Local Forums held on China and Taiwan

“Taiwan and China Since Joining the WTO” Forum held at Georgia Tech, September 25th

Georgia Tech’s Center for International Strategy, Technology and Policy, the Taipei Economic and Cultural Office (TECO) and the China Research Center co-sponsored a forum addressing economic integration in Asia in light of both Taiwan and China becoming recent members of the World Trade Organization (WTO). Director General Maggie Tien of the TECO opened the forum with an assessment of the trends in the region from Taiwan’s point of view, followed by presentations by three eminent scholars.

Article – “Taiwan and China Since Joining the WTO” – Forum held at Georgia Tech, September 25th

Georgia Tech’s Center for International Strategy, Technology and Policy, the Taipei Economic and Cultural Office (TECO) and the China Research Center co-sponsored a forum addressing economic integration in Asia in light of both Taiwan and China becoming recent members of the World Trade Organization (WTO). Director General Maggie Tien of the TECO opened the forum with an assessment of the trends in the region from Taiwan’s point of view, followed by presentations by three eminent scholars.

Nicholas Lardy, a fellow with the Brookings Institution in Washington, D.C., spoke about the impact of the rise of China in the global economy. China is now the 6th largest trading nation in the world. Significantly, last year total world trade and foreign direct investment (FDI) both fell, but China’s trade and FDI continued to rise. These developments in China will make a difference around the world, but especially in Asia.

Japan now imports more from China than from the U.S. China has replaced South Korea and Taiwan as the leading suppliers of footwear to the U.S. This pattern of trade is also seen in toys, sporting goods and games. Further, the next group of products that China may dominate is personal computers and related internet technology (IT) products. In IT hardware, China is now the third largest exporter in the world. This is largely due to Taiwan companies moving their production from Taiwan to the mainland. In addition, since quota restrictions on apparel will be phased out by 2005 due to the Uruguay Round agreements, China is likely to increase its exports of apparel, especially to the U.S. Taiwan will reconsider trade barriers that now exist towards China as a result of joining the WTO.

Although these trends are impressive and bode well for China’s future, Dr. Lardy pointed out three major challenges. The first is dealing with the changes required within China to meet their negotiated WTO obligations. China agreed to far-reaching changes, beyond what any other country has done. The second is rural restructuring. China employs more people in agriculture than is economically sustainable, which means that many people will have to find non-agricultural jobs either in rural areas or in the cities. The impact of WTO will push this restructuring forward, but it would be necessary even without the WTO factor. Finally, the third challenge will be political transition.

Dr. Zhi Wang, who is currently at George Mason University, gave the second presentation. He began by asking why the relationship between China and Taiwan was warm in terms of economics but cold in terms of politics, and what this might mean for the next ten years in terms of who would gain and who would lose. Dr. Wang’s analysis is based on a general equilibrium model (GEM) that incorporates China and many countries in Asia. Using this approach, the impact of different policy choices or phases of WTO obligations can be assessed.

Overall, Dr. Wang’s analysis points to companies moving towards higher capital intensive production in China between 2002 and 2011. This result is driven by China’s relative factor endowments and inflow of capital, combined with the segmentation of world commodity production due to the globalization of production primarily driven by outsourcing. Typically production design is done in advanced countries, with high-tech production done in the newly industrialized countries and assembly done in the less advanced countries. In this setting, China has the most to gain since it is exploiting both labor-intensive assembly and high-tech production.

Dr. Lawrence Grinter, Professor of Future Conflict Studies at the Air War College in Alabama, gave the final presentation focusing on the security aspects of the cross-strait situation. While Taiwan businesses are moving production to China to help their profits, government officials and others are concerned that the island is being drained of capital and skilled labor. Some believe this will have serious national security consequences. If the two sides come to blows, then Taiwan will have much more to lose.

On the military side, China is gaining a quantity and stealth advantage in weapons. To counter this trend, Dr. Grinter argued that Taiwan needs more defensive weapons. Weapons alone will not be enough, however, since Taiwan will also need training and other help to absorb them. This has become more challenging as talent moves to the mainland. Overall, Dr. Grinter expressed pessimism in the longer term political relationship between Taiwan and China, pointing out that after 2008, when the Olympic Games in Beijing will be over, there could be serious problems.

