Having discussed China–United States frictions over Taiwan, Part III of this book now examines the development of relations between mainland China and Taiwan particularly between 1995 and 1998. Developments in cross-strait relations since late 1998 to 1999 and future prospects will be discussed in Part IV.

This chapter looks at the evolution of both China's perception of Taiwan and Taiwan's position on reunification before the 1995–96 Strait Crisis to help explain how China and Taiwan got onto a collision course and why China has come down so hard on Taiwan.

China's Perception of Taiwan

The sharp response by Beijing to Lee's United States visit reflected a fundamental change of its perception of the position of Taiwan leaders on reunification, and consequently a major change in its Taiwan policy.

When Chiang Kai-shek and Chiang Ching-kuo were in power in Taiwan from 1949 to 1987, Beijing never suspected them of seeking Taiwan's independence. Mao knew his old rival too well to be disturbed by the thought of Chiang Kai-shek seeking Taiwan's independence. He considered Chiang's resistance as only an unwillingness “to confess to being defeated” or a “matter of face”, not an intention to seek Taiwan's independence. On the contrary, the two Chiangs suppressed those who advocated independence no less harshly than they did communists in Taiwan. Very often they strenuously resisted what they suspected to be a U.S. effort to split Taiwan from China permanently. As a matter of fact, in private many Chinese officials and scholars highly respect the two Chiangs as national heroes as far as reunification and maintaining China's territorial integrity are concerned. They regard them as having strong patriotism. As for their close alliance with the United States against Beijing, this is seen as a strategy for survival and common ground in an ideological commitment against communism, but never against reunification.

It is now widely reported that in the 1950s and 1960s, Chiang Kai-shek tried to maintain secret channels with Beijing for negotiation and that he sent his own men to Beijing several times for secret discussions with leaders about reunification.

The Taiwan Strait crisis of 1995-96 was not an accident. It should be examined in the broad framework of post-Cold War international politics, in which the United States, China and Taiwan, in the process of bargaining over Cold War dividends and redefining their positions in the new strategic structure emerging in the Asia Pacific, had unavoidably come into conflict.

Lee Teng-hui's United States visit was obviously not simply a personal trip. It reflected Taiwan's intensified effort to change the status quo in the strategic structure in the Asia Pacific that had been in place for the previous two decades during the Cold War. Taiwan felt that it had been deprived of its former international status as member of the United Nations, as well as diplomatic recognition by the United States and most other countries, because of U.S. efforts to seek China's strategic support at the expense of Taiwan. The collapse of communism in Europe and the former Soviet Union dramatically reduced China's strategic weight in the eyes of the United States and encouraged Taiwan's eagerness to redress what it perceived to be the wrong it had suffered during the Cold War.

To China, Taiwan's efforts posed a serious threat not only to stable China–United States relations but also to the established strategic structure in the Asia Pacific, which already accepted the “one China” principle, a condition China insisted on for every country wanting to establish diplomatic relations with it. Taiwan's efforts were also a serious threat to China's vision of the future strategic structure in the Asia Pacific which, as China firmly demanded, should not go against the “one China” principle.

China also wanted to reap dividends from the Cold War. As a matter of fact, China had played a significant role in containing Soviet expansion and in its collapse. In hindsight, without China's de facto strategic alliance with the United States and its efforts in forming an international anti-hegemonic united front in the 1970s–80s, the Soviet Union would not have collapsed so easily.

The rise of China is an important phenomenon in post-Cold War international relations and one which has brought about to many contending views. Not since China–United States rapprochement in the early seventies and China's reform policy which opened the country up to the outside world in the late seventies, has China created such academic interest.

China's foreign policy has long been influenced by its relations with the Soviet Union and the United States. And in China–United States relations, the Taiwan issue has always been a crucial factor. China's Taiwan policy is very sensitive to the U.S. stance on this key issue. Its importance to China–United States relations as well as to stability in East Asia was demonstrated by the events that followed Lee Teng-hui's “private” visit to Cornell University in the United States in June 1995 and his announcement of “special state-to-state relations” with China in July 1999.

The Taiwan issue has never been confined to the Chinese on both sides of the Taiwan Strait as the United States has always had a role to play. And its influence is likely to continue. A considerable part of this book is therefore devoted to an examination of how China–United States relations have affected the Taiwan issue.

