My Enemy, My Partner

Economic ties beween Taiwan and China aren't just the best hope for stability in the region -- they are the only hope for peace

By Stan Crock

The cycle of violence in the Middle East never seems to end. Internal conflicts from Indonesia to Rwanda to the Balkans also feel interminable. But the dispute that poses the biggest danger for the U.S. has no guns blazing right now -- and no refugees. It's the confrontation across the Taiwan Strait. Beijing and Taipei's differences over Taiwan's future affect everything from the Administration's missile-defense plans to the chronic problem the U.S. faces in dealing with an emerging power such as China. Unlike some other conflicts, this one could quickly drag American GIs into the fray.

At first glance, the Taiwan dispute seems as difficult to resolve as the other festering quarrels. Leaders in Taiwan have no interest in following Hong Kong's lead and coming under Beijing's oppressive thumb. And the mainland is ready to go to war if Taiwan makes any moves toward independence. Now that the Bush Administration has made clear it would send in forces to protect Taiwan in the event of an unprovoked attack by China, the stakes for Washington are higher than ever. Making matters more dicey, the status quo is becoming ever harder to maintain. But some quiet developments, ones that don't earn the headlines devoted to missile tests and the movements of of U.S. aircraft carriers, suggest there may be a way to avoid disaster.


  The Bush team knows how ticklish this all is. One senior aide frets that missile defense wouldn't be an issue for Beijing if it weren't for Taiwan. China knows that it already has enough warheads to overwhelm the primitive and limited defensive shield President Bush envisions. And by the time any defense is in place, China will have even more. So, Beijing isn't really worried that its small retaliatory arsenal would be neutralized. Its real concern is that the technological advances from developing a defensive system could find their way to Taiwan and insulate the island against the threat of short-range Chinese missiles.

Taiwan also is the biggest thorn in the overall Sino-American relationship. The Bush Administration will raise issues such as human rights and intellectual-property protection with the Middle Kingdom. But politically, everybody recognizes the explosiveness of the Taiwan issue. It involves Chinese sovereignty and what Beijing views as outside interference in its internal affairs. Aggravating matters are Taiwan's effective lobbying in Washington and the anti-China rhetoric that has become a constant in the U.S.

So, what is the way out? Some analysts say the strategic ambiguity of the past, in which neither China nor Taiwan knew exactly when Washington would intervene, continues to make sense because it prevents both sides from acting irresponsibly. Others argue for the clarity the Bush Administration has tried -- not quite successfully -- to give to the matter.


  In their thoughtful new book, Wilson's Ghost (PublicAffairs, June, 2001) former Defense Secretary and World Bank President Robert McNamara and Brown University Professor James Blight talk about big issues like nuclear disarmament. But they seem to hit a dead end when they turn to Taiwan. They approve of the suggestion of Joseph Nye, a former top Pentagon official in the Clinton Administration who now is dean of Harvard University's Kennedy School of Government. Nye advocates a pledge by China not to use force in return for a pledge by Taiwan not to declare independence. Even if both sides were to agree to this, which is hardly likely, it would be only a stopgap measure and far short of a solution.

The real answer may come instead not from some grand strategic plan or breathtaking diplomatic breakthrough, but rather from something far more prosaic: economic necessity. With U.S. growth slowing, Japan still in the doldrums, and Asia and Europe on slow economic trajectories, China is looking increasingly attractive to Taiwan businesses.

For years, China has been a manufacturing platform for low-end items such as shoes and toys, but now Taiwan executives see China as both a market and place to make high-end items. They're putting pressure on the government to end restrictions on investments. (See BW, 6/11/01, "Q&A with Taiwan's Top China Policymaker"). At the same time, China needs more employment as its state-owned enterprises close their shutters. The increased economic interdependence could well reduce the prospects for conflict as both sides' political elites rely on economic growth to keep domestic constituents happy.


  Some in Taiwan fear increased economic integration would run afoul of policymakers in Washington. I think nothing could be further from the truth. There may be some China-bashers in Washington who would like to go to war, but I don't think anyone with the responsibility of power thinks that way. The Bush Administration's goals are peace and prosperity in the region. What's more, it believes increased trade will mean Beijing has less and less control over what goes on in the country. It's a peaceful way to undermine the regime and force the system to evolve into something more acceptable to Taiwan. So, increased Taiwan investment and economic integration with the mainland helps achieve all of Washington's goals.

To be sure, prosperity doesn't always prevent war. Europe's economic integration after the turn of the century didn't stop World War I. But every other option right now seems doomed. A kind of diplomatic invisible hand -- in which Taiwan's and China's individual economic interests unintentionally create a common good -- is the best hope we have. And it just might work.

Crock covers national security and foreign affairs for BusinessWeek from Washington. Follow his views twice a month, only on BW Online

Edited by Douglas Harbrecht

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