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Understanding the Political Economy of Cross-Strait Security: A Missing Link

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Abstract

This paper explores how and why China has been perceived as an economic threat in Taiwan through an examination of Taipei’s post-Cold War economic policy with respect to the mainland. While Taipei’s restriction on trade and investment across the Taiwan Strait until mid-2008 was widely considered a failure by both opponents and supporters of closer cross-Strait economic ties, this analysis points to an overlooked function of Taiwan’s economic policy that was not just about tackling the problems of the security externalities or promoting the island’s economic development. What appeared to be an ineffective policy can be understood as a successful boundary-drawing practice that discursively constituted a vulnerable Taiwan under Chinese economic threat, hence conducive to the (re)production of Taiwanese national identity.

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Notes

  1. See, for example, Tsai [1] and Lin [2].

  2. Tsai [3], Chen [4], and Chen et al. [5]. All of them had headed either the cabinet-level Mainland Affairs Council or the Council of Economic Planning and Development during Chen Shui-bian’s presidency.

  3. Much ink has been spilled on the economic and security consequences of booming trade and investment ties between Taiwan and China since Taipei officially lifted the ban on trading with the mainland in 1987. For examples of earlier analyses, see Wu [6], Wu [7], Boutin [8], and Leng [9].

  4. The underlying logic is that the poorer one’s enemy is, the less pressure there will be for an arms race. See Gowa [10].

  5. Chan [12]. For Chan, whether or not Taipei had wanted to communicate to Beijing a desire for conciliation, the actual development of cross-Strait commerce in the past two decades signaled a commitment not to destabilize relations.

  6. Tung [13]. Tung was vice chairman of the Mainland Affairs Council during the second Chen administration. Although his purpose here is to use this point to criticize the previous KMT government’s passive economic policy toward the PRC, as will be seen later, the same remark can be made on the DPP government’s own policy.

  7. Fuller [14], shows that Taiwan has adjusted rather well to increasing trade with and investment in China. If this is the case, then the growing sense of economic crisis in Taiwan until 2008 was as much politically motivated as reflecting an economic reality. I thank Christopher R. Hughes for pointing this out to me.

  8. Campbell [15]. See also Campbell [16].

  9. For a general discussion on this theme, see Connolly [17].

  10. Statistic data as showed here are intended to help the reader grasp the context in which Taiwan’s economic policy changes and debates taking place in the 1990s and early 2000s. For later exposition, see Tian [18], and Kao and Wang [19].

  11. Cited in Roy [20], 1.

  12. How to strike a balance between cross-Strait economic exchanges and protection of Taiwan’s security has thus been a constant theme in Taiwan’s policy and academic debates about the implications of economic cooperation with the PRC since the mid-1990s. Previous analyses of Taiwan’s restrictions and their rationale include, for example, Chu [21], Bolt [22], Leng [23], Sutter [24], Roy [20], Cheng [25], Tian [18], chap. 3, Kastner [26], and Lee [27].

  13. These preconditions were laid out by Lee in his inauguration speech in May 1990. He also insisted that contacts were to occur on an equal footing. See Bush [29].

  14. Even 3 years after Taiwan’s entry of the World Trade Organization (WTO), only 72.6% of products imported into Taiwan were open to China. United Morning Post, September 24, 2004.

  15. Chu [21], 172–73.

  16. Cheng and Chang [28], 134; and Chu [21].

  17. Commercial Times (Taipei), August 24, 1994.

  18. Sutter [24], 535–36; and Cheng [25], 119–20.

  19. Smith [31]. For Taipei’s assessment of the “three mini-links” issue, see Mainland Affairs Council, “Report on the Preliminary Impact Study of the ‘Three Mini-links’ Between the Two Sides of the Taiwan Strait,” October 2, 2000.

  20. Tian [18], 84.

  21. See, for example, a collection of conference papers edited by the Taiwan Advocates (Qun Ce Hui) in Liangan jiaoliu yu guojia anquan (Cross-Straits Exchange and National Security of Taiwan) (Danshui: Taiwan Advocates, 2004). The Mainland Affairs Council also warned that the opening of direct links without effective management would hasten the transfer of Taiwan’s capital, technology, and talent to China and thus aggravate unemployment on the island. See Mainland Affairs Council [34].

  22. Wu [35]. Wu had served as a vice premier during Chen’s presidency.

  23. See Yang and Hung [36]; and Cheng [25], 116–26. A wafer is a thin slice of semiconductor material, such as a silicon crystal, used in the fabrication of integrated circuit and other microdevices.

