Signs
in China and Taiwan of Making Money, Not War
May 15, 2001
By CRAIG S. SMITH
The New York Times
KUNSHAN, China, May 11 - Despite the visions of war conjured by President
Bush's suggestion that the United States could help defend Taiwan
from a Chinese invasion, the social and economic integration between
the mainland and the island is stronger than ever, and growing.
Tension
across the 100-mile strait separating the two sides of a decades-old
civil war has recently ebbed considerably. Some experts say that if
the trend continues, Taiwan's government will soon be unable to afford
antagonizing China, and that the cost to China of attacking Taiwan
may become prohibitive.
Nowhere is that on starker display than in Kunshan, a town that Taiwan
built. About 10 percent of Taiwan's $50 billion investment in the
mainland has landed here, just off the 60-mile highway from Shanghai
to Suzhou.
And almost all of the town's tax revenue comes from 900 Taiwan companies
that have transformed the once ramshackle farming community into one
of China's brightest new cities.
During the spring and autumn wedding seasons, a few women a month
here marry men from Taiwan. The women wear dresses from brightly-lit
bridal shops with names like Ruby, Venus and Taiwan Flavor. They move
into one of the town's upscale Taiwanese compounds, like Beautiful
Crystal Plaza or Treasure Island Garden, a reference to T 1970's,
and Taiwan, under pressure from business people eager to take part
in China's economic opening to the world, began allowing indirect
travel, trade and investment in the mainland in 1987. Taiwan has since
become one of China's top investors.
Investment accelerated markedly after a devastating earthquake on
Taiwan in 1999. The quake temporarily shut down much of the computer-related
industry on the island, which is prone to quakes, prompting many technology
companies to shift production to China. Taiwan investors are also
drawn to the vast mainland market. Half of Taiwan's high-tech products
are now made on the mainland.
Belligerency and political mistrust may still, of course, vanquish
economic imperatives.
China's
weapons purchases and recent sharp increase in military spending are
directed almost exclusively at Taiwan. China has not slowed the frequency
of its military exercises or new missile deployments facing the island,
which in turn has not slowed its own program to acquire weapons.
The same economic growth that is drawing Taiwan to the mainland is
financing Beijing's military expansion, aimed at giving China a coercive
edge over Taiwan.
Talks between the two governments show no sign of resuming after
breaking down two years ago. China's leaders, trapped by their Marxist-Leninist
past, have yet to define a more democratic future in which Taiwan
might want to take part.
Growing
economic ties to Taiwan's business community could even work against
political reforms as that community becomes increasingly reliant on
a stable government in China to protect its investments and interests,
Mr. Schell said.
But there have been no military tensions in the strait since President
Chen Shui-bian of Taiwan was elected a year ago. And he has proven
more open to developing economic ties than was his predecessor, Lee
Teng-hui.
Taiwan
investment on the mainland is booming, and at any one time there are
hundreds of thousands of people from Taiwan living in or visiting
China.
As
much as $10 billion has poured into China from Taiwan in the last
two years, compared with $40 billion in the previous decade, when
the country had already become the main destination for overseas investment
from the island of 23 million people.
Cross-strait trade reached $30 billion in 2000, making Taiwan China's
sixth-largest trading partner.
By some estimates, Taiwan is poised to invest more money in the mainland
in the next three years than it has in the last 10. If so, that could
further blend the two economies.
"After visiting Taiwanese companies along the Shanghai-Suzhou
corridor, I'm convinced that the cross-strait issue will resolve in
10 years," said Andy Xie, an economist at Morgan Stanley in Hong
Kong.
In his New Year address this year, President Chen said China and
Taiwan should begin "the integration of our economies, trade
and culture" to gradually "build a new framework of permanent
peace and political integration."
Continued
He opened direct trade and transport between the mainland and two
tiny Taiwan-controlled islands hard against the mainland coast, and
he is reviewing such links between the mainland and Taiwan proper.
He plans to begin allowing mainland tourists to visit Taiwan later
this year and is considering relaxing restrictions governing Taiwan
investment on the mainland. Taiwan companies regularly ignore the
rules by investing through offshore companies in any case.
