News from the "Other China" – ECFA

Two years ago, I wrote a long post discussing the political and economic relationship between Mainland China (People’s Republic of China) and Taiwan (Republic of China) ahead of  the implementation of the Economic Cooperation Framework Agreement (ECFA).  The ECFA was signed on June 29, 2010, in Chongqing, PRC, and went into effect on September 12 of the same year.  There have already been clear financial benefits, with an edge to Taiwan (as designed by the Mainland):

…Zheng Lizhong, vice president of the Beijing-based Association for Relations Across the Taiwan Strait, said China’s official statistics show that cross-strait trade totaled US$145.37 billion in 2010, up 36.9 percent from the previous year.

China’s exports to Taiwan rose 44.8 percent to US$29.68 billion, and imports from Taiwan increased 35 percent to US$115.69 billion, giving Taiwan a US$86.01 billion trade surplus, Zheng said.

Despite this, all Cross-Strait issues are confounded by a volatile mix of Mainland nationalism, Taiwanese identity confusion coming from a lack of island consensus (are they 漢人: hànrén, 華人: huárén, Taiwanese, etc), and the Taiwanese fear of being reduced to Hong Kong status (“One Country, Two Systems”: 一国两制: Yīguó liǎngzhì), which would result in the loss of, what many Taiwanese see as hard-earned political rights won through years of struggle in Taiwan under the KMT (Guo Ming Dong)’s White Terror. (白色恐怖: Bai Se Kong Bu).

The Economist is currently running a fairly balanced piece on the contemporary state of Taiwanese domestic politics as it relates to Mainland China, and what effect the ECFA has had on the island of 23 million.

“Taiwan’s commonsense consensus: Economic integration with China is not doing what China hoped and the opposition feared” (Economist Online Feb 24th 2011)

“TWO elderly men in baseball caps have been touring Taipei’s government district this week with a loud-hailer. The slogans they shout are plastered over their battered little van: “Warmly welcome Chen Yunlin and the inauguration of the Economic Co-operation Committee!” It is not catchy, and nobody pays a blind bit of notice. Their excitement about two of the latest signs of Taiwan’s burgeoning ties with China is not widely shared.

Mr Chen is a Chinese official who has been leading negotiations with Taiwan. Since Ma Ying-jeou was elected Taiwan’s president in 2008, these have led to 15 cross-strait agreements, including last year’s “ECFA” (Economic Co-operation Framework Agreement)—a free-trade agreement in embryo. Mr Chen arrived in Taiwan on February 23rd with a group of businessmen, scouting investment opportunities. The day before, an Economic Co-operation Committee (ECC), a joint China-Taiwan body to oversee implementation of the ECFA, met for the first time.

All this is par for the course these days. Exchanges between the two sides have been booming for over 20 years. China and Hong Kong take more than 40% of Taiwan’s exports; its businesses have at least $90 billion invested in the mainland, where some 800,000 Taiwanese live. And the past couple of years have seen a remarkable acceleration in exchanges. Besides Mr Chen and the ECC members, 400 Chinese travel agents arrived on February 22nd. The previous week saw the mayor of Nanjing fly in with 100 people in tow, and the governor of Liaoning province with 800. Regular direct flights began only in July 2008. Yet last year 1.6m Chinese tourists visited.

Perversely, the traditionally “pro-independence” DPP is better placed to profit from the heightened sense of a distinct Taiwanese identity that increased contacts are spawning. But it too faces a dilemma. People undoubtedly do like the economic benefits of co-operation with China. The KMT has negotiated them under a weird formula known as the “1992 consensus”, in which China and Taiwan sit down together agreeing there is only “one China”, while keeping silent about what that means.

The DPP rejects this. The rival contenders for its presidential candidacy next year are competing to come up with other “consensuses” to propose as a substitute. They know that to be a credible party of government again, they have to be able to deal with China. As one supporter puts it, “that’s not a consensus, it’s common sense.” So this week the DPP launched a think-tank intended both to devise a workable China policy and to act as a channel for cross-strait talks. China seems ready to give the DPP a chance. The trip by Chen Yunlin, the senior Chinese negotiator, includes a foray into the party’s heartlands in the south of the island. The DPP itself is for once not to stage any protests against his visit, though doubtless plenty of citizens will.

Make me free or Chinese. But not yet

The KMT likes to portray the DPP as dangerous hotheads who might force China to carry out its threat of invasion if Taiwan declares independence. The DPP paints the KMT as a party of Chinese stooges leading Taiwan blindfold towards absorption by the mainland. In fact, the two parties are having a more sophisticated argument: not about independence or unification, but about how best to preserve a status quo most people in Taiwan cherish. The danger is how China might react as it becomes clear that present policies are bringing unification no closer. The hope is that, with so much else to preoccupy it, its leaders will enjoy the smoother relations and not ask where they are leading.