The coming decade will be critical for Taiwan, and for its relationship to the Chinese mainland. Taibei will face the difficult problem of succession to President Jiang Jingguo, its economic development will meet new and serious challenges, and its relations with the People’s Republic of China will evolve—in one direction or another. Developments in Taiwan-P.R.C. relations will continue to influence the Sino-American relationship and the political structure of east Asia. Relations between the two governments claiming to rule over China, however, will increasingly depend on the interaction between Beijing and Taibei themselves, rather than on Washington and other international players.

Three related factors determine the texture of this interaction: the policies evolving in Beijing, internal developments on Taiwan, and the international environment. This article will examine each of these factors, then discuss Taibei’s policy options and their possible consequences, and finally suggest a desirable course of developments for the decade to come.

II

The most important influence on Taibei’s relationship with the mainland is, of course, Beijing itself. P.R.C. policy toward Taibei has changed significantly since Mao’s death in September 1976, and especially since Deng Xiaoping’s consolidation of power three years later. The new policy has three components: an effort to reduce tensions and convince Taibei to come to the negotiating table; a parallel strategy of pressuring Taibei to talk with Beijing; and the policy of setting limits to constrain Taibei’s behavior.

During the past several years, Beijing has offered Taibei several proposals for reunification. These proposals, including Deng Xiaoping’s recent "one state, two systems" proposal, allow Taibei to maintain its social and economic system, its armed forces and its unofficial ties with foreign countries. In return for promising not to interfere in Taibei’s internal affairs, Beijing expects Taibei to give up its claim to represent all of China and agree to become a "special administrative region" of China. Beijing has repeatedly suggested that open direct trade should be allowed in the interim, as well as the free exchange of mail and travel between the two sides. Beijing has also stated that it is prepared to open its market to Taiwan’s exports, allow Taiwan commercial interests to invest on the mainland, and provide to Taibei natural resources, including oil. Beijing has accorded good treatment to former officials of the government party, the Kuomintang (KMT), and to others who have relatives on Taiwan, and has encouraged its scholars and students abroad to contact their colleagues from Taiwan. In the international community, Beijing has allowed Taibei to return to many international organizations under the name of "Chinese Taipei" or "China-Taiwan."

The P.R.C.’s offer of reunification is sweetened by its remarkable internal reform program, its expanded cooperation with the West, and its flexibility and sensitivity in handling the Hong Kong issue. But Taibei is still publicly critical of Beijing’s overtures. It takes the position that the P.R.C.’s current reforms will collapse, it views Beijing’s efforts to improve ties with the West as a strategy to isolate Taiwan, and it does not recognize the Sino-British agreement on Hong Kong.

Despite this rigid posture in Taibei, Beijing’s policies have had some effect on the island. The P.R.C.’s ongoing political and economic reforms have strongly influenced public opinion, especially among Taiwan intellectuals, businessmen and technocrats. International press coverage of the reform program and direct contacts between Taiwan and mainland Chinese students and scholars have provided a perspective different from that of the KMT’s anti-P.R.C. propaganda; they have brought increased understanding about the mainland, and reduced the old hostility to Beijing. This has already created dissent over Taibei’s long-standing policy of the "Three Nos"—no contacts, no negotiations and no compromises toward Beijing. The views—openly expressed—of dissenting intellectuals and politicians have strengthened liberal tendencies within the KMT and provided an impetus to search for alternatives to the present hard-line policies.

Continued political stability on the mainland will also be an important incentive for Taibei to reduce tensions with Beijing. If Deng’s successors, namely Hu Yaobang, the secretary general of the Chinese Communist Party, and Premier Zhao Ziyang, are able to continue the reform program, Taibei should feel much more secure, because such reforms require a stable international environment. And any serious tension or confrontation between Beijing and Taibei would damage business confidence on both sides of the Taiwan Strait.

Beijing’s increasingly close ties with the West and Japan have worried those in Taiwan who believe that such ties will give Beijing increased leverage over Taibei and further isolate Taiwan from the international community. Actually, stronger ties with the West would reduce Beijing’s incentive to try taking Taiwan by force, since such a move would damage those ties.

