Taiwan In Troubled Times: Essays On The Chen Shui-bian Presidency 9789812777812, 9789810248918

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Essays on the Chen Shui-bian Presidency

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Editor

Essays on the Chen Shui-bian Presidency

Taiwan in Troubled Times

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Essays on the Chen Shui-bian Presidency

Taiwan in Troubled Times Editor

John F. Copper Department of International Studies, Rhodes College

V f e World Scientific «•

New Jersey 'London * London• •Singapore Sinaapore••Hong Kong

Published by World Scientific Publishing Co. Pte. Ltd. P O Box 128, Farrer Road, Singapore 912805 USA office: Suite IB, 1060 Main Street, River Edge, NJ 07661 UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library.

TAIWAN IN TROUBLED TIMES Essays on the Chen Shui-bian Presidency Copyright © 2002 by World Scientific Publishing Co. Pte. Ltd. All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system now known or to be invented, without written permission from the Publisher.

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Preface

T

he "Taiwan issue" constitutes a vexing problem for the world's two most important powers: the United States and the People's Republic of China. It is sometimes called their "non-negotiable disagreement." In 1996, the two faced off when Taiwan held its first direct presidential election and China's People's Liberation Army did missile tests near Taiwan to intimidate voters. The U.S. sent two aircraft carriers with a flotilla of accompanying ships to the scene. Not only were Washington and Beijing tense, but so were other capitals throughout East Asia. The rest of the world also worried and paid heed. They still do. In early 2000, Taiwan held another direct presidential election. This time the opposition party's Chen Shui-bian won. He was, and is, considered a proponent of Taiwan's independence, which is an anathema to China. Beijing did not respond with missile tests. Instead China took a more patient approach. Chinese leaders refused, though, to make friends with Chen. They adopted a cool policy toward the Chen government while waiting for opportunities. This created what some called a "permanent crisis." Meanwhile the new president faced difficulties at home. He and his party had little experience governing. They had been the opposition. The ruling Nationalist Party, similarly, had no experience in opposition. It didn't take to it well. They did not work together, even to solve serious problems. Taiwan thus experienced political paralysis. This affected the economy. And it impacted relations with China.

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Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

The following chapters assess the Chen presidency's first eighteen months. The writers do that from different, but important, perspectives and points of view. The idea of this book originated with Professor John Wong, Director of Research at the East Asian Institute at the National University of Singapore. The editor and three of the contributors were visiting senior research fellows at the East Asian Institute during the summer of 2001. Professor Sheng was at the nearby Institute for Southeast Asian Studies. They met and talked about the issues. It is hoped that the analysis in the following pages will contribute to a better understanding of an important actor in international politics at a critical time in history. John F. Copper

Contents Preface Chapter 1 Chapter 2 Chapter 3 Chapter 4

Introduction, John F. Copper Taiwan in Gridlock, John F. Copper Whither Cross-Strait Relations, Sheng Lijun The Democratic Progressive Party's Factional Politics, Chao Chien-min Chapter 5 Dynamic Stability in Beijing-Taipei Relations, George W. Tsai Addendum Taiwan's December 2001 Election, John F. Copper Append x l China's White Paper on Taiwan Append xll Zhu Rongji's Statement before Taiwan Election Append xIII Chen Shui-bian's Victory Speech Append xIV Chen Shui-bian's Inauguration Address Append x V President Chen's National Day Address, 2000 Append xVI President's New Year's Eve Address Append xVII President's New Year's Address Append xVIII President's First Anniversary Speech Append xIX Economic Conference Closing Address Resolutions of Economic Conference Append x X Appendi xXI President's National Day Address, 2001 Append xXII President's Comments on the APEC Conference Notes Selected Bibliography Index About the editor and contributors

v 1 19 52 101 123 146 153 174 177 180 190 194 199 204 210 217 219 224 227 255 257 263

1 Introduction John F. Copper

O

n March 18,2000, Taiwan's populace witnessed a momentous event: the opposition Democratic Progressive Party's (DPP) candidate, Chen Shui-bian, defeated the ruling Nationalist Party's or KMT's Lien Chan and also James Soong running as an independent, in Taiwan's second direct presidential and vice presidential election.1 It was a spectacular come-from-behind victory and a win for the underdog. Soong, a former member of the Nationalist Party, was the early favorite. Throughout most of the campaign he led in the opinion polls. Much of the time he was way ahead. In other surveys, asking the question, "Who do you think will win?" (rather than "Whom do you support?"), the answer was consistently the KMT's candidates, Lien and Vincent Siew. Few believed that the KMT's professional politicians, campaigns strategists, policy planners and its big money (for campaign advertising, vote buying, etc.) would not in the end prevail, even though its lackluster candidates did not themselves poll well.2 In any event, Chen won. It was not an easy defeat for the Nationalist Party that had ruled Taiwan for more than fifty years. The KMT had governed the island since the end of World War II when Japan returned it to China. It had planned and implemented successful economic development during the 1960s and after that put Taiwan on the map: turning an eco-

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Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

nomically hapless island into the fastest growing economy in the world. The KMT had also engineered Taiwan's transition politically from an authoritarian system to a democracy and won elections along the way to stay in power with a "people's mandate." In the process it turned Taiwan from a state ruled by Mainland Chinese, an ethnic (more accurately sub-ethnic) group of Chinese that came from the mainland after the war, to one ruled by "local" Chinese or Taiwanese (Chinese who came to Taiwan much earlier)—the majority. The Nationalist Party had, in short, been the creator of both Taiwan's economic miracle and its political miracle.3 Serious questions arose as a result of the KMT's election setback: Was it ready to recognize defeat and become a loyal opposition? Or would it bear a grudge and try to obstruct? What about Soong? What role would he play in post-election politics? Could the DPP, which was at heart an opposition party, govern Taiwan effectively? Was it ready? Or did the DPP victory happen too soon? These were troubling questions. Many in Taiwan were apprehensive. Others were stoic. Some said Taiwan may face troubled times. But the country and its people had faced adversity before. Most felt they could again. However, what that meant remained to be seen. Indeed! Some, however, were not so concerned or felt the event was either inevitable and/or a good thing. What happened, they opined, and many Taiwan scholars agreed, was very natural given the country's successful democratization. Various academics called it the "consolidation of democracy." Taiwan could not really be called a democracy, they said, unless there was a transfer of power to another political party. Chen Shui-bian's election victory thus constituted the realization of the "Taiwan political miracle."4 DPP leaders took this position. Another sign of the times was the widely made claim that the opposition party, now the ruling party, was a "fourth generation" leadership.5 The first generation was Chiang Kai-shek who, along with Mao Zedong, ruled two competing Chinese regimes from the 1920s on. After Mao's victory and Chiang's flight to Taiwan in 1949, Taiwan represented one Chinese state in a civil war that had not ended. Both leaders were political modernizers, but of the old school. When the two died in 1975 and 1976 respectively, Chiang Ching-kuo and Deng Xiaoping, after a brief period of consolidating power, became

