China Policy Institute: Analysis



U.S. Government Commission Strategic Policy Analysis

Written by Bert Chapman.

Bilateral relations between China and the U.S. encompass multiple issues including human rights, space power, trade relations, currency manipulation, cyber power, China’s increasing military assertiveness in the East and South China Seas, Beijing’s desire to implement this assertiveness through international legal forums and its economic assistance to other countries, and its desire to get other countries to submit to its desire to restrict international support for Taiwan. Continue reading “U.S. Government Commission Strategic Policy Analysis”

São Tomé and Príncipe drops Taiwan, embraces China

Written by J. Michael Cole.

The African nation of São Tomé and Príncipe on December 20 announced that it was severing diplomatic relations with the Republic of China (Taiwan) and establishing ties with the People’s Republic of China.

Following the news, Taipei announced that it was immediately severing diplomatic ties with the African country and withdrawing all diplomatic and technical personnel.

Taiwan now has 21 official diplomatic allies worldwide, and just two in Africa—Burkina Faso and Swaziland. Continue reading “São Tomé and Príncipe drops Taiwan, embraces China”

Does Trump Spell the End for Kissinger’s China-U.S. Strategy?

Written by Edward White.

The Dec. 2 phone conversation between U.S. President-elect Donald Trump and Taiwan President Tsai Ing-wen (蔡英文) may signal Washington’s longstanding approach to Taiwan and China, developed by Henry Kissinger, could be drawing to an end, a visiting academic in Taiwan says.

The rapprochement between the U.S. and China during the 1970s was spearheaded by Kissinger, who served as national security advisor and secretary of state under President Richard Nixon, and continued in the latter role under Nixon’s successor, President Gerald Ford. Continue reading “Does Trump Spell the End for Kissinger’s China-U.S. Strategy?”

Why Did the Ruling KMT Suffer a Humiliating Defeat in Taiwan’s 2016 Presidential Elections?

Written by T.Y. Wang.

Taiwan concluded its 2016 combined presidential and legislative elections on January 16. In a three-way presidential race, Tsai Ing-wen of the opposition Democratic Progressive Party (DPP), who was rejected by voters four years ago, won a landslide victory to become Taiwan’s first female president. Her opponent, Eric Chu of the ruling Nationalist Party (Kuomintang or the KMT), lost the election by a substantial margin of 3 million or 25 percent of the 12 million cast votes. The third presidential candidate, James Soong of the People’s First Party (PFP), garnered about 12 percent of the vote. The rout of the KMT also extended to the legislative election as the DPP secured a majority in the 113-seat legislature. For the first time in the Taiwan’s democratic history, the DPP took control of both the executive and legislative branches. Immediately after the election, Chu resigned the chairmanship of the Nationalist Party, as supporters of the DPP celebrated their historic victory. While the DPP’s electoral success should be credited to Tsai’s efforts of revitalizing the party since its humiliating defeat in 2008, the KMT’s disastrous setback in 2016 was more of its own doing.

Reasons for the KMT’s Crushing Defeat

 1. President Ma’s Low Approval Rating[1]

When the outgoing President, Ma Ying-jeou of the ruling KMT, won the election for his first term in 2008 and re-election in 2012, he promised to bring peace and stability between the two sides of the Taiwan Strait, as well as economic prosperity to the Taiwanese people. For the past eight years, the Ma administration adopted an engagement policy toward China and expanded economic relationships between the two sides of the Taiwan Strait. While cross-Strait trade and tourism have boomed, the economic reality is far from Ma’s campaign promises. Even as big businesses make profits, wages are stagnant, economic inequality has worsened and home ownership is beyond the reach of most citizens. Although the unemployment rate has finally dropped below 4% since 2014, it is higher than those of neighbouring countries. In particular, youth unemployment has been hovering around 12-13 percent between 2010 and 2015.[2]  The harsh economic realities have left many to feel that it is mainly businesses, not ordinary people, which have benefited from the expanded economic exchanges with China. With a stagnant economy and plateaued wages, the younger generation faces a grim prospect.