During the past two years, Beijing has increased the pressure on Taibei for reunification talks. Reunification with Taibei is one of the P.R.C. government’s three principal objectives, together with the economic reform program, and its goal of freedom of action and independence from both the Soviet Union and the United States. As soon as the Sino-British agreement on Hong Kong was initialed in September 1984, Deng Xiaoping expressed his willingness to adopt the Hong Kong model of "one state, two systems" to solve the Taiwan issue.

Actually, the Beijing government is willing to provide more favorable conditions to Taibei, as Taiwan and Hong Kong are different in important respects: unlike Hong Kong, Taiwan has been self-governing for over three decades; it has maintained its own armed forces and independent international ties; it is geographically separated from the mainland. Nevertheless, Deng Xiaoping and Zhao Ziyang have repeatedly announced that Beijing is not willing to rule out the possibility of using force against Taibei if the latter continues to reject their proposals for reunification talks.

Finally, Beijing has put pressure on Washington to cut back its support of Taibei. The P.R.C. has emphasized that the Taiwan issue is now the principal obstacle to the further development of Sino-American relations, and has demanded that Washington reduce and eventually stop its arms sales to Taibei and revoke the Taiwan Relations Act of April 1979, which defined the unofficial relations between the United States and Taiwan following the end of diplomatic relations.

Beijing’s new policy derives from several factors. The P.R.C. leaders are worried about the succession to Taiwan’s President Jiang Jingguo. They know little about the next generation of KMT leaders; they understand, but probably exaggerate, the conflicts between the regime and the native Taiwanese. They fear that Jiang’s successor might lead Taiwan in the direction of independence and are aware of the instabilities that could arise from structural weaknesses in Taiwan’s economy and politics. At the same time, Beijing is confident of its military capability vis-à-vis Taibei, and the successful settlement of the Hong Kong issue has apparently increased a parallel confidence in its ability to deal politically with Washington and Taibei. One can, therefore, expect Beijing to increase pressure on both Taibei and Washington in the near future.

But Beijing may overestimate the role that Washington can play to encourage Taibei to negotiate with the P.R.C. Washington has reacted ambiguously to Beijing’s pressure. On the one hand, it has indicated that it will not make further concessions to meet Beijing’s demands for revocation of the Taiwan Relations Act or to rapidly reduce arms sales to Taibei. On the other hand, the Reagan Administration has become more cautious in its dealings with Taiwan, Washington has repeatedly denied Taibei’s requests to purchase highly sophisticated fighter planes. So far, therefore, Beijing has had some success in setting certain limits on U.S. policy toward Taibei.

III

Taibei has not softened its position in response to Beijing’s inducements or threats and it probably will not do so in the near future. On the contrary, the pressure from the P.R.C. has only made Taibei more skeptical of Beijing’s parallel promises of non-intervention in Taiwan’s internal affairs.

Taibei views Hong Kong as a test of Beijing’s policy intentions and will be watching the P.R.C.’s behavior closely. Beijing’s experiences with Hong Kong should teach it about the complexity of some of the issues involved in reunification, and its progress in resolving the Hong Kong issue through a moderate approach could encourage it to use a similar moderation toward Taiwan.

The P.R.C. has not yet defined the detailed principles and procedures for the establishment of local administration in Hong Kong. Beijing’s offer to Taibei raises similar questions. Furthermore, the P.R.C. has promised that Taibei would be allowed to maintain its armed forces after reunification—yet its position on whether Taibei would be allowed to import weapons is still unclear. And nothing has been specified about Taibei’s future position in the international community. For such basic reasons, Beijing’s pressure for reunification has so far provoked no receptive response from Taiwan.

Under what conditions would Beijing use force to regain authority over Taiwan? Deng Xiaoping has set the following five: if Taibei leaned toward Moscow instead of Washington; if Taibei decided to develop nuclear weapons; if Taiwan claimed to be an independent state; if Taibei lost internal control as a result of the succession process; or if Taibei continued to reject reunification talks for "a long period of time."