Introduction

3

the leaders of the two Chinas. Chiang Ching-kuo launched the democratization process in Taiwan. Deng Xiaoping changed China's political system from a totalitarian to an authoritarian one, but even more important, put economic growth on track. They were the second generation. After them were Lee Teng-hui and Jiang Zemin. These two leaders had little or no first-hand knowledge of the Chinese civil war. To most observers they were not bound to the past. They had other concerns. They sought to modernize their countries or the two parts of China; and they did. They constituted the third generation of leaders. A fourth generation, it was thought, or hoped, would be even more progressive and could do much more to modernize and democratize "China." Also they would get along with the other. Things would be different.6 Taiwan's new president, pundits said, even looked like a "fourth generation" leader. Chen Shui-bian was not yet fifty years old. He was born following World War II, after the Chinese civil war ended. He knew nothing of either war from direct experience. He grew up in a poor family in southern Taiwan far from the capital, Taipei. He excelled in high school. He left home to attend Taiwan's premier academic institution, Taiwan National University and finished at the top of his class in law school. He was a poor boy made good.7 Chen became a lawyer, but he also took an interest in government. Opposition politics was the name of the game for him. He disliked the Nationalist Party, which he perceived was run by outsiders, Mainland Chinese (those who came to Taiwan after World War II). He talked of political reform and democracy. Chen cut his teeth career-wise before thirty when, in 1979, he defended opposition political dissidents in Taiwan's most famous trial ever. The accused had reacted with concern, perhaps desperation, to the government's loss of credibility following U.S. President Jimmy Carter's decision to withdraw diplomatic recognition from Taipei and establish formal ties with Beijing. They launched a democratic opposition movement. They argued, generally convincingly, that Taiwan was a dictatorship just like China and unless Taiwan democratized the international community would have no sympathy and would allow Taiwan to be incorporated by China against its will.8

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Taiwan in Troubled Times: Essays on the Chen Shui-bian

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Their efforts reached a crescendo in December during a protest march in Kaohsiung, Taiwan's second largest city, its main port in the south, and a hotbed of Taiwanese opposition to the government. That event, subsequently called the "Kaohsiung Incident," resulted in a number of police being injured. The population of the island, which had up to this point widely sympathized with the opposition, now supported the government out of fear that chaos might ensue.9 The government arrested leaders of the movement and put them on trial. One of them was Annette Lu. Chen was her defense lawyer. Later Chen himself went to jail for libel, in connection with Taiwan's increasingly open and democratic (but not very much yet) politics.10 From 1981 to 1985, Chen served on the Taipei City Council as an independent. There he acquired political savvy and on-the-job-training. He made friends and built ties with other independent politicians. In 1986, when a group of like-minded political aspirants got together and formed the Democratic Progressive Party, Chen was there. He became a founding member of the DPP. In the first national election, which saw the DPP perform well, in 1989, Chen won a seat in the legislature and served there until 1994. That year he was catapulted to national fame when he was elected mayor of Taipei." As both legislator and mayor, Chen opposed the government's oneChina policy. He felt Taiwan should be separate and independent, ruled by locally-born Chinese or Taiwanese (not Mainland Chinese who dominated the KMT, although by this time this was no longer true) and without ties to China. He put a provision in the DPP's charter calling for Taiwan's independence. In 1998, Chen lost a reelection bid to be Taipei's mayor for a second term. But he was not discouraged. In fact, this allowed him to prepare to run for president two years down the road.12 And that he did. Chen had little trouble getting the nomination of his party. To both DPP leaders and stalwarts, he was the most likely of any of the leaders in his party to win. Chen had name recognition and a good record when he was a legislator and mayor. He was young and dynamic (which fit the DPP's image). He had charisma.

Introduction

5

Chen picked Annette Lu as his running mate. She was, like Chen, Taiwanese, born on the island of parents who were born there. She received a good education locally and went to the United States to study, including doing a stint at Harvard University. She was not only a well-known political activist who had been involved in opposition politics; she also founded the feminist movement in Taiwan.13 As mentioned above, Lu was arrested after the Kaohsiung Incident. She was given a twelve-year prison sentence. She served five. She blamed the Nationalist Party and Jimmy Carter for her misery in jail. She later recalled her prison experience as increasing her determination to make Taiwan democratic and to take power from the KMT. They were the same to her. She also wanted Taiwan to be legally separate from China. All of this constituted a badge of honor to most supporters in the DPP.14 In 1992, Lu was elected to the legislature. In 1997, amidst a Democratic Progressive Party "sweep" in local elections, she became magistrate of Taoyuan County, the site of Taiwan's international airport. Meanwhile, she had served as a senior advisor to President Lee Teng-hui, with whom she became a close friend.'5 During the 2000 campaign she expounded daily on her independence views. Chen moderated his. She viewed Taiwan's future as one distinct from China; and she said so. She advocated women's rights. She exuded energy and commitment. She sent signals that the new administration would be pro-independence. She would also help Chen, who did not speak English and had little experience with foreigners. She was certainly the fourth generation, or more. She would be Taiwan's first female vice president. After Chen and Lu were proclaimed election victors, their supporters were elated. They celebrated their successful "revolution." They talked of change. They boasted of a "new era" in Taiwan. Indeed they were right. Things would never be the same again. But it was not to be the new era they had hoped for. In fact, it was quite different. Chen had not won a clear mandate. He got 39.3 percent of the popular vote. James Soong won 36.8 percent, less than three percentage points behind Chen. Lien Chan got 23.1 percent. A mandate had previously been defined as a candidate winning more than half of the ballots.16 In this elec-

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Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

tion more voters chose other candidates than voted for Chen. Since both the Soong vote and the Lien vote came from the "KMT voter base," were there to have been a runoff election Chen would not have been elected president. (Such a provision was debated earlier but was not made an amendment to the Constitution because of other pressing matters at the time.) During the early days of the campaign, meaning six months to a year before the balloting, Soong led in the polls by a huge margin. In many polls he was preferred by more than half of the electorate and twice as many as Chen. Notwithstanding his popularity, he did not get the Nationalist Party's nomination. President Lee Teng-hui saw to that. Lee disliked Soong and wanted the party's nod to go to Lien. And he got his wish.17 So Soong had to run without a party. He still led in the polls by good margins, that is until the KMT released documents on Soong's alleged misdeeds (when he was secretary general of the party) that involved the transfer of large sums of money apparently into his own accounts (actually his relatives and elsewhere). Soong had had the reputation of being the cleanest candidate running. He was liked by the common man, was considered caring, and was the most charismatic of the candidates. Sullying his reputation thus hurt badly and Soong sank in the polls. A KMT legislator at the party leadership's behest stayed on the attack. The case went to court and to the Control Yuan, the oversight and investigative branch of government. Soong had difficulties answering. He said some of the money was for Chiang Ching-kuo's family. He explained some of the other discrepancies, but not too well. His campaign was distracted. He fell further in the polls. The KMT stayed on the offensive. It played dirty politics up until the very end, saying that Soong could not win (when they knew differently) and asked his supporters to vote for Lien.18 Meanwhile there were reports that President Lee Teng-hui wanted Chen to win and had so acted. Chen's party was said to have gotten KMT money. Lee Yuan-tseh, Taiwan's famous Nobel Prize winner, and a friend of Lee Teng-hui, came out in support of Chen at a critical time in the final days of the campaign. Many said that had Lee Teng-hui opposed this, he would not have done it. The latter's support created momentum for Chen and tipped the balance. Several business leaders who had KMT ties came out for Chen.