A lively question-answer session followed the presentations. The Center for International Strategy, Technology and Policy is in the Sam Nunn School of International Affairs and is co-directed by Dr. John Endicott and Dr. Seymore Goodman. The Center can by reached at 404-894-1903 and www.cistp.gatech.edu. The Taipei Office of Economic and Cultural Affairs (TECO) can be reached at 404-532-1940 or [email protected], and the China Research Center’s website is www.www.chinacenter.net.

“Relatives or Neighbors?” Forum at Emory held on October 8th

Forum on Cross-Strait Relations Held at Emory On October 8th Emory University hosted a discussion dealing with the complex issues surrounding the relationship between Taiwan and the People’s Republic of China. The Taipei Economic and Cultural Office, Emory’s Department of Russian and East Asian Languages and Cultures, and the China Research Center co-sponsored the event. Three guest speakers addressed the question of whether China and Taiwan were “Relatives or Neighbors?”

The moderator of the forum was Dr. Rong Cai, Assistant Professor in Chinese at Emory University. The evening’s program began with introductory remarks by Professor Elena Glazov-Corrigan, Chair of the Department of Russian, Eurasian, and East Asian Languages and Cultures and Directory-General Maggie Tien of the Taipei Economic and Cultural Office in Atlanta. Professor Glazoy-Corrigan and Director-General Tien succinctly summarized the purpose of this public forum-which was attended by students, faculty, and other interested parties-as being an exploration of the unique relationship between the peoples of mainland China and Taiwan. Professor Glazov-Corrigan made the point that this cross-Strait relationship was the key to peace in Asia, and thus the key to peace in the world. Director-General Tien voiced the hope that the two sides of the strait could indeed get along peacefully, and noted that the direction of future relations will depend on actions taken by both sides.

Article – “Relatives or Neighbors?” – Forum at Emory held on October 8th

Forum on Cross-Strait Relations Held at Emory On October 8th Emory University hosted a discussion dealing with the complex issues surrounding the relationship between Taiwan and the People’s Republic of China. The Taipei Economic and Cultural Office, Emory’s Department of Russian and East Asian Languages and Cultures, and the China Research Center co-sponsored the event. Three guest speakers addressed the question of whether China and Taiwan were “Relatives or Neighbors?”

The moderator of the forum was Dr. Rong Cai, Assistant Professor in Chinese at Emory University. The evening’s program began with introductory remarks by Professor Elena Glazov-Corrigan, Chair of the Department of Russian, Eurasian, and East Asian Languages and Cultures and Directory-General Maggie Tien of the Taipei Economic and Cultural Office in Atlanta. Professor Glazoy-Corrigan and Director-General Tien succinctly summarized the purpose of this public forum-which was attended by students, faculty, and other interested parties-as being an exploration of the unique relationship between the peoples of mainland China and Taiwan. Professor Glazov-Corrigan made the point that this cross-Strait relationship was the key to peace in Asia, and thus the key to peace in the world. Director-General Tien voiced the hope that the two sides of the strait could indeed get along peacefully, and noted that the direction of future relations will depend on actions taken by both sides.

The first speaker, Dr. John Garver from the Sam Nunn School of International Affairs, spoke on the Bush Administration’s approach to the cross-strait situation. From 1979 until 2001, U.S. policy regarding the U.S. response to a cross-straight war was “strategic ambiguity.” This meant that the U.S. kept its position on a possible PRC-Taiwan conflict deliberately unclear in order to keep both sides from moving too far from the status quo. If the U.S. declared that it would defend Taiwan in the case of a military attack from the mainland, then Taiwan might be encouraged to declare independence. On the other hand, if the U.S. made it clear that it would not defend Taiwan, then that might encourage the mainland to consider an attack.

Dr. Garver argued that in the 1990s the wisdom of this approach was challenged by to several major trends on both sides of the straits. First, Taiwan increasingly became more democratic. Second, this increasing political maturity was accompanied by a growing awareness by Taiwan’s people and political elite of the sensitive nature of Taiwan’s situation. Third, and perhaps most importantly, there was increasing concern in the U.S. that China would use force against Taiwan. This concern was based on analyses of the Chinese press, where discussions of how the U.S. would not intervene, or would pull out quickly, or would even lose in a confrontation with China were commonplace. In addition, military spending in China had risen substantially.