The first three conditions are part of Beijing’s policy to limit Taibei’s freedom of action. In fact, Taibei is unlikely ever to be in the position of wanting to play a "Soviet card." Such a move would damage relations with Washington, not to mention provoking a strong reaction from Beijing. The policy would undermine the KMT’s internal legitimacy as well as its ideology. It is also unlikely that Taibei would manufacture nuclear weapons—at least openly—in the near future. Such an effort would put Washington in a difficult position, further weakening the existing U.S.-Taiwan relationship, and would cause serious political tensions with other Asian countries, especially Japan and the Association of Southeast Asian Nations (ASEAN). The major danger of trying the nuclear option, of course, would be a possible preemptive attack by Beijing. Finally, a claim to independence would hardly solve Taibei’s problems; rather, it would create immediate military, political and economic crises.

On these three conditions, Taibei is already on public record: President Jiang has announced that Taibei will never lean toward Moscow, will never develop its own nuclear weapons, and will never claim to be an independent state.

The fourth condition—internal disorder on Taiwan—reflects Beijing’s worries about a succession crisis in Taibei and a possible loss of KMT authority to the Taiwan Independence Movement, though the latter does not seem likely in the near future.

The last of Deng’s conditions—rejection of negotiations—is the one that will ultimately be determined by Beijing’s own evolving policy calculations. Some elements are constant: the costs of military action against Taiwan, even if it were only a blockade, would be very high. Taibei has the capability to retaliate by attacking the entire east coast of the mainland, where over 70 percent of the P.R.C.’s industrial capacity is located. Politically, any military offensive would damage Beijing’s expanded relations with the West and destroy the peaceful international environment that is essential to the process of modernization—to which the Dengist leadership is committed. Whether Washington would strengthen its support to Taibei, under conditions of military pressure, is still an open question. More important, public opinion on the mainland, especially among the young and the educated elite, has changed since Mao’s death. People seem more interested in improving their living standards than in fighting a war, and a war would probably destroy the ongoing reform program. Beijing would therefore use force against Taibei only if there seemed to be no alternative.

IV

The most important factor in Taiwan’s domestic situation is the succession to President Jiang Jingguo (Chiang Ching-kuo), son of the late Jiang Jieshi (Chiang Kai-shek). There is no clear and qualified successor. Jiang, now 76 years old and in failing health, has made several important personnel changes in the last year and a half, including the ouster of General Wang Sheng, head of security affairs and intelligence forces, regarded as the second most powerful man on the island and a potential contender for the succession. Among other current contenders is Yu Guohua, identified with the conservative wing of the KMT, who was appointed Premier Sun Yunxuan’s successor after Sun was hospitalized in the summer of 1984. Jiang Yanshi, the secretary general of the Central Committee of the KMT, is another possible candidate; he is a well-known technocrat and moderate, who was recently replaced by Ma Shuli, a member of the conservative old guard with close ties to President Jiang’s son, Xiaowu.

The succession has not, however, been clarified by these changes. Many observers have speculated that the purpose of these shifts in personnel was to secure a strong position for Xiaowu. But he is not a member of the KMT Standing Commission of the Central Committee, the party’s decision-making institution, nor has he made any significant contribution to Taiwan society or established an independent reputation. Unlike his father, Xiaowu has never been well received by the technocratic establishment. His succession would be made even more difficult by the opposition of the dissident movement on Taiwan to the possibility of yet another "dynastic succession." In addition, widespread speculation has implicated Xiaowu in the assassination of Henry Liu, a Taiwan writer with American citizenship, in Daly City, California, last October. President Jiang’s choice of Xiaowu as his successor, in sum, would probably increase political tensions, and might even undermine the political stability that the island has enjoyed over the past three decades.

Politics within the KMT range from liberal to conservative. The conservative camp has a strong hold in the military, security and party apparatus, especially in the Standing Commission. The liberals are stronger in economic affairs and public administration.

The liberal faction of the KMT has lost several important posts over the last year, and it is unlikely to regain power in time for the succession struggle. Popular among technocrats, business circles, and the intellectual establishment, the liberal faction has very little influence within the army and intelligence forces. Moreover, it is not a unified force and lacks a strong leader capable of coordinating different interest groups within the regime and society. The liberals are unlikely to gain dominance within the KMT Standing Commission, though the faction will continue to be influential in the policymaking process.

There is always a possibility that the succession might result in joint rule by the army, the KMT conservative faction and the intelligence forces. Such a regime would be able to maintain political stability, at least temporarily. It would, however, seriously reverse Taiwan’s process of political pluralization. Tensions between the regime and the democracy movement, known as the Dang-wai (non-KMT) movement, would increase. It would also encourage intellectuals and technocrats to become further alienated from the regime. In the long run, it would be politically destabilizing.