Introduction

1

Finally, Beijing opposed Chen and created a backlash that some say gave him the 3 percent he needed.19 Still Soong won in voting districts in north, east and central Taiwan (except for Yilan County). He won the most votes from all of Taiwan's minority ethnic or sub-ethnic groups. He won the female vote (which Annette Lu was supposed to give to Chen). He won in the offshore islands. He won the capital city. He won the poorest districts. Chen won the Taiwanese vote and he won big in southern Taiwan. Lien lost virtually everywhere.20 After the election, the KMT's humiliating drubbing riled its rank and file. They demonstrated for two days. Their protest turned violent. They demanded Lee Teng-hui resign from the chairmanship of the party. Party leaders met and expelled Lee. Lien Chan, though defeated, remained first vice chairman of the party, and took charge. Shortly after the election Soong formed a new party, the People First Party (PFP).21 Soong and Lien, according to most pundits, had not been bitter enemies. In fact, early on many KMT luminaries and campaign planners had called for a Lien-Soong ticket and both seemed willing (at least they were not adamantly opposed). President Lee nixed this. So after Chen took office, with Lee not around, Lien and Soong began to cooperate. They saw an opportunity to "get" Chen and weaken and possibly even derail the Chen presidency and wrest political power from him in the process. If they could force Chen to accept coalition government, they would rule; Chen would be a figurehead.22 Chen indeed faced an unenviable situation: divided government. The KMT had a majority in the legislature or Legislative Yuan. Together with Soong's supporters and sympathetic independents, they had nearly a twothirds majority. The DPP had only one-third. The KMT had not always had the best party discipline. Chen might have tried to exploit this. In fact, he did. But, with the KMT now more united than usual and with the KMT and the PFP cooperating he didn't get far. Chen hence sought to rule as something other than a "party" president. He cut his ties with the DPP. After all, the DPP couldn't help him very much in his efforts to deal with the legislature. Chen appointed members of the other parties to join his cabinet, even his premier, General Tang Fei (from the KMT).

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Taiwan in Troubled Times: Essays on the Chen Shui-bian

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But President Chen did not make any promises to share power. Nor did he make any formal arrangements with the KMT or any other party when he asked their members to join his government.23 Thus he did not get much help in governing. He talked of cohabitation (a term used in France where divided government presented a similar situation). It was an alternative to coalition government. But no one knew how, or even if, this would work. As the euphoria of Chen's election victory wore off, the opposition became even more determined to take a share of power if not governance. The KMT and the PFP also sought revenge. In the legislature they found numerous opportunities to embarrass President Chen. They passed laws that put him in conflict with his party and his supporters, such as shortening the workweek more than he requested. They tried to win over parts of his constituency. They sought to alienate his labor and business supporters. They made issue of his failed China policy.24 There soon developed other problems than those created by the opposition. Chen had moderated his policies toward China to such a degree that the DPP's rank and file became upset, even angry. They charged that Chen had "betrayed the revolution" and that he had turned his back on Taiwan's independence. A feud ensued between President Chen and his vice president, Annette Lu. She wanted to share power; but that was not Chen's intent. She made known her dissatisfaction openly and loudly.25 Chen was not only a weak president because of divided government and his inability to figure out a way to deal with the opposition but also because of the way the Constitution set out presidential powers. The Constitution originated in a political milieu of fear of a strong leader. It thus did not give a lot of authority to the president. Chiang Kai-shek got around this by adding provisions to the Constitution that gave him "extra-ordinary powers" through the so-called Temporary Provisions. He then declared martial law. Chiang also headed, and controlled, the ruling Nationalist Party. His successors, Chiang Ching-kuo and Lee Teng-hui, had some of these advantages, the most important being their control of the legislature by presiding over the majority party. Without that the presidency was impotent. That characterized Chen Shui-bian's presidency.26 Taiwan's political party system was also a problem. In the 1960s, 70s and 80s, it had evolved from a one-party or one-party dominant system to a

Introduction

9

multiparty system. At times it looked like it was evolving into a two-party system. That would have fit a presidential system better. After Chen's election victory the system was essentially a three-party system, which seemed to be the worst of all worlds. Especially since Chen could not win over either opposition party. It was a two-against-one situation and the alignment was against him.27 So, President Chen went to the people. Or at least he tried. He spoke out for what he believed and wanted. He called for a "people's government." He tried to be a populist president. But his poll numbers were falling. Chen could not dictate to the media; he even found it hostile.28 The KMT and the PFP in opposition made their case. They accused Chen of being the "public opinion poll president with no principles." They said he showed no leadership. They accused him of lacking creativity. Chen knew how to strike back, and did. A war of words, plus vindictive deeds, followed. Nasty politics and gridlock were the result. Taiwan's population was not accustomed to so much negative political news. The bickering that followed was troubling to the populace even though Taiwan had seen uncivil behavior, even fist-fighting and worse, quite regularly in the legislature for some time. By the fall political struggle had reached a fever pitch. After President Chen cancelled work on Taiwan's fourth nuclear power plant, the opposition attempted to impeach him. The plant had been "legally" approved by the previous legislature and Chen did not have the authority to stop it, his opponents said. In taking this action, Chen had also violated the Constitution, or so it was charged. Moreover, Taiwan needed electricity and the decision sent the wrong signals to the business community. Finally, contracts had been signed and would have to be paid if the plant were scrapped. It looked like a breach of faith and a waste of money to cancel the plant.29 The opposition had the support of the public on the plant issue. They did not on impeachment. Thus it did not go forward. But Chen's presidency was further debilitated. And the gridlock that had plagued Taiwan's politics got worse. Chen's premier, Tang Fei, stepped down; Chen had to form a new cabinet. This one was less broadly based. Hence, after this there was even less cooperation between the president and the legislature. There developed a serious "I will take you down with me" mentality.

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Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

All of this turned off citizens and both Chen's and the opposition's popularity plummeted in the polls. The public felt cynical. Malaise set in. Good government, much less political stability and civil behavior, seemed to have evaporated.30 What could President Chen do? His constitutional authority was strongest in foreign affairs, personally his own weakest suit. In terms of the nature of Taiwan's political system, the opposition was better equipped to operate in domestic affairs and in opposition or protest politics, their weakest suit. Could Chen use his management of foreign affairs to compensate for his weaknesses in domestic politics? There seemed to be some hope. The response in the United States to Chen's victory had been and remained one of encouragement and support. After the election, President Clinton personally congratulated the president and vice president elect. He spoke in a positive tone about their win being a contribution to democracy in Taiwan. Secretary of State Madeleine Albright gave her blessing and spoke about the "very vibrant democratic election."3' The message was: the U.S. would support Chen and Taiwan. The executive branch of the U.S. government seemed not to worry about Chen's past advocacy of Taiwan independence or the views about that espoused by his party. Top White House and State Department officials apparently believed Chen's campaign rhetoric. They thought he no longer sanctioned a separate Taiwan and would make peace with China. Alternatively they were glad to get rid of Lee Teng-hui and felt that Chen could not be worse than Lee and, in addition, perceived that in view of his inexperience and the obstacles of divided government Chen faced he could not implement his independence views anyway. Just in case though, President Clinton declared that the United States would not revise its one-China policy. Secretary of State Albright added that America's policy toward Taiwan would not change because of the election. This put a major constraint on Chen.32 The U.S. Congress took a much different view of the election. It had no objections to Chen Shui-bian, and said so. It was not opposed to Chen's independence views either. Senator Jesse Helms, chairman of the Senate Foreign Relations Committee, said the election was a "wake up call." He declared after the election that "the people of Taiwan made it clear this

