RAND Corporation report on China's Econ Pressure on Taiwan

Murray Scott Tanner has a new report out at RAND that discusses China's attempts to coerce Taiwan economically. Tanner says that Beijing's economic clout is a tricky weapon to use and cannot always be brought to bear. For example:

Beijing’s frustration was dramatically illustrated in the 2004 Taiwan presidential election. The elections proved that widespread forecasts that Taiwan’s business leaders and Taiwan voters -- both worried about the poor state of Taiwan’s economy and anxious for expanded cross-strait economic relations -- would combine to defeat President Chen Shui-bian were mistaken or at least badly exaggerated.

A major reason why Beijing is having trouble exploiting its economic leverage is that most Taiwan businesspeople have become highly adept at “flying below the radar” politically—keeping their true political inclinations and activities hidden from political leaders in both Taiwan and mainland China, thereby frustrating Beijing’s efforts to pressure them into forming a ready-made “lobby” for Beijing’s interests. While mainland-invested Taiwan businesspeople have been, for the most part, successful in encouraging their government to loosen economic restrictions on cross-strait ties, the business community has been unwilling or unable to use its political influence to pressure Taipei into making significant political concessions to Beijing.

Taiwan’s voters have also frustrated Beijing’s forecasters. Although the voters have largely supported candidates who favored improved cross-strait economic ties, it
has not prevented the continuous slide in support for reunification with China on terms that Beijing prefers.

Nor have Taiwan’s political leaders sat back passively as Beijing attempted to exploit its burgeoning economic might. President Chen has frequently shown himself to be fairly adept at politically disarming or counterattacking many advocates of a more rapid opening up of cross-strait relations.

Finally, China must reflect upon the potential blowback that large-scale efforts at economic coercion against Taiwan might have upon its own economy and society. Although Taiwan is, overall, more economically dependent upon mainland China than China is on Taiwan, there are key regions and sectors of China’s economy that are enormously dependent upon Taiwan investment, and these would likely suffer very badly in the event of a serious cutoff of trade and investment.

The report is 180 pages crammed full of statistics, projections, warnings, and analyses too complex and detailed to go into here. Enjoy it yourself.

[Taiwan] [China] (hat tip to Life, the Universe)