Tuesday, July 23, 2002
STRATFOR also has a good (and depressing) piece on the state of China-Taiwan relations. The only bright spot: China doesn't need to invade any time soon, because time is on its side. Here's the key section:
Beijing can afford to sit back and wait for economic integration to reach a point where Taiwan has little choice but to accede to Beijing's demands for reunification under the "one country, two systems" scheme. Chinese officials have carefully assessed the balance of power across the strait and know that, should the United States intervene, China would have little chance of conquering Taiwan through military action. Further, were Beijing to attempt such a move, it surely would lose all of the incoming investment and global goodwill the regime has worked so hard over the past decade to attract.
Beijing sees little need to act militarily against Taipei any time before the 2008 Summer Olympics, and probably not for several years after that. In the meantime, the People's Liberation Army can improve its technological assets and operational capabilities, just in case Taiwan finds some way out of the economic web Beijing is weaving. If Taiwan has not come to a peaceful solution on cohabitation with mainland China a decade or two down the road, or if Taipei takes the drastic step of declaring independence, leaders in Beijing will feel little choice but to respond with force.
Taipei does not feel the same luxury of time as Beijing. Investment into Taiwan keeps falling, dropping nearly 47 percent year-on-year for the first half of 2002 to just $1.5 billion. Over the same period, foreign investment into China grew 18.7 percent, and officials expect a record $50 billion in incoming investment for the year. Taiwanese businesses, meanwhile, are looking to relocate some of their operations to China to take advantage of cheap labor costs and to remain competitive in the global race for a stake in China's huge market and labor pool.
As a result, Taiwanese leaders face a conundrum. To remain economically competitive and vibrant, Taipei needs to approve Taiwanese business investments in China, and in fact has approved 611 such requests amounting to $1.5 billion in the first six months of this year, according to the Taiwan Investment Commission. Yet the more tightly Taiwan's economy becomes tied to that of mainland China, the more exposed Taipei is to the whims of Beijing.
Sounds like a good argument for a Free Trade Area of the Pacific, hmmm?