Introduction

11

weekend that, if there is still 'one China,' there are without question two Chinese states." Tom DeLay, Republican whip, labeled the Clinton administration's China policy "appeasement" and called for a two-China policy. Senator Kerry, Democrat from Massachusetts, said that the "United States will never accept a rollback of democracy and freedom in Taiwan." Forty members of the House of Representatives sent a formal letter of congratulations to president-elect Chen. The letter said, among other things, that "Taiwan should not be compelled to accept Beijing's 'one country, two systems' formulation." The House also passed a resolution, by a vote of 418 to 1, congratulating Taiwan and reaffirming the Taiwan Relations Act, while asserting that Beijing should renounce the threat of force against Taiwan. Putting its feelings into a specific legislative bill, the House voted $75 million for new facilities for the American Institute in Taiwan (the U.S. representative organization in Taiwan).33 The U.S. media reported favorably on the election, applauding Chen's victory and the nation's democratization. Many drew a stark contrast with China. A number of newspapers called for stronger U.S. support for Taiwan during the campaign. The Wall Street Journal called Chen's victory convincing and suggested that the United States government should not treat Taiwan as an embarrassing troublemaker. It pointed out that when the U.S. gave strong support to Taiwan, China engaged in cross-strait talks.34 USA Today suggested that the United States continue to employ economic leverage against China in view of its intimidation of Taiwan.35 The New York Times wrote of Taiwan's "democratic evolution" and predicted future problems because Beijing had "failed to defeat Chen."36 The Washington Post said the election was part of Taiwan "consolidating its democracy" and that China's efforts to keep Chen from winning had backfired.37 The Los Angeles Times called the election a "new chapter" in Taiwan's political history.38 International opinion was likewise generally positive toward Taiwan and Chen's victory, though less so than the U.S. media. The Daily Telegraph in the U.K. called the election a "great opportunity for the West to stand up for Asia's most promising democracy" notwithstanding "China's bullying."39 The Sunday Times called Chen's win a "victory for democracy" and a "defeat for Jiang Zemin." It described Taiwan as a "role model ."40

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Taiwan in Troubled Times: Essays on the Chen Shui-bian

Presidency

Papers in other European nations and throughout Asia were more cautious. Most congratulated Chen, but expressed concern about future relations between Beijing and Taipei. The Russian media declined comment. Could Chen and his advisors take advantage of this situation? Might Chen become a "foreign affairs president" and use a good image in this realm to enhance his power in domestic politics? That appeared difficult. Chen and his people were handicapped. They had little experience dealing with the White House, the Department of State, Congress or the Western media. Chen and most of his backers were not very cosmopolitan. They were not internationalist in their backgrounds or views. Not many top leaders of the DPP had studied abroad. They rose to power through local politics. In national politics their interests had primarily been in domestic matters. The Chen administration, hence, had to rely on KMT people for help and learn on the job. It did both. Opportunities were lost, badly lost. The learning process was also one of making serious mistakes.41 Chen, some said, might have exploited differences between the White House and the State Department on the one hand and the Congress and the media on the other. He might have tried to take advantage of public hostility in the United States toward China and good feelings toward Taiwan. These were not easy tasks though. There was another problem. While campaigning for president, Chen had promised better relations with China. And he needed to do so. The United States wanted this—that is, the White House and the Department of State. The business community in Taiwan wanted it. Taiwan's populace wanted it; at least, most did not want trouble with China. But China's reaction to Chen Shui-bian's victory was clearly negative. Chinese leaders in Beijing had hoped that one of the other candidates would win, not Chen. They had tried to make this happen. Chen stood for independence; that was bad. Chen was bad. Beijing was clearly on record opposing Chen.42 During the late days of the campaign, China issued a white paper on Taiwan. (See Appendix I.) Its contents shocked Taiwan. It said that China would employ military forces (presumably meaning it would invade the island) if Taipei did not engage in talks leading to unification and do so

Introduction

13

soon. This was unprecedented. It was foreboding. Beijing had long threatened the use of military force against Taiwan if it did something wrong (for example, if Taiwan were to allow foreign bases on Taiwan or go nuclear). It had never said it would attack Taiwan if it failed to do something. Just before the voting Premier Zhu Rongji spoke on television with a frightening countenance and tone of voice for all in Taiwan to see and hear. Zhu advised Taiwan's voters not to cast ballots for Chen. (See Appendix II.) Taiwan was warned! One might think that those who advocated a tough line toward Taiwan in Beijing would have lost face and have had their political stature diminished by Chen's victory. Not so. Nationalism had become such a potent force in China in recent years that recovering "lost territory" was too important. Five thousand students marched in the streets in Chongqing demanding a tough policy toward Taiwan. The government took measures to prevent similar protests in Beijing. Reportedly internal "circulars" took a very hostile line toward Taiwan.43 Even those who were not firebrand patriots believed that China was now strong economically and in other ways and Taiwan could not continue to resist unification; thus, anyone who supported Taiwan's independence should be considered China's enemy.44 The Taiwan Affairs Office of the Central Committee of the Chinese Communist Party after the balloting declared that the election did not change the fact that Taiwan is Chinese territory and that the one-China principle is "the prerequisite for peaceful unification."45 The military took an even harder position. Defense Minister Chi Haotian forthwith visited Fujian Province (adjacent to Taiwan) and inspected troops. This was a warning. He ordered military movements in the area at the time. A few days later, suddenly hundreds of Chinese fishing boats appeared around one of Taiwan's "offshore islands" (small islands near China that were not taken by the People's Liberation Army in 1949). The People's Liberation Army said menacingly that it would mobilize thousands of boats for an invasion of Taiwan.46 Notwithstanding their ill feeling and negative predisposition toward Chen, Chinese leaders did not adopt an unyieldingly aggressive policy or take an unabashedly hostile attitude toward Chen. Had they done so it may have helped Chen. Rather, Beijing espoused a cautious or patient stance. In

