Foreign Affairs: 100 Years
The Future of History
Can Liberal Democracy Survive the Decline of the Middle Class?
In presidential elections this weekend, Ma Ying-jeou, Taiwan's incumbent president from the ruling Kuomintang (KMT), or Nationalist Party, decisively defeated Tsai Ing-wen of the Democratic Progressive Party (DPP). With about 52 percent of the vote (compared to Tsai's 45.6 percent and the third-party candidate James Soong's 2.8 percent), Ma will be able to govern with a clear majority of popular support. His margin of victory was far higher than most opinion polls had predicted. Many Soong supporters seem to have decided in recent days that by voting for their preferred candidate, who is almost politically identical to Ma, they might hand Tsai the victory.
During the campaign, most observers insisted that the election was not about cross-strait relations but about socio-economic issues, including rapid economic growth amid worsening inequality, reduced career opportunities for recent college graduates, and unaffordable housing costs. In fact, socio-economic issues are inseparable from cross-strait issues. Ma ran on his record of improving ties between China and Taiwan, claiming that friendship meant stability and prosperity and that a reversion to DPP rule would throw Taiwan back into the dark days of the mid-2000s, when DPP President Chen Shui-bian's avowedly Taiwan-centric policies blocked negotiations even on direct passenger plane flights across the Taiwan Strait. Tsai, no protectionist or isolationist herself, promised not to roll back cooperation with China for the same reason. Her main criticism of Ma was that he is naive about China. According to her, issues of further integration -- such as allowing Chinese professionals and white-collar workers to take jobs in Taiwan -- should be approached cautiously.
For their part, voters seem to have accepted Ma's contention that reducing cross-strait tensions improves the country's economic well-being. Indeed, more than ever, Taiwan's economy is dependent on China's. This is partly a result of market dynamics (Taiwanese capital flows across the Taiwan Strait in search of lower production costs) and partly a result of the KMT and Chinese Communist Party's efforts to facilitate integration. By the end of 2011, some 80,000 Taiwanese firms had invested up to $200 billion in mainland factories, research and development centers, stores, and restaurants. And annual trade between the two sides exceeded $150 billion. Meanwhile, out of a total population of 23 million, one million or more Taiwanese live in China. Directly or indirectly, the majority of Taiwanese households depend on Chinese economic dynamism for their livelihood.
These are the dynamics that had helped Ma win a landslide victory in the 2008 Taiwan elections to begin with. He had made the campaign promise to pursue something like a Taiwanese-Chinese common market. He delivered on this pledge in 2010 by signing with Beijing the Economic Cooperation Framework Agreement (ECFA), under which the two sides agreed to slash tariffs on a wide variety of goods and services. By December 2011, 16.1 percent of Taiwanese goods exported to China and 10.5 percent of Chinese goods exported to Taiwan were already tariffed at preferential rates. Important services were also covered under ECFA's "early harvest" provisions.
Ma was able to achieve his ECFA breakthrough because he was willing to recognize the so-called 1992 consensus. This is the name given later to an agreement between his party and the Chinese Communist Party under which both sides acknowledged that there is only one China. Taiwan belongs to it, but each side could define "China" as it wished. Beijing could thus claim that the one China is the People's Republic (PRC), while Taipei could claim it is the Republic of China (ROC), Taiwan's official name. Beijing has long set acknowledgement of the 1992 consensus as a non-negotiable precondition for stable cross-strait relations.
The DPP, however, has consistently rejected the 1992 consensus, including under Chen's 2000-8 administration. The DPP believes that acknowledging the consensus is unacceptable for two reasons: First, if the world has only one China, that one China will inevitably be the PRC, and consequently, acknowledging the consensus means denying the existence of the ROC; and second, Taiwan was still an authoritarian state in 1992, when the KMT negotiated the consensus. Any agreement with such profound implications for Taiwan's future should have been approved by voters in a referendum or through other democratic procedures.
