Books on Taiwan
New Taiwan dollar (TWD)
Update No: 014 - (15/03/05)
The move by China to enact an anti-secession law has again
inflamed passions just at a time when the heat was going out of the relationship
with China in expectation of a rapid move forward in the economic and the
political arenas. However, the current brouhaha is expected to be short-lived
with both sides signalling that they want a continued improvement in ties.
Expect no serious further escalation in tension, and business continuing as
usual beneath the surface. However, no great leap forward can be expected for
the foreseeable future.
Enter the rooster
In February, the Chinese world celebrated the start of the Year of the
Rooster (leaving behind a "Monkey" year). Those in the know claim that
the colourful Rooster brings bright and happy days, but he also dissipates
energy very quickly. Translate this into the Chinese environment (and while
Taiwanese will vehemently deny they are Chinese in the political definition of
the term, culturally they leave room for little else), the year is destined to
be marked by a good deal of oratory but little by way of practical action. The
rooster is also destined to make simple things more complicated.
Well then, the year seems to have started on cue. The lunar New Year holiday was
marked by a marked easing of tension with China and the first direct air flights
between China and Taiwan in more than 50 years. At the end of the 10-day charter
period, China proposed, and Taiwan responded positively, to extend the direct
flight regime towards regular cargo flights between Taiwan and the mainland.
Another positive sign of an easing of tension came with the visit to Taiwan of
the highest-ranking Chinese delegation in more than a decade.
The passing of veteran business leader and cross-straits negotiator Koo Chen-fu
prior to the lunar New Year holiday provided the opportunity for China to show
respect for the person who really got the first ever political dialogue
underway. Ms. Sun Yafu, vice chairman of the mainland Association for Relations
Across the Taiwan Straits (ARATS) and deputy director of China's Taiwan Affairs
Office (TAO), together with ARATS secretary-general Li Yafei made a brief visit
on behalf of ARATS chairman Wang Daohan.
Koo and Wang made international headlines in the early 1990s with groundbreaking
negotiations known as the "Koo-Wang Talks." As the respective heads of
Taiwan's Straits Exchange Foundation (SEF) and its Chinese counterpart, ARATS-both
semi-official organisations oversighting cross-strait ties in the absence of
formal relations-Koo and Wang met in 1993 in Singapore and later in 1998 in
The 1993 meeting paved the way for cross-strait communication, and the 1998
meeting was hailed as a resumption of dialogue following former president Lee
Teng-hui's visit to the US in 1995. Sun is the most senior official from the
Taiwan Affairs Office to have visited Taiwan since 1995. However, lest too much
be read into the present visit Beijing stressed (as it had to do), that Sun was
visiting Taiwan strictly in his capacity as an envoy. Nevertheless, the fact
that they came at all was full of significance.
And then just as things were starting to look up, China went ahead with its
Anti-Secession Law. Now for a period, we are back to square one, but probably
not for long. Let the heat die down and it will be back to business as usual.
China throws in a spanner
Just as relations with China looked to be on an upswing, again comes another
spanner into the works. It has happened before and it seem, to the dismay of the
rest of the world, that it will keep on happening. Do China and Taiwan really
want to see a better relationship developing? Or are they both really more
comfortable with an antagonistic status quo?
The spanner this time has come in the form of China's Anti Secession Law. Talk
of this new law, which many have long suspected (and which has now been all but
confirmed) was directed against Taiwan, has been around for several months. The
trouble was that until recently nobody, outside of a small coterie in Beijing,
had actually seen a copy of it.
The National Peoples Congress, China's rubber-stamp parliament which met in
early March, did get to see the new law and they voted on it. And they voted
2897-0 in favour of a law that completely ignores the rights and choice of
Taiwan's people and which seeks to unilaterally determine Taiwan's future.
The Anti-Secession law condones the use of military action against Taiwan, not
only should Taiwan seek independence from the mainland but also if progress
towards unification is not (in Beijing's eyes) moving ahead fast enough.
