Amidst the ongoing political turmoil in Chinese controlled Hong Kong, the island state of Taiwan, comprising of 23 million people, mainly descendants of migrants from the Fujian province of China, recently underwent a closely watched elections.
A Dutch colony in the 1600s, it was incorporated into China late in the 17th century. In 1895, it was transferred to the Japanese Empire which ruled it till its defeat in WW II. When mainland China was being overrun by the Communist Armies of Mao, the Nationalist dictator Chiang Kai-shek fled to the island, turning it into a fortress and hoping to use it as a base for a campaign to retake the mainland, a dream which was never fulfilled.
Since 1949, two China's came into existence, the ROC or Taiwan and the People's Republic of China, commonly known as 'The China'. Only 15 countries recognize Taiwan, which although in diplomatic isolation, has economically fared extremely well. Exploiting its highly educated and skilled population, it has emerged as an important hub in the global high tech supply chain. Despite its ongoing tensions with China, the Taiwanese have a flourishing trade with mainland China and are one of its leading investors.
Since the early 1980s the Kuomintang (KMT) relaxed its stranglehold on the politics of the island and today it has a vibrant multiparty democracy. Both a reformed KMT and the strongly pro-independence Democratic Progressive Party (DPP) have intermittently ruled the island.
Tsai's DPP won the first term on the back of the 2014 Sunflower Revolution. This was a student movement against the KMT government's trade pact with PRC which was commonly perceived to be tilted in favor of PRC. The youth felt that the pact gave PRC the heft to hurt Taiwan's economy, in the long run, rendering it vulnerable to political pressure and ultimate unification.
Overall, her first team war lackluster and largely unpopular but the changing geopolitical situation in the region sprung her back into power.
The internal politics in Taiwan can be largely attributed to the political dispensation and optics of the two major parties - the DPP and KMT, especially their stance on cross-strait relations. PRC considers Taiwan as the unfinished agenda in the road to the restoration of China's national power. Taiwan is a painful reminder of its past humiliation and the Chinese are working towards its ultimate unification, one way or the other.
Over the past decades, PRC has been using both carrots and stick to entice Taiwan into unification. A burgeoning economic partnership is occasionally marked by the firing of missiles and overflights over the disputed Taiwan Straits, a 110 mile wide stretch of water in the Western Pacific which remains the scene of power play. But trade and investment, has done little to diminish the inherent hostility between the two.
The intense protests against the Chinese government in Hong Kong rejuvenated Tsai's campaign. Tsai has enraged Beijing by putting the defense of her country's sovereignty and democracy at the center of her electoral campaign.
In 1995, marking a century after Japan's colonization of Taiwan, the then Chinese President Jiang Zemin had said that it was the "sacred mission and lofty goal of the entire Chinese people" to see the unification of the island with mainland China. Reiterating their stance, after Tsai's election victory, Chinese Foreign Ministry has said that "regardless of what happens in Taiwan, the basic facts won't change: there is only one China in the world, and Taiwan is part of China."
Early last year, President Xi posed the idea of exercising greater political control over Taiwan. He stepped up the efforts to end Taiwan's independence and incorporate the island into the mainland. Hong Kong's relationship with the PRC — known as "one country, two systems" — was originally held out as a model for the incorporation of Taiwan into the Chinese state, as Mr Xi has noted. However, the popular revolt in Hong Kong allowed Ms. Tsai to argue that "one country, two systems" has clearly failed and that the suppression in Hong Kong represents a clear warning to those who feel unification with China could be without pain.
Under Tsai Ing-Wen in the last few years, Taiwan has pursued a new 'southbound' strategy, attempting to develop closer economic and educational ties with countries in south and southeast Asia so as to wean away from her country from the economic shadow of PRC.
US is a staunch supporter of Taiwan and has been largely instrumental in dissuading PRC from any misadventure across the Taiwan Strait. The United States did not challenge the position of 'One China' policy which was first stated in 1972 until December 6, 2017, when President Trump said that the U.S. is not necessarily bound by that policy. In 2019, Trump signed into law the Asia Reassurance Initiative Act reaffirming the U.S. commitment to Taiwan, including arms sales. Washington does not have any formal ties with Taiwan, yet is bound by law to help it defend itself and is its main source of weapons. The U.S. also regularly sends warships through the Taiwan Strait as a sign of support.
- Taiwan is likely to get increasingly embroiled in the growing US-China rivalry and power games in the Pacific region. How this will impact its economy and trade, keeping in mind that despite its new southbound economic strategy, PRC remains its principal trading partner and investor/ destination for investment.
- With Hong Kong on the boil and its trade wars with the Western World, China is unlikely to exacerbate the security situation in the Taiwan Straits in the foreseeable future. It has learned to bide its time and act at the opportune moment. However, a relentless information/ disinformation campaign will be unleashed, and the Taiwan Straits will remain the focal point to generate pressure points from time to time.
- With Taiwan's defiance of Beijing now cemented for at least the next four years, the question lingers as to what and how the economic relationship with the mainland will continue. Another battlefield includes regional trade agreements and mechanisms. Prudence demands that both bury their political differences for the sake of economic benefits and carry forward their mutually rewarding trade.
- The role of Taishang (Taiwanese businesspeople who do business in mainland China) should not be underestimated. This community has played a crucial role in helping develop the Chinese economy over the decades and could again be Taiwan's ace up the sleeve.
- The geostrategic implication of China gaining control of Taiwan is nothing less than transformational, as such an event would signal the effective end of U.S. dominated post-war system in what is now the world's most dynamic economic region.