Most KMT figures privately acknowledge the absurdity of the claim that any one China could be the ROC. They explain that the 1992 consensus should be understood not in literal terms but rather as a kind of mantra the Taiwanese government must chant in order to have good relations with China -- a harmless ritual that allows Taiwan to proceed pragmatically with the all-important business of facilitating cross-strait economic and sociocultural ties. Most voters evidently accept the KMT's interpretation.
DPP leaders, in contrast, argue that far from being innocuous, the consensus is a dangerous formulation that threatens to push Taiwan down the path of becoming a Chinese "special administrative region" like Hong Kong. In domestic polls, some 75-80 percent of respondents consistently reject the notion that Taiwan should ever accept a status resembling that of Hong Kong. But the DPP has been unable to capitalize on this sentiment, because it has yet to produce a workable replacement for the consensus concept: a pithy summation characterizing cross-strait relations that would be acceptable both to Beijing and to Taiwanese worried about securing Taiwan's de facto, or even de jure, independence.
Under Tsai, the DPP advanced two potential replacement concepts: "peaceful development" and "harmonious but distinct." Both of these terms had already been used repeatedly in recent years by Chinese officials and policy commentators to depict Beijing's ideal form of international relations. To Chinese writers, "peaceful development" (sometimes "peace and development") means that China would never start a war with another state because what it needs most is a peaceful international environment conducive to economic growth.
"Harmonious but distinct" is a bit more complex. Chinese writers use the term to suggest that the world's great powers can all interact harmoniously but need not -- and should not -- become so close that their domestic institutions start to resemble one another. The concept is deployed as a direct rejoinder to those who contend that as China develops it must reform politically to resemble industrialized democracies. "Harmonious but distinct" means that it will not reform but that it does not see its political status as cause for acrimonious relations with other states.
The DPP's difficulty in positing "peaceful development" and "harmonious but distinct" as replacements for the 1992 consensus is that Beijing clearly views them as applying only to international relations, not relations across the strait. From Beijing's point of view, the very purpose of the 1992 consensus is to compel Taiwan to acknowledge that it is a part of a single Chinese nation, perhaps even a single Chinese nation-state. The DPP's use of "peaceful development" and "harmonious but distinct" must therefore seem outrageous to Chinese leaders because it implies that Taiwan is analogous to Japan, Vietnam, or some other sovereign state.
Whether most Taiwan voters considered the nuances of this issue in deciding which candidate to support is uncertain. But they clearly understood that electing a DPP president -- however talented and impressive she might have otherwise been -- risked an immediate worsening of cross-strait relations and severe damage to Taiwan's economy.
This does not mean that Ma's cross-strait policies are risk-free. Beijing is unlikely to tolerate Taiwan's de facto independence indefinitely. Yet Ma is evidently not worried about the prospect of China becoming impatient and demanding more. During the campaign, he even stated his willingness to consider pursuing political negotiations with the People's Republic during a second term. He suggested that China might sign a peace agreement with Taiwan, freezing the political status quo. Representing almost half of Taiwan's population, DPP leaders called Ma naive. Any such talks, they said, might lead to an erosion of U.S. military and diplomatic support, which would effectively leave Taiwan defenseless. Amid this firestorm of criticism, Ma backed down his proposal and attached arduous conditions to considering any future negotiations.
Even so, Ma's victory almost certainly raised Beijing's expectations. China's leaders may pressure Ma to begin formally discussing Taiwan's political future. So, rather than stabilizing the cross-strait status quo, as the Australian foreign minister and the former U.S. representative to Taiwan separately suggested in interviews last week, Ma's election might usher in a new period of instability in which Chinese demands on Taiwan intensify. Among other measures, Beijing might call upon Taiwan to stop purchasing weapons from the United States, phase out its institutionalized military ties with Washington, and formalize the 1992 consensus into law. No new demands appear on the immediate horizon, partly because China itself is currently tense with anticipation of this year's coming leadership transition. Ma probably has a one-year window in which to heal Taiwan's domestic divisions and generate the kind of "Taiwan consensus" on cross-strait relations that the DPP candidate Tsai warned was essential for strengthening Taiwan's hand prior to any political negotiations. Nothing less than the future of one of Asia's most advanced democracies is at stake.