Issue: 2011: Vol. 10, No. 1

Lee Teng-hui and Cross-Strait Relations: 1995-1999

Article Author(s)

Daniel S. Mojahedi

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Daniel Mojahedi graduated from the School of Oriental and African Studies in London and lived in Taiwan several years. He is currently working in Atlanta and can be contacted at [email protected]
2011: Vol. 10, No. 1
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Lee Teng-hui and Cross-Strait Relations: 1995-1999 Introduction

The late 1980s and early ’90s saw unprecedented rapprochement between Taiwan and China. The two sides went from being at a technical state of war to having citizens from both sides visiting one another. Trade blossomed, and limited, unofficial contact between the two governments was encouraged. While Taipei and Beijing had very real and substantial differences to overcome before any official relations could be built, the confidence-building measures and growing civilian contacts did seem promising. Yet all this changed quickly. Starting in 1995, the two sides quickly backslid into a state of tension not seen for 30 years largely because of Taipei’s shift away from supporting reunification with China into what Beijing perceived as clear steps toward independence.

Adding to the complexity of this shift was that the Chinese Nationalist Party, called the KMT, remained in power and was much more sympathetic to China than the opposition Democratic Progressive Party, or DPP. Any analysis as to why relations deteriorated must revolve around Taiwan’s president at the time, Lee Teng-hui. As Lee and Wang note, Taiwan’s cross-Strait policy during Lee’s presidency was largely “a one-man show” (2003, p196), making him the central focus of any study of this time period. Thus the focus of this article is to analyze why Lee Teng-hui, head of the pro-China KMT and hand-picked successor to dictator Chiang Ching-kuo, would decide to shift away from closer ties with the mainland and seek to develop a more independent identity for Taiwan.

Cross-Strait Relations Prior to and After 1995

Before going into any detail about why Lee shifted away from the cross-Strait rapprochement of the early ’90s, it is important to understand the historical context before and after 1995. Previous to 1987 any thought of rapprochement was considered treacherous. The government held fast to its “Three Noes Policy” of no contact, no negotiation, and no compromise with the CCP regime, and debate on the matter was strictly forbidden under martial law.

Yet the situation began to shift. In 1986 the DPP, which later spearheaded Taiwan’s independence movement, was founded as the island’s first opposition party. One year later martial law was lifted. This served as a step toward allowing the freedom of discussion needed to bring up rapprochement. It also took Taiwan off war footing toward China. In early 1988 Chiang Ching-kuo died, replaced by the island’s first native Taiwanese president Lee Teng-hui. Lee continued promoting democratic principles, lifting the Period of National Mobilization for the Suppression of the Communist Rebellion in April 1991. As Roy notes, Taiwan no longer considered itself at war with China (2003, p185).

Although the war had not officially ended in Taiwan’s eyes until then, the government had already begun preparing to proceed with cross-Strait relations. In January 1991 the government created the Mainland Affairs Council (MAC), a cabinet-level agency in charge of developing cross-Strait policy, along with the Straits Exchange Foundation (SEF), a quasi-private organization put in place to deal with the Chinese government as any official contact with China was still officially forbidden. The Chinese government responded in kind, creating the Association for Relations Across the Taiwan Strait (ARATS) in December of the same year. Everything was in place for contact to resume between the two sides after a 40-year hiatus.

While talks did in fact begin, and did result in technical agreements on issues such as the transfer of registered mail and the repatriation of Chinese illegal immigrants in Taiwan, practically no progress was made toward the betterment of relations between the two sides. This stagnation was due to a critical disparity in the objectives each side maintained for holding talks. The Chinese government saw the talks as paving the way for the reunification of Taiwan with China. The Taiwanese saw them as a way to normalize relations between two states (Cabestan 1998, p217) and actively avoided getting pinned down in unification talks with their Chinese counterparts.

This stagnation would turn into outright hostilities during and after 1995 as Lee Teng-hui began showing more concern for Taiwan’s political reform, sovereignty, and international status at the expense of relations with the mainland. From 1995 to the end of his presidency in 2000, Lee engaged in a series of activities that served to anger and frustrate Beijing. These included a high-profile visit to the U.S. in 1995 during which Lee actively sought to promote Taiwan’s interests, encouraging the island’s shift from a Chinese to Taiwanese national identity through his New Taiwanese campaign, and finally his description of relations between Taiwan and the mainland as state-to-state relations. These activities brought cross-Strait tensions to a new all-time high where they would remain until Ma Ying-jeou became president in 2008.