In any event, the succession process is likely to be painful and difficult. There are real possibilities of an upheaval, or the formation of a new dictatorship. In either case, Taibei would be likely to take a tougher position toward Beijing, at least temporarily, as the new regime would need an excuse for tightening political control.

V

The second challenge to political stability on the island is an accelerating process of social and political pluralization. This process, largely a result of Taiwan’s economic growth during the past 30 years, has now reached a new stage. On the one hand, the Dang-wai has already become a strong opposition force in Taiwan’s society, capable of significant popular mobilization against the regime. In the national elections of both 1980 and 1983, it gained roughly 30 percent of the total vote. It is backed by many businessmen, most of whom are native Taiwanese, and it has been highly critical of the KMT.

The Dang-wai is not yet an alternative to the KMT. Because of the restrictive conditions of martial law, which has been in force for more than 35 years, and the operations of the secret police, the movement has not been allowed to organize as a formal political party. As a result, it is unable to organize its supporters effectively and create a strong consolidated leadership. Moreover, the Dang-wai is particularly weak in its ideological appeal. Without much of a theoretical basis, the movement is not able to present an alternative program to the KMT or attract much support from the well-educated elite. Factionalism is another problem for the Dang-wai. It has never been, and probably will not be in the foreseeable future, a unified force.

The Taiwan Independence Movement is another focus of dissent on the island. Many activists of the Dang-wai are members of the independence movement, but most of the TIM’s activists now operate overseas, particularly in Japan and the United States. The TIM has strong financial backing, mainly from wealthy native Taiwanese businessmen. But the movement’s political future may not be as bright as some American scholars believe. Like the Dang-wai, it is not a unified political force. Sharp political and ideological conflicts within the movement weaken its ability to challenge the KMT in any practical sense.

The gradual relaxation of restrictions on political freedom, and the KMT’s program of "Taiwanization," a policy to bring more native Taiwanese into various party and governmental institutions, including the army, has countered the appeal of the TIM. The independence movement does not seem to enjoy much support from the educated elite, partly because it does not have persuasive political and economic programs, and partly because the younger generation has been deeply influenced by traditional Chinese culture. The old tensions between mainlanders and native Taiwanese have softened among the young. Instead, social and political tensions have arisen between the authoritarian regime and the democracy movement. Even if neither the Dang-wai nor the TIM seems capable of replacing the KMT government on Taiwan, both can exert strong influence on Taibei’s policy toward Beijing.

Lacking an effective institutionalized opposition, the ruling KMT continues to enjoy considerable support throughout Taiwan, due primarily to the success of its economic policy. In 30 years (1949-1979) of KMT rule, Taiwan’s remarkable economic growth has made it one of the most successful examples of economic development in the world. But the island’s export-oriented strategy has come under challenge—both from industrial competitors such as the United States and Japan, which have the advantage of superior technology and financial capacity, and from other east Asian states, notably South Korea, Thailand, Singapore, Indonesia and, most recently, mainland China, where labor costs are lower than in Taiwan. In addition, Washington has put strong pressure on Taibei to reduce its trade surplus with the United States.

Taiwan does not have the natural resources—especially oil, which supplies some 70 percent of its energy—necessary to fuel its economy. It imports over 95 percent of its oil from Saudi Arabia and Kuwait. Although oil prices have been declining, any further turmoil in the Persian Gulf could pose serious problems for Taiwan.

Since the end of the 1970s, the government of Taiwan has placed high priority on shifting from a labor-intensive to a technology- and capital-intensive economy. However, this transformation has not been fully successful. Because of the island’s uncertain political future, a large proportion (85 percent) of Taiwan’s students studying abroad do not return, and businessmen are hesitant to invest in large-scale and long-term projects, preferring more stable overseas investments. Furthermore, the island’s large military budget has made it difficult for the government to increase investment in infrastructure and research and development. These structural weaknesses and vulnerabilities are unlikely to be overcome in the next decade.

Taiwan’s economic problems and the increasing pressure from its business community—which has been engaged in indirect and even direct trade with the mainland for years, and has been impressed by the results of Beijing’s "open door" policy—are strong inducements for the government to take a more conciliatory line toward Beijing in the future.