Surveys by the Election Study Center (ESC) of the National Chengchi University in Taiwan reflect this sentiment. As Figure 1 shows, since September 2012, Taiwanese citizens have consistently rated Ma poorly for his ability in handling matters related to the economy, as less than 20 percent of the public expressed satisfaction with his performance. Based on the results of another survey conducted only one week before the election, 65 percent of the citizens felt that the economy was worse than it was a year ago and such a feeling was prevalent across all age groups.[3]

 Wang_Fig 1

The public dissatisfaction with Ma’s performance is not limited to the economy. Shortly after he won re-election in 2012, several policy reforms the Ma administration initiated encountered fierce public opposition. These included permitting a rise in both gas and electricity prices, imposing a capital gains tax on securities transactions, and lifting restrictions on importing U.S. beef products.  All of these policy initiatives were perceived as hurting the public’s livelihood, contradicting his campaign promises. A series of food safety scandals between 2013-14 also led many to lose confidence in the government’s ability of providing a safe and prosperous living environment for its citizens. Moreover, in June 2012, a bribery scandal involving a major cabinet member, who had been repeatedly promoted by Ma, erupted. The scandal dealt a serious blow to Ma’s image as “Mr. Clean,” and the public further questioned his ability to appoint the right persons to key cabinet positions. The Ma administration was seen as incompetent, inefficient, and lacking intergovernmental coordination. As Figure 2 shows, Ma’s approval ratings suffered significantly, which dipped to as low as 11 percent between 2012 and 2015.

 Wang_Fig 2

Empirical research has shown that presidential popularity is the “causal agent” of presidential effectiveness. A high approval rating not only indicates more power and a greater ability to govern, it also affects the electoral fate of a president’s party members. Ma’s low approval rating thus became the KMT’s liability in the 2016 elections.

 2. China: the Silent Player

To its credit, the Beijing government restrained itself during the 2016 elections. Learning lessons from Taiwan’s 1996 and 2000 presidential elections, Chinese leaders realized that their sabre-rattling could only backfire. In both instances, candidates who they disapproved won the election as Beijing’s actions only hardened Taiwanese citizens’ resistance. Chinese leaders have since based their Taiwan policy mainly on economic exchanges, hoping that would lead to political integration. When Ma took office in 2008, he endorsed the “1992 Consensus,” a tacit understanding that the notion of “one China” should serve as the basis for cross-Strait interactions, without specifying precisely what it means. By accepting the notion of “one China”, along with his proclamation of the Three-noes policy, “no unification, no independence, and no use of military force,” Ma essentially reversed the pro-independence policies of his predecessor, former President Chen Shui-bian of the DPP. The Chinese government naturally has welcomed Ma’s policies. More than 20 agreements were reached between Taipei and Beijing during Ma’s presidency, including a landmark trade deal, in which the Chinese government made significant economic concessions. China is now Taiwan’s largest trading partner and the top destination of Taiwanese investments. Along with these economic activities, many business people shuttle routinely between the island and the Chinese mainland, while more than 3 million Chinese tourists visited Taiwan in 2014. Chinese leaders, nevertheless, continue to treat Taiwan as a renegade province and refuse to renounce the use of military force against Taiwan. They also continue to impose diplomatic isolation on Taipei in the international community.

In this context, deepening cross-Strait economic relations raise the concerns of Taiwanese citizens, fearing that intense economic interactions with the Chinese mainland may increase Taiwan’s vulnerability. Beijing’s economic concessions, despite being quite generous, are viewed as a sugarcoated scheme aiming to annex Taiwan. Surveys by the Election Study Center (ESC) at National Chengchi University in Taiwan (Figure 3) show that support for expanding economic activities with China gradually declined from 44 and 56 percent between 2004 and 2008, to 37 and 42 percent between 2011 and 2015. But opposition to expanding cross-Strait economic ties grew during the same period and reached as high as 43 percent in 2013. Meanwhile, as Figure 4 shows, public disapproval of Ma’s engagement approach towards China reached 60 percent in 2014, culminating in a massive protest known as the Sunflower Movement. The lasting effect of this anti-China sentiment has contributed to the KMT’s disastrous loss in the 2014 local election and extended to the 2016 elections.

Wang_Fig 3 Wang_Fig 4

 3. A divided KMT

The KMT is notoriously susceptible to internal division. Indeed, it was a divided KMT that delivered the slim victory to the opposition DPP in the 2000 presidential election and thereby passed political power at the national level to another political party for the first time in the country’s democratic history. The KMT during Ma’s presidency was no exception. In September of 2013, Ma accused parliament speaker Wang Jin-pyng of obstruction of justice and tried to expel Wang from the party. Although Ma’s attempt was not successful, it was perceived as a power struggle between factions, and severe strife within the party has since surfaced. Meanwhile, only four months before the 2016 presidential election, the KMT decided to drop the party’s first female presidential nominee, Hung Hsiu-chu, following a series of poor ratings in opinion polls. While Hung was officially nominated through a party-sanctioned procedure, she was replaced by the party’s chairman, Eric Chu. The episode, again, left many KMT core supporters feeling betrayed.

