said. To rule China is no easy job. To be 4th generation leaders is going to be doubly difficult, for their power/capacity to use high-handed coercive measures may become more restricted but the problems they have to deal with become more and more complicated. Can they meet the challenge?

How can they afford to divert their attention to the Taiwan Straits under such circumstances?

Moderation in the short-run - regional domination in the longer run In the short-run, the foreign policy of the 4th generation leaders will probably continue to be relatively moderate.

Clearly, development diplomacy has been, is and will be a priority with

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Beijing’s 4th generation leaders. The slogan, “Nations want independence!

Peoples want liberation! The people want revolution!” is heard no more. In public pronouncements, Beijing shuns war, for China requires a peaceful international environment in order to develop its comprehensive national power at the present stage. The motto is peace and development. This is said to be the tide of the day. Hence, the priority is to cultivate relations with the developed nations, particularly the US, so as to attract FDIs and obtain technology transfers. Thus, development diplomacy has as its primary purpose development rather than unification. Just the same, however, it is helping Beijing’s unification cause along the way.

There is no denying that Beijing’s foreign policy has been relatively conciliatory during its reform period.

In dealing with the United States, Beijing has proven itself quite flexible. In the cases of the SS Inhe stop and search, the bombing of the Chinese embassy in Belgrade, and the EP-3 mid-air collision, it protested strongly but took no retaliatory action of real significance. Swallowing discontent and humiliation, Jiang and Hu exchanged state visits with Clinton and Bush in order to mend relations with the US. It seems acknowledging the dominant status of the United States in global affairs is making a virtue out of necessity, so to speak. After the September 11th terrorist attack, Beijing quickly chose the American side and indicated a willingness to support the Bush anti-terrorist policy.

The 4th generation leaders participated in these developments as policy implementers, if not policymakers, during the Jiang 13-years. They too cannot afford to antagonise the US. As they carry the economic reform further down the road, it is to be hoped that they will follow the same moderate line.

If this analysis is sound, then the Taiwan Straits will be relatively quiet in the coming years, for it is Washington’s position that the cross-Strait problems between Beijing and Taipei must be settled by peaceful means and the Bush Administration clearly believes that it is in the interests of the United States to maintain a strategic balance in the Taiwan Straits area. Whatever is said, the 4th generation leaders are still in no position to make the final call on the Taiwan question. With the United States as the central concern in Beijing’s worldview, they are not likely to have such freedom for now.

In the longer run, however, one must not harbour any illusion that Beijing will not pursue a more ambitious course in its foreign policy. Jiang has endeavoured to build up China’s big power image January 2003

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The 16th CPC Congress

and few doubt that, if they can have their way, the Beijing leaders may try to make China a dominant regional power. This entails, in addition to annexing Taiwan, preventing further American encirclement of China, taming a more assertive Japan, managing a divided Korea, salvaging and consolidating comradeship with Russia and other former Soviet republics, maintaining good neighbour relations with India and Pakistan, and making the best of ASEAN Plus One. However, these are not easy tasks and cannot be rushed at will.

Beijing opposes Washington’s unilateralism and advocates multilateralism. In the new game of antiterrorism co-operation, Beijing has insisted that international actions should be taken only with UN authorisation. [Beyond that, Beijing took the opportunity to officially label the Falungong group as terrorist and managed to have the UN and the US designate the East Turkistan Islamic Movement (ETIM) as a terrorist group. It also supports Moscow’s designation of the Chechen rebels as terrorists.] The war on terrorism has enabled the US to establish footholds in central Asia, Pakistan and even India. That is alarming to Beijing. While cultivating a “strategic partnership” with the United States, Beijing did not abandon its flirtation with “the Axis of Evil” states. Top leaders visited Iran, Iraq and North Korea, ostensibly to play the role of a facilitator. Some say, this is actually in preparation for a day when an anti-American coalition can be formed. And Jiang and associates certainly do not see eye-to-eye with their American counterparts with regard to fundamental human rights, an open, free and just society and a democratic government.

Such differences are real.

This means the medium and long-term assessment of the cross-Strait situation will be more uncertain.

Beijing may become more aggressive as it perceives an improved power position vis the United States.

Unification through economic integration and the Three Links There is one area, namely, the economic relations across the Taiwan Straits that is of great concern to Taipei. Here, one must look closely into possible alternative developments. As a result of Beijing’s development diplomacy, one hears of the market of 1.3 billion consumers and “the giant sucking sound”. Lately, the talk is about “the factory of the world”. Such characterisations are telling, if somewhat exaggerated. Taiwan, like Hong Kong and Southeast Asian countries, is suffering the negative effects of China’s deflation export. Factories close down and unemployment rises. The people are

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restless. Many fear that Taiwan’s economy will become hollow as more and more of Taiwan’s own investors move across the Straits to the other side.

‘Under the principle of one China, everything can be negotiated.’ So Beijing repeats, even as it buys out another “little friend” from among Taiwan’s remaining diplomatic allies or squeezes Taiwan out of another international arena. Within Taiwan, the DPP administration resists any Beijing effort to pull or push it to the negotiating table, but the opposition politicians are responsive to Beijing’s united front manoeuvres and pressure the government to establish direct transportation links to the mainland. These politicians argue that economic integration leads to interdependence and intertwined mutual or common interests. That may be where Taiwan’s national security lies since China, like all other nations, will not intentionally damage her own economic interests. With every passing day, one senses that Beijing’s strategy of “encircling the government through the greedy businessmen” and “getting to the officials through the susceptible people” is actually having some effects. It is not too far from truth to say that Beijing is quietly pursuing a new strategy of “achieving unification by means of ‘the three links’ and economic integration”.

Engaging China What can be done then to improve cross-Strait relations? Here, by improvement, we mean to say a reduction in tension or an increase in friendly contacts and exchanges rather than a change leading to either unification or independence. With regard to China, I suggest the following.

First, a policy of conditional engagement or “congagement” (containment + engagement) toward China is advisable over containment or engagement. The purpose is China’s peaceful change. China is already changing significantly.

Skilful guiding and nudging can help her become a more normal and responsible member of the international community.

Second, the Beijing authorities need to be persuaded to adopt a more enlightened notion of sovereignty. This is at the root of Beijing’s rigid position regarding the “one China principle”. A breakthrough in this alone will make negotiations between Beijing and Taipei a reality. The international community can be helpful through a deliberate and concerted effort in this regard.

Third, the United States, and hopefully also Japan, the EU and other nations of the world must continue to insist on peaceful settlement of differences 7

The 16th CPC Congress

between Beijing and Taipei. One should be clear and unyielding in this.

Fourth, the international community can also encourage the two sides to negotiate for an interim agreement pending the final settlement of the question of Taiwan’s status. Such an interim agreement will reduce tension and facilitate smoother relations across the Taiwan Straits.

Fifth, efforts toward the creation and placement of confidence building measures (CBMs) are in order.

Good examples include, unilaterally, greater transparency regarding force deployment; bilaterally, better direct communication and mutually beneficial exchanges; multilaterally, provision of good will and mediation by third parties, or a system of dispute settlement through international organisation. If the international community succeeds in fostering the establishment of a hotline between Beijing and Taipei, for instance, tension in the Taiwan Strait may have less possibility of flaring up.

Impact of democratisation on Taiwan’s mainland policy Can Taiwan do something to improve cross-Strait relations? There are a number of obvious moves possible, but paying for the costs may be difficult, if not prohibitive. Obviously, if Taipei can find its way to accept the “one country, two systems” formula offered by Beijing, the road ahead will open up. But the people of Taiwan have said no to this loudly. If Taipei is willing to accept the one China principle, that will lead to negotiation in no time. But Chen Shui-bian has said clearly that “one China” can be an agenda but not a precondition for any negotiation.

Presently, Chen’s DPP administration is under the watchful eyes of all interested parties for its response to Beijing’s seemingly flexible new overture about the three links. The question of transportation links need not be political, according to Qian Qichen. Called it “cross-Strait lines” rather than domestic or international lines. He said recently. Negotiations can be carried out by designated private agencies under government authorisation as was done in the Taiwan-Hong Kong line. His overtures must sound very reasonable to third parties. Certainly, the response from the prounification circle and the big businesses in Taiwan has been quick and positive. But, Chen and his government have been very cautious so far. They said that Beijing’s new offers are still being studied.

The involved departments-- the Mainland Affairs Council, the Ministry of Economics, and the Ministry 8

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of Defence, among others-- have done the homework and plans have been made for the three links. Amendments to relevant laws have been drafted and sent to the Legislative Yuan to enable “reauthorization” of negotiation agencies (e.g., the Strait Exchange Foundation can, with Government approval, reauthorize a private agency to negotiate with a counterpart designated by the Beijing authorities). However, the people of Taiwan are also warned that establishing the three links will not be a panacea to the many difficulties that they face today. It might even accelerate the hollowing of Taiwan’s economy. It is still not certain that actual negotiations over the three links will take place soon perhaps because no solution has yet been found for dealing with the possible negative impact of direct transportation links. Former President Lee Teng-hui adopted a “Haste not; be patient!” policy while in office. He is still adamantly opposed to direct transportation links for now.