China has never treated the Taiwan issue in isolation: it is integral to its overall strategy. Its displeasure with Taiwan since 1995 has not merely been because of Taiwan's persistent drift away from reunification, but also because of China's view that Taiwan is helping the United States to contain it and undermine its overall strategy for the next century. This strategy is to keep a low profile in international affairs and concentrate on domestic modernization for the time being. The “one country two systems” formula which China intends for Taiwan is more to prevent Taiwan's further drift towards independence than to bring about immediate reunification. Reunification before conditions are ripe would create more problems for China.

After several rounds of negotiation between Li Yafei, deputy secretary of A.R.A.T.S. and his S.E.F. counterpart, Jan Jih-horng, Wang Daohan announced in late June 1999 that he would pay a return visit to Taiwan in the coming October. China hoped that there would be no restriction on the topics for discussion. To prepare for Wang's visit, Beijing planned to hold a forum in late August on mainland China–Taiwan ties and would invite senior Taiwanese statesmen responsible for handling contacts with the mainland. The two sides agreed to a visit by Taiwanese legal experts to China in July and a visit by a Chinese agricultural delegation to Taiwan in August. Jan suggested building detention centres in Xiamen for mainland Chinese who were caught illegally entering Taiwan. Li said that China was willing to co-operate, but would not be able to take full responsibility for the problem. China hoped that a hotline would be set up between the two sides after Wang's visit. The hotline would be of a “higher status” than routine communications between A.R.A.T.S. and S.E.F. China's wish list for the Wang-Koo talks also included closer co-operation on economic issues, such as on agriculture, and listing political matters.

Taiwan Makes a Big Splash

To the surprise of many, in an interview with the German radio station Deutche Welle on 9 July 1999, Lee Teng-hui for the first time openly defined the relations between mainland China and Taiwan as “between two countries (guojia), at least a special relation between two countries”. With this definition he dumped Taiwan's previous position of “two equal political entities”, although according to him, this was actually equal to “two countries”. He also noted that there was no need for Taiwan to declare independence again since it (R.O.C.) had been an independent country since 1912.

Taiwan's Foreign Minister Hu Chih-chiang, S.E.F. Chairman Koo Chen-fu, M.A.C. Chairman Su Chi, and other high officials immediately confirmed this as the government position. Koo changed his previous position (i.e. that he had held in his meeting with Wang Daohan in October 1998) and publicly called cross- strait ties country-to-country (guojia) relations.

China's sharp response to Lee's visit to the United States also reflected a major change in its Taiwan policy, which will be discussed in this chapter. The rationale for the change will be presented in Part IV.

Rising Nationalism and Domestic Politics

To the Chinese, at least the Chinese on the mainland, the Taiwan issue is a very emotional one because it touches upon the bitter memory of 150 years of humiliation by the West and 100 years by Japan. They can agree to the “one country, two systems” formula for Taiwan, accept Taiwan's status quo as such for the time being, and may even endorse the Taiwan model of democracy in future if it is proved to be successful. However, they cannot accept Taiwan's independence, which in their eyes is tantamount to Taiwan being “snatched away” by foreign powers as it once was. China has lost a lot of territory over the last 150 years. This territory was ceded to foreign powers in formal treaties, mostly following China's military defeats. No matter how the Chinese now feel about these treaties, they have to accept them as historical facts, as well as accept their consequences, such as the current China–Russian border and Mongolia's independent status. However, Taiwan is different. To the Chinese, it has been returned to China by formal international declarations and they will not accept its independence without a good fight.

With this background, no leader in China will accept the independence of Taiwan, both because of the national interest and their own political survival. The leadership in China today derives its reputation and legitimacy to rule largely from its success in terms of domestic economic reform and reunification. Mao Zedong became modern China's founding father by liberating it. Deng Xiaoping was supported by the Chinese because of his role in saving China from the political chaos of the Cultural Revolution, in opening China to the outside world for its economic modernization and in seeing to the return of Hong Kong and Macao to China.

In previous chapters, the policies and positions taken by Beijing, Taipei and Washington have been discussed in detail. In this chapter, the rationale behind those “given facts” is examined to illustrate the stalemate and dilemma Beijing is faced with in cross-strait relations.

