"What does China want?"

September 2, 2001

Washington Times editorial

Talk about ingratitude. This week, China signaled it was rejecting an overture by Taiwan to establish closer commercial relations. Taiwan's President Chen Shui-bian, who used to favor independence from China, had surprised much of the world by embracing a prestigious panel's recommendation that Taiwan integrate with China more aggressively in commercial terms. However, this was shot down by Beijing just days later.

Much of the world had cheered Mr. Chen's decision to adopt the findings of a panel of top business leaders and officials, which he commissioned to recommend economic stimulus measures. With Taiwan's economy entering its sharpest decline in over two decades and expected to contract 2 percent this year, the panel suggested a broad easing of trade, transportation and investment restrictions with China. Taiwan should remove a $50 million cap on investment in China, and instead evaluate projects case-by-case, the panel said, and Taiwan should be permitted to open branches on the mainland. China, in turn, should be allowed to invest in Taiwanese property and stock markets, which are in a tailspin, it added.

The implementation of these policy prescriptions would have been groundbreaking, since the Taiwanese government clamped down on investments to China in 1996, and there is no direct transportation across the Taiwan Strait. Furthermore, Mr. Chen once supported a referendum on Taiwan's independence from China.

In financial terms, it seems China ought be rather partial to the panel's recommendations, since they could translate into a windfall of new investments. Taiwanese companies have invested an estimated $60 billion in China over the past decade, but according to Ramone Myers, a China expert at the Hoover Institution, this figure could grow substantially, should restrictions be eased.

However, China's rejection of closer ties, in the absence of Taiwan's acceptance of a one-China principle, surprised the experts who believed Beijing would be eager to attract capital from Taiwan. An editorial published in the state-controlled New China News Agency said that if Taiwan believes it "can avoid the 'one China' principle . . . by just talking about economic problems, this is not realistic and will not succeed." By harping on this theme, Beijing clearly signals its priorities. Dominating Taiwan is more important than improving economic conditions for its own citizens.

But then again, the Beijing regime hasn't traditionally staked its survival on acting in the interest of its citizens. Beijing eyes the Chen government with acute suspicion, and believes that Taiwan's incremental disavowal of a one-China policy could lead to an eventual full-blown independence movement on the stealth. It's too bad they have chosen to deny their own people this opportunity.