It must be pointed out that Taiwan has also changed: it has democratised during the past fifteen years and the first democratic, peaceful transfer of power has taken place. A full-fledged but immature democracy is at work and the politics of election rhetoric and costly inter-party bickering consumes much of Taiwan’s resources. The representative bodies, the opposition parties, the sensationalism-prone media and the newly assertive people are all very keen to scrutinise matters of public policy, including, nay especially, China policy. Mass participation is sometimes disruptive and counter-productive. Chen’s DPP government, with a mandate of just 39% of the electorate and the support of less than a majority in the Legislative Yuan, has been unable to implement its programs. It takes the responsibility of government seriously but has been unable to reign in the unruly elements of the overly politicised society.

Over the years, some have accused Taiwan of being “a trouble maker”. That is unfair and not at all helpful. In her own way, Taiwan can endeavour to contribute to the several measures suggested above with regard to the PRC. Taiwan would benefit from an interim agreement and can help institute certain CBMs. If the people truly want the three links, steps might be taken to realise them. In the final analysis, however, the cross-Strait situation will probably remain stalemated for a while. Rushing things may not be the right answer at this point.

Taipei, December 12, 2002 Amended January 15, 2003

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Taiwan’s mainland policy

Driving forces behind Taiwan’s mainland policy Professor Su Chi Graduate Institute of China Studies, Tamkang University, Taipei

A revised version of paper presented at the Peace Across the Taiwan Strait Conference, 23-25 May 2002, sponsored by the Asian Studies Centre, Oxford University, UK

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he relationship across the Taiwan Strait has long been one of the most important issues in the world. However, the relationship has been so rigid and Taipei’s and Beijing’s policies toward each other have been so predictable that for decades they have attracted little attention. It emerged as a contentious policy issue-area and a field of serious academic study only in the late l980s when the people (not yet governments) began to interchange in various ways. Only then did the Chinese term for the relationship, liangan guanxi, come into use. And its English translation, cross-Strait relations, came even later. So did the term for Taipei’s Mainland policy, dalu zengce. All “specialists” in this field are in this sense latecomers because they used to belong to other fields.

The new field has thus not accumulated sufficient research findings over the past dozen years. The least satisfying is the question of the domestic linkage of Taiwan’s Mainland policy.

This paper represents an initial attempt to venture into this unknown field. I will begin with a brief sketch of Taiwan’s Mainland policy in its different stages, followed by a discussion of the context in which the policy evolved. The influence of the Ideas, Institutions, and Players moving the policy will then be explored.

The policy Taiwan’s Mainland policy has gone through several stages since November 2, 1987 when some Taiwan residents (mostly veterans of the civil war) were allowed to visit their relatives in the Mainland.

Confusion, experimentation, and improvisation characterised this initial stage of Taipei’s policy.

After nearly forty years of separation and confrontation, only a small number of people in Taiwan then had any experience in dealing with the Mainland. Fewer knew how to interact peacefully.

The ministry in charge of co-ordinating and policymaking, the Mainland Affairs Council, was not to be established until January 1991. And its precursor,

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the Working Group on Mainland Affairs (August 1988-January 1991), was only beginning to draft regulations with the hope of injecting some order into the chaos. However, the direction of the policy was unmistakably toward more opening and more contact with the Mainland. Recent disclosures pointed to the onset of a direct, secret channel between then President Lee Teng-hui of the Republic of China and the Beijing leadership in 1990 – a channel that preceded and later co-existed with the “officially unofficial, and unofficially official” channel between the Strait Exchange Foundation (SEF) and the Association of Relations across the Taiwan Strait (ARATS).1 The pronouncement of the end of martial law on April 30, 1991 by President Lee marked the beginning of the second stage. The declaration made two breakthroughs.

One, Taiwan’s democratisation was to begin in earnest as the martial law period was over. Two, the Mainland would no longer be treated as a “rebel group,” but as a “political entity” more or less on an equal footing with the Republic of China on Taiwan. In both senses, the declaration represented a change of paradigm. Henceforth, the Taiwan people could openly visit, trade, marry and otherwise interact with the people on the Mainland without fear of being accused of “aiding the rebels.” And the ROC government would no longer be bound by its past paradigm which prohibited any contact with their counterparts in the People’s Republic of China and could proceed to negotiate over issues of mutual concern. In 1992, during the first face-to-face encounters of both sides in decades, the SEF and the ARATS haggled over the most difficult issue of “one China,” culminating in a compromise whereby each side would state its own definition of “one China” and then leave the issue aside at that. This compromise, later dubbed “the l992 consensus” led to the meeting of the two venerable Chairmen, Koo Chen-fu and Wang Daohan in Singapore in April 1993, which paved the way for two full years of talks alternating between Taipei and Beijing.2 In retrospect, this stage is the only period of thaw in the five decades of tension in the cross-Strait relations.

The third stage began with Lee’s visit to Cornell University in June 1995 and the PRC’s furious reactions to that visit. In rapid succession, the PRC discontinued the SEF/ARATS talks, threatened Taiwan with missile firings and military exercises and demonised Mr. Lee and his government in its domestic and international propaganda. The three agreements (on illegal immigrants, hijackings, and 9

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fishing disputes) that were near completion at the time of the Cornell visit remained unsigned to this day. Beijing’s sabre-rattling brought in world sympathy for Taiwan and two U.S. aircraft carrier battle groups to its vicinity. More importantly, in March 1996, it gave Mr. Lee a clear majority in the four-way race for the presidency. The taste of victory was rather short-lived, however. The domestically invincible President soon found his hands bound from the outside. Viewed as a “trouble-maker,” Mr. Lee and his government no longer enjoyed the world (and the US) goodwill.

While continuing to cold-shoulder Taipei, to the point of partially denying the existence of the political compromise of 1992, the PRC quickly moved to improve its relations with the US. President Bill Clinton’s remarks of July 1998 about the so-called “three nos” (i.e. the US does not support Taiwan independence; it does not support “two Chinas” or “one China, one Taiwan”; it does not support Taiwan’s membership in any international organizations that require statehood) was especially alarming for those in favor of eventual Taiwan statehood, because it was thought to be foreclosing its preferred option. The heightened tension during this stage even spilled over to the economic and cultural exchanges. The mainland investment policy of “go slow and be patient” was announced in September 1996 partly with this trend in mind. Under those circumstances, the visit of Mr. Koo to Shanghai and Beijing in October 1998 was more an exercise in damage control than anything else. For President Lee was by then gearing up to break out of the bondage by

changing the paradigm itself.

The fourth stage spans from July 9, 1999, when Mr. Lee made his remark about the “special state-tostate relationship” to a German radio reporter, to this day. The “special state-to-state relationship” was nothing short of a “new paradigm.” But owing to enormous pressures from all sides he had to return to the ROC’s long-standing position about “one China, with respective interpretations,” without implementing any portion of its original design up to the end of his presidential term.3 However, President Chen Shui-bian has been doing just the opposite since his inauguration in May 20, 2000. He and his administration officials have made no mention of the “special state-to-state relationship” but have, slowly but surely, put into practice the suggestions contained in the yet undisclosed policy study commissioned by President Lee to Dr. Tsai Ing-wen in August 1998.4 The deliberate rhetorical ambiguity was finally removed on August 3, 2002 when Chen proclaimed publicly that Taiwan and the Mainland were “one country on each side”.5 The continuity of the “new paradigm” from Lee to Chen was made possible by three factors. First, as Table 1 shows, the core of the “special state-tostate relationship” study of July 9, 1999 was nearly identical to that of the “Resolution on Taiwan’s Future” of the Democratic Progressive Party (DPP) passed by the DPP Party Congress on May 8, 1999.6 For both, “Taiwan is a sovereign country whose name, according to the present Constitution, is the

Table 1

DPP Resolution on Taiwan’s Future and Lee Teng-hui’s “Special state-to-state relationship” Resolution on Taiwan’s Future Timing of study and announcement Adopted on May 9, 1999 at the DPP National Congress Taiwan’s status Taiwan is a sovereign and independent country.

Official title It acknowledges the title of “the Republic of China” under the current constitution.

Sovereignty and jurisdiction

Cross-Strait relations

The One China principle

Prospect on cross-Strait relations

10

Taiwan’s jurisdiction covers Taiwan, Penghu, Kinmen, Matsu, its affiliated islands, as well as territorial waters and adjacent bodies of water in accordance with international law.

Both Taiwan and China share geographical proximity, mutual economic benefits and same cultural origins.

Taiwan should abandon the “one China” position.

Taiwan and the PRC do not govern each other. Any change in the existing independent status must be decided by all the residents of Taiwan by means of a plebiscite.

peter.sutton@clsa.com

The Statement of Special State-to-state Relationship The study was first started in August 1998 and completed in May 1999. The statement was made on July 9, 1999.

Taiwan is a sovereign country.

It suggests a three-phased transition: from “the Republic of China”, to “the Republic of China on Taiwan”, and gradually to “Taiwan/Republic of China” (a “New Republic”).

Sovereignty and jurisdiction do not cover mainland China.

Taiwan’s effective governing area covers only Taiwan, Penghu, Kinmen, and Matsu, which constitute Taiwan’s national territory.

Cross-Strait relations should be categorized as a state-tostate relationship or at least a special state-to-state relationship.

It rejects the following views: the CCP’s “one China principle”, the KMT’s “one China principle”, “one China with respective interpretations”, “one China means the Republic of China”, “one country, two governments”, “one divided China”, “one China, two co-equal political entities”, etc.