Strategy and Rationale

The key to understanding China's Taiwan policy and its future direction lies in the understanding of its perception of (1) the international situation, (2) United States/Japan intentions with regard to Taiwan, (3) the intention of Taiwan leaders (as a whole) with regard to reunification and (4) the domestic situation.

China's persistent suspicion of U.S. intentions with regard to the Taiwan issue has long been a major factor in its Taiwan policy. Even Mao Zedong, aware that Chiang Kai-shek resisted what he saw as U.S. intentions to keep Taiwan permanently from the mainland, lent him political support. Mao said in a speech to the C.C.P. leaders in 1959: “At this point, our choice in Taiwan is between Hu Shi/Chen Cheng and Chiang Kai-shek. Who is better? Faced with this choice, I think that Chiang Kai-shek is better. Chen Cheng and Hu Shi have more connections with the United States and therefore Chiang Kai-shek is better.”

Mao was more concerned about U.S. intentions than his arch political rival Chiang and backed Chiang against Chen Cheng and Hu Shi. In 1988, Deng Xiaoping expressed the same concern. He said: “So long as Taiwan has not been reunified with the mainland, the status of Taiwan, the status as part of the territory of China, remains uncertain. Nobody knows when it will be snatched away from us once again in the future”.

China has always been suspicious that the United States and Japan are against Taiwan's reunification for both geo-political and ideological reasons. This explains China's strong opposition to the “internationalization” of the Taiwan issue.

In 1979, its slogan was “placing the hope (of reunification) on the government of Taiwan”.

Taiwan in China's Overall Development Strategy

To understand why Beijing felt so slighted by Lee Teng-hui's United States visit in 1995, we should first of all examine the importance of the Taiwan issue in China's overall development strategy.

In my view, China's basic overall development strategy since 1978 has been to build a booming coastal economy in the south first, i.e. Shenzhen, Xiamen and other special economic zones in the south. This southern coastal economy would be positioned to obtain foreign capital and high-technology from the world market, while at the same time its influence would extend inward to other coastal regions in the north as well as middle and far-flung regions to bring about a nation-wide, mutually supplementary and wave-like economic development. The purpose of this would be to build strong, comprehensive and well co-ordinated industrial, scientific and agricultural bases for China's sustained development into the next century.

In order to extend outward, China needs a strong “small triangle” made up of the southern coastal economy as well as Hong Kong and Taiwan. Developments in Hong Kong and Taiwan will make or break China's future development. Initially they will serve as two pillars in the “small triangle”. And, post-reunification, they will form a bigger “nucleus” which will greatly boost China's economy and status in the world.

In a talk on 23 October 1993, Chinese President Jiang Zemin called for the reunification of Taiwan's economy and the mainland's “solid industrial technologies”, saying that if Taiwan joined hands with the P.R.C., “none in the world could bully us”. By the end of 1995, the combined foreign currency savings of Taiwan, China and Hong Kong topped US$210 billion, overtaking Japan as the largest. The combined amount of foreign trade registered by Taiwan, Hong Kong and China in 1996 totalled US$890 billion, coming in third after the United States and Germany, with aggregate exports and imports reaching US$450 billion and US$440 billion respectively, both at the third-highest levels.

Mainland China and the island of Taiwan were linked by a land bridge in ancient times, but are now separated by the Taiwan Strait, which is about 72 nautical miles at the narrowest point and 140 nautical miles at the widest.

Mainland Chinese people began commercial activities on Taiwan island much earlier than the establishment of the first Chinese local government there, which was during the Yuan Dynasty (1271–1368). In 1662 the Ming General Zheng Chenggong (Cheng Cheng-kung: his Japanese name was Koxinga) expelled the colonial Dutch occupiers from the island, claiming that “Taiwan is China's territory”. The general refused to withdraw his troops in exchange for goods offered by the defeated Dutch army. It was after this that China began to pay more attention to Taiwan.