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Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

retrospect, it was a policy of looking for future opportunities. There were sure to be some. Jiang Zemin and the moderates apparently were able to convince hard-liners in the military and the party left of that.47 One reason for China's reserved posture was the fact that it was too late to do something about Chen after the fact. The military and hard-liners had pressed for a tough policy toward Taiwan leading up to the election and got it. Those efforts had not worked. Moreover, it was the second time an aggressive policy failed. Missile tests at the time of the 1996 election had been counterproductive. Moreover, it evoked a "call to action" in the United States and this led to a serious deterioration in U.S.-China relations. Some Chinese leaders also espoused the view that Chen may not be so undesirable after all. It seemed quite likely he would not be as bad as Lee Teng-hui. After all, to Chinese leaders, who could be worse than Lee? Chen, they observed, was very flexible. He had departed almost totally from his earlier independence stance, perhaps for good. Chinese leaders similarly had a notion that politicians in democratic countries once in office frequently do just the opposite of what they previously stood for. Recall that Richard Nixon, who had a reputation for hating communism, masterminded and carried out the U.S. policy of rapprochement with China. Chinese leaders also had some understanding of the fact that Chen would likely be a weak leader in view of divided government in Taiwan.48 China's reformist civilian leaders had other arguments to present to the hard-line leftists in the Party and the military for not taking any rash actions against Taiwan. China was still growing fast economically and militarily and time was on its side in terms of dealing with Taiwan. And China needed a good relationship with the United States at least for a while longer for several critical reasons. China required access to the U.S. market and American (and Taiwan's) investment capital to keep China's economic development on track. Beijing wanted to join the World Trade Organization. It wanted to host the Olympics in 2008. U.S. support was a sine qua non for both. An election was coming in the United States, which meant it was not a good time to provoke the American people.49 Perhaps the bottom line was this: Beijing, not knowing quite what to do and facing the problem of big differences of opinion among the top

Introduction

15

leadership about a Taiwan policy, settled on a policy of watching and waiting for opportunities. Yet, Chinese leaders needed to make a statement. So they adopted a policy that China would not have anything to do with Chen directly unless he would accept the one-China principle. One China was a precondition for dealing with Chen. Making any concession on this would, in any case, have amounted to a major policy shift, which would have provoked the Left and the military. Chen had said he would accept one China as an item for discussion. But that was not enough. China insisted that he accept it without equivocation or conditions. That Chen could not do. He tried to find a compromise solution. He suggested that he would agree to the notion of one China with each side having its own interpretation of what one China meant.50 Beijing subsequently talked to, and welcomed to China, officials from the opposition parties and leaders in Taiwan not affiliated with the Democratic Progressive Party. This had the effect of taking the conduct of cross-strait policy out of the hands of the president and making one of Chen's campaign promises impossible to fulfill. It also had the effect of isolating Chen and provoking further ill feeling between Chen and the opposition.51 Meanwhile, China implemented a policy of discriminating against businesses operating in China that had supported Chen during the election campaign or were pro-DPP. It pressured them to get Chen to change, or punished them to send a signal. There was little Chen could do about this. This policy was continued and even extended to foreign companies that dealt with Taiwan too openly or too officially. China also adopted a tougher position to counter Taiwan's flexible diplomacy, which Chen had inherited from Lee Teng-hui. Beijing further reduced Taiwan's "international space" and legitimacy. Officials in China warned other nations about dealing on any formal diplomatic level with Chen's government. Beijing's Taiwan policy was only marginally successful at first. After mid-2001, however, when the economy in Taiwan began to take a nosedive, this changed. Broader commercial ties with China seemed the only cure for Taiwan's recession. Business people among Chen's supporters moved their factories and other operations to China. Some called for better rela-

16

Taiwan in Troubled Times: Essavs on the Chen Shui-bian

Presidency

tions with China, even supporting Beijing's "one country, two systems" formula for reunification. Taiwan Plastics tycoon Wang Yung-ching said this, much to Chen's consternation. Opposition politicians exploited Chen's vulnerability on this issue. This weakened Chen's popularity and his government.52 Meanwhile, a new administration was elected in the United States and President George W. Bush adopted a hard-line China policy. And it got harder. In April 2001, after colliding in the air with a Chinese fighter, a U.S. reconnaissance aircraft made an emergency landing on China's Hainan Island. The incident soured U.S.-China relations, to the advantage of Taiwan. President Bush subsequently approved a huge weapons purchase by Taiwan, the largest on record save his father's decision to sell Taiwan F-l 6 fighter planes in 1992. The United States also granted Chen a stopover visit in the United States, which made him look statesman-like and diverted attention from his domestic problems for a while. President Chen was given renewed hope. But U.S.-China relations did not remain in the deep-freeze for long. In a few months relations warmed a bit. In the meantime, Washington set forth no new policy toward Taiwan and did nothing to help Taipei better manage cross-strait relations. One China, which was the policy of previous U.S. presidents, became Bush's stated China policy. Then the terrorist attacks on New York and Washington, D.C. in September brought the United States and China much closer. America needed China's cooperation in its anti-terrorist campaign, and got it. At the Asia Pacific Cooperation forum meeting in October in Shanghai, China rejected President Chen's proposal to attend. Beijing also refused to accept his designated representative and then humiliated Taiwan publicly at the preliminary meeting compelling Chen to withdraw Taiwan's representative from the meeting. Neither the United States nor other members of APEC rendered Taiwan much sympathy.53 During all of this controversy the opposition made issue of Chen's cross-strait policy flubs and criticized him for a bungled policy. At that juncture (an election approaching) Chen realized that friction with China might help him and his party. So he assailed China for its rude behavior

Introduction

17

and its efforts to isolate Taiwan. It looked as if Chen was picking a fight to help his party in the election. Beijing, one should recall, helped Chen win. Why not his party too? Chen and his party also found playing the "ethnic card" handy. It worked in tandem with his tough stance toward Beijing. But this meant a continuing standoff, perhaps worse, with the opposition and another reason for more gridlock. Meanwhile economic conditions got much worse in Taiwan. Some forecasters said Taiwan would experience 2 percent negative economic growth for the year.54 One, of course, may ask: Does all of this really matter very much? After all Taiwan is a small country (if indeed a country at all). Taiwan is not important some would say. On the contrary, Taiwan is a very significant actor in international politics. It is what might be called a "critical state" or a "vortex nation." It is a political actor that has a critical global political role—one that far transcends its size, population and resources. Taiwan's importance stems from the fact that the United States and China are the two most important nations in the world. Their relationship is a critical one. It will be decisive in determining the course of world politics and global peace (or war). Taiwan is an "impasse issue" between them that cannot be resolved easily, if at all. Some call it the "non-negotiable issue" between Washington and Beijing. To Beijing, Taiwan is a domestic matter. Hence it will not abandon the right to use force to resolve it. It is America's policy, and has been for some time—with the support of all branches of government, the media and the public—that the Taiwan matter should be resolved peacefully. The two are at odds. It is no wonder then that scholars of strategic issues and those concerned with war situations label the Taiwan Strait the world's number one "flashpoint" (a place where weapons of mass destruction may be used resulting in a major world conflict). It is that. And it will likely continue to be that. In the following chapters, the authors assess in greater depth parts of or aspects of the situation just described. They examine specific issues or problems that relate to the change in government in Taiwan that happened in May 2000 and Taiwan's situation since then.