Naturally, reaction in Taiwan to this move has been swift and negative.
President Chen Shui-bian has called the Chinese action "a major threat to
regional stability." Demonstrations are planned for the island on March 26
and are expected to draw more than 1 million marchers.
Aside from the marching and the banner waving, it seems that cooler heads may be
prevailing when it comes to any further escalation of tensions. Taiwan has
indicated that it will not, for the time being, introduce counterpart
legislation but will rather ignore the provocation and continue with
This is probably a wise course of action. Very few consider that China will
actually come to blows with Taiwan at any time in the near future. With the
Chinese economy continuing to grow at a clip of around 9 percent per annum and
with foreign direct investment reaching new highs, military intervention is the
last thing China needs. The leadership in China is after all (so goes their
pervasive mantra) pragmatic.
So why did China do it - and just at a time when relations with the island
province appeared to be on the mend. The most likely reason is that President Hu
Jintau wanted to place his mark on the leadership and how better to do it than
to be hawkish on Taiwan especially at a time when Mr. Hu is replacing former
President Jiang Zhemin at the helm of China's Central Military Commission. After
all, it is the military that has been the most hawkish of all on the Taiwan
question with civilian politicians restraining the military commanders. Mr. Hu
was promoted to the Chairmanship of the Chinese Communist Party's Central
Military Commission in September last year. Most recently he has also replaced
Mr. Zhiang as Chairman of the State Military Commission, effectively
consolidating his hold on the reins of power.
Mr. Hsieh fine tunes his cabinet
While earlier it had been hoped, at least in some quarters, that Taiwan's
new premier, former Kaohsiung mayor, Mr. Frank Hsieh would pick an opposition
KMT stalwart as his vice premier, the KMT it seems, could not make up their
minds. Tired of waiting for an answer, Mr. Hsieh swore in Taiwan Institute of
Economic Research (TIER) President Wu Rong-il into the post. Hsieh had pledged
to form a "Cabinet of Consultation" and had suggested Kuomintang
lawmaker Chiang Pin-kun to assume the post but instead invited the prominent
economist to take the position after waiting more than two weeks for a response
from the opposition camp.
Mr. Wu is best known for his role as an advisor to former President Lee Teng-hui
and for his staunch support for the former president's "no haste, be
patient" policy that sought to dissuade local companies for over-reliance
on the mainland. Now the watchwords are to be "active opening, effective
management" and he has vowed to coordinate the efforts of the different
branches of government to enhance economic growth.
…And seeks to cool tempers
A mark of Mr. Hsieh's premiership is his conciliatory stance towards
Beijing. Nowhere was this more needed than in cooling tempers over the Anti
Secession Law. Even ahead of action by the (Chinese) National People's Congress
Mr. Hsieh had reaffirmed that Taiwan does not need formal independence from any
country and will not change its official name despite pressures to do so from
the pro-independence movements. Mr. Hsieh's remarks were clearly intended to cut
the ground from under such activists and were in step with similar moves made by
President Chen Shui-bian to distance the government from a formal declaration of
Late in February, President Chen met with opposition People First Party chair,
James Soong, to end partisan bickering between the extremes of the political
spectrum. Following that meeting the two leaders issued a joint statement that
committed Mr. Chen to four pledges, namely: that the government "will not
declare independence, will not change the name of the country, will not embed
the state-to-state formula for relations with China in the Constitution and will
not promote a referendum to change the status quo relating either to
independence or to unification during his term as president.
This represents a significant backing off from the position taken prior to the
December election in which President Chen floated the idea of using
"Taiwan" instead of "China" in government agencies, much to
the ire of Beijing. China has taken note. So it seems, have Tokyo and
The exchange rate to the US dollar as of February 2005 stood at 31.124 (as
of 31 January the rate stood at 31.70). In the first week of March the currency
appreciated further to close at 30.751. Against the UK Pound the rate was 59.823
(59.66). Against the Euro, the rate stood at 41.314 (41.22).