VI

Ronald Reagan’s election in 1980 led the Taiwan government to hope, albeit briefly, that Washington might turn back the clock of history and restore official diplomatic ties with Taibei. Before August 1982, when the most recent U.S.-P.R.C. joint communiqué was signed, Sino-American ties were indeed in deep trouble. But the clock has not been turned back—and it is unlikely to be.

In fact, Sino-American relations have solidified since the second half of 1982. While both Washington and Beijing have played down their need for strategic and military cooperation against Moscow, strategic consultations and military exchange programs between the P.R.C. and the United States have advanced.

Economic relations between the two countries have also prospered: trade between the P.R.C. and the United States reached about $6 billion last year and the United States is now the P.R.C.’s third largest trade partner (after Japan and Hong Kong). Several hundred American companies and banks now operate in China. This development is likely to continue as China’s demands for Western technology and capital increase, and China’s economic reforms further reduce the institutional gap between the Chinese economy and Western market economies.

Almost 14,000 Chinese students are now studying in the United States and another several thousand in Western Europe and Japan. At least 60-70 percent of them will return to China and will have great influence on policymaking in various government and nongovernment institutions. The Dengist leadership in Beijing seems likely to continue this open door policy, and the positive trend in Sino-American relations is unlikely to be reversed.

During the coming decade, Washington will surely try to adhere to its commitment to sell defensive weapons to Taibei, as called for under the Taiwan Relations Act. Nevertheless, the United States will face at least two tough tests. There is a sharp contradiction between the August 1982 joint communiqué and the Taiwan Relations Act. In the communiqué, Washington promises that arms sales to Taiwan "will not exceed either in qualitative or in quantitative terms" the level supplied in the years since the establishment of diplomatic relations with the P.R.C. in January 1979, and that the United States "intends to reduce gradually its sales of arms to Taiwan, leading over a period of time to a final resolution." The Taiwan Relations Act, however, claims "to provide Taiwan with arms of a defensive character," without specifying any reductions. Under increased pressure from Beijing, Washington may find reason to reduce even further its arms sales to Taibei.

Because shifts in the regional balance of power seem likely to favor the Soviet Union and its allies, notably Vietnam and India, Washington may need to increase its strategic cooperation with Beijing on regional security issues. This, in turn, could strengthen Beijing’s bargaining position.

Political instability in the region will have its impact in Taibei. The noncommunist dissident movements in South Korea and the Philippines encourage the Dang-wai of Taiwan, which has been following these political developments closely. These movements have one important common feature: they all command strong support in the United States.

Taibei may find it increasingly difficult to participate in multilateral organizations unless it returns to the flexible policies it pursued up until the end of the 1984 Olympic Games. These included Taibei’s efforts to regain its place in some 400 non-governmental organizations under the name "Chinese Taipei," a name that is acceptable to Beijing and which was used at the Olympics. In addition, Taibei reduced restrictions on trade between Taiwan and the mainland, and allowed greater public discussion within Taiwan about future relations with the P.R.C.

Following the Olympics, however, there was a sharp move away from these flexible policies. Yu Guohua, the new premier, and Zhu Fusong, the minister of foreign affairs, are among those who doubted that the flexible approach would in fact strengthen Taibei’s position in the international community, and this group has gained the upper hand in policymaking. They believe that the model used in the Asian Development Bank—which seats both Beijing, under the name the People’s Republic of China, and Taibei, under the name Republic of China—should be applied to other intergovernmental organizations.

As the result of this new rigidity, Taibei lost its seat last fall in the International Criminal Police Organization (Interpol), one of ten international governmental organizations to which Taibei still belonged. This inflexible approach, though criticized by many liberal KMT politicians, seems to have become the current strategy of the Taibei government in its efforts to reinforce its international position. At the same time, Taibei has reintroduced restrictions on trade with the mainland and on free discussion of the issue.

This policy is becoming less and less viable. Taiwan’s neighbors (mainly Japan, South Korea and the ASEAN countries) will not support an inflexible approach by Taibei; most of them no longer even include Taiwan in their security and strategic planning. It is unlikely that Taibei will be able to apply the Asian Development Bank model to other international organizations, since Beijing is not willing to make any further concessions on this matter.

