Economics Across the Taiwan Strait
Philip Bowring International Herald Tribune
Tuesday, June 12, 2001
TAIPEI The waters across the Taiwan Strait are now choppy. That is less because of a gathering storm than because winds blow one way and the currents run another. On each side there is heightened tension between political and economic objectives. Right now, economics has the upper hand.
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Washington and Beijing have put recent rhetoric, and their longer-term mutual suspicion and rivalry, behind them for now. Major progress has been made toward resolving the remaining obstacles to China's entry into the World Trade Organization.
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China has been engaging in another round of war games along the coast opposite Taiwan, appearing to suggest yet again that the war option remains should the United States encourage adventurism by Taiwan. While playing up the games for some of its domestic audience, in the process giving face to the army, Beijing has been playing them down for Taiwan and foreign consumption.
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Economic interests still take precedence over yielding to the nationalist and conservative forces which want a more robust attitude toward the United States, a quicker timetable for bringing Taiwan to heel and a slowdown in market-oriented economic reform.
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With President George W. Bush set to visit for the Asia-Pacific Economic Cooperation forum meeting in Shanghai in October, this bodes well for the crucial period leading to the Party Congress next year, when President Jiang Zemin must retire.
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Mr. Jiang's legacy cannot now include any major progress towards reunification, but it should definitely include WTO membership. There is just a chance that if relations with America remain on even keel, once the Taiwan election is out of the way some real progress on cross-strait relations will be possible.
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Joint WTO membership could provide cover for a softening in China's definition of One China. That could open the way to the long-delayed establishment of direct trade links, for which Mr. Jiang could claim credit. It is a possibility, not a probability, but prospects are better than at any time since high-level talks were broken off in mid-1995.
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In Taiwan, economic pressure for better cross-strait relations has never been stronger, particularly from the business community. The benefits of direct trade and the investment opportunities offered by China's buoyant economy may be exaggerated, but they are real.
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There is recognition that joining the WTO is good for both sides of the strait. Bearing the brunt of a collapse in U.S. electronics demand, Taiwan in general and its minority government in particular are feeling vulnerable. Most have been happy to hear President Bush's commitment to Taiwan's defense, but Taiwan has been careful to avoid triumphalism.
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There is plenty that could douse optimism. A further U.S. economic downturn could generate a surge of anti-China protectionist sentiment before the WTO deal is finalized. Unrest in China could lead Mr. Jiang to backtrack on economic reform and wrap himself in anti-American nationalist sentiments. The Bush administration could lose its balance in its attempt to reassert U.S. interests and values without causing a major rift with China.
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But beyond the current economic gloom in Taipei is a glimmer of political optimism that it will be possible to advance cross-strait ties without changing the political status quo.

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