The demoralization effect of this series of events was clearly shown in the aforementioned ESC Survey conducted one week before the elections. Out of 2000 respondents, close to 2 percent of the KMT-led pan-Blue alliance supporters indicated that they would not vote or cast void votes if they had shown up at the polls at all. This translates into a loss of more than 300 thousand votes lost to the KMT.  More importantly, the PFP, which shares the same electoral base with the KMT, received a substantial boost to 12.8 percent of presidential votes from just 2.76 percent four years ago.  It is plausible to speculate that many pan-Blue alliance supporters switched their backing to the PFP.

In summary, the crushing defeat of the KMT in the 2016 combined presidential and legislative elections was mainly due to Ma’s poor performance, the party’s China-friendly policy and internal strife.

Looking Ahead

Both the KMT and the DPP are facing serious challenges in the coming period. For the KMT, the humiliating electoral defeat suggests the party needs to do some serious soul-searching. Should it adjust its engagement policy with China? How should it connect to the younger generation and energize its base? It will need a strong leader who can help the party to identify a direction and navigate through this troubling time.

As the ruling party of Taiwan, the DPP will have to deal with two closely related issues: the economy and cross-Strait relations. As previously indicated, Taiwan’s economy has suffered slow growth, wages are stagnant and economic inequality worsens. The political gridlock during Ma’s tenure has created an unfriendly investment environment, despite Taiwan’s highly skilled workforce and strategic location in East Asia. The Tsai administration will need to take serious measures to revitalize investors’ confidence. Complicating the matter is  the Taiwanese economy’s dependence on the Chinese market. As a trade-dependent economy, about 25% of Taiwan’s annual exports go to China. A stable cross-Strait relationship with Beijing will be important not only for its own right but also for Taiwan’s  economy.

Tsai has made it clear that she will not endorse the “1992 consensus.” Beijing leaders have been alarmed by Tsai’s stance because the core of the Consensus is an acknowledgement of the notion of “one China.” In their view, a rejection of the “1992 Consensus” is a step toward Taiwan’s independence. They therefore warned that cross-Strait relationship would suffer catastrophic consequences should the Consensus be rejected. In her post-election speech, Tsai pledged that her administration “will build a consistent, predictable, and sustainable cross-strait relationship… [that is based on] the Republic of China’s constitutional order, the results of cross-strait negotiations, interactions and exchanges, and democratic principles and the will of the Taiwanese people.”  Unlike former President Chen, who adopted a series of pro-independence policies that angered Beijing and irked Washington, Tsai is cautious and her statements are moderate and reassuring.  The essence of her message is the maintenance of status quo. The challenge is finding a proper formula, whatever it is, that would meet Beijing’s perceived needs and satisfy her domestic constituencies. Given that the DPP controls both the executive and the legislative branches of the government, she will need to resist the domestic pressure from her fundamentalist supporters who are likely to take advantage of the newly found political power to pursue their more provocative objectives. Otherwise, cross-Strait relationships during Tsai’s tenure as Taiwan’s president could get very messy.

T.Y. Wang is professor of political science at Illinois State University. He is the co-editor of Journal of Asian and African Studies. He was the Coordinator of the Conference Group of Taiwan Studies (CGOTS) of the American Political Science Association.

[1] For a systematic analysis of Ma’s popularity, see T.Y. Wang and Su-feng Cheng. “Presidential Approval in Taiwan: An Analysis of Survey Data in the Ma Ying-jeou Presidency.” Electoral Studies, v.40 (2015): 34-44.

[2] The 2015 unemployment rates for Singapore, Hong Kong, Japan, and Korea were 2.0%, 3.3%, 3.6%, and 3.5%, respectively. <;. Accessed Jan. 20, 2015.

[3] Su-feng Cheng. 2016. “Generational Differences of Taiwan Citizens’ Identity and the Political Implications.” Election Study Center, National Chengchi University.

Green Taiwan vis-à-vis China’s the Red Supply Chain

Written by Chun-Yi Lee.

On January 16 2016, Taiwan’s politics experienced its third turnover of ruling parties. The Democratic Progressive Party (DPP)’s presidential candidate, Tsai Ing-wen won over the vote with 56.1 %, becoming the first female president in Taiwan. The DPP not only had a sweeping victory in the presidential election result, but also won a majority in the Legislative Yuan, turning Taiwan into a DPP-green island. The election result was not a surprise to most people familiar with domestic politics in Taiwan, but this post focuses on the new government’s plans for the future of Taiwan’s economy, especially how to face China’s growing industrial capacity. When China has evolved into a self-sufficient supply chain in industrial production, what is the future for Taiwan’s industrial development?

