Taiwan and the New Regional Political Economy of East Asia

Regional economic relations in East Asia have experienced a period of profound change since the 1997/98 financial crisis. Two developments are particularly notable. The first relates to the ASEAN Plus Three (APT) framework, under which an increasingly coalescent regional economic grouping has emerged in East Asia. Thus far, APT member states (Japan, China, South Korea and the ASEAN group) have devoted much energy to creating new mechanisms of regional financial governance, such as the Chiang Mai Initiative and Asian Bond Market Initiative. The second development concerns the expansion of bilateral free trade agreement (FTA) projects in East Asia and the Asia-Pacific. Many see this as a precursor to forging wider sub-regional or regional trade agreements. Both developments mark a potentially significant shift from regionalization to regionalism in East Asia, and thus “high politics” becomes de facto more important given regionalism is largely founded on inter-(nation-)state agreements. Beijing's continued ardent contestation of Taiwan's nation-statehood has hence limited Taiwan's ability to engage as it would like in East Asia's new regional political economy. This article considers the nature of regional political economy and applies it to the recent East Asian experience, which in turn provides an analytical framework for examining the significance of the APT framework and new FTA trend, and Taiwan's position in relation to them. Special attention is paid to Taiwan's prospects in East Asia's new regional political economy.