"Over the long run I believe that economic integration will
lead to some kind of social and political integration," said
Lin Chong-ping, vice chairman of Taiwan's Mainland Affairs Council,
in a telephone interview.
Taiwan's investment in the mainland, most of which comes into the
country indirectly through Hong Kong, once focused on Guangdong Province
in southern China, lured by cheap land and low-cost labor.
It has more recently migrated north toward Shanghai and shifted into
increasingly advanced technologies and larger, longer-term projects.
Formosa
Plastics, Taiwan's largest enterprise, is considering plans to invest
in a huge petrochemical plant in Ningbo, south of Shanghai. And last
year Winston Wong, the son of Formosa Plastics' chairman, joined President
Jiang Zemin's son, Jiang Mianheng, to break ground on a $1.63 billion
Shanghai plant that will produce circuit-etched silicon wafers - the
most critical component in computer chips. Nearby, another Taiwanese-financed
wafer foundry, as the plants are known, is under way.
"With China entering the World Trade Organization, we are looking
more at the domestic market here than at China as a base for exports,"
said D. C. Yang, the former head of the Shanghai association of Taiwan
business people.
While no exact figures are available, he estimates that there are
a quarter of a million people from Taiwan in Shanghai at any one time.
There are many more living in or visiting the south.
"East China is becoming the hub of Taiwan investment radiating
out to other parts of the country," Mr. Yang said.
The highway between Shanghai and Suzhou has become a technology corridor,
with Kunshan drawing most of the investment because of prompt service
to investors by the town's mayor and easy access to Shanghai, just
40 minutes away.
And despite a recent mainland spy hunt that has led to the arrest
of ethnic Chinese scholars visiting China, Beijing is more welcoming
to people from Taiwan today than any time in the last decade.
It has drastically increased the number of mainlanders allowed to
visit Taiwan and aggressively courted visits from Taiwan opinion leaders,
including legislators, former government officials, scholars and celebrities.
Taipei and Shanghai have exchanged visits by deputy mayors. And Taiwan's
former prime minister, Vincent Siew, is currently in China to lobby
for a common market between the mainland and Taiwan. He is the second
vice chairman of Taiwan's main opposition party, the Nationalist Party,
to set foot in China in less than six months.
"In cross-strait relations, we are in something of a race between
the forces of economic integration and political separation,"
said Mr. Schell. "Barring some really nasty bump in the road,
I would bet on integration."
TAIPEI, Taiwan, July 7 ?For a 78-year-old pensioner with heart trouble,
Lee Teng-hui is not easing up. When Mr. Lee, the former president
of Taiwan, came home from a visit to the United States this week,
he greeted well-wishers by grabbing a megaphone and bellowing, "Let's
all have confidence in our Taiwan."
Those seemingly benign sentiments have propelled Mr. Lee into the
white-hot center of Taiwanese politics.
Fourteen months after he stepped down, the economy here is sputtering,
and the government is paralyzed. China, meanwhile, is growing stronger
by the day. Polls indicate that as their fortunes diverge, the idea
of uniting Taiwan with its fast- growing neighbor is gaining ground
here.
For
the man who spent his career trying to fashion a separate identity
for Taiwan ?often drawing Beijing's wrath in the process ?this gradual
drift toward China is alarming. And it has prompted Mr. Lee to set
off on an emotional, some say quixotic, campaign to restore the hope
of his people.
"He
thinks people are putting China's interests ahead of Taiwan's,"
said Huang Chu-wen, an adviser of the former president. "We feel
that emphasizing Taiwan's indigenous culture should be our No. 1 priority."
Last month, Mr. Lee threw his support behind Chen Shui-bian, the
pro-independence opposition leader who succeeded him. That enraged
Mr. Lee's comrades in the Nationalist Party, who were swept out of
power in that election after a half- century of rule.
And now, Mr. Lee is lending his prestige to efforts to start a new
party, one that would ally with Mr. Chen against the Nationalists
in legislative elections this December.
Mr.
Lee's moves have far-reaching implications, not just for Taiwan's
politics but also for Taiwan's relationship with China and the United
States. Experts here say it could fuel latent animosities between
people of mainland Chinese descent and native Taiwanese who share
this island. Mr. Lee and Mr. Chen are both native Taiwanese.