It does not preset any long-term objective with respect to cross-Strait relations except presenting a procedural explanation, meaning that Taiwan’s future should be determined by all the people on Taiwan. The idea of “unification under democracy” or “unification” should no longer be advocated.

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Republic of China.” Hence, “Taiwan”, being a sovereign country, is not a part of China; and the “Republic of China” is being reduced from a sovereign country to merely a label for the sovereign Taiwan. As such, the later President Lee changed, in 1999, the paradigm set by the early President Lee himself in 1991. And the self-identity of the “Republic of China” was transformed from a sovereign country representing the entire China (1949-1991), to a sovereign country within the historical, geographical and cultural China (19911999), to merely a label for the sovereign Taiwan (1999- ). The identity of the “People’s Republic of China” was transformed from a rebel group (19491991) to a political entity, “another part of China” more or less equal with Taiwan (1991-1999), to another sovereign country with special relationship with the sovereign Taiwan (1999- ). And the selfidentity of “Taiwan” was transformed from the seat of the ROC Government and a model province (1949-1991) to the sovereign ROC, a political entity and also “a part of China” (1991-1999), to a sovereign country who still bears the name of the Republic of China (1999-).7 The fact that the Resolution on Taiwan’s Future was upgraded by the DPP in October 2001 to the level of the Party Charter indicates that, as far as the party members are concerned, this Resolution is equal in importance with the Party Charter which has openly advocated Taiwan Independence. There is no evidence to suggest that there was a secret channel between the framers of Lee and Tsai’s study group and the initiators of the DPP Resolution, even though the timing of their births, July and May of 1999, was curiously close. What seems clear is that the DPP basically inherited the core thinking behind Lee’s “special state-to-state relationship” study.

Whether by design or by coincidence, President Chen picked up where President Lee left off.

Two other factors helped ensure the continuity of the paradigm. Strong opposition at home and hostile PRC leadership across the Strait made the Chen-Lee alliance, however tacit, a political necessity. Time and again, President Chen has failed to split the Kuomintang (KMT)-People First Party (PFP) alliance and/or the Kuomintang itself.

Time and again, he had to seek the support of Mr. Lee and his TSU (Taiwan Solidarity Union) followers.

Consequently, despite occasional invocation of the so-called “new middle road,” Chen had no choice but to follow Lee’s old road.

The third factor had to do with President Chen’s personnel choice. As is now known, nearly all the members of Tsai’s study group, including Tsai January 2003

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herself, were non-KMT members, even though the study was commissioned by the KMT Chairman (Lee Teng-hui) and paid for by the KMT administration (as disclosed recently, a secret fund known to Lee and a few others).8 After Chen succeeded Lee as the President, he retained the services of nearly all the members of Tsai’s group in Mainland Affairs Council, the National Security Council, and other advisory roles where they would implement their own suggestions from first-hand knowledge.

As a result, whether by ideology, political necessity or personnel choice, President Chen’s Mainland policy is built on the “later Lee’s” unrealized legacy, which is not only different from the policy of the Chiang Ching-kuo years, but from that of the “early Lee’s” to which the KMT/PFP basically still hold up now. How did the transformations take place? Who and what have influenced the process? These are the questions to be answered below.

The context Taiwan’s policy toward the Mainland is, generally speaking, shaped by the Beijing factor, the international (especially the US) factor, and the domestic factor. As Taiwan democratises itself over the years, the domestic factor gains in weight and complexity. Within the domestic context, the Mainland policy has never stood alone. In fact, its evolution since late 1980’s has been inextricably intertwined with three other parallel processes: the democratisation process beginning also in the late 1980s, the desire and pursuit of greater visibility and participation in the family of nations, and the effort to promote continuous economic growth.

There are several special features about these four processes. First, three out of the four processes were completely new to Taiwan, even the entire Chinese people. For instance, the entire Chinese people have not experienced anything like democratisation during their thousands of years of history. Hence, Taiwan had to experiment on its own, building on the basis of four decades of “guided democracy” in Taiwan, borrowing from the West and Japan, and improvising here and there.

The same was true with the opening to the Mainland and the “pragmatic diplomacy.” By the late 1980’s, the confrontation across the Strait and in the international arena had gone on for so long that no one remembered anything else. Everything had to start anew. And everyone had to learn to adjust – rapidly. Secondly, during the last decade, Taiwan did not have the luxury of handling these new-born things one by one, but had to juggle them all at once. What it entailed was that the issues were linked up; emotions flew high; and consensus was 11

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difficult to come by. Last but not least, the relationship among the four processes became critical. For example, greater or lesser emphasis on Mainland policy or foreign policy would have very different consequences for the domestic politics and economic growth. The debate on economic issues would most likely have implications for mainland and foreign policies. Hence, over the past dozen of years, the people in Taiwan were doing several things at the same time: adjusting their relations with the outside world, rearranging the domestic order, redistributing power among the elites, and fighting for different policy mix.

Among the three other processes, democratisation process appears to have exerted the greatest influence on the Mainland policy. As said earlier, the origin of Taiwan’s Mainland policy has often been dated to November 2, 1987 when Taiwan residents were allowed by the government to visit their relatives on the Mainland. That was only two months away from the death of the late President Chiang Ching-kuo (January 13, 1988) and the ascendance of Mr. Lee Teng-hui as the President.

So, from the very beginning, the Mainland policy has been framed and shaped by the democratisation process and its built-in transfer of power – from generation to generation, from mainlanders to “native Taiwanese,” and from one political party to another.

Normally, politics is about reallocation of values and power. And democracy is a form of popular participation in this process of reallocation. Yet, different countries tend to develop different types of democracy according to their history and culture.

Taiwan is no exception. In Taiwan’s case, three unique features stand out. First, as Table 2 shows, between 1988 and 2002, there has been at least one election each year, except only 1988 and 1999.

This is because, according to the Constitution, the ROC has four levels of government (central, provincial, county and township) until the end of 1998 and three (minus the provincial) since 1998.

Each level has executive and legislative branches.

And the central level had had, until 2000, two legislative bodies: the Legislative Yuan (LY) and National Assembly. So, at its “highest” point, Taiwan’s democracy had ten elections. Since each office has different lengths of term (three years for the LY Legislators, six years for the pre-1996 presidency and National Assembly, and four years for the rest), Taiwan’s voters have to go to the voting booth nearly every year to register their preferences. And since Taiwan is relatively small in size, densely populated, and has a highly opinionated population, no election is considered too small and too local to be hotly contested. The high frequency of elections thus tends to permeate the otherwise “rational” policy-making process with a high degree of political content. The emotionladen Mainland policy is particularly susceptible to this tendency.

Second, Taiwan is the only democracy in the world that still uses the single non-transferable vote under Multi-Member-District (SNTV-MMD). Because one needs perhaps only three percent of the total votes in a large district to win,9 this system is conducive to the survival of small parties and/or radical wings of the large parties and tends to radicalise the

Table 2

Taiwan’s elections（ （1988～ ～2002) ) President

1988 1989 1990 1991

LY

National Assembly

Taiwan Governor

"

Provincial Assembly

Taipei, Kaohsiung Mayor

"

Taipei, Kaohsiung Council

County Mayor

"

"

"

"

"

" "

1994

"

"

"

"

"

"

"

"

1995

"

" " "

1998

2001

"

" "

1993

1999 2000

Township Head

"*

1992

1996 1997

County Council

" "

"

2002

Note: Data was compiled by the author. * In 1990, the President was still elected by the National Assembly, not by the populace.

12

peter.sutton@clsa.com

January 2003

Taiwan

Taiwan’s mainland policy

campaign debate. It also undermines party discipline, because candidates compete not only with members of other parties but with their own comrades. As a result, negative campaigning seems to be a norm, rather than an exception. Rational debate tends to be drowned out by simple sloganeering. Again, the Mainland policy, being at once highly complex, emotional and consequential, has been a prime subject for campaign manipulation.

Third and perhaps most important has to do with the nature of the public political debate in Taiwan’s democracy. Theoretically, debates in any democracy take place on three levels. The highest level is that of boundary and identity of a state. The perennial debate over “reunification” and “independence” in Taiwan is a case in point. The second level is over the political system, such as democracy versus dictatorship, the presidential system versus parliamentary government, etc. During the 1990s, the ROC went through six rounds of constitutional revisions, each involving power redistribution among government organs. The third level concerns public policy, such as trade, environmental protection, war and peace, and mainland policy, etc.

Most of the mature democracies have resolved the issues on the first and second levels and conduct political debates only on the third level. For instance, the North American Free Trade Area (NAFTA) had been a subject of heated debate for years before it finally won US congressional passage by a one-vote margin. The debate was never raised to either of the first two levels, however. Canada is a rare exception because of Quebec separatism, but there has been no debate on the systemic level.

Some other countries (e.g. South Korea), in the process of democratisation, would debate over constitutional arrangements on the systemic level, but a high degree of consensus always exists consensus on their status as nation-states.

In contrast, Taiwan has been and still is experiencing heated debate involving all three levels simultaneously.

This is a unique phenomenon. Generally speaking, quasi-religious fervour marks the debate involving the first level.

The second and third levels tend to highlight struggles for power and a conflict of interest respectively. An open debate on one level alone is usually sufficient to fuel fierce partisanship among the general public. One can imagine how divisive a debate can be while involving all three levels – state, system and public policy – simultaneously as is now on Taiwan. Here lies the knot of political –

January 2003

peter.sutton@clsa.com

and for that matter, Mainland policy – predicament in Taiwan today.