VII

Over the next decade, Taibei has four basic options. The first is "Yi Bu Bian Ying Wan Bian"—to maintain its current policy in dealing with the changing world. This "cold-war" policy has the stated objective of "reunifying China under the Three People’s Principles" (Nationalism, Democracy and People’s Livelihood). It would reject direct trade with Beijing, limit indirect trade between the two sides, and further minimize informal contacts between the people on the mainland and on Taiwan. Taibei would continue to compete with Beijing in international institutions, and would make every attempt to damage Sino-American relations. It would increase its defense spending and try to import more sophisticated weapons from the United States. Internally, this policy would require further restrictions on the press and human rights. It would probably increase tensions, even provoke a confrontation, between Beijing and Taibei.

Taibei would continue this policy only if the forthcoming succession produced a conservative leadership, or if Beijing were suddenly to take a tougher approach toward Taibei. A cold-war policy would temporarily consolidate the KMT’s control over the island and help to stabilize a conservative successor to Jiang.

The cost, however, would be very high. It would slow the process of the island’s pluralization. It would meet strong resistance from the internal opposition forces, and heighten policy differences and political struggles between the conservatives and liberals. Taiwan’s program of upgrading the economy would be damaged, as businessmen were pushed to channel more of their investments overseas and the well-educated elite was discouraged from returning to Taiwan. In addition, foreign investors would be less inclined to move their capital and technology to Taiwan. The government would also be forced to increase its military budget, as Taibei would face the possibility of an invasion, or at least a blockade, from the mainland. Without direct U.S. involvement, Taibei would probably be unable to break up a blockade, and no one can predict the eventual economic and political results.

If Beijing initiated a blockade or attack on Taiwan, Taibei would probably receive American political support and arms. But whether such support would be transformed into direct U.S. military involvement is unclear. In my view, if the tensions came from Taibei’s succession crisis or a self-initiated offensive, it is unlikely that the United States would continue its commitment to the security of Taiwan, as such involvement would provoke a strong reaction from Beijing, thereby destabilizing the international system of the region and endangering ongoing Sino-American cooperation. Furthermore, other states in the region would not welcome increased tensions between Taibei and Beijing.

What if Taibei chose another option, and claimed independence? A policy of independence would change the nature of the relationship between the two sides of the Taiwan Strait; it would be perceived abroad as a conflict between two states rather than civil conflict within a sovereign nation. Even if independence were claimed by the ruling KMT, rather than after a takeover by the TIM, Taiwan’s internal politics would be destabilized. More seriously, the KMT, whose authority rests on the claim that it is the true government of all China, would lose its legitimacy as well as its power base. Political tensions and conflicts between different interest groups would be heightened, especially between those who support independence and those who oppose it. The majority of the people on the island would be worried about the possibility of war with Beijing and many would seek to leave. Most foreign companies would pull their investments out of Taiwan, and the island’s economic prosperity would be jeopardized.

Facing an independent Taiwan, Beijing would be strongly tempted to launch a preemptive strike, because of strong domestic nationalism and the fear that a "do-nothing" policy would damage China’s international credibility. If the TIM took power and declared the island to be independent, the sharp confrontation between the KMT and the extremists of the TIM could serve as a pretext for a military invasion by Beijing.

Independent, Taiwan would be more isolated than ever. No major world power would be likely to recognize its new status. Washington would publicly support it only at the risk of confronting Beijing and chancing a fundamental change in the balance of power in the Pacific. In addition, Taibei might even lose most of its existing informal or nongovernment contacts with other countries and international organizations, since Beijing would certainly put very strong pressure (including cutting off diplomatic ties) on any country that recognized the independent Taiwan. No country in Asia would encourage Taiwan to become independent in this manner, as it would destabilize the area and possibly provoke a regional war.

The only way Taiwan could gain sympathy (though not necessarily recognition) for a declaration of independence would be if it resulted from a preemptive attack by Beijing. But even under this condition, the choice for Taibei would still be dangerous. Washington might not be willing to fight a war with Beijing; the rest of Asia would protest the attack, but probably do nothing to help Taibei.

