Chinese threats over Taiwan: The U.S. decision is economic, not military.

Caught Between China and America, Taiwan Plays Its Hedge

Caught Between China and America, Taiwan Plays Its Hedge

The Reckoning
The Future of American Power
Jan. 24 2012 1:22 PM

Caught Between China and America, Taiwan Plays Its Hedge

Downtown Kaohsiung, in southern Taiwan.

Photo by Sam Yeh/AFP/Getty Images

Nine days ago, Taiwan’s voters began a process that, if not mishandled or suddenly seized upon by GOP presidential contenders, could defuse one of the two ideological time bombs that could conceivably lead to an outright war between China and the United States. The U.S.-China dispute over Taiwan’s future, along with the unpredictable mess in North Korea, represent the only true sources of World War III in Asia. Any progress toward a peaceful solution to either is in everyone’s interest.

Michael Moran Michael Moran

Michael Moran is an author and geopolitical analyst.

The Jan. 14 re-election of President Ma Ying-jeou showed that Taiwan’s people now firmly reject the idea of declaring independence from China, which since the 1949 civil war has regarded Taiwan as a renegade province. China’s reaction to past threats by pro-independence forces on the island has been reckless and probably counterproductive, but nonetheless they were hard to misinterpret: provocative missile launches into Taiwanese coastal waters and angry diatribes from Beijing restating China’s right to take the island by force if it so choses. The U.S. 7th Fleet, at the end of the day, was the main obstacle to that claim.


During Ma’s first term, which started in 2008, decades of bitterness and threats faded quickly, making the tense standoffs of the 1990s—when President Clinton ordered an American carrier task force to stand between the two Chinas—look like ancient history. Economic and cultural ties blossomed, censorship of Taiwan Websites faded, and friendly exchanges of diplomatic and business delegations became yawningly common.

Yet the acid test of whether this was the work of a pro-China elite on the island or representative of actual changes in the attitudes of Taiwanese to their cousins across the Straits was Ma’s re-election bid. With that secured, and by an impressive margin, the two Chinas seem very likely to begin exploring, privately at first, something that once seemed impossible: talks about talks on reunification.

The decision of Taiwan’s voters to decisively reject a candidate promising to hold a referendum on independence in favor of Ma’s quest for ever closer economic ties is a milestone in regional history. After years of sheltering behind the shield of the U.S. 7th Fleet, Taiwan has grown confident enough to pursue a more independent relationship with Beijing. These changes include, of course, the erratic performance of the United States over the past decade as it launched wars and drove the global economy toward the brink, but also China’s increasing confidence that the long game will inevitably favor its hand, both economically and politically. Taiwan’s voters apparently agree, at least enough to begin hedging more than a half a century’s worth of pro-American bets.

Before Americans launch into a “Who Lost Taiwan?” diatribe (here’s a good example of one), let’s consider the realities of the island through their own eyes. After all, Taiwan still lobbied hard for advanced military technology last fall, including an upgrade to its F-16 warplanes. (It got about half of what it wanted from the Obama administration, which has also recognized the new realities of selling top line weaponry to a potential adversary of our most important foreign creditor.*)


But the real calculation here is no longer military, it is economic: In June 2010, Ma’s government inked the landmark “China-Taiwan Free Trade Agreement,” officially opening commercial links and charting a path to future political negotiations. The deal lifted more than 500 tariffs on trade between them. It also it opened Taiwan’s private enterprises to Chinese investment for the first time. While Taiwan has continued to limit the stakes China can purchase, no one can be sure how much of the investment that actually pours into Taiwan each year already contains Chinese money, channeled via foreign investment banks. An influx of tourists from the mainland—another result of the newly warmed ties—has also bolstered Taiwan’s economy.

This is not to say that sentiment for reunification is strong in Taiwan. Many Taiwanese have personally experienced life under their own dictatorship and harbor a sophisticated view, through access to Chinese media and their own tenacious journalistic outlets, of the downside of life across the Taiwan Straits. The pro-independence Democratic Progressive Party (DPP) still won 46 percent of the Jan. 14 vote. But if open political talks on reunification remain out of the question, KMT President Ma’s slogan “no unification, no independence” has nonetheless allowed diplomats on both sides to explore the kind of halfway house the British negotiated with Beijing in 1979 when they agreed to hand back Hong Kong. That may not appeal to many Taiwanese: The lack of democratic guarantees in Hong Kong after China assumed control in 2004 belie the popular idea that, in absorbing a free-wheeling democratic society, China itself will somehow be democratized.