In the face of these trends, some analysts in U.S. foreign policy circles -analysts who would assume key roles in the Bush Administration–became convinced that continued ambiguity about where exactly the U.S. stood was increasingly dangerous. In April 2001 the Bush Administration acted on these concerns when he stated publicly and clearly that the U.S. would use all means necessary to defend Taiwan from PRC attacks. At the same time Bush reiterated the “One China” policy and said the U.S. would work to prevent Taiwan declaring independence. Dr. Garver argued that this shift in policy was well founded in the current environment, and given a long record of Chinese miscalculations toward Taiwan.

Dr.Yawei Liu gave the second presentation. Dr. Liu is a professor at Georgia Perimeter College and the Director of the China Village Elections Project at the Carter Center. Dr. Liu addressed a number of recent events that have increased the pressure on the Taiwan-China relationship. While neither side wants war, both sides are preparing for war, which underscores this point. Domestically both sides have constituencies to play to. On the mainland, the leadership has lost focus as they deal with major leadership change leading up to the 16th Party Congress in November, and in Taiwan, President Chen Shuibien is preparing for re-election. In early August President Chen gave a speech in which he characterized the situation as one country (guo) on each side of the strait, which was reminiscent of Lee Teng-ui’s “special state to state relations.” In addition, Chen urged the Taiwan legislature to put forward a referendum to allow a vote on the issue of independence. The contents of this speech caused great confusion in the China, the U.S. and in Taiwan, where the stock market reacted negatively.

The negative reactions to President Chen’s speech caused him to retract some of his statements. Nonetheless, his speech reflects a growing impatience on Taiwan of the current situation. Dr. Liu outlined several factors that are contributing to the situation. First, timetables set by either side are not helpful. For example, some argue that Taiwan should declare independence in 2008, since China is not likely to act when they are hosting the summer Olympics. Second, the Cross-Strait arms race is increasing the instability of the relationship. Third, domestic politics in both the mainland and Taiwan affect the relationship. Fourth, the U.S. has to walk a fine line, especially if either or both sides lose their rationality. And fifth, people on both sides are subject to manipulation. In conclusion, Dr. Liu asked if there was any common ground. He argued that at this time Beijing cannot unify Taiwan and Taiwan cannot declare independence. How long this can last, however, is questionable.

Dr. Chien-pin Li gave the third presentation. Dr. Li is professor and chair of the Department of Political Science and International Affairs at Kennesaw State University. Dr. Li’s discussion explained why people in Taiwan might feel isolated and frustrated with the status quo. His theme was that Taiwan is a very successful polity economically and politically, but is “invisible” in the international political arena due to the isolation imposed on Taiwan by China wherever possible.

In 1971 China forced Taiwan to leave the United Nations and other organizations. 1983 was the low point when Taiwan was a member of only nine international organizations-and China was not a member of any of these. By 2001 Taiwan had increased its membership to 31 organizations. Although Taiwan still has a long ways to go, Dr. Li argued that this was good progress.

Several factors have contributed to Taiwan’s increasing international presence. One was that China eventually relaxed restrictions on Taiwan’s participation in non-governmental organizations (NGOs) as long as Taiwan uses a name that does not counter its allegiance to China. For example, in the Olympics Taiwan is known as “Chinese, Taipei.” Eventually this compromise carried over to some government organizations as well. Another key factor that has helped Taiwan increase its international political presence is that Taiwan’s government under President Li Teng-hui decided to pursue a flexible diplomacy where they would participate in any organization that benefited them at any level of participation.

Dr. Li gave an overview of Taiwan’s changing participation points to three stages. The first stage was 1989-92 when Taiwan focused primarily on financial and economic organizations. The second stage, 1993-96, began with an effort to re-join the United Nations. In 1997 Taiwan began a third stage, where they have tried to join groups related to the U.N., such as the World Health Organization. Dr. Li suggested that all three stages have allowed Taiwan to increase its membership substantially, although it is far from the desired level of participation on the part of the government as well as the general citizenry of Taiwan.

All three of the presenters are Research Associates of the China Research Center (www.www.chinacenter.net). The Taipei Economic and Cultural Office can be reached at 404-532-1940 or [email protected], and the Emory Department of Russian and E. Asian Languages and Cultures can be reached at 404-727-6427.