18

Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

In chapter 2,1 evaluate the first year and a half of the Chen Shui-bian presidency from the perspective of the two major campaign issues: crossstrait relations and "black gold" (or the issue of criminal involvement in politics and corruption). Added are two other criteria used to evaluate the Chen administration: the economy and political governance. In chapter 3, Professor Sheng Lijun analyzes Taiwan under Chen Shuibian from Beijing's perspective. Sheng explores the reasons for Beijing's hostile posture toward Taipei and especially toward Chen Shui-bian. He observes that both internal and external forces make solving the crisis difficult, especially for President Chen. In chapter 4, Professor Chao Chien-min assesses factionalism in the ruling Democratic Progressive Party. According to Chao, the DPP has long been plagued by factionalism; the dividing issue was Taiwan's independence. Since the DPP is in power the referent can no longer be KMT rule as it had been, in part at least. The radical pro-independence factions have always had considerable influence in the party, he says. That was true right before the election. The situation is now different, but factionalism still limits Chen's freedom of action on a number of issues. In chapter 5, Professor Tsai Wei assesses cross-strait relations. Tsai believes the situation to be tense because of the standoff between Beijing and Taipei. Yet the national interests of each keep it from getting out of control and it is oddly stable. This, of course, does not mean it cannot be set off balance, and since the mutual ill feelings probably will not subside there is plenty of time for that to happen. The documents that follow chapter 5 are also instructive, especially President Chen's speeches. They reflect his travails, his frustrations, his efforts to deal with political gridlock and often an effort to put a good face on his presidency and engage in spin. Changes in the focus of his addresses and their tenor are easily discernable. It is hoped that the chapters below will contribute to the reader's understanding of this vital place that is truly at a crossroads and whose government not only faces serious difficulties but presents challenges to China, the United States and the rest of the world.

2

Taiwan in Gridlock: Thoughts on the Chen Shui-bian Administration's First Eighteen Months John F. Copper

Introduction

O

n March 18, 2000, Taiwan's populace was electrified (or stunned depending on one's perspective) by an announcement late that afternoon that Chen Shui-bian had won the presidential election. Chen, the candidate of the opposition Democratic Progressive Party (DPP), had just defeated James Soong, who was considered Taiwan's most charismatic politician. More importantly, he also beat Lien Chan, candidate of the ruling Nationalist Party or Kuomintang (KMT). This ended more than half a century of KMT rule. He also beat two other candidates. Chen's campaign had been spirited. It was energized by the help of throngs of young people, diehard opponents of the government and ruling party who for many years had seen themselves as oppressed and largely disenfranchised, and Taiwanese (Chinese who migrated to the island beginning several centuries ago, as opposed to the Mainland Chinese who arrived with Chiang Kai-shek after World War II and governed the island). Chen and his DPP campaigned on improving cross-strait relations, or ties with

20

Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

China, and ridding the country of "black gold" (crime and political corruption, which both the DPP and the public viewed as linked). After the election, Chen's supporters celebrated wildly. They called for a "new era of politics." They promised far-reaching reform. They exuded optimism about Taiwan's future. Meanwhile, observers spoke of the event, meaning the opposition winning political power by electing "their man" president, as constituting the "consolidation of democracy" in Taiwan. Some called it the final step in Taiwan's "political miracle." Soon, however, reality set in. Chen had not won the election because of a profound gain in his party's popularity. Nor was it a product of Chen's ideas or his charisma, though both helped. The victory resulted from a split in the Nationalist Party's vote. James Soong, failing to get the party's nomination, ran as an independent and siphoned off KMT ballots. Soong was ahead in the polls throughout most of the campaign and would have won had not President Lee Teng-hui made a dogged effort to derail his campaign. On Lee's orders, the KMT released information on Soong's misuse, "stealing," as Lee said, of party funds when he was general secretary. This undermined Soong's image as a clean politician. Further, answering the KMT's charges diverted his energies away from campaigning. Still Soong ended up winningthe vote of women, all minority groups, and most ofTaiwan's electoral districts (but losing big in southern Taiwan); and he got a vote tally less than three percentage points below Chen's. He accomplished that with neither a political party nor much money, while doing battle with the mighty KMT. Because of this situation Chen did not have a strong mandate (though there was no effort by Soong or anyone else to challenge his being the nation's legitimate president-elect). Worse than not having a good mandate, his party did not have a majority in the legislature; the KMT did. And the KMT was angry. Adding further to his problems, the powers of the presidency were not clearly delineated in the Constitution, and without a majority in the legislature, were weak. Finally, neither Chen nor his party was really prepared to govern. The product of Chen's election victory, or the Chen presidency, has been characterized by many as a period of political chaos, infighting, paralysis of the decision-making process, and worse. Meanwhile, there has been

Taiwan in Gridlock

21

but a modicum of reform, most of it inconsequential. Most people expected otherwise. In fact, very little at all has been accomplished during Chen's first eighteen months as president. The "new era of politics" has certainly not been what was hoped for or anticipated, especially by Chen supporters, in the spring of 2000. Whether or not the current situation, which no doubt can be correctly labeled political malaise, is Chen's fault is debatable. And debated it has been. The Chen administration, his supporters contend, has not been treated fairly, and frequently not civilly, by the KMT that is now the opposition party, more often than not with the help of Soong and the People First Party which Soong formed right after the election. But Chen has not been civil either. Political bickering has never been worse. There seems to be a standoff at every turn in the political process. It is not certain who deserved to be blamed most. In any event, there has been little compromise and Taiwan has suffered from it in a variety of ways. Public sentiment and trust in government have been very adversely affected. Opinion surveys have mirrored this. Six months into his presidency the polls indicated Chen would not be elected if the election were held again. From ratings of around 80 percent approval during his first several weeks in office, President Chen's popularity a year later was 50 percent or below. The opposition's poll numbers were even worse. The KMT, Soong's People First Party and the legislature all garnered lower poll numbers. This situation mirrored a cynical and dissatisfied population. Chen's first year and a half of governance (and the role of the KMT and Soong's new party, the PFP, in opposition) can, it is submitted, be evaluated by examining the president's handling of the two major issues the voters said were important during the presidential campaign: cross-strait relations and "black gold" (meaning criminal influence in politics and corruption). The economy and the nation's political leadership are two additional arenas where Chen's and his party's performance, as well as that of the opposition, can be and are being judged. In the pages below, the Chen presidency will be assessed in these four areas. The role of, and actions by, the opposition will also be given special attention. Conclusions will center on where the blame belongs for Taiwan's political mess and what political gridlock will lead to in terms of Taiwan's future.