Taiwan has long viewed its technology sector as a ‘national champion’. Since the 1990s Taiwan has aimed to transform itself from a reliable OEM (Original Equipment Manufacturer) to ODM (Original Design Manufacturer). This means that Taiwanese high-tech companies not only want to do low-end assembling or packing, but also aim to establish their own brands. However, wishful thinking will not establish brand-name companies in the high-tech sector. It requires huge support from the government, and also the supply of human capital. In terms of governmental support, the Taiwanese government played a significant role in promoting the development of high-technology industries in Taiwan. The state is important in concentrating national resources on R&D spending, and also in building up new innovation infrastructure, for instance the establishment of Hsinchu Science Park (HSP) in the late 1980s. Human capital was also important in this wave of high-technology miracle in Taiwan. As Saxenian and Hsu point out[1], attracted by the promise of better working opportunities, a return to their families, and also the missionary sense of contribution to their home country, there were a growing number of US-educated engineers who returned to Taiwan in the 1990s. Along with the establishment of HSP in 1980, this group of technological elites is the backbone of Taiwan’s high-tech human capital. It was under this condition, Taiwan’s electronic/high-technology companies went to China, benefiting from the cheap labour and numerous tax holidays from the Chinese government at the end of 80s, therefore resulted this term ‘Chiwa’, which means made in China, designed from Taiwan.

In the past ten years, conditions have changed. China has emerged as the second most important economy in the world, impressing the world with rapid GDP growth and impressing foreign investors with its cheap labour and vast domestic market. The Chinese government became selective regarding potential investors. Wang Yang, currently the Vice Premier of China, asserted ‘Empty the bird cage in order to attract better bird’ in 2009 when he was then Guangdong provincial governor. China started to select investors not only to protect the environment, but also for the purpose of industrial upgrading. It is good to be the world’s factory, but the Chinese government understood that selling cheap labour wasn’t sustainable nor profit maximizing. This is the main reason that starting from the coastal cities in 2009/2010, the Chinese government became selective in terms of investments and strategically incubated domestic capacity in industrial development. Research and development oriented capital is most welcome; stimulus funds for companies to develop R&D, the establishment of numerous ‘high-technology parks’, and also, several schemes to attract overseas students to return to motherland were advanced. China learned from Taiwan’s path of industrial development. China isn’t satisfied with being at the low end of the supply chain, and with increasing GDP it has started to move up the supply chain. The new technology elites, Huwai, ZTE, even Tsignhua Unigroup are the best examples. Certainly there is still a long way for China to reach the top designer position like Apple, but while there is only one Apple, there could be many Chinese make high-tech products to satisfy customers at all levels. That’s why the power of the ‘red supply chain’ intimidates many international companies in the sector.

So, where is Taiwan in all of this? Taiwan has to face the reality that China’s supply chain in the coming years may no longer include Taiwanese factories. It is not for political reasons, but for the market-economy principles. The term ‘Chiwan’ has already faded; there are very few companies designing products in Taiwan then manufacturing them in China, because Chinese companies can do it themselves or head-hunt Taiwanese human capital. One interviewee from the HSP informed me in 2015 that Chinese companies offer highly competitive compensation packages and promised to settle Taiwanese employees’ families in China. ‘Few of my colleagues could resist such temptation’, my interviewee confessed. This is the main and most acute problem that the new government will have to face.

Taiwan is proud to show the world that party turnover can be peacefully achieved, however Taiwan’s vitality, in the sense of industrial and technology development, is on the wane. The new government will have to find a niche for ‘green Taiwan’ in the ‘red supply chain’, or, if possible, to outshine the red supply chain, but firmly standing in the global market. The new government currently has overwhelming support from the Taiwanese people so there is no excuse that Taiwanese people didn’t give enough power to the new government to renovate Taiwan..

Chun-yi Lee is a Lecturer in the School of contemporary Chinese Studies, University of Nottingham.

[1] Saxenian, Annalee and Jinn-Yuh Hsu, 2001, The Silicon Valley-Hsinchu Connection: Technical Communities and Industrial Upgrading, Industrial and Corporate Change, 10 (4), p.905.

Strategic Hypocrisy: the Labelling of Taiwan in the Trafficking in Person Report

Written by Isabelle Cheng.

The ‘Nationhood of Human Rights’ (renquan liguo) was critical to the nation-building project of the Democratic Progressive Party (DPP) after the party assumed power in 2000. Interestingly, this slogan was also adopted by the Kuomintang (KMT) government after 2008. The prominence of a human rights discourse in Taiwan’s self-image and the impact of the discourse on the making of public policy can be found in the reform of immigration legislation. A substantial literature has persuasively analysed how the ‘Nationhood of Human Rights’ was utilised by the migrants’ movement for legitimising their rights-claim campaign. There is also an attempt to explore how the same discourse renders Taiwan susceptible to pressure by the US for cracking down on human trafficking.  This unilateral pressure from the US is symbolised by the publicity of the Trafficking in Person Report (TIP).