In many ways, ROC’s foreign policy and Mainland policy have been Siamese twins. Both are parts of the country’s external environment. Both represent and express the deep frustration of Taiwan’s people over its status in the world. Both help release Taiwan’s pent-up energies into the outside world.

Both were born, nurtured, and honed by the democratisation process. As such, both are closely related in the minds of the decision-makers and many citizens.

According to the surveys commissioned by the Mainland Affairs Council (MAC) and conducted by five different polling units over the years, when asked to compare the importance of “developing cross-Strait relations” and “developing foreign relations,” the twins closely tail each other, with “foreign relations” leading during the KMT period and “Cross-Strait relations” leading during the DPP period. (see Figure 1) But when asked “if foreign relations would bring about cross-Strait tension, are you in favor of developing foreign relations?” the “yes” percentages consistently outnumber the “no” answer by 60 to 20. (see Figure 2) Figure 1

Priorities - foreign or cross straits relations?

70 60 50

Both are equally important Developing foreign relations is more important Developing cross-strait relations is more important Don't know

40 30 20 10 0 Aug-96 (c) (1067)

Apr-98 (b) (1067)

Sep-98 (e) (1078)

Aug-99 (c) (1067)

Apr-00 (a) (1085)

Feb-02 (a) (1081)

Source: http://www.mac.gov.tw/english/POS/9102/9102e_5.gif

13

Taiwan’s mainland policy

Figure 2

Are foreign links worth rising cross-Straits tensions?

90

Yes

No

No opinion

80 70 60 50 40 30 20 10 0 Aug-97 Apr-98 Jul-98 Oct-98 Aug-99 Feb-00 Mar-01 Feb-02 (a) (d) (b) (c) (e) (a) (b) (c) (1067) (1067) (1098) (1107) (1067) (1067) (1077) (1081)

Source: http://www.mac.gov.tw/english/POS/9102/9102e_4.gif

Translating this popular sentiment into policy practice would necessarily entail greater confrontation with the PRC and more frictions with Taiwan’s friends abroad who may wish to maintain good relations with both and yet avoid being drawn into their bilateral conflict. The Taipei government is thus caught between the rock and the hard place.

Pushing too hard on the foreign front may damage the cross-Strait relations and create tension. Yet doing little, for whatever reason, runs the risk of being perceived by the voters as too soft. Among the foreign relations, the U.S. connection has always been of prime importance to Taiwan, being the major source of its advanced weaponry and technological know-how. During the pre-1996 period, the KMT administration under Lee sought to simultaneously advance relations with the U.S. and the world (including the UN campaign) and initiate a rapprochement process with the PRC. The Cornell visit of 1995 and the ensuing military tension thwarted both processes, thus generating a sense of collective insecurity in Taiwan which led to greater alienation for the Mainland as well as stronger yearnings for a proper role in the world. By contrast, the DPP administration since 2000 seems to have given clear primacy to foreign (especially US) relations over Mainland relations in response to popular frustration. This policy in combination with heightened cross-strait tensions appears to give the US greater influence in Taiwan’s mainland policymaking, and, as shown by the three post-2000 surveys, stir up new anxieties over the Mainland relations.

As for the balance of politics and economics on the scale of the Mainland policy, it has always tipped in favor of the former, but the balance is clearly 14

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changing. For most of the 1990s, most of the Taiwanese investments in the Mainland were small and medium-sized enterprises. Weak in organisation and finance, they could hardly lobby the government, executive or legislative, for a preferred policy. Besides, former President Lee Teng-hui exercised stringent control over the highly political Mainland policy. While the “army of ants”, as the small and medium-sized enterprises were sometimes dubbed, could slip through his fingers, he went out of his way to half-cajole and halfcoerce those few business tycoons, such as Y.C. Wang of the Formosa Plastics Group and Chang Jung-fa of the Evergreen Group, into staying home.

Toward the end of 1990s however, several factors converged to change the picture. More than half of the companies listed in Taiwan’s stock exchange had by then invested in the Mainland.10 Anticipation of the PRC’s entry into the WTO and Beijing’s expansive fiscal policy added more impetus to the westward drive. Clearly these large enterprises needed longer-range planning for their investments, and they needed lobbying to ensure a more favourable, or at least more predictable, environment. They were also better equipped for lobbying. Meanwhile, the role of the government has changed. For the 2000 presidential campaign, the DPP as a less financially endowed political party sought most eagerly the support of the businesses.

Not only could they help filling up the campaign cachet but painting a pro-business image as well.

So the influence of the businesses on the Mainland policy has increased, not decreased, during the period when the formerly pro-labour DPP is in power.11The tug-of-war over the exports of 8-inch wafer fabs in spring 2002 reflected the conflict between the old Lee thinking and new prowess of the business community, with Chen’s administration caught in the middle. By all indications, the tenuous compromise reached in March 2002 was not the end, but only a prelude to more contests in the future.12 In short, the context of Taiwan’s Mainland policy framed by its democratisation process, foreign and economic policies has changed over the years. More forces have come into play as Taiwan’s democratisation progresses.

The government increasingly had to share power with other actors.

Its political control gave way to more economic considerations, though the latter still remains largely in check. The influence of foreign policy appears to have grown, particularly during the DPP period. Most importantly, the weight of the domestic factor increases at the expense of the PRC factor. As the internal power struggles intensified in the last January 2003

Taiwan’s mainland policy

few years, first inside the KMT and then between the DPP and the KMT, the debates on mainland policy appear to be conducted more for domestic consumption than for Beijing’s understanding.13 Catchy slogans were pronounced without proper explanation.14 Empty gestures were made without consideration of the context in which these gestures might be seen by Beijing.15 There are also important continuities over the years. Throughout the past decade, the Mainland policy has not been just a policy, but a “high politics” policy about which nearly every citizen had an opinion. As such, it is a perfect candidate for all three levels of debate. There are certain ideas that tend to frame the debate more than others, certain institutions that tend to shape the policy more than others, and certain players that tend to influence the policy outcome more than others. These are the topics to which we now turn.

The ideas Two ideas are essential to the understanding of Taiwan’s Mainland policy: the Chinese/Taiwanese identity and the unification/independence issue. The former is more a “heart” issue, and the latter a “head” issue. In truth, both are highly political issues that belong more appropriately in the realm of beliefs. Yet to the extent that they are consequential, they remain real issues to be considered.

The issue of Chinese/Taiwanese identity is particularly difficult to decipher. Many refer to this issue as an ethnic issue. In fact, it does not even qualify as a sub-ethnic issue, because, with the exception of the 300,000 aborigines, nearly all Taiwan residents are Han Chinese. Since the KMT administration stopped the practice of asking for the citizens’ provincial origin years ago, there is no reliable statistics on the numbers of the Hakkas, the “mainlanders” or the so-called “native Taiwanese.”

Through decades of intermarriages, the socialpsychological line blurs even further. So the distinction itself is a political act. And during election campaigns, it is nearly impossible for the candidates to resist the temptation of manipulating this “heart” issue to his or her advantage.

This is understandable if one takes into consideration Taiwan’s unique political culture. In the US, for instance, the voters tend to look for candidates’ leadership qualities. And the candidates strive to appear to be strong persons who can lead.

Yet in Taiwan, tears are more powerful than smiles.

And one needs to appeal to the sympathy of the

January 2003

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Taiwan

voters by saying, “I may lose,” not “I shall win.”

This is because in Taiwan there is the deep-rooted “underdog complex” (beiqin yishi). It grows out of the belief that the people of Taiwan have never been the master of its own land, as the island has been alternately occupied by Portugal, Spain, Holland, Japan and the Chinese. Since the “native Taiwanese” constitute the majority of Taiwan’s population and the “underdog complex” is still strongly held by many of them, the Taiwanese identity is an extremely powerful instrument for candidates to mobilise support. It helps conjure up an image of a victim suffering at the hands of the outsiders – in this case, the candidates with Chinese identity. With the exception of the city of Taipei where intermarriages abound, the strategy often worked quite well.

The competing self-image held by the so-called “mainlanders” and some of the “native Taiwanese” goes as follows. Taiwan is an immigrant society, constituted by Chinese immigrants from the Mainland at different points of time. Whether they originate from Fukien Province or other provinces or the Hakka group is irrelevant, because they are all Chinese ethnically. Those who were not born on the island but have lived there long enough should be considered as “native” as any other whose forefathers arrived generations earlier.

The assertiveness of the Taiwanese identity in recent years tends to breed among this group a contrasting “underdog complex.” If one adds to the picture the “underdog complex” held by the Hakkas who felt deprived by both the “native Taiwanese” and the “mainlanders” for decades if not centuries and that held by the aborigines who felt being mistreated by all three Han groups for centuries, it would be no exaggeration to say that democratization of the last decade unleashed, among other things, a proliferation of “underdog complex.” Politicians compete to represent and project these syndromes into the policy-making process. Again, the Mainland policy is a prime victim of this exercise.

Since the identity issue is mostly subjective, a person’s self-identity does not necessarily match with his or her ascribed identity. Most pollsters chose to ask the respondents to pick one among three categories: “Chinese,” “Taiwanese,” and “both.”16 Though they differed in poll result, a general pattern seems clear. That is, if the Taiwan people can be so categorised, those with Taiwanese identity began to outnumber those with Chinese identity by mid-1990s and the gap continued to grow in the late 1990s, even though the “both” 15

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group remained high throughout. Figures 3, 4 and 5 show the series of surveys done by the National Chengchi University’s Election Research Center, the MAC and the United Daily News respectively.

