The booming cross-straits commerce is both about blood and Adam Smith. Blood because people on both sides of the Straits are ethnically Chinese (excepting a tiny minority of native aborigines in Taiwan) and thus share common social norms and kinship but without the politics. It’s also an amazing example of the “Invisible hand” in economics through which individual businessmen have followed the path to commerce and profit long before governments in either Beijing or Taipei officially sanctioned it.
Between 1949 and 1987 there was no official contact, compromise, or negotiation between the two sides; yet since 1987 there has been an evolving socio-economic rapprochement between the PRC and Taiwan.
In contrast to divided Korea where high level top-down official contact has led to formal agreements but little two-way trade and people to people contact, in the Chinese case contacts are unofficial but facilitating commerce and confidence building measures.
Yet despite the evolving economic ties, Nationalist President Ma Ying-jeou still firmly holds to a policy of “no negotiation on unification with Mainland China, no pursuit of de jure Taiwan independence, and no use of force by either side.” He moreover called for a “diplomatic truce” where neither side will poach the others allies.
| A tourist from Xiamen, China, takes a photo of the cityscape from the 89th floor of the Taipei 101 skyscraper building in Taipei June 28. Reuters/Nicky Loh
Two way trade between Taiwan and the PRC, its chief political rival, amounted to $153 billion in 2010 or 29 percent of total commerce. Taiwan moreover enjoyed a $77 billion surplus with the PRC. Last year both sides signed an Cross-Straits “Economic and Cooperation Framework Agreement” (EFTA), a prototype free trade agreement.
According Dr. Chiang Pin-kung, Chairman of the semi-official Straits Exchange Foundation (SEF) stated, “there is more than $100 billion in Taiwan investment on the Mainland.” He added, “We do not rely on the China market but the Chinese labor force.”
Three years ago, direct scheduled air travel began between both sides of the Straits. There are 370 weekly flights between Taiwan and 37 Chinese cities; the number will soon increase to 558 weekly flights between Taiwan and the Mainland.
Tourist, transportation, and investment links have been developing for years and now appear in full bloom; Mainland Chinese tourists now visit Taiwan much as millions of Taiwanese tourists and business visits have done on the Mainland for twenty years.
Much of the socio-economic thaw has to do with the policies of President Ma who reaffirmed the Republic of China’s constitutional commitment to “eventual” reunification but in political democracy. For all practical purposes the Taipei government stresses values integration within a wider greater Chinese community. One government minister deemed the relationship as “pragmatic and predictable.”
Naturally in a democracy opinions differ on issues of Taiwan’s status. Public opinion polls by the Mainland Affairs Council show that the vast majority favor maintaining the political status quo concerning China. Still 46 percent feel the pace of cross-straits exchange is just right, but another 33 percent fear it’s too fast.
Taiwan, it appears, may become overly dependent on the Mainland market; the opposition Liberty Times warns editorially, “Taiwanese had better be on their guard, because China’s all-out united front strategy towards Taiwan is not someone else’s problem.” The paper adds, “China wants to give the impression that it is conceding benefits to Taiwan all over the place. For example the real purpose of the Economic Cooperation Agreement is to lock Taiwan’s economy into a monolithic Chinese market.”
Former ROC Prime Minister Hau Pei-tsun warns that despite the thaw in relations between both sides, the PRC’s deployment of over 1,000 missiles aimed at Taiwan, “is not a smart move.”
Despite the persistent demonization of Taiwan by the Chinese communists, it’s the Mainland tourists who go to the classic symbols of Nationalist China when visiting Taipei; The National Palace Museum, the world’s premier repository of Chinese art and the Chiang Kai-shek Memorial, before then going on shopping sprees and spending, as most people say, “the way the Japanese used to do.” In 2009 some 967,000 Chinese tourists visited Taiwan; by 2010 the number doubled.
Interestingly many visitors watch Taiwan’s spirited TV shows to see and hear freewheeling political discussions and opinions unheard of in China. Seeing and hearing fellow countrymen, separated by history, may have a subtle effect on the impressions and opinions these visitors bring back to China along with their luxury purchases.
John J. Metzler is a U.N. correspondent covering diplomatic and defense
issues. He writes weekly for WorldTribune.com.