Beginning in 2001, the annual release of the TIP by the Department of State is a diplomatic tool employed by the US government for improving the global monitoring of human trafficking, particularly for preventing sexual exploitation and labour servitude. As a major destination for labour and marriage migration in East Asia, Taiwan is closely watched by the US. This is also partly because Taiwan, at times, was identified as a transit point for human trafficking from China to further parts of the world. In the past 15 years since the beginning of the annual reporting, the reputation of Taiwan experienced a contrasting course of downgrading and elevation. With respect to the interest of improving migrants’ human rights, it is imperative for researchers to focus on how Taiwan reacted to US pressure and, as a result, made changes to the areas that were under the international spotlight.

However, for the student of International Relations, this annual reporting also opens a new avenue through which to see how the sovereignty of Taiwan became a case of ‘organised hypocrisy’ (Krasnar 1999). It is believed that external recognition by other nation-states is essential to the claim of sovereignty. In this regard, the claim of the government of Taiwan for possessing sovereignty of the Republic of China (ROC) is challenged, as there is a very small number of states who recognise the statehood of ROC. Nevertheless, this does not prevent the government of Taiwan from developing nearly full-fledged relationships with other nation-states. When these relationships are tested, it occurs most often in the areas where the government of Taiwan is deprived of prerogatives commonly enjoyed by nation-states. However, when there are demands placed on the government of Taiwan for specific conducts, such as the prevention of human trafficking, and sovereignty is a prerequisite of these conducts, Taiwan is treated as if it is a full-fledged nation-state.

The label imposed on Taiwan in the TIP Report sufficiently illustrates the hypocrisy of Taiwan’s challenged statehood. The inclusion of Taiwan in this report is a tacit recognition of Taiwan’s de facto sovereignty. Without this working recognition, the US government would fail to pressure Taiwan to reform and make the legislation to meet the ‘minimum standard’ that is based on US domestic laws. On the other hand, this recognition can only be a tacit one as, by US domestic laws, Taiwan is not recognised as a state. Along this official line, the TIP Report addresses the ruling party of Taiwan not as the ‘government’ but merely ‘authorities’ of Taiwan. Likewise, the geographical space where the jurisdiction of Taiwan is effectively exercised is not referred to as a ‘country’ but merely ‘territory’. Although the insistence on the official use of ‘authorities’ and ‘territory’ is consistently applied throughout the reports of the past 15 years, the report is not immune from ‘errors’ that fall out of this official line. That is, at times (in 2004, 2006, 2007, 2009, 2012), the report did address Taiwan as in terms of its ‘government’ and the geographical space as a ‘country’. Trivial though this revelation may appear, as this occasional deviation from the official line may very likely be due to nothing but simply a human error, nevertheless, this human error, and the confusing gap between what is ‘real’ and what is ‘presumed’, with regard to the questioned statehood of Taiwan sends a clear message across the board on the hypocrisy of this strategic pretence. On the one hand, Taiwan is not a state; hence using official designations, such as ‘government’ or ‘country’, are inapplicable. On the other hand, when it becomes necessary for pursuing practical interests, Taiwan is expected to exercise its jurisdiction as if it is a nation-state.

In the spirt of hypocrisy, in 2001, 2008, 2009 and 2010, the State Department acknowledged the challenges faced by Taiwan as a non-recognised international actor. Nevertheless, the very interest of monitoring and pressurising Taiwan to adopt policy tools deemed necessary for preventing human trafficking would have to be premised on the actual functioning of the sovereignty of Taiwan. Thus, the TIP Report also positively documented Taiwan’s out-reach efforts beyond its borders, including engaging with the governments of source countries, forging international agreements with the US and other states, and disseminating information and advice on prevention, protection and prosecution of human trafficking.  All of these activities require a tacit recognition of the statehood of Taiwan. In this light, the embedded ambiguity in the hypocrisy and the derived flexibility seems to serve the interests of the US and the international system well.

The discovery of this minor inconsistency of the official labelling imposed on Taiwan may be considered trivial or insignificant. Yet, the implications as argued above should not be shrugged off quiet so easily. There shall be more research on how the hypocrisy of the sovereignty of Taiwan is seamlessly and strategically incorporated into formal policy without being noticed or questioned.

Isabelle Cheng is a Senior Lecturer in East Asian and International Development Studies at the School of Languages and Area Studies and University of Portsmouth.

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