SCMP hosts wonderful thinking on Taiwan

Compare this excellent missive, enriched with penetrating political insight and abundant local knowledge, to the piece of crap from WaPo below it. It appeared in today's SCMP.

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Economic limits
Beijing is wrong to think that its trade pact with Taiwan will help its long-term political aims

Michael Fahey
Updated on Jul 02, 2010
As representatives from the mainland and Taiwan signed the historic Economic Co-operation Framework Agreement in Chongqing on Tuesday, pro-independence media outlets in Taiwan prominently ran a famous picture of a smiling Mao Zedong toasting a beaming Chiang Kai-shek during the 1945 peace talks between the Kuomintang and the Communist Party. Like this week's negotiations, those talks were also held in Chongqing, which served as the Republic of China's provisional capital during the dark days of the second world war. Four bloody years later, Chiang fled Sichuan for permanent exile in Taiwan.

While mainland and Taiwanese negotiators blandly denied any historical significance to the choice of Chongqing, those opposed to the agreement in Taiwan obsessed over the historical parallels. The lesson they drew is that history repeats itself: the KMT has once again been duped by the Communist Party.

They will be proved wrong. The agreement does not signal the end of Taiwanese democracy but, rather, the beginning of the end of Taiwanese President Ma Ying-jeou's somewhat one-sided love affair with the mainland. The real lesson that should be learned from the meetings in Chongqing this week and those 65 years ago is an old philosophical one: appearance does not always reflect reality. Especially in East Asian politics.

Much as the United States once believed that economics drove politics in China in the 1990s, the mainland now thinks the same about Taiwan. Beijing's strategy is to wait for the magical economic elixirs it has given Taiwan to take effect. Once the Taiwanese have tasted the benefits of direct flights, millions of mainland tourists in Taiwan, and the fruits of free investment and trade across the Taiwan Strait, Beijing is optimistic that a political accommodation with Taiwan can be reached through negotiations and patience. This betrays a fundamental lack of understanding about the arc of Taiwanese history over the past three decades and what matters to the Taiwanese now. During the 1980s and the first half of the 1990s, a mass democracy movement forced the KMT to hold free elections, end military law and censorship, and normalise Taiwanese society. While Taiwan's politics are messy and its judiciary weak, Taiwan's vibrant civil society enjoys the same political freedoms as people in North America or Europe.

During Taiwan's struggle for political emancipation, however, it deferred the problems of economic and social inequality. By 2000, it had become clear that the economy in particular had serious long-term problems. Incomes stagnated and unemployment rose as the promised knowledge and service-oriented economy never materialised. To this day, Taiwan's economy remains overly reliant on low-margin contract manufacturing that is itself dependent on the exploitive and dehumanising labour practices seen in Foxconn's recent problems on the mainland. Taiwan's educated and ambitious people aspire to much more.

When the heroes of the democracy movement proved themselves to lack the imagination, interest and, most importantly, integrity to remake Taiwan's economy, the electorate decided, with considerable justification, to throw the bums out in 2008.

They put current president Ma Ying-jeou and the KMT back in power on the strength of promises that Taiwan's economy could be rebuilt by opening up to the mainland. And Ma has been largely successful in liberalising relations with the mainland as both sides have signed a series of agreements, culminating with the signing of the trade pact this week that reduces tariffs on more than 500 Taiwanese exports to the mainland and more than 200 mainland exports to Taiwan.

The problem for the mainland and its long-term political goals is that Ma has now hit the limits of his mandate to open up the economy and has expended most of his political capital in forcing through the agreement without a referendum, against the wishes of about a third of the population.

Like Japan, Taiwan is a society that prizes consensus. Unlike Japan, it is deeply divided as to its identity. Nonetheless, it is united in its determination to keep its hard-won political freedoms and the de facto but very real sovereignty that underpins its open society.

If Ma were to exceed his mandate by putting Taiwanese sovereignty on the bargaining table with Beijing, he would risk significant unrest that would damage his already unpopular administration even further.

He is politically vulnerable because, although Taiwan's economy has made a sparkling recovery in terms of gross domestic product and other conventional economic indicators, Taiwan's working people are waiting, with increasing impatience, for some of the benefits to trickle down to them.

They will be waiting for a long time since the main effect of Ma's mainland-oriented economic policies is that Taiwanese businessmen are being enabled to extend the life of their moribund business model even longer by relocating to the mainland to exploit its cheaper labour, instead of investing in new technologies and the service industry in Taiwan.

The ineffectual and now deeply unpopular Ma is also the last ethnic mainlander politician in Taiwan with national appeal. After he leaves office in 2012 or 2016, the KMT has no one electable who still shares the mainland's nationalist dreams. While it appears that all Beijing needs to do is to wait for Taiwan to rejoin the fold, the reality is that time is running out. It is probably in Taiwan's interest that Beijing chooses to continue to believe in the illusion that unity of the Chinese people is coming soon.

Michael Fahey is a Taiwan-based writer and political commentator

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By "economics drove politics" Fahey is arguing that China is suffering from a delusion similar that which afflicted US foreign policy thinkers in the 1990s: that if we just made China rich and brought it into the international system, it would become more tractable, maybe even democratic. That has turned out to be a fantasy. Similarly, China is thinking that if it showers Taiwan with economic benefits, the Taiwanese will want to annex themselves to Beijing. Actually, as two decades of Taiwanese manufacturing in China have shown, Taiwanese who make money off Beijing do not develop any particular support for annexation. Beijing's policies will create islands of support in Taiwan by developing interests in favor of Chinese money. But there isn't going to be a sea-change, as interaction with Chinese generally leads Taiwanese to discover that they are a culturally different people.

I was having a conversation yesterday with a very dear Deep Blue friend, many years in the military, and steeped in KMT ideology and Chineseness, who identifies as Chinese. He remarked to me that he understood what the Taiwanese independence people mean. He went back to China for a visit this year and experienced it as "going home" and "being at home" among the people there. But in Taiwan, he experiences a cultural difference between himself and those who identify as Taiwanese.

Like myself, Fahey believes that ECFA is a status quo agreement that will enable Taiwan to continue to pursue its current type of manufacturing structure, the contract/ODM/OEM manufacturing, and thus defer the deep structural changes that island needs. Because ECFA is about maintaining the current system with its rising income inequality and wage stagnation, it will not create broad political support because its benefits will not appear in the pockets of most people, who will come to associate ECFA with continuing income inequality and economic stagnation. Hence China will at some point become disappointed in its quest to use economic levers to move the Taiwanese world. What it will do at that point is anyone's guess....
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