Clearly, the consequences of either continuing Taibei’s cold-war policy or declaring independence would be costly and dangerous. There is a third option, theoretical, at least at present, rather than realistic: Taibei could choose to accept Beijing’s proposal of reunification in the near future. This course would relieve Taibei of immediate fears of a preemptive attack by Beijing and allow direct economic ties with the mainland. But it would immediately cause an internal political upheaval. The distrust and hostility that has divided the political leaderships of Beijing and Taibei for over 60 years remains strong—the fundamental schism has not altered with the passing of the generations.

VIII

The final option for Taibei in dealing with Beijing is to adopt a policy somewhere between the first and third, that is, to reduce tensions and to expand contacts, even informal ones, with Beijing, but not start formal negotiations immediately. To a certain extent, this policy was in fact followed by Taibei from 1981 to the summer of 1984.

This policy can be characterized as follows:

—A gradual shift away from the aim of " reunification of China under the Three People’s Principles." The central policy issue would no longer be whether Taibei should talk with Beijing, but rather when and how to do so while protecting its fundamental interests. The two sides could even start informal but direct talks, in particular on the issue of Taiwan’s future position in juxtaposition with the mainland. Taibei could be more flexible about its status in international forums, gradually shifting from the Asian Development Bank model of recognition to the Olympic model, expanding cultural and economic relations with countries with which it does not have diplomatic ties, and shoring up its political support in Washington.

—Decreasing tensions between the two sides by reducing hostile propaganda and provocative military or intelligence operations against the mainland; gradually reducing the restrictions on direct trade, exchange of mail and travel, and encouraging "people-to-people" contacts and scholarly exchanges, while maintaining well-trained and equipped armed forces, and continuing to import certain weapons. The basic security strategy would reasonably be shifted from one of "recovering the mainland" to effectively deterring military invasion.

—Continuing the process of pluralization and "Taiwanization," and terminating martial law.

Two basic conditions must come about for this policy option to be adopted: internally, the accession to power of a liberal group with broad popular support, in which technocrats play important policymaking roles; externally, the continuation of Beijing’s reform program and "open door" policy, and a moderate approach toward Hong Kong and Taiwan.

Such a policy would change Taibei’s weak position: it would reduce the possibility of a military attack by Beijing and buy time for Taibei. It would gradually increase mutual understanding and create a favorable atmosphere for formal negotiations.

This option would not undermine Taibei’s autonomy or its international posture, as Taibei would not have to promise anything specific. There might be some increase in internal political tensions, should the conservatives within the KMT challenge a flexible policy. But there would be no marked increase in insecurity on the island, the Dang-wai would find little opportunity to challenge the government, and the continuing process of Taiwanization would erode the TIM’s position. Expanded cultural and economic exchanges between Taiwan and the mainland would reinforce existing ties between mainlanders and Taiwanese, especially in intellectual and business circles.

Taiwan’s program of upgrading its economic structure would also be strengthened. The island would be able to transfer more resources from its defense program to economic construction, especially large and long-term investment projects and high technology. It would certainly increase business confidence and encourage more of the well-educated to return to the island. It would also give Taiwan businessmen an advantage over foreign companies wanting to do business on the mainland.

Taibei would enjoy wider international contacts and could increase its participation in various international organizations. There is a possibility that some in Beijing might take advantage of this shift in policy to push Taibei to make further concessions. And Beijing would, of course, continue to pressure Washington to revoke the Taiwan Relations Act and rapidly reduce its arms sales to Taibei. But its incentive to do so would be reduced as tensions between Beijing and Taibei lessened and Beijing’s concerns about the possibility of Taiwan’s independence were allayed. In the long run, this moderate policy would create a favorable environment for peaceful reunification between the mainland and Taiwan.

It took 30 years for Beijing to change its policy from "liberation of Taiwan" to "reunification with Taiwan." It took even longer for Taibei to respond to such a fundamental change by shifting from "recovery of the mainland" to "reunification with the mainland under the Three People’s Principles." Time and a well-reasoned approach by both sides should allow even further progress toward peaceful reunification.

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  • GUO-CANG HUAN, born in Shanghai, pursued graduate studies at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences in Beijing. For this year he is a visiting Senior Fellow at the Atlantic Council of the U.S. in Washington, D.C. This article is adapted from a paper presented to the Atlantic Council, and the author expresses his appreciation to his colleagues there for help in its preparation.
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