The Political Center

Lee’s shift was at least in part determined by the will of the public. As democratic reforms took hold in the early ’90s the KMT began paying more and more attention to the needs and wants of the political center. According to public opinion polls conducted by the Election Study Centre of NCCU, the public had been shifting its preferences from unification to either maintaining the status quo or even independence, with just a fifth of the population supporting unification by 1995 (Election Study Centre, 2011). This put public opinion at diametric odds with the stated goals of China’s bid for rapprochement. Although the KMT had long maintained its desire to reunify Taiwan with China, the political center’s moderated stance could not be ignored. Lee, looking to maintain the KMT’s power in a more democratic environment, embraced a broader Taiwanese identity and gradually slowed the island’s rapprochement with the mainland in order to accommodate this political center.

To make matters more complicated, the KMT no longer monopolized the promotion of unification with the mainland in Taiwan’s political arena. In late 1993 the New Party (NP) was founded from the New KMT faction, later pushing more aggressively for eventual unification with China. This created two factors that allowed the KMT to shift toward a more moderated stance. First of all, the exodus of many of the hardliners from the KMT to the NP removed much inner-party opposition and helped Lee consolidate his power within the KMT and pursue more liberal cross-Strait policies (Roy 2003, p188). Secondly, as the NP staked a more extreme position on the political spectrum, taking possession of this part of the electorate, the KMT was forced toward a more moderated stance (Fell 2005, p117). This proved advantageous to the KMT. Cabestan notes that, as new parties formed and staked out their cross-Strait policy, Taiwan’s political theater went from having one cross-Strait policy to three (1998, p229). Finding itself on the political spectrum in between the DPP on one side and NP on the other, the KMT was now seen as a moderating force, protecting the country from two extremes and more responsive to the political center (Fell 2005, p102). Thus, because the KMT aligned itself more with the political center through its shift to one of cautious links with the mainland, Lee was both able to defend Taiwan’s sovereignty against pressures from China, consolidate his power within the KMT and, as will be discussed in the next section, help the party fare better in national elections.

National Election Politics

The KMT would never be more keenly aware of the political center’s position on cross-Strait issues than during national elections. For one thing, as Su points out (2004, 58-59), it is advantageous for Taiwanese candidates to be seen as the underdog. As elections draw near on the island, voters often see campaign flags and posters with the characters ??, meaning “to make an emergency rescue.” Candidates want to be seen as fighting an uphill battle in order to garner as much support as possible right before the election. Lee Teng-hui was able to take advantage of this political tactic by portraying himself as an underdog standing up against a belligerent communist China during the missile crises of 1995 and 1996. The crises, during which the PLA fired missiles into the waters near Taiwan’s two major ports, was a reaction by the Chinese government to a private visit by Lee to the U.S. and an attempt to warn people not to vote for him in the upcoming presidential elections. The crises caused China to be seen as the aggressor and created a defiant Taiwanese public, helping Lee soundly defeat his opponents (Su 2004, p46). As one elite interviewee pointed out to Fell, “If the CCP attacks and you do not attack back, then you’ll lose. People will think that you have no guts. You are a coward (2005, p128).” Lee thus stood up to China, attacking back.

Another advantage Lee was able to reap by promoting Taiwan’s sovereignty during this period was to bring cross-Strait relations to the forefront of domestic politics when the KMT was struggling to maintain public trust in other areas of domestic concern. This fact was particularly true for how the island’s youth saw Lee. The younger generations within Taiwan’s population do not harbor the same amount of animosity that is seen in the older generations. In fact, they tend to worry about cross-Strait relations much less than more immediate concerns such as education and employment (Rigger 2006, pp31-32), areas in which the KMT was not accomplishing as much as the public wished. In fact, many voters saw Lee’s 1995 trip to the U.S. as a way to isolate himself from the KMT’s failure to fight corruption (Roy 2003, p198). With his trip to the U.S., and by maintaining a brave face against China’s threats, Lee was able to highlight his successes in defending Taiwan’s sovereignty while also taking attention off of the KMT’s failures (Fell 2005, p19), giving the electorate cause to be wary of China, and portraying himself as the brave underdog. 1 Lee was thus able to both promote Taiwan’s sovereignty and consolidate his power through the island’s first direct presidential elections. While, as Su points out, in the long run cross-Strait tensions would push the political center away from independence (2004, p63), for the elections Lee’s moderated stance was given the advantage.