22

Taiwan in Troubled Times: Essavs on the Chen Shui-bian

Presidency

Cross-Strait Relations During the early months of the 2000 presidential election campaign, numerous opinion polls indicated that cross-strait relations constituted one of two "big" issues that would decide which of the candidates would capture the presidency. The press said this. The candidates agreed. Their advisors wrote papers on the issue and spent considerable time on the stump talking about it.1 The polls said the majority of the electorate favored the status quo.2 Chen Shui-bian's tack, therefore, became one of playing down his past radical views on independence or separation from China. He didn't have to worry too much about his base of support in doing this. Most of his supporters thought he believed in his heart that Taiwan should be permanently and legally separate from China and that as president he would act accordingly, notwithstanding what he said. Or, they simply trusted him no matter what. In any case, among the three main candidates in the race Chen had the image of being the "independence candidate," but also a candidate with a new workable agenda.3 As the campaign proceeded, Chen's stance on relations with China became in some ways more accomodationist than the other candidates. Chen preached "full normalization of relations" (though he didn't define this) and promised, if elected, he would end Taiwan's (actually Lee Tenghui's) "go slow, be patient" policy regarding capital investment transfers from Taiwan to China. He also supported the "three links" (with the mainland): mail, trade and transportation ties. He even called for immediate negotiations with Beijing, not limited to issues raised in past talks.4 During the course of the campaign the candidates' views on the matter of cross-strait relations became so blurred and seemed so much alike to voters that the issue diminished as a factor in the election contest. James Soong, who was seen as the candidate of reunification, "moved to the center." Lien took a centrist view from the start and kept that position.5 Soon, however, and to Chen's advantage, the debate on cross-strait relations was moved into the spotlight again. A fortnight or so before the voting China released a "White Paper" on the Taiwan issue. (See Appendix I.) It announced a new and shocking (to Taiwan) cross-strait policy: Instead

Taiwan in Gridlock

23

of threatening military action against Taiwan if its leadership declared independence or allowed "foreign intervention" on the island (other actions such as Taipei allowing foreign bases in Taiwan or going nuclear, or serious domestic instability having also been mentioned), Beijing swore it would attack Taiwan if its leaders did not negotiate unification with some measure of haste. In other words, the terms were now very different: If Taiwan failed to act (engage in productive talks), rather than if it did something wrong, China would employ the force of arms.6 This naturally aroused the public. But before Beijing's new policy had been thoroughly digested by the electorate in Taiwan and just three days before the voting, Beijing raised the ante. Premier Zhu Rongji appeared on television, beamed to Taiwan for all there to see. He warned voters not to cast votes for the "independence candidate," meaning Chen. He bleated out in an ominous voice: "You will not get a second chance." (See Appendix II.) Zhu was perceived to be blatantly trying to influence the election— against Chen and for Lien or Soong.7 Chen impressed almost everyone with his calm. Then he struck back. He said China was "engaging in terrorism." He asserted with controlled emotions that Taiwan was a sovereign and independent country. Both Chen's cool demeanor at first and his angry response later helped win him points with the electorate. He seemed to grasp the electorate's feelings very well and this boosted his campaign.8 In any case, in the final analysis Taiwan's voters were not to be intimidated; they cast more votes for Chen, not fewer. Some pundits after the election said that Zhu had given Chen a boost of three percentage points, which provided him the win.9 Notwithstanding Beijing's efforts to prevent Chen from winning the election and its hostile statements about him, Chen needed to stick to his plan to improve cross-strait relations. The business community in Taiwan wanted more extensive commercial ties with the mainland. The populace wanted to avoid tension with Beijing and might blame Chen for any problems. So, after his victory Chen offered a fig leaf, or rather several of them. In his victory speech and during his inauguration address two months later, Chen made a host of conciliatory statements. (See Appendices III and IV.)

24

Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

He declared that he would not be a party president (meaning he would drop his ties with the DPP). He again vowed to establish the so-called "three links" with China as he said he would during the campaign. He repeated his pledge to get rid of Lee Teng-hui's "no haste, be patient" policy. He topped this off with a "four noes" policy: no declaration of independence, no change in the country's name, no constitutional amendment to legalize Lee Tenghui's "two state" theory (of July 1999 that had incensed Chinese leaders), and no referendum to alter Taiwan's status. He later added one more no to make it five: He would not nullify the National Unification Guidelines adopted in 1991.10 Chen's "mainland policy" thus amounted to one of encouraging broader commercial ties while preserving the political status quo. This balancing act, however, was not going to be an easy one to maintain. As it turned out Chen was walking a tightrope. Meanwhile, Chen sent signals of another kind about his stance toward China. After all, Chen's base constituency favored independence. He could not ignore them. Apparently with this in mind, Chen called on Peng Mingmin, the "father of Taiwan independence," to officiate at his inauguration. There was still other evidence: During his address, Chen used the word "Taiwan" thirty-five times and "Formosa" (an even stronger term in conveying the idea of independence) twice; he used Republic of China (a friendly term to Beijing) nine times." Analysts in Beijing certainly picked up on this. Then, former President Lee Teng-hui's mark on the Chen administration became evident. Many pundits said, and probably most people agreed, Lee had helped Chen win the election. Lee being Beijing's nemesis, this was not good news in China. Some Chinese leaders, in fact, had earlier opined that Chen would be a "relief after Lee and many were apparently at least somewhat optimistic about a Chen presidency.12 Now they had to reconsider this. In forming his new administration, Chen appointed former Minister of Defense General Tang Fei to the premiership. Lee Teng-hui had recommended Tang to Chen. Tien Hung-mao, also a friend of Lee's, became foreign minister. Chen Po-chih, long a vocal advocate of independence, was made chairman of the Council for Economic Planning. Tsai Ying-wen

Taiwan in Gridlock

25

was chosen the new chairwoman of the Mainland Affairs Council (which made cross-strait policy); she had penned Lee's "state to state relationship" policy. The list went on.13 Meanwhile, the Clinton administration sent Chen a clear signal that he should not make trouble by starting a conflict with Beijing. Clinton even said the United States supported a one-China policy and that he, Chen, should negotiate with Beijing. It was obvious Chen's options were limited. So Chen had to be shrewd; thus what Chen said publicly was conciliatory and friendly toward Beijing; his actions were not.14 This was not a good way to deal with China. At this time China was concerned, preoccupied some said, about getting membership in the World Trade Organization and it needed U.S. support for that. Beijing also wanted to host the Olympics in 2008. U.S. help was critical. Chinese leaders, more importantly, did not want to disturb commercial relations with the United States. Finally, Beijing was cautious about stirring up anti-China feelings in the U.S. during an election campaign. So Beijing adopted a wait and see position.15 As a result Chinese leaders took no overtly hostile actions (save some military maneuvers right after the voting) against Taiwan in ensuing months.16 But, due to the potent voice of China's military in decision making on Taiwan and the fact "one China" was a dictum almost set in stone, and it was U.S. policy, Beijing could not accept anything less from Chen. One China hence became the prism through which Chinese leaders viewed both Chen's statements and his actions regarding cross-strait relations. Hence, Chen's verbal concessions meant little. China, moreover, did not trust Chen. He had no rapport with leaders in Beijing. Many said he was just like Lee Tenghui: devious and in his heart a proponent of Taiwan's separation from China (i.e., a "splittist").17 Hence, as far as Chinese leaders were concerned, cross-strait relations were put in a deep freeze. President Chen could not accept the one-China formula (other than as a point of discussion, which he did). So, for Chen, cross-strait relations were essentially put on hold. China studiously refused to see or deal with Chen or anyone in his party. This became a firm policy. In addition, Beijing vetted its ill feelings against Chen by harassing (strictly enforcing safety