Figure 3

Chinese or Taiwanese - Identity in question Both Taiwan

60

Chinese No response

50 40 30 20 10 0 Dec-91

May-93

Oct-94

Mar-96

Aug-97

Jan-99

Jun-00

Source: http://www2.nccu.edu.tw/~s00/database/data0406_3.htm Figure 4

Rising sense of Taiwanese identity Both

60

Taiwan

Chinese

50 40 30 20 10 0 Feb-94

Jul-95

Feb-97

Jul-98

Feb-02

Source: Bau Tzong-ho, “The People’s Ethnic Identity,” in Chen Yih-yan, Bau Tzong-ho, “A Study of Mainland Policy and Cross-Strait Relations,” a research project commissioned by the MAC and published on June 30, 2000, p.124

In retrospect, it appears probable that the perceived trend of growing Taiwanese identity may have encouraged the launching of the new paradigm by Lee and Chen at the turn of the century. According to Mr. Lin Cho-shui, a wellknown DPP strategist, “all the polls (MAC, the United Daily News, the DPP) point to the year of 1999 as the height of the new public opinion (of Taiwanese Identity) . . . By 1998 the mainstream public opinion was already Taiwan Independence (or at least special state-to-state relationship), and yet the mainstream discourse was still about unification.”17 Mr. Lin may be correct about the trend of Chinese/Taiwanese identity. But to slide from there into the unification/independence issue requires more than a quantum leap. The two issues are related for some but not for others. That is to say, those supporting Taiwanese identity may not support Taiwan Independence. At least that is what the MAC survey series have indicated. Figure 6 shows clearly that, despite the rising Taiwanese identity, the “status-quo supporters” (including those in favour of “status-quo forever” and “statusquo now and the future depends”) constitute around half of the total population. The Independence supporters (including “Independence now” and “status-quo now and Independence later”) garner no more than 20 percent, though most of the time slightly ahead of the Unification supporters (including “Unification now” and “statusquo now and Unification later”).

Figure 6

Unification or independence?

45 40

Figure 5

30

More recent convergence

25

Chinese Both

70 60

Taiwanese T is C

50

A

35

20

B

15 10

C D

5

E F

0 40

Aug-97 (c) (1067)

30

10 0 1991

1993

1995

1997

1999

2001

Source: http://udnnews.com/survey/introduction.shtml.

16

Oct-98 (e) (1107)

Feb-00 (b) (1067)

Jul-01 (e) (1100)

A) Status quo now/decision later. B) Status quo indefinitely. C) Status quo now/reunification later. D) Status quo now/independence later. E) Independence asap. F) Reunification asap.

Source: http://www.mac.gov.tw/english/POS/9102/9102e_1.gif

20

1989

May-98 (d) (1122)

peter.sutton@clsa.com

The divergence between the identity issue and other more “concrete” policy issues is even more apparent.18 Throughout the 1990s most of the “Taiwanese,” “Chinese,” and “both” respondents January 2003

Taiwan’s mainland policy

were pleased with the pace of the people-to-people exchanges. They all deemed appropriate the regulations and norms governing these exchanges.

Around 70 percent were in favour of “conditional direct transport link.” Also, 69% of the “Taiwanese”, 64% of the “Chinese” and 78% of “both” felt that Beijing government was hostile to the Taipei government and slightly less hostile toward the Taiwan people. The differences among the three identity groups narrowed when it came to the even “smaller” issues such as cultural exchanges, tourism, “mainland brides,” etc. In general, most were in favour of people-to-people exchanges.

What these data mean is that the Chinese/Taiwanese identity does matter, and the Taiwanese identity has grown more salient, and even outnumbered the Chinese identity during the second half of the 1990s. But the identity has remained nothing more than that – an identity. It did not translate automatically into support for Independence.

For most, “status-quo” still dominated. The “heart” yielded to the “head.” So, ironically, the PRC’s heavy-handed approach toward Taiwan may have contributed to more changed “hearts” in Taiwan, it also kept the “heads” cool.

The “heart” mattered less regarding the even smaller issues. On that level, the chequebooks and normal politics probably played a more important role. If this interpretation was true, one might wonder if the initiators and followers of the “new paradigm” have over-read the will of the Taiwan people. Apparently, the influence of determinants other than the Ideas must have been at play.

The institutions As with other countries, the Institutions have an important place in the process of Mainland policy making in Taiwan. Certain institutions are consistently more influential than others. And the importance of each institution varies over time.

Generally speaking, other than the Presidency itself (to be discussed below), the National Security Council (NSC), the National Security Bureau (NSB), the Mainland Affairs Council, and the ruling party are the more important actors. Others, such as the Vice President, the Premier, the Legislative Yuan (LY), and the opposition parties play only a secondary role.

It is a well-known fact that the National Security Council played little or no policy-making role during the Chiang Kai-shek and Chiang Ching-kuo years.

After assuming the Presidency, Mr. Lee Teng-hui began to expand its role at the expense of others.

During the last four years of his 12-year presidency, January 2003

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he relied on the NSC to such a high degree that the advice and dissent of other institutions were largely neglected. The existence of an unlawful secret fund between 1994 and 2002, totalling 3.5 billion NT dollars enabled the President to conduct his own preferred foreign and Mainland policies.19 As is now known, the Lee-Tsai study that suggested the “special state-to-state relationship” in July 1999 was one of many projects run by the fund.20 Since May 2000, President Chen had apparently found the secret fund extremely useful that he not only continued to use it but even sent a NSC “adviser” (Mr. Yang Liu-sen) to work in Taipei’s representative office in Washington D.C. – the first time the NSC has stationed an official abroad.21 The fund and the unprecedented practice were, needless to say, discontinued after media disclosure in March 2002.

It is now apparent as to why the NSC has been so powerful among all the institutions. First, as with the NSCs of other countries, it enjoys easiest access to the President. Second, the size of the secret fund, if the disclosed amount is correct, equals the total annual budget of at least three ministries (such as the MAC). Third, the NSC as a staff institution of the President’s Office rarely has to face the press or the LY oversight. It does not even have a spokesman. So its officials conduct operations only under the instructions of the President or the NSC Secretary General. As such, absolute secrecy and total top-down control can be maintained. In the infantile and often chaotic democracy such as Taiwan, the rationale for the existence of such a powerful institution is understandable. It can do much good for the country under the disadvantageous circumstances. But as with any unchecked institutions, use of power often slides into abuse about which the public may know nothing. Here may lie an undemocratic spot at the apex of the Republic of China’s national power.

The National Security Bureau is important for the information it provides. An equivalent of the Central Intelligence Agency plus some of the functions of the Federal Bureau of Investigation, the NSB collects, processes and disseminates information on the world, the PRC and the ROC itself. As all the participants in the national security area are keenly aware, information is everything. Yet, in Taiwan democracy, information is not disseminated fairly.

As far as the Mainland policy-related information is concerned, the government knows a great deal more than the private sector in terms of quantity, quality, speed, accuracy and reliability. The scholars oftentimes have to gather fragmented and incomplete information from various sources to 17

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make some sense of the total picture. The public, left to its own devices, have to probe in the dark and make judgments from some mixture of the “heart” and “head.” Even among the government agencies, the distribution is quite uneven. The NSB as the largest source of information serves first and foremost the President. The NSC comes as close second, whereas the rest, including the MAC, lag far, far behind. This practice, rooted in longstanding Chinese tradition, reinforces the Presidential power vis-à-vis any other institutions and players beyond the constitutional mandate.22 The Mainland Affairs Council derives its power from its central location in the bureaucracy. Vertically, it participates in some NSC deliberations and carries out the directions from above. Down the chain, it supervises the works of the Strait Exchange Foundation, particularly its negotiations with the ARATS of Beijing. Horizontally, the MAC is in charge of co-ordinating with all the other ministries and agencies. Equally important, the MAC serves as the government’s main window to the outside world, domestic and international. It has to face the media, the LY, the academic community, the opposition, etc. In time of crisis, it becomes the lightning rod of the government and the country. As such, the MAC is an indispensable institution although its actual weight varies over time.

The last among the major league players is the ruling party. It is basically the conduit through which the politician/comrades of the President seek to influence the topmost decision-maker. It tends to exert most influence when election time comes near. In the early years of Mr. Lee’s presidency, the KMT set up a Steering Committee of the Mainland Works which heard the voices of other concerned KMT heavyweights. As President Lee gained more power in the mid-1990s, the Steering Committee fell nearly defunct. But as the KMT Chairman, Mr. Lee could still absorb the opinions of his comrades through other party channels. President Chen’s relations with his party has always been less than comfortable. The personal feud between him and Mr. Frank Hsieh, the DPP Chairman of 2000-2002, and some other politicians are well known. In his book, The Century’s First Voyage: Reflections on the 500 Days Since Power Transfer, published in November 2001, he even criticised the party as “not well transformed into a ruling party, despite my repeated appeals.”23 So until July 21, 2002 when President Chen assumed the DPP Chairmanship, one can safely assume, the DPP’s input in Mainland policy-making had been few and far between. After July 21, 2002, much will depend on how the new 18

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Chairman/President would interact with his “revolutionary comrades” who are unaccustomed to a hierarchical and disciplined party life.