Economic Factors

One important threat to Lee’s power and Taiwan’s sovereignty during the mid- to late 90s was the growing economic ties between the two sides of the strait. Although Taiwan did not officially open up to cross-Strait trade until 1987, it had been going on at least since China opened its doors in 1979 (Luo 1998, pp18-23). By 1995 this trade had grown to US$11.46 billion and by 1997 equaled 10.33% of Taiwan’s total foreign trade and 7.52% of China’s (Luo 1998, p17). In fact, if it had not been for Taiwan’s US$16.61 billion surplus with China, the island would have suffered an overall international trade deficit of US$8.97 billion, compared to the US$7.74 billion surplus it enjoyed in reality (Luo 1998, p17). By any reckoning Taiwan and China were becoming economically integrated.

This would threaten Lee’s power and Taiwan’s sovereignty in two ways. First of all, it was believed that increased economic relationships between the two sides would lead to less Taiwanese animosity toward China (Rigger 2006, p7). Secondly, this closer economic integration was a threat to Lee’s power by creating a unified challenge to his cross-Strait policy. While there was much disagreement about the advantages and disadvantages of cross-Strait economic ties, business leaders across the political spectrum were very much for those ties, creating a unified opposition to Lee’s policies (Lee and Wang 2003, pp191-193).

Lee would work to stave off this perceived economic threat, while at the same time countering China’s political and military threats, by tying economic relations to the cross-Strait political environment and trying to induce Taiwanese companies not to invest in or trade too heavily with China. As Tso notes, Lee tried to play the economic card in an attempt to force China to yield to Taiwan’s economic demands (1996, pp132-133). In lieu of such political concessions, Lee sought to prevent any kind of rapprochement on China’s terms that would lead to further economic integration. For example Myers and Zhang theorize that another reason Lee made his 1999 “State-to-State” comment was to derail upcoming talks and prevent the kind of mainland fever that was seen after the talks held in the early ’90s (2006, pp42-43). While the KMT was indeed keen to be seen as working toward the island’s economic interest, Lee was loathe to do so at the expense of his personal power and Taiwan’s national interests.


Throughout the mid- to late 90s Lee showed clearly that he preferred to maintain Taiwan’s sovereignty and his own personal power base over improving ties with China. Yet, despite the fact that Lee had his own clear ideas on how cross-Strait policy should be dictated, these ideas were not created in a vacuum. Firstly they were developed in response to the political center’s wishes, which decreasingly saw the island as a province of China. Secondly they were developed as a way to politicize cross-Strait relations during national elections, namely the 1996 presidential election. Finally they were developed as a response to what Lee saw as an overheated economic integration of the two sides that would give the business community too much political sway while mollifying public opinion toward China. Many scholars question the success of Lee’s cross-Strait policies, as economic ties continued to flourish and Taiwan’s international space remained limited. Nevertheless, it cannot be denied that they were borne out of very real concerns regarding the island’s status in the global arena that were shared by much of the public.

These factors gain much more relevance today as KMT President Ma Ying-jeou looks to re-engage China after more than a decade of chilled relations. Indeed there are some differences between what happened with Lee and what Ma faces now. However, the similarities between the two cannot be ignored. Regarding the differences, Ma has embraced the cross-Strait economic ties Lee feared and has given up the zero-sum game over diplomatic relations Lee so eagerly fought with China. On the economic front Taiwan’s trade surplus with the mainland, shrinking be it may, has helped the island’s sagging export-based economy, and Chinese tourists visiting the island have created a limited but real boost for local businesses. On the diplomatic front, China has responded to Ma’s rapprochement by making limited concessions, such as not objecting to Taiwan’s WHA membership as an observer. However, China’s intentions to reunite Taiwan with the mainland remain unchanged and, despite Ma’s pleading, Beijing has not renounced its willingness to take back Taiwan militarily, continuing to add to its missile arsenal aimed at the island.

The greatest similarity between the two environments is that China still expects unification between the two sides, and the majority of people on Taiwan are against any such endeavor. Ma must also function in an election system and political environment similar to what Lee faced. While much of the New Party has been re-absorbed into the KMT, Ma was put into office by an electorate whose political center has continued moving further away from a Chinese national identity and support of unification, keeping pressure on him not to make too many concessions to Beijing. In short, while tensions have been reduced during Ma’s tenure, it has only eased some of the symptoms of the problem, not provided a cure. If the two sides of the Strait are going to develop any lasting rapprochement, they will have to do so in a way that will acquiesce to China’s own needs to maintain its sovereignty and territorial integrity while not abandoning the island’s own political and economic desires. If they do not, history could very well repeat itself, and Ma could be left facing many of the same difficult choices Lee was faced with almost two decades earlier.


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  1. It is interesting to note that the results of the election closely mirrored the public’s desires regarding sovereignty (Cabestan 1998, p232).