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China Expert Says Taiwan Issue Raising Problems in U.S.-China Relations

Interviewee: Elizabeth C. Economy, C.V. Starr Senior Fellow and Director for Asia Studies
Interviewer: Bernard Gwertzman, Consulting Editor
December 4, 2003

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Elizabeth C. Economy, the C.V. Starr senior fellow and director of Asia studies at the Council on Foreign Relations, says that when President Bush and China’s new prime minister, Wen Jiabao, meet next week in Washington, they will discuss a “traditional agenda” of Taiwan, trade, and human rights.

She says that Taiwan’s President Chen Shui-bian has injected the issue of Taiwan’s independence into his re-election campaign, predictably nettling the Chinese and forcing the issue into the Wen-Bush talks. On trade, she says Bush has adroitly avoided the punishing sanctions many in Congress have urged to counter the huge trade imbalance between China and the United States by limiting them to unimportant imports. Economy also says that there has been “a sea change” in the ability of Chinese citizens to express themselves politically but that arrests of political and religious dissidents continue to be a serious thorn in relations.

Economy was interviewed by Bernard Gwertzman, consulting editor for cfr.org, on December 4, 2003. She published an article about the Wen-Bush meeting in the December 5 International Herald Tribune.


Wen Jiabao is coming to the United States next week on his first foreign visit since being promoted to prime minister in March. What is the agenda likely to consist of?

As of about two months ago, the agenda would have consisted of a positive appraisal of the current state of relations and perhaps some discussion of potential areas of future cooperation. But in part because of election year politics in the United States and in part because of some new challenges on the Taiwan front, we are back to the traditional agenda, which is dominated by human rights, trade, and Taiwan.

Let’s start with Taiwan, which for most Americans has seemed to drop off the political map.

President Chen Shui-bian is up for election again in Taiwan this coming March and, in an effort to ensure his re-election, he began to promote the idea of passing referendum legislation and rewriting the Constitution.

He wants independence, or at least campaigns for it?

He does favor independence for Taiwan, and he has worked very aggressively to promote Taiwan’s sovereignty and enhance the island’s international space. He promoted this referendum legislation, which recently passed in the Taiwan legislature, the Legislative Yuan, in a compromise form. Basically, the legislation gives President Chen Shui-bian the right to call for a referendum on independence if, in fact, Taiwan’s national security is threatened. This, to Beijing, is very provocative because two key implicit understandings that have helped maintain stability across the Taiwan Straits traditionally are that Taiwan will not declare independence and Beijing will not use force [to impose its will on Taiwan]. Neither side makes such a promise overtly, but the United States has used this implicit understanding to help enforce stability in the region.

How large is mainland-Taiwan trade?

The trade is quite significant. Even though the two sides do not have formal diplomatic relations, cross straits trade last year was more than $40 billion and the mainland has become Taiwan’s largest export market. There are also 900,000 Taiwanese living on the mainland. The two nations are highly integrated both through economic and personal ties.

Why would President Chen of Taiwan try to rock the boat?

President Chen needs to do something to ensure that he is re-elected. In 2000, he campaigned on a platform that promised he would advance Taiwan’s status internationally. He hasn’t been able to do that. There are three forms that such advancement might take. One is diplomatic recognition by other states. Just recently he lost Liberia and he gained Kiribati, an island state of 98,000 people. So he maintained the status quo.

How many states recognize Taiwan?

Twenty-seven. As I said, that’s one mechanism for enhancing Taiwan’s room to maneuver internationally. The second is membership in international organizations. Taiwan has been pressing for observer status in the World Health Organization (WHO). However, China has consistently blocked Taiwan’s participation. Even in the midst of the SARS [Severe Acute Respiratory Syndrome] crisis, China prevented WHO inspectors from going to Taiwan until very late in the game. Taiwan hoped to use the international outrage at China’s actions to finally gain observer status in the WHO. But Beijing blocked Taiwan again.

And third, Taiwan hopes to gain membership in the United Nations, but that is not going to happen in the foreseeable future. So, Chen has really not made progress in any of the established arenas for expanding Taiwan’s international space. The referendum promotes Taiwan as a democratic nation and gives another opportunity, down the line if necessary, to advance the notion of Taiwan as an independent state.

What is the Bush administration’s view of all this?

The Bush administration’s attitude is two-fold. It supports the one-China policy [that acknowledges the mainland as the sole Chinese nation] and it supports the peaceful resolution of the conflict across the Taiwan Straits. It is the same position that every administration has held. My sense is that the administration would have preferred that Chen not pursue the referendum legislation, but Chen’s poll numbers jumped whenever he talked about it, so there wasn’t much that Washington could do.