It could also draw a jagged line between those who support or oppose
unification with China.
"He is appealing to people who believe in Taiwanese independence,"
said Wu Nai-jen, the secretary general of Mr. Chen's party. "He
is whipping up nationalist feeling, not a rational discussion of the
issues.'
Political discourse has been uncommonly heated for the last few weeks.
Some of Mr. Lee's Nationalist colleagues are howling for his expulsion,
while newspapers and talk shows debate his motives.
But critics and defenders of Mr. Lee agree that he has accurately
gauged the public mood. The collapse in the global technology industry
has devastated Taiwan's economy, pushing growth to its lowest level
since the early 1970's and unemployment to a nearly two-decade high.
As times become tough, more people believe that maybe Taiwan should
cast its lot with China.
Two recent surveys reported a spike in the percentage of Taiwanese
who say they could accept "one country, two systems," the
arrangement under which China took possession of Hong Kong from Britain
in 1997.
While those who favor one country, two systems are still in a minority,
the number has almost doubled, to 33 percent, since the last polls
in 1999.
"People
suddenly have doubts about Taiwan's long-term economic and political
future," said Chu Yun- han, a professor of political science
at National Taiwan University.
In this gloomy atmosphere, China beckons. Taiwan companies are flocking
to Shanghai to open factories. Unlike the past, when investors used
China's cheap labor to make sneakers and other low-end goods, factories
now churn out advanced chips and notebook computers.
For many college students here, China is replacing the United States
as the land of opportunity. "All my classmates think they are
going to work in China," said Chou Ju-yi, 21, an electrical engineering
major at National Taiwan University. "They think they will have
no choice, because the economy here is so bad."
Ms. Chou said she opposed unification. But her boyfriend, Hsu Chieh,
said he believed that integration was inevitable, and desirable. "China
is getting stronger and stronger," said Mr. Hsu, who is 21 and
studies botany. "To survive, we will have to integrate our economy
into China. And to do that, we have to have political integration."
Such attitudes run deep in Taiwan's business establishment. One of
the island's most powerful industrialists, Wang Yung-ching, recently
called on President Chen to accept Beijing's demand that Taiwan recognize
a single China of which it is a part. Mr. Chen's refusal to do so
has angered Beijing.
The
Nationalist Party, which under Mr. Lee took a confrontational approach
toward Beijing, has changed course and begun to cultivate ties with
China's leaders. A former Nationalist prime minister recently visited
Beijing while the mayor of Taipei went to Hong Kong.
The chairman of the Nationalists, Lien Chan, denies that his party
has tilted toward Beijing. But he makes no apologies for the visits.
"The majority of the people here do not agree with the idea
of Taiwan independence," said Mr. Lien, who served as vice president
under Mr. Lee. "We have to make this clear to the leaders in
Beijing."
It
was the Nationalists' shift toward China that precipitated Mr. Lee's
break with his party. Mr. Lee had anointed Mr. Lien as the party's
presidential candidate in 1999. But experts say the former president
secretly preferred Mr. Chen. In the end, Mr. Chen trounced Mr. Lien.
Despite the bad blood, Mr. Lien said he was aghast that Mr. Lee appeared
to have switched sides. He speculated that other people were exploiting
the former president's name to further their own goals.
Mr. Lee declared recently that he would die as a Nationalist Party
member. But he has met with former Nationalist lawmakers who are thinking
of running in the new party being formed by Mr. Lee's adviser and
protagonist? Huang Chu-wen.
Mr. Huang said his goal was to win 35 seats in Taiwan's 220-seat
Legislature. If he does, and if Mr. Chen, with Mr. Lee's implied blessing,
can increase his party's seats to more than 75 seats, from 66 now,
Mr. Chen's party and its allies would gain a majority. In the past,
his government has been stymied because the Nationalists control the
assembly.
Political oddsmakers say the chance of both those things' happening
is slim. But Mr. Huang said Mr. Lee has a broader agenda. He is trying
to stem the tide of pro-China sentiment. If he fails and Taiwan lets
its identity erode, he said, the island will be powerless to ward
off Beijing.
"The
mainland would be quite happy to let this situation continue,"
Mr. Huang said. "They figure maybe Taiwan will collapse by itself."