26

Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

and other regulations and offering less favorable treatment) Taiwan companies operating in China whose owners had supported Chen during the campaign or were openly pro-independence.18 China's leaders subsequently invited opposition politicians (from the KMT, James Soong's newly formed People First Party, and independents) to visit China and even talk about issues. Many went. This gave the appearance that foreign relations, at least cross-strait diplomacy, were being conducted by the legislative and not the executive branch of government. This embarrassed Chen and allowed him little opportunity to make any headway at all in cross-strait affairs that might add some glamour to his presidency and help him fulfill a campaign promise.19 In response, Chen decided to launch a diplomatic travel offensive. He sought to visit as many foreign countries as possible. The effort resulted in some measurable successes that burnished Chen's image as a leader both at home and abroad. In fact, "Chen's diplomacy" seemed to offset setbacks in domestic politics. So the president continued it. In mid-2001, Chen made a major journey that included transit stops in the United States. There he made a hit.20 Almost coinciding with the visit, the Bush administration announced the largest package of arms sales to Taiwan since 1992. Chen seemed to be doing well in foreign affairs. But, tit for tat, Beijing took measures to undermine Chen's diplomatic initiatives. China pressured other nations to help it reduce Taipei's diplomatic presence abroad. Beijing made efforts to diminish Taiwan's "international space" by pressing other countries to have less to do with Taiwan (and especially with Chen), and by stepping up efforts to win the allegiance of overseas Chinese.21 The Chen administration was put in a dilemma since many Overseas Chinese and numerous regimes that supported Taiwan diplomatically were loyal to the KMT, and Chen's pro-independence image prompted them to turn to Beijing. President Chen also had difficulties justifying Taiwan's foreign assistance program (in the context of the economic downturn and the fact his party had been highly critical of it in the past as wasteful), but he needed it to preserve formal diplomatic ties with a number of countries.22 Beijing even grabbed one of the less than thirty countries with which Taipei had formal diplomatic relations (Macedonia) and had its eyes on

Taiwan in Gridlock

27

some others that China could probably persuade to abandon Taipei if it made a concerted effort. President Chen could not easily counter Beijing's offensive. Some of his supporters recommended that Chen alter his oneChina policy and proclaim "Taiwan is Taiwan." But Chen could not do that; he had promised better relations with China, not worse, and had to contend with U.S. China policy (meaning one China and Taiwan not provoking trouble). Meanwhile, Taiwan's business community, including many of Chen's Taiwanese supporters (who dominate commerce on the island), increased their investments and their commercial ties with China. As political paralysis set in six months into his presidency, adversely affecting the economy (for which Chen was widely blamed since it happened well beyond the honeymoon period of his administration) this trend accelerated. It seemed unstoppable. According to one estimate, investment in China grew by over 30 percent during the first part of 2001,23 Meanwhile, unofficial estimates of capital transfers far exceeded official ones, indicating that the government's policy banning investment projects of over US$50 million was being grossly flaunted.24 Then, in mid-2001, one of Taiwan's best known business tycoons (owner of a premier company, Formosa Plastics) and a Chen supporter, Wang Yungching, spoke publicly in favor of China's "one country, two systems" policy (which Chen and the DPP opposed), causing a serious dilemma for the president.25 On the heels of Wang's shocking pronouncement, a group of prominent businessmen called on the Chen administration to lift the ban on investors joining certain of China's governmental organs such as the National People's Congress (China's parliament) and advising such bodies as the Chinese People's Political Consultative Conference. It was reported that at least one had been invited to join this agency.26 Such actions would, many thought, amount to formally agreeing with Beijing's one-China policy. In the context of Taiwan's industries hollowing out and leaving in droves to the mainland, imminent recession, and growing unemployment, Chen was under intense pressure from members of his own party and other quarters to put the brakes on escalating economic ties with China. Nobel Prize winner, Lee Yuan-tseh, who had come out in support of Chen during the last days of the campaign and who, some say, gave Chen the victory, blamed

28

Taiwan in Troubled Times: Essavs on the Chen Shui-bian Presidency

the government for so many companies fleeing to China. Chen's vice president wanted to halt this trend and said so openly. This created more than one serious dilemma. If Chen tried to halt or slow down the process, he would have to renege on a campaign promise. He would also alienate the business community in Taiwan. Making matters worse, Chen was seen as the main cause of recent capital flight, especially that going to China, since it was going out of fear of political instability. Anyway, if he tried to trammel commercial ties with China it was unlikely he would succeed since the process appeared almost, and perhaps was, out of control. On the other hand, not taking steps to deal with Taiwan's industries closing and rising unemployment would also have consequences. Chen was on the horns of a dilemma. The latter half of 2001 saw the stalemate in cross-strait relations get worse. Chen's collaboration with Lee Teng-hui, which he perceived was vital to help the DPP win the year-end legislative election (together with Lee's new party, the Taiwan Solidarity Union), made Beijing harder to deal with.27 Meanwhile, China's continuing rapid economic growth, getting over the final hurdles to join the World Trade Organization, and persisting in its military buildup near the Taiwan Strait (most notably installing more missiles), all gave it confidence that time was on China's side and that Beijing did not need to negotiate with Chen or grant him any favors. Demonstrating its continuing hostility toward Chen (as long as he would not agree to the one-China principle, which he could not do), in the fall of 2001 China put increased pressure on foreign firms dealing with Taiwan. In a widely publicized case Beijing shut Credit Suisse First Boston, a Zurichbased underwriting company, out of the China market for inviting Taiwan's minister of finance to a conference. Meanwhile Beijing rudely ignored Chen's efforts to tear down barriers to cross-strait trade.28 In fact, Chinese leaders signaled Taipei they were not interested as long as Chen did not accept one China. Beij ing's moves embarrassed the Chen administration since the president had just recently organized a high level council of experts to find solutions to Taiwan's economic problems and President Chen had agreed to accept its recommendations (including getting rid of Lee Teng-hui's "go slow" policy relating to cross-strait economic ties). (See Appendices IX and X.)

Taiwan in Gridlock

29

China also rebuffed Chen's efforts to personally attend the Asia Pacific Economic Cooperation (APEC) meeting in Shanghai. Beijing subsequently rejected his choice (former vice president Li Yuan-zu) to go. Worse still, at the meeting Chinese officials, including former foreign minister Tang Jiaxuan, interrupted Taiwan's representative when he spoke and refused him the right to speak. China demeaned Taiwan at the meeting to the extent that President Chen terminated the mission and publicly assailed China for its behavior.29 In light of President Bush (who was at the meeting) supporting one China and cementing more cordial relations with Beijing in order to deal with the terrorism problem, and lauding China's help, Taiwan seemed helpless.30 In the context of an election approaching, the opposition made issue of Chen's inability to deal with China and his "clumsy diplomacy," pointing out that he had not handled the matter well and that the previous administration had. Even Chen's vice president criticized him for his ineptness.31 Confirming the opposition's criticism and angering members of his own party, while making him look very inconsistent, President Chen just days later approved measures to further open commercial relations with China and to play down the independence issue.32 Adding to President Chen's woes, China was admitted to the World Trade Organization in November. Soon after, Taiwan joined (according to the agreement that Beijing would enter first). This had several effects. It enhanced Beijing's international influence. China soon attracted even more foreign investment. Joining fueled optimism about China's economic future. For Taiwan it put relations with China in a formal setting, giving Taipei less control. The