What about U.S. arms sales to Taiwan, a perennial irritant to Beijing?

The Bush administration did something a little bit different from previous administrations. It announced at the beginning of its term a very large arms sales package to Taiwan but said it would not conduct the annual review of arms sales to Taiwan [that put the sensitive issue of U.S.-Taiwan relations in the spotlight]. So in that sense, it annoyed Beijing enormously at the beginning, but we haven’t had the issue arise every spring to yet again raise tensions in our relationship with Beijing. In fact, Taiwan hasn’t purchased many of the arms that the U.S. was prepared to sell. That is not to say, of course, that it is not a continuing source of irritation to Beijing, as you point out. And frankly, the Bush administration has gone further to enhance the military-to-military relationship with Taiwan than any previous administration. This also irks Beijing enormously.

The issue of trade intrigues many Americans. It seems that virtually every manufactured product I buy these days, whether a new computer or a set of new dishes, is made in China.

What’s happened is that, once again, there are election year politics in the United States and what everybody knew was going to happen, has happened. The trade deficit between China and the United States has continued to increase, even in the wake of China’s accession to the World Trade Organization (WTO). China has 1.3 billion people, and its manufacturing laborers earn on average 60 cents per hour. It is difficult to see how industry won’t take advantage of this incredibly large and cheap source of labor and how the Chinese won’t produce many goods more inexpensively than we do here.

How big is the trade deficit now?

It was $102 billion last year. And I think it is going to be more than that this year. Estimates today are as high as $130 billion for the year. Faced with those kinds of numbers, Congress threatened wide-ranging punitive measures on Chinese-made goods. But President Bush has moved relatively quickly to try to narrow the scope of this potential trade war. I don’t think he gets much credit for this— and he may not want much credit in an election year— but that in fact is what he has done. He first announced quotas on Chinese-made textiles, but these reportedly affect only 5 percent of China’s textile exports. Then the Department of Commerce announced plans to place tariffs of up to 45.9 percent on Chinese-made televisions. But Chinese televisions occupy a fairly small part of the U.S. market, and at least one major Chinese television exporter has said that its business would barely be affected. I think President Bush is trying to address political concerns but avoid inciting a trade war. So far the strategy appears to be working relatively well. The Chinese have not responded in kind, and they are trying to purchase American goods in order to make a dent in the surplus.

What is happening on human rights?

There are a few key things that the Bush administration pressed China on last December that remain outstanding. The administration had gotten a commitment from the Chinese to invite the special rapporteur on torture from the United Nations to visit China. But that hasn’t happened. China has signed but still not ratified the International Covenant on Civil and Political Rights within the United Nations. That’s another area in which the Bush administration would like progress. In general, of course, the administration would like to see China dramatically improve its treatment of political and religious dissidents. China, in response, has done its usual pre-summit diplomacy and released several dissidents in advance of the meeting between President Bush and Prime Minister Wen. But I don’t think that this will placate the administration. I expect the administration will have to address the issues of human rights protection head-on and, if it doesn’t see signs of progress, I think the United States will go in March to the U.N. Human Rights Commission and press for a resolution condemning China’s human rights practices.

In China itself, how much freedom is there today, in comparison with the past? With all this economic growth, has there been a drastic increase in personal freedom?

There’s no doubt that there has been a sea change in terms of the degree to which the Chinese people are free to express themselves and to express themselves politically. I think part of the problem is that it is very difficult in the current environment to know exactly what the boundaries are. A newspaper might run an article one day in one particular province and not encounter much trouble. Three weeks later, in another province, in another newspaper, that same article might prompt local officials to close down the newspaper.

What is the prime minister like? He has gotten good press.

I think deservedly so. Prime Minister Wen has a reputation within China for being genuinely concerned with the needs of the Chinese people. He was viewed as one of the moderates during [the 1989 pro-democracy protests in] Tiananmen [Square] and went with then President Zhao Ziyang to talk to the students [before the government violently broke up the demonstrations]. He has stepped forward on SARS and AIDS to argue for a more open approach to acknowledging and confronting these diseases than has traditionally been the case in China. And, finally, he also seems relatively comfortable tackling the issue of political reform in China, arguing that China is not wealthy enough and has too many people to move immediately to direct elections of top level leaders. However, the restrained manner in which he and President Hu Jintao handled the [anti-government] protests [last summer] in Hong Kong suggests a greater willingness to listen and respect the voices of the Chinese people, even when their opinions run contrary to Beijing’s wishes. I think that this is a positive sign for future political change on the mainland.

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