Taiwan at first resisted the establishment of the Qing Dynasty which replaced the Ming Dynasty out of its proclaimed loyalty to the latter. Then, before being defeated by the Qing troops, Taiwan asked for vassal status as Korea and Vietnam once had. The Qing Emperor, Kang Xi, turned down this request, insisting that Taiwan was Qing China's territory, not a vassal state. Taiwan remained a territory (Qing court upgraded it to a province in 1885) until the Qing court, and after being defeated, signed it over to Japan with a treaty in 1895. Before then, China's claim of sovereignty over Taiwan had never been challenged (the Dutch had only wanted to use or rent Taiwan as a trading port).

The Role of the United States in Taiwan before the 1990s

Taiwan attracted the attention of a few Americans as early as the mid-nineteenth century when the United States began to expand into the Asia-Pacific region. Inconclusive proposals were made for the occupation, purchase or colonization of the island as a coaling station and trading port. M.C. Perry, who led a U.S. fleet to visit the island in 1854, even proposed that Taiwan be procured as a front post for the United States to ensure stability in the Western Pacific.

On 22 May 1995, the United States, in a reversal of a 16-year ban on United States visits by high ranking R.O.C. officials, granted a visa to President Lee Teng-hui for a 6-day “private” visit to his alma mater, Cornell University, in Ithaca, New York. This prompted a crisis in both China–United States relations and cross-strait relations.

Since the United Nations shifted its recognition from the R.O.C. to the P.R.C. in 1971 and the United States followed suit in 1979, Taiwan has been working hard to break its diplomatic isolation. In May 1994, the Clinton Administration refused Lee a visa to visit the United States, but allowed him a refuelling stop in Hawaii on his way to Central America, restricting him to the airport grounds in Honolulu while his plane was being refuelled. Lee landed at the airport in Honolulu but refused to disembark from the plane in protest. However, this did not deter his efforts to return to the United States.

In 1991, the Taiwan alumni of Cornell contributed US$1 million for an academic chair. This was followed by the establishment of the Lee Teng-hui Professorship of World Affairs at Cornell University in 1994 through a US$2.5 million endowment provided anonymously by Lee's friends in Taiwan. In early 1995, the university invited Lee to be the main speaker at its June alumni observance. During a rally in April 1995, described as the largest political gathering of Asian students ever at Cornell, the “Taiwan Speak-Up Committee” collected more than 2,000 signatures urging Clinton to grant Lee a visa to visit the university. In order to ensure that the visa was issued, a Taiwan think-tank, headed by Lee's right-hand man, Liu Tai-ying, hired the Washington lobbying firm of Cassidy & Associates in 1994 for US$4.5 million and a promise of a large bonus if Congress voted in favour of Lee's visa.

Traditionally, Taiwan's allies in the United States have been conservative Republicans.

THEME OR VARIATIONS

Southeast Asia's great depression — the pre-war depression — was a complex phenomenon. Even to answer the apparently simple question, ‘When did it start?’, would require an extended and highly nuanced analysis. This complexity arises from three main considerations. First, the very causes of the depression in Southeast Asia were highly complex. Second, economic structures and circumstances in the different parts of the region, despite important commonalities, were greatly varied. And finally, the impact of the depression (indeed any sharp contraction on the scale experienced by Southeast Asia in the early 1930s) was different for each socio-economic group — rural-dwellers as against townsfolk, landowners as against landless, creditors as against debtors. To rework a well-worn phrase, all generalizations about the causes, course, and impact of the 1930s depression in Southeast Asia are wrong — except the present one. The immediately following paragraphs will expand on the three considerations above.

The principal cause of the depression in Southeast Asia, most scholars would argue, lay outside the region — in the sharp contraction in economic activity in the industrial countries of North America and western Europe which began towards the end of the 1920s. Perhaps the most important mechanism by which the depression was transmitted from the advanced industrial economies to Southeast Asia was through a sharp contraction in demand for many of the region's major primary commodity exports. A notable example was the heavy fall in demand for the rubber produced on plantations and smallholdings in the Malay States, Sumatra, and Cochin- China, as automobile production contracted, notably in the United States at the close of the 1920s. But there were other mechanisms of transmission, perhaps most importantly the worldwide tightening of credit that arose, first from the sharp contraction of American foreign lending from mid- 1928 as funds were drawn into the fierce speculative boom on the New York stock exchange and then as the American authorities raised rates in an attempt to dampen the boom, and subsequently from the widespread collapse of banks across the United States and western Europe as the depression took hold.