Taiwan’s Tightrope

By | Updated June 13, 2017 6:29 AM UTC

Taiwan is a country, right? Well, sort of. It has a constitution, an army and an elected government, and yet the United Nations doesn’t recognize it. The reason? Taiwan became the home base of Chinese who fled Communism in the 1940s, and China considers the island one of its provinces, the government as illegitimate and any talk of independence as deeply hostile. China blasted missiles into the waters surrounding Taiwan in the mid-1990s as a warning not to go it alone. Relations and trade links have strengthened since then, but Taiwan's first female president, leader of the independence-leaning Democratic Progressive Party, is testing China's tolerance.

The Situation

President Tsai Ing-wen said in a New Year's Eve address that China was reverting to “threatening and intimidating” tactics as she provoked an angry response by speaking to Donald Trump after he won the U.S. presidential election. In deference to the Beijing government, no U.S. leader has talked directly with a Taiwan president in almost four decades. Elected in a landslide in January 2016, Tsai said at her inauguration she would seek peaceful ties with China even as she resisted pressure from the mainland to support the "one-China principle" — the understanding that both sides belong to one China, even if they have different ideas about what that means. (The Beijing government considers itself the rightful ruler over territory that includes Taiwan; under Taiwan’s constitution, adopted in 1946, Taiwan is the legitimate ruler of all of China including Taiwan.) Trump at first said his backing for the one-China policy would hinge on cutting a better deal on trade with China but, after Beijing warned that its position on Taiwan was non-negotiable, the U.S. president agreed to honor the policy in a phone call with President Xi Jinping. In Taiwan, polls show strong support for maintaining the status quo of coexistence and little immediate interest in independence. Meantime, China has pushed for closer relations with some of Taiwan's few remaining allies. In recent months, Panama opened diplomatic relations with China, while Nigeria forced Taiwan to relocate its trade mission out of its capital before receiving a $40 billion investment package from China.


The Background

Victory by the Communists in the Chinese civil war in 1949 forced the nationalist Kuomintang government to flee the mainland and cross the 110-mile Taiwan Strait along with more than 1.5 million refugees. Staunch U.S. support mellowed in the 1970s when President Richard Nixon shifted America’s diplomatic recognition to China from Taiwan in an effort to contain the Soviet Union. Even so, America passed a 1979 law committing to keep the peace in the Taiwan Strait and facilitate arms sales to the island democracy. After 38 years of often brutal rule, Taiwan dropped martial law in 1987 and a year later got its first native-born president, who went on to become its first democratically elected leader in 1996. Tensions erupted into Chinese military action twice — in the 1950s then again around a Taiwan election in the mid-1990s. China passed a law in 2005 authorizing an attack if the island declares independence. Even with only a handful of nations recognizing Taiwan, its 23.5 million people have built their economy into a technology and manufacturing powerhouse. Average income is three times greater than that of China. Much of Apple’s iPhone is made by Taiwanese companies, while tech giants including Taiwan Semiconductor Manufacturing Company lead the world in making computer chips for other firms.

The Argument

China aims more than 1,200 missiles at Taiwan and no peace treaty has been signed in the seven decades since the governments split. While many China-watchers say there is too much at stake for military confrontation, especially given the prospect of U.S. involvement and possible economic fallout, Trump's election has added a degree of uncertainty to old assumptions. China’s actions in Asia’s disputed waters have indicated a more expansionist and aggressive regional stance. Taiwan’s voters, wary of the lack of political freedom in China, turned to Tsai to keep the peace while building international ties — something of a challenge given its neighbor's influence — with a view to a future less dependent on the mainland. 

The Reference Shelf

  • A Bloomberg Q&A on the One-China principle.
  • U.S. Congressional Research Service report on Taiwan policy and Taiwan Relations Act of 1979 that  “maintains the capacity of the U.S. to resist any resort to force.”
  • The Diplomat considers the legality of the U.S. and Japan coming to Taiwan’s defense and looks at China’s attempts to win the hearts and minds of Taiwan’s people.
  • Richard Bush makes the case for a peaceful long-term solution in his book “Uncharted Strait.”
  • China’s 2005 anti-secession law stating that “reunifying the motherland is the sacred duty of all Chinese people, the Taiwan compatriots included.”
  • A 2007 paper by the Cato Institute says Taiwan risks war by relying too much on the U.S. for defense.

First published Jan. 10, 2016

To contact the writer of this QuickTake:
Debra Mao in Hong Kong at dmao5@bloomberg.net

To contact the editor responsible for this QuickTake:
Grant Clark at gclark@bloomberg.net