In the minor league, the Vice Presidency is normally definitely a secondary player. Ms. Annette Lu is a glaring exception. But by all indications, she affects the Mainland policy at the end of the output, not the input. And even at output end, she compounds the perception of the policy, not altering the policy itself. As for the premier, he has only nominal control over the Mainland policy. The President takes care of the “fundamentals” of the policy, whereas the Premier disposes of the administrative matters already co-ordinated by the MAC. The chain of command between the Premier and the MAC exist more in name than in reality. In all likelihood, the importance of the Premier is further reduced after May 2000, because Premiers Tang Fei, Chang Chun-hsiung and Yu Shyi-kun had much less knowledge and experiences than their KMT predecessors: Lien Chan, formerly a Foreign Minister, and Vincent Siew, a former MAC Chairman.

The role of the Legislative Yuan is also minor.

Individual Legislators may carry some weight owing to his expertise and experience. But the LY as a whole does not command the services of a large professional staff or a well-stocked library. As the Legislators move from one committee to another each session (six months), it becomes extremely difficult to accumulate institutional, or even individual, memories on this policy. Furthermore, as vital a policy area as the Mainland policy is, the LY thus far has no corresponding committee that solely interacts with the executive branch. Since the Mainland policy is being dealt with mainly but not exclusively in the LY’s Interior Committee, most of the Committee members may take some interest in the Mainland affairs, while their expertise most likely lie elsewhere – land, water, police work and immigration, etc. Hence, collectively, the LY is no match to the power of the executive branch. It has to satisfy itself with news making, often with the gracious presence of the administration officials.24 The opposition parties fare even worse. With no power and no information, they are reduced to educated guesses and, for some, simply opposition.

The KMT probably stands slightly better now than the DPP of the 1990s, because the KMT has at least a hard core of expertise, while the DPP, until 2000, had little access to any essential information. In this sense, the transfer of power in 2000 is good for the country in the long run because either party gets a taste of power as well as ignorance. Maybe as

January 2003

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Taiwan’s democracy matures, both will learn to share power and information, hence reducing ignorance and irresponsibility.

The players Clearly by far the most important player in Mainland policy-making in Taiwan is the Presidency. There is no doubt that the power of Messrs. Lee and Chen far surpassed any of their contemporaries. A comparison of the power paths of Lee and Jiang Zemin is particularly revealing. Two men were about the same age (Lee was born in 1923, Jiang in 1926), came to power at about the same time (Lee in 1988, Jiang in 1989) and under similarly uncertain circumstances. Yet by mobilising the liberal wing of the KMT and the popular aspiration for democratization, Mr. Lee managed to, first, sweep away all senior mainlander/politicians by early 1992 (when he appointed Lien Chan, a native Taiwanese, the Premier), and then defeat his native Taiwanese peers (Lin Yang-kang of KMT and Peng Ming-ming of DPP) through direct presidential election in 1996. So between 1996 and 2000, Mr. Lee could govern with perfectly legitimate mandate and make policies from position, power as well as authority. No peer or challenger was anywhere in sight. Across the Strait, Mr. Jiang has not been so blessed. Throughout his tenure, he may have had the topmost position, but he had to share power and authority with his peers such as Qiao Shi, Lee Peng, Zhu Ronggi, etc.

Lee’s changing power position seems to be directly related to the evolution of Taiwan’s Mainland policy during the last decade. The 1991 paradigm was clearly a break from the past. It served to undermine the power and legitimacy of those mainlander /politicians, and win the support of the liberal wing of the KMT and the general public.

Indeed, by the end of 1991, all the senior LY members who had held on to their jobs for decades without re-elections were retired en masse. The opening to the Mainland and the SEF-ARATS talks during 1992-1995 further enlarged the popular support for Mr. Lee and strengthened his hand against the Old Guard. His humiliating stopover at Honolulu on his way to Central America in May 1994 aroused the “underdog complex” in Taiwan, so much so that the visit to Cornell University in June 1995 was initially greeted with a chorus of joy and excitement at home.25 The PRC’s subsequent missile firings reinforced the “underdog complex” and gave Mr. Lee a comfortable majority over his three competitors. At the same time, however, Taiwan’s “heart” and “head” began to part their ways.

January 2003

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The “later Lee” of post-1996 years seems to have followed his “heart” more than the “earlier Lee” of pre-1996 years did. He was by then definitely the man in charge. All other politicians, KMT or DPP, were his juniors who competed for his favours. So, at home, he set out to abolish the “Taiwan Province” (December 1996) and enlarge the presidential power to appoint a premier without prior approval of the LY (July 1997). Armed with the secret fund, he could combat Clinton’s “three nos” with “the special state-to-state relationship.” He also sought to slow down the capital outflow into the Mainland by enforcing the “go slow, be patient” policy. And he could do all of these without full consultation with high-level government or KMT officials. The launching of the new paradigm in 1999, in the form of the remarks about “the special state-to-state relationship”, is a good example. As the picture now becomes more clear, it began as a NSC study commissioned by President Lee to Dr. Tsai Ing-wen in August 1998, just weeks after the “three nos” was made in Shanghai. Funded by the secret fund, the study group, composed mostly of scholars who were not KMT members, and under the leadership of Dr. Tsai, also a non-KMT member, went on to study ways to “strengthen Taiwan’s sovereignty”26 Before and after the conclusions and policy suggestions were presented directly to the President sometime in May 1999, no substantive consultations were made outside the NSC. According to the book, A True Account of Lee Tenghui’s Rule, based solely on a series of interviews with Lee after May 2000, President Lee alone made the decision to use the occasion of the German radio interview on July 9 to make the pronouncement. Even the Secretary-General of the President’s office, Dr. Huang Kun-huei, and Secretary-General of the KMT, Dr. John Chang, were informed of his decision only two hours ahead of the pronouncement.27 This writer, then MAC Chairman, was on his way back from a visit to the US. The burden of the ensuing mini-crisis, triggered by ROCPresident-cum-KMT-Chairman and a group of nonKMT scholars, however, had to be borne by the government bureaucracy and the KMT. As the presidential election of March 2000 approached, Lee’s new paradigm split the KMT ranks down the middle and legitimised to some degree the DPP’s pro-independence stance, thus contributing to DPP’s electoral victory.

When Mr. Chen Shui-bian assumed the Presidency on May 20, 2000, he inherited all the powers that Mr. Lee amassed for that office. According to the pre-1990 Constitution, the President had the right to appoint Premier, subject to the LY approval. The 19

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Premier in turn appointed the Ministers, subject to the President’s (not the LY’s) approval. The Premier alone supervised the daily state affairs and was held responsible by the LY. The President had only the power to oversee the “fundamental policies,” other than being the Commander-in-Chief of the armed forces. So the two Chiangs and Lee led the government more through their position as the chairman of the ruling party, not as the head of the government. That esteemed title belonged to the Premier. After rounds of constitutional revisions, the ROC President by 1997 could pick the Premier without LY approval (Vincent Siew, 1997-2000; Tang, Chang and Yu, 2000-2002). Because the Premier owes his job solely to one man, the President can thus shape, more than ever, the cabinet appointments. Henceforth, he could govern directly through the Premier. Furthermore, thanks to Mr. Lee’s swan song, the National Assembly was frozen in April 2000. The President need no longer go to the National Assembly once a year to report to and be questioned by the Assemblypersons, as Mr. Lee had done in the past decade. He also need not face the press, as Mr. Chen chose to meet the press only four times in his first two years as President. President Chen could thus lead the government and let the Premier and other cabinet members take the heat from the LY, opposition parties and the press on his behalf.

However, there is a crucial difference between Lee and Chen. Although both were popularly elected, President Chen does not command the authority that Lee enjoyed during the 1996-2000 period.

Chen was elected only with 39% of the popular vote. He was not and until July 2002 had never been the DPP Chairman. His relationship with Chairman Frank Hsieh (August 2000-July 2002) has always been more competitive than collaborative.

Many DPP elites – mostly his peers and elders – were eager to share power and glory after the longawaited electoral victory. Until the end of 2001, the KMT still dominated the LY where the DPP only had one-third voting strength. Besides, he might have popular prestige, but as a new leader he had yet to establish his professional reputation as an effective manager of national affairs. The sudden termination of the fourth nuclear power plant project in October 2000 nearly halved his popularity, from where he is still struggling to recover.28 When it comes to the Mainland policy-making, President Chen seems to be doubly inferior to the “later Lee.” By 1996, Mr. Lee had accumulated enormous knowledge and first-hand experiences.

He had also built a loyal group of experts around 20

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him. By contrast, President Chen was not anywhere nearly as knowledgeable and experienced, and he and the DPP as a whole were in dire need of talents.

So he had to borrow from outside the DPP. As the most natural ally who shares the same “new paradigm,” Lee was invited to fill the void in the national security system with his loyal lieutenants who have since been serving in the NSC (Deputy Secretary-General Chang Jung-feng), the Ministry of Denfense (Chief of staff Tang Yiau-min), the MAC (chairperson Tsai Ing-wen), the President Office (deputy Secretary-General Eugene Chien) and a few other key positions (e.g. Minister of Finance Yen Ching-chang)29. The collaboration of the “two presidents” would presumably free Chen’s hands for domestic affairs, particularly his re-election campaign. It also helps to ensure the continuation of the “new paradigm” initiated by Lee in 1999.