The possibility that Taiwan could do for China’s political process what Hong Kong did for its financial acumen was on dramatic display during the Taiwan election campaign. Without explanation, China’s censors allowed broad access to the Taiwanese media’s coverage of the campaign, and as Andrew Jacobs of the New York Times reported last week, it was a breathtaking moment for many Chinese readers.

Happily, China is a very different country than it was in the late 1970s when Beijing told Britain, finally, that its rule in Hong Kong was going to end one way or another. The British, unable to resist by that point, did their best—indeed they did quite well in the end, considering their late 1970s realities. The mistake Britain made (as so often in their history) was not in turning the Crown Colony over to the natives, but rather in waiting too long. By 1979, when talks began under Margaret Thatcher, Britain had sunk to second-tier military and economic status and had no real ability to project power into Asia.

The lessons for the United States, as the guarantor of the democratic freedoms Taiwan had struggled to fashion since the end of the KMT dictatorship in the 1980s, are obvious. The U.S. should be seeking to move this process forward now, while the 7th Fleet still rules the Pacific and the U.S. economy still ranks at the top of the heap. If the stalemate lasts beyond another decade, the question will not be what guarantees the U.S. can extract for Taiwan in a peaceful reunification, but rather how Taiwan would like to be digested—quickly and violently, or voluntarily, under economic and political duress. Happily, the Taiwanese seem to be taking matters into their own hands.

* (The Obama administration sold Taiwan air-defense missiles, upgraded communications equipment for its F-16 fighters and other arms in January 2010, a $6 billion deal that prompted China to suspend all military ties with the U.S., a high-stakes game given the importance of mutual understanding as China’s navy and other forces increasingly come in contact with the Seventh Fleet. A lobbying campaign for a second sale raged through the summer of 2011, presenting an enormous dilemma for the U.S.

Adm. Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, voiced concern over offending China yet again after returning from a July 2011 visit in which he rode in a Chinese submarine and watched PLA counterterrorism exercises. It was the first U.S. high-level exchange with China’s military since the 2010 arms sale, which resulted in a complete freeze on U.S.-China military relations. With American allies brushing uncomfortably close to China’s military, this self-imposed blackout carries real risk—akin to trusting the most important relationship in the world to the young commanders of minor Chinese, Japanese, Vietnamese, and Filipino warships rubbing elbows in Asia’s coastal waters. By the time of Mullen’s goodwill trip, which followed a similar trip to the U.S. by China’s military chief of staff, Taiwan had requested a second, more controversial arms sale: the delivery of an upgraded version of the F-16 warplane that the island’s air force first purchase in 1992. Those older aircraft, Taiwan argued, risked being outclassed by the latest models built in China. Obama chose to split the difference—rejecting the sale of more advance aircraft but agreeing to supply “upgrade kits” for the older warplane’s avionics and weapons systems. In Taiwan, the decision confirmed the new reality: The United States would risk only so much today on behalf of a promise made when Jimmy Carter was president in 1979.

The Taiwan decision raised the usual accusations of appeasement, particularly from the largely Republican congressional delegation representing the F-16’s production lines in Texas. But the uproar remained local. Beijing chose not to freeze military ties this time, apparently satisfied at the compromise. In Washington, the voices that once asked “Who Lost China” had passed from the scene. In the Pentagon, tempered by a decade of overreaching, reality prevailed. As Mullen explained in a New York Times op-ed after his China visit, the U.S. must place coexistence with China above other concerns. “I understand the concerns of those who feel that any cooperation benefits China more than the United States. I just don’t agree. This relationship is too important to manage through blind suspicion and mistrust. We’ve tried that. It doesn’t work. I’m not suggesting we look the other way on serious issues, that we abandon healthy skepticism, or that we change our military’s focus on the region. But we need to keep communication open and work hard to improve each interaction.” Amen, to that, Adm. Mike).