Watch & Brief #1
Taiwan: Chen's Risky Business
Summary
Taiwanese President Chen Shui-bian recently said he is dismissing the National Unification Council (NUC), along with the guidelines for cross-Strait relationships set in place 15 years ago. The NUC has not met since Chen -- whose Democratic Progressive Party opposes unification -- became president. Dismissing the NUC is risky business for Chen; not only do the United States and China condemn the move, but it is not in the business community's interests. Chen's political move jeopardizes his remaining tenure and the island's economic stability.
Analysis
Taiwanese President Chen Shui-bian decisively changed the status quo between China and Taiwan on Feb. 26 by dismissing the National Unification Council (NUC) and the guidelines that maintained the Sino-Taiwanese relationship. After Chen announced the dismissal of the NUC, the United States firmly reiterated its stance on the China-Taiwan issue -- one that does not support Taiwan's independence and disapproves of unilateral changes to the status quo by either Taipei or Beijing. The international business community, especially businesses in China and Taiwan, also resist Chen's strategy.
Dismissing the NUC is Chen's boldest anti-unification move yet. In his final term as president, Chen has faced falling approval ratings within his own pro-independence Democratic Progressive Party (DPP). The defiant anti-unification move is a way for Chen to regain political ground. Also, the timing of the announcement seems perfect: China will approve its 11th five-year plan March 5 and is thus turning Beijing's focus inward, toward domestic economic issues. Chen might have thought his announcement would meet with a less-determined Beijing, or he might be testing Washington's resolve to protect Taiwan should Beijing respond with violence. Regardless, the notoriety that will result from his dismissing the NUC does not bode well for the rest of Chen's tenure.
China has stepped up its rhetoric on peaceful co-existence and cross-Strait relations while subtly reminding the international community of its 2005 Anti-Secession Law, which states if peaceful measures are not possible, Beijing retains the right to quash secessionists. Last week, Beijing released an official statement that says, "To whatever changes on the island, the mainland still concerns itself with the Taiwan compatriots, and will, as always, make utmost efforts for their well-being with a broader mind and more flexible approaches."
The responses from Taiwan's opposition parties, which enjoy a majority in the parliament, could translate into more clout for Chen within his own party. Chen's provocation of the opposition could show the DPP that he is serious. However, outside the DPP, Chen will enjoy no such support; Ma Ying-jeou -- Taiwan's mayor, the chairman of the Kuomintang (KMT) and a favorite in the next presidential elections -- is now pressing for Chen to be recalled. Furthermore, Ma has just announced he will visit the United States, where he will doubtless work with the Bush administration to counter Chen's strategy.
The KMT, China and the United States are not the only ones decrying Chen's actions. China and Taiwan's business communities, along with the international business community, oppose any drastic measures. Taiwanese investors, who have invested more than $100 billion in China since the late 1980s, have voiced concerns over Chen's position. Taiwan's stocks and currency fell last week when Chen began stepping up his rhetoric. They are recovering, partly because of China's measured response, but it is obvious that Chen's position is not a good omen for business in Taiwan. If China continues to emphasize peaceful economic ties with Taiwan, Beijing is likely to win the war of words.
Chen might be able to shore up a little support in the DPP, but many Taiwanese are speaking with their pocketbooks: "Show me the money." Chen is gambling with Taiwan's economic interests, which will jeopardize not only his future, but also the DPP's. |