Hence, as a green new-comer, less powerful and less self-confident, Mr. Chen Shui-bian conducted the mainland policy of his first year as President with caution and moderation. The message of “five nos” (I will not declare independence; I will not change the national title; I will not push forth the inclusion of the so-called “state-to-state” description in the Constitution; I will not promote a referendum to change the status quo in regards to the question of independence or unification; and there is no question about abolishing the National Unification Guideline or the National Unification Council) in his inauguration speech (May 20, 2000) indicated a high degree of continuity with the KMT Administration’s mainland policy. Though lacking substance, the “integration” proposal at the turn of the millennium was also a positive development.

However, his inclinations toward the “new paradigm” became more pronounced and more frequent in his second year (May 2001-May 2002).30 This may be due, first and foremost, to the tougher stand taken by the Bush Administration toward Beijing. Second, the re-emergence of Mr. Lee Tenghui into politics with clear pro-independence emphasis may have also strengthened Chen’s hand against his domestic opponents. Examples of the “new paradigm” abounds in Chen’s second year.

Suffices here to mention three. First is his total denial of the “92 consensus” in October 2001.

Second, the widely publicised case with regard to the new addition of “Taiwan” to ROC’s passport cover.31 Third and perhaps most revealing example has to do with Chen’s National Day speech on October 10, 2001. As said earlier, the “new paradigm” has as its core the assertion that “Taiwan is a sovereign country whose name, according to January 2003

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the present Constitution, is the Republic of China.”

So the treatment respectively given to “Taiwan” and “Republic of China” by the President himself on the National Day (October 10) of the ROC each year may serve a useful guide to the inner thinking of the President. As Table 3 shows, not counting the ceremonial mentions in the very beginning (“Today is the National Day of the Republic of China”) and in the very end (“Long Live the Republic of China”) of the President’s National Day speeches each year, President Lee mentioned “Republic of China” or “China” 11 times on average each year between 1988 and 1995. The number dropped to roughly 5 times each year between 1996 and 1999. President Chen cautiously followed the “Later Lee” with 5 times in his speech of October 2000. But on October 10, 2001, the official name of the country completely disappeared. Instead, Taiwan (even Formosa) was mentioned 15 times, the highest point ever. This trend seems to correspond with the slide from 1991 paradigm to post-1995 tension and to 1999 new paradigm, as discussed earlier.

Table 3

National Day speeches, 1988-2001 Year

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Number of times “China” or “Republic of China” was used 11 15 8 10 12 5 14 9 2 6 6 5 5 0

Number of times “Taiwan” was used 2 2 0 3 3 2 2 1 1 1 1 4 8 15

Source: CLSA Emerging Markets

Chen’s third year seems to reflect greater selfconfidence and power. The LY election of December 2001 increased the DPP seats in the 225-member LY from 70 to 87. For the first time in history, the DPP, allied with the 11-member Taiwan Solidarity Union and some non-Party members could form a majority in the LY. Again, for the first in history, Chen the President became the Chairman of DPP in July 2002. Not only could he govern from a position of greater power, but he could run his own reelection campaign. Last but not least, he must have grown more self-confident and command greater respect from his ministers (including those previously loyal to Lee) after two full years in office.

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Hence President Chen’s third year witnessed bolder assertions of the new paradigm. In May 2002, he not only assailed Mr. Hu Jingtao, Vice President of the PRC, but told domestic and overseas audiences, on separate occasions, that “no matter if you agree or not, whether you accept it or not, Taiwan is (already) an independent country…”32 One week after assuming DPP chairmanship, he shook the world by stating to a pro-independence gathering that “Taiwan and China standing on opposite sides of the Strait, there is one country on each side. This must be clearly distinguished…Taiwan have the right to decide the future, fate, and status of Taiwan…And should the need arise, how will this decision be made? It will be made by referendum. A referendum is a basic human right...I sincerely call upon and encourage everyone to give thought about the importance and urgency of initiating a referendum legislation.”33 In spirit, though not in exactly the same words, Chen’s statement was clearly a continuation of Lee’s 1999 remark on “special state-to-state relationship.” But it broke important new ground in that, by advocating plebiscite, he advanced the cause of independent Taiwan into action. If the trend continues in the months ahead, despite US and PRC misgivings, not only Taiwan but the entire East Asia may enter into an era of great uncertainties.

Conclusion Taiwan’s Mainland policy has come a long way since 1987. It was built from ground zero and evolved through the vicissitudes of tumultuous domestic political life. Because of its vital importance, too many fingers have tried to dip into the pie. And the rules of the game were in such a fluid state that the observers – or even the participants – had to feel their ways toward a better understanding. While this paper attempts merely to analyse the domestic driving forces behind Taiwan’s Mainland policy, largely leaving out of the Beijing and US factors, the separation may become increasingly unrealistic in the near future, because these two big-power factors, each in its own way, are apparently injecting themselves into the domestic Taiwan scene more forcefully than before. Taiwan’s elections, previously lauded as steps toward democratisation, would henceforth be watched nervously abroad as harbingers of a new policy or paradigm. Were the tail to wag the dog this way, Taiwan’s democratization would have really come with a twist.

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Endnotes 1

The first media report of this secret channel was found in “A True Account of Nine Rounds of Cross-Strait Secret Talks in Lee’s Era,” Business Weekly (Taipei), July 24-30, 2000, pp.60-94. It was later confirmed by Chou Jingwen, A True Account of Lee Teng-hui’s Rule (Taipei: Ink, 2001), pp.192-204.

Chou’s book, based solely on interviews with Lee, disclosed that a total of 27 meetings were held during Lee’s presidency of 12 years. The main Taiwan envoy had always been Mr. Su Chih-cheng, Lee’s personal secretary. Su’s Mainland interlocutors included Yang Sede (Director of CCP Taiwan office, 1986-1993) , Wang Daohan, and Zeng Qinghong (Jiang Zemin’s confidant).

The venues were Juhai, Hong Kong, and Macao. See Chou, p.192.

2

This is of course only one interpretation of what had transpired in 1992 regarding the knotty issue of “one China”. Whatever the interpretation, it seems undeniable that by the end of 1992, there was sufficient degree of mutual trust between Taiwan and the Mainland on the concept of “one China” for both to agree to put it aside and allow dialogue to go on other issues between 1993 and 1995. After Chen was elected the President in 2000, it seemed clear that the DPP who believed “Taiwan is Taiwan, and China is China”, would not even acknowledge the concept of “one China,” however defined. The author thus coined the term “92 consensus” in the hope that, by equivocation of “one China” the deadlock might still be broken. See United Daily News, April 29, 2000, p.4.

3

The SEF, the Mainland Affairs Council and President Lee himself issued statements on July 30, August 1 and October 10, 1999, respectively, calling for a return to “one China, with respective interpretations. ” See Central Daily News, July 31, 1999, p.2; August 2, 1999, p.3; and October 10, 1999, p.2.

4

Dr. Tsai told the author in May 2000, just before she took office that the DPP administration would not mention the “special state-to-state relationship,” but would continue to implement it. For an analysis of the origin, synopsis and practice of the “special state-to-state” formulation, see Su Chi, “The Undeclared ‘special state-to-state’ Formulation: A Year End Review of President Chen’s Mainland Policy, ” in National Policy Forum (Taipei), July 2001, pp.79-87, or http://www.npf.org.tw.

5

http://www.president.gov.tw/1_news/index_e.html

6

For the Resolution on Taiwan’s Future, see Important Documents of the DPP’s Cross-Straits Policy, DPP Department of China Affairs, Taipei, 2000, pp.88-90. For the “special state-to-state relationships,” see Su Chi, op.cit; and Lee Teng-hui and Mineo Nakajima, Asia Wisdom and Strategy, (Taipei: Yuanliu, 2000), pp.34-65.

7

Mr. Yao Chia-wen, a former DPP Chairman and presently chairman of the Examination Yuan, once said, “the term, Republic of China, is to be tolerated, not accepted.” See United Daily News, March 19, 2001, p.2.

8

According to a PFP legislator, the National Security Bureau admitted having paid Dr. Tsai more than 9 million NT dollars for the study. See China Times, January 19, 2002, p.4.

9

For example, in the Legislation Yuan election of 2001, nineteen candidates competed for 10 seats in the second district in Taipei County. The last winner won only 2.82 percent of the total votes in the district.

10

http://mops.tse.com.tw/server-java/t51sb10?step=0

11

According to a survey by United Daily News, 42 percent of those polled viewed the DPP as pro-business, in contrast to 11 percent 2 years earlier. See United Daily News, July 29, 2002, p.3.

12 After months of intense debate, the government decided to allow only 8inch (not 12-inch) and only used (not new) wafer fabs to be exported to the mainland. And until 2005 no more than 3 fabs, worth 70 billion NTD in total, are allowed. See United Daily News, March 30, 2002, p.1.

13

For example, the initial rounds of frontal assault on the so-called “92 consensus” were fired not from Taipei offices, but by President Chen at campaign rallies in Hua-lien and Peng-hu just weeks before the LY election.

In his speeches, he equated “92 consensus” with “sell-out of Taiwan”. See United Daily News, October 23, 2001, p.2.