  24. Quoted from Roy [20], 4.

  25. Mainland Affairs Council [38]. The new policy (jiji guangli, youxiao kaifang) lasted until Chen stepped down and drew criticisms from both advocates and opponents of closer cross-Strait exchanges. For the former, it was unnecessarily restrictive; for the latter, it was too ineffective to stem the tide.

  26. Cheng [25], 104.

  27. See Huang [39]. Huang laments that Taiwan’s overinvestment in China has led to its shrinking market share in Europe (as well as its international standing there), whereas China’s share (and influence) continues to surge.

  28. Likewise, David Baldwin argues that economic statecraft can be most effective when combined with the use or the threat of use of other dimensions of power [40].

  29. Hirschman [41]. See also Chan [42].

  30. Quoted from Waltz [44].

  31. Mearsheimer [45], 32–35, 37, 345–46.

  32. Mearsheimer [45], chap. 7. Due to the “stopping power of water,” Mearsheimer conceives offshore balancers as having no apparent territorial ambitions in other areas. On the relationship between regional hegemons and offshore balancers, see Mearsheimer [45], 141–43.

  33. Mearsheimer [45]. Also see Mearsheimer’s debate with Brzezinski [46].

  34. Mearsheimer [45], 401–02.

  35. By extending Mearsheimer’s “stopping power of water” concept that entails differentiation among different types of great power, Elman [47], demonstrates why hegemonic bids are no longer rational for would-be revisionists in the twenty-first century. In fact, Mearsheimer also admitted that hegemony is rare because “costs of expansion usually outrun the benefits before domination is achieved.” Mearsheimer [48].

  36. This point is generally overlooked by realist scholars in Taiwan. See Shih [50].

  37. On the importance of deepening and broadening the concept of cause in the IR theorizing, see Kurki [55].

  38. Johnston [54].

  39. The discussion below is based on Fuller [14], 246–49, which draws data from Taiwan’s Council of Labor Affairs, Directorate-General of Budget, Accounting, and Statistics, Council of Economic Planning and Development, and the Statistical Yearbook of the Republic of China.

  40. Fuller [14], 246.

  41. Fuller [14], 248.

  42. Fuller [14], 249.

  43. On Taiwan’s industrial adjustment through a mix of private and public initiatives in the key electronics sector, see Fuller [14], 250–54.

  44. Tian [18], 157.

  45. Cheng [25], 105–08; and Tung [59]. See also Tanner [60]; and Rigger and Reid [61].

  46. Tung [59], 143.

  47. Based on various “The Public’s Views on Current Cross-Strait Relations” conducted by the Election Studies Center, National Chengchi University. See Keng [62].

  48. National Security Council [63], describes the PRC’s sanzhan as “a war without gunpowder,” “the latest and most focused type of threat to Taiwan’s national security.”

  49. Chu [21], 169.

  50. See, for example, Tian [18]; and Friedman [64].

  51. Campbell [15], 61. Emphasis in original.

  52. Ashley [65]. Quoted in Campbell [15], 62. Emphasis in original.

  53. Campbell [15], 68.

  54. Ironically, it is Taiwan’s intelligence sector that has a track record of recruiting Taishang as its agents on the mainland.

  55. According to the same survey (“The Public’s Views on Current Cross-Strait Relations” by the Election Studies Center, National Chengchi University), Taishang have also been more pro-independence than the general public.

  56. A useful illustration is Hsu et al. [67], a brochure intended to raise the risk awareness of ordinary Taiwanese planning to travel, work, or live on the mainland. See also Chen [68].

  57. The WTO non-discriminatory principle, as embodied in the most favored nation clause, calls for equal treatment of similar products imported from different WTO members.

  58. Cho [72]. To be sure, Article 24 of the General Agreement on Tariffs and Trade (GATT) allows members to form a FTA without immediate elimination of tariffs on substantially all trade, but the maximum transitional period is 10 years. It seems that opponents of the ECFA would demand a much longer transitional period, if not a permanent one.

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  1. College of Asia Pacific Studies, Ritsumeikan Asia Pacific University, 1-1 Jumonjibaru, Beppu City, Oita Prefecture, 874-8577, Japan

    Ching-Chang Chen

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Chen, CC. Understanding the Political Economy of Cross-Strait Security: A Missing Link. J OF CHIN POLIT SCI 15, 391–412 (2010). https://doi.org/10.1007/s11366-010-9118-y

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