14 For example, after President Chen put forward his important “integration” proposal on January 1, 2001, the DPP Chairman, Frank Hsieh, told the press that, after the proposal was made, no meetings were held at the highest level to discuss the issue. (Liberty Times, February 3, 2001, p.4.) And “senior officials” of both the NSC and the President’s office said that Chen never asked the NSC or other offices to study the “integration” proposal, and the government would not elaborate on the meaning of “integration.” (Liberty Times, March 21, p.2)

mainland in August. (United Daily News, May 10, 2002, p.1) This announcement was made just 2 days after Chen publicly criticized Mr. Hu Jingtao by name that “Hu led the PLA into Tibet after the Tiananmen incident (of 1989)” and even posed for photo in front of a tank with PLA…It is difficult to expect him to think independently, to be his own man…to get things done.” (United Daily News, May 8, 2002, p.4). A similar remark was made to Newsweek (international), May 20, 2002, p.24 16 Professor Yung Wei proposed a different polling methodology. Instead of asking “one question, three options,” he asked two questions: “Are you a Taiwanese?” and “Are you a Chinese?” and found 93.4 % answering yes to “Taiwanese” and 70.7% to “Chinese.” His yet unpublished survey was done in mid-November 2001.

17 Lin Cho-shui, “Electoral Politics and the Administration’s Stance on CrossStrait and Ethnic Relations, ” China Affairs (Taipei), October 2001, p.85.

18 For an excellent analysis of this issue, see Yu-shan Wu, “The Chinese/Taiwanese Identity in Cross-Strait Relations,” China Affairs (Taipei), April 2001, pp.71-89.

19 The existence of this fund was first disclosed in “The National Security Bureau’s Top-Secret Documents,” Next Magazine, March 21, 2002, po.10-23.

20 Next Magazine, March 21, 2002, p.13; and China Times, January 19, 2002, p.4.

21

United Daily News, March 26, 2002, p.3

22

For instance, when the Mayor of Kaohsiung, Frank Hsieh, was planning a trip to Xiamen in early July, 2000, one month before he was to take over the DPP Chairmanship, he was astounded that President Chen confronted him with his itinerary and other details. Hsieh joked to his friends later that he would have to be more cautious because the President seemed to know everything. Needless to say, his Xiamen trip was cancelled. See United Evening News, September 10, 2000, p.2.

23

Chen Shui-bian, Century’s First Voyage: Reflections on the 500 Days Since Power Transfer (Taipei: Eurasia Press, 2001), p.190.

24 In one typical episode during my tenure as MAC chairman, I was invited by some DPP LY members to their press conference. When I felt at the end of my remark and QA, the entire press corps vacated the conference room. I felt so embarrassed as to return to the room immediately. Needless to say, the room was once again filled with reporters.

25 Some press even referred to it as “a visit of the century.” For an assortment of media reports, see United Daily News editorial, June 7, 1995, p.2; China Times, May 22, 1995, p.2; Economic Daily editorial, June 13, 1995, p.2 26 Chou Jing-wen, A True Account of Lee Teng-hui’s Rule, (Taipei: Ink, 2001), p.223 27 According to A True Account of Lee Teng-hui’s Rule, before Lee made the remarks on July 9, 1999, “indeed no high officials at the Presdient’s office, the Premier’s office, or the KMT knew anything about it. For Lee, it was a decision he pondered over three days. In fact, it was something sticking in his chest for years. (To get it out) was thus not an extemporaneous act.” (p.228).

28 On October 4, 2000, the DPP administration suddenly announced the termination of construction of the fourth nuclear power plant project-a longstanding DPP position. President Chen’s popularity immediately plunged to 43% from 79% at the previous height in the summer. When the October decision was rescinded on February 17, 2001, his popularity was 45% and remained around 50% for more than one year afterwards. Taiwan’s economy, on the other hand, also never recovered to pre-October 2000 level. See United Daily News, July 21, 2000, p.2, and China Times, February 21, 2001 editorial, p.2.

29 The cabinet reshuffle of February 2002 increased, not decreased, the weight of this group. For example, Engene Chien was made the Foreign Minister, and General Tang Yiau-min became Defense Minister.

30 For a more extensive analysis of Chen’s policy of his second year, see Su Chi, “Cross-Strait Relations: Now and the Future,” in Central Daily News, February 28, 2002, or http://www.npf.org.tw.

31

See United Daily News, January 14, 2002, p.1.

32

Newsweek (international), May 20, 2002, p.25. A similar remark was made to a group of editors-in-chief in Kinmen, when he was asked to comment on President Bush’s earlier mention of “Republic of Taiwan.” See United Daily News, May 10, 2002, p.4.

33

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15 For example, President Chen announced his decision on May 9, 2002 to send a delegation led by the DPP Department of China Affairs to visit the

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January 2003

Research & sales offices www.clsa.com

Operational hubs Hong Kong CLSA Hong Kong 18/F, One Pacific Place 88 Queensway, Hong Kong Tel : (852) 2600 8888 Fax : (852) 2868 0189

Singapore CLSA Singapore Pte Ltd 9 Raffles Place #19-20/21 Republic Plaza II Singapore 048619 Tel : (65) 6534 3268 Fax : (65) 6533 8922

USA Credit Lyonnais Securities (USA) Inc Credit Lyonnais Building 1301 Avenue of The Americas New York, New York 10019 Tel : (1) 212 408 5888 Fax : (1) 212 261 2502

United Kingdom Credit Lyonnais Securities Broadwalk House 5 Appold Street, Broadgate London EC2A 2DA Tel : (44) 207 696 9190 Fax : (44) 207 214 5401

India CLSA India 8/F Dalamal House Nariman Point Bombay 400 021 Tel : (91) 22 2284-1348 Fax : (91) 22 2284-0271

Korea CLSA Korea 15th Floor Sean Building 116, 1-Ka, Shinmun-Ro Chongro-Ku Seoul, 110-061 Tel : (82) 2 397 8400 Fax : (82) 2 771 8583

Switzerland CLSA Geneva 4 Rue du Parc 1207 Geneva Tel : (41) 22 718 0303 Fax : (41) 22 718 0313

Emerging Markets China – Beijing CLSA Beijing Unit 10-12, Level 25 China World Tower 2 China World Trade Centre 1 Jian Guo Men Wai Ave Beijing 100004, P.R.C. Tel : (86 10) 6505 0248 Fax : (86 10) 6505 2209

China – Shanghai CLSA Shanghai Room 03, 16th Floor Jin Mao Tower 88 Century Boulevard Pudong, Shanghai 200121 Tel : (8621) 5047-1118 Fax : (8621) 5047-3533/4

China – Shenzhen CLSA Shenzhen Room 3111, Shun Hing Square Di Wang Commercial Centre 333 Shennan Road East Shenzhen 518008 Tel : (86) 755 8246 1755 Fax : (86) 755 8246 1754

Indonesia CLSA Indonesia WISMA GKBI Suite 1501 Jl. Jendral Sudirman No.28 Jakarta 10210 Tel : (62) 21 574 2626/2323 Fax : (62) 21 574 6920

Japan Credit Lyonnais Securities (Japan) Hibiya Kokusai Building 7th Floor 2-2-3 Uchisaiwai-cho Chiyoda-ku, Tokyo 100 0011 Tel : (81) 3 5510 8650 Fax : (81) 3 5512 5896

Malaysia CLSA Malaysia Suite 15-2 Level 15 Menara PanGlobal 8 Lorong P Ramlee Off Jalan P Ramlee 50250 Kuala Lumpur Tel : (603) 2072 4288 Fax : (603) 2078 4868

Philippines CLSA Philippines 18th Floor, Tower One The Enterprise Center 6766 Ayala Avenue corner Paseo de Roxas Makati City Tel : (63) 2 886 5637-46 Fax : (63) 2 886 5692

Taiwan CLSA Taiwan 6/F, No. 117, Sec. 3 Min-sheng E. Road Taipei Tel : (886) 2 2717 0737 Fax : (886) 2 2717 0738

Thailand CLSA Thailand 16th Floor, M. Thai Tower All Seasons Place 87 Wireless Road, Lumpini Pathumwan, Bangkok 10330 Tel : (662) 253 2945 Fax : (662) 253 0534

Key to investment rankings: BUY = Expected total return greater than >20%; SELL = the share price is expected to decline. O-PF = stocks with expected local market relative performance of more than 0%; U-PF = stocks with expected local market relative performance of less than 0%. Recommendations are made on a 12 month time horizon.

Additional information is available upon request ©2003 CLSA Emerging Markets. The information and statistical data herein have been obtained from sources we believe to be reliable but in no way are warranted by us as to accuracy or completeness. We do not undertake to advise you as to any change of our views. This is not a solicitation or any offer to buy or sell. CLSA Emerging Markets has produced this report for private circulation to professional and institutional clients only. All information and advice is given in good faith but without any warranty. CLSA Emerging Markets, its affiliates or companies or individuals connected with CLSA Emerging Markets may have used the information set forth herein before publication and may have positions in, may from time to time purchase or sell or may be materially interested in any of the securities mentioned or related securities. This report is subject to the terms and conditions of use set forth on the www.clsa.com website. MITA (P) No 328/07/2002. V.030101.

09/01/03 MSCI-sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without prior written permission of reproduced, redisseminated or used to create any financial products, including any indices. This information is provided on an "as is" basis. The user assumes the entire risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. MSCI, Morgan Stanley Capital International and the MSCI indexes are services marks of MSCI and its affiliates. The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's. GICS is a service mark of MSCI and S&P and has been licensed for use by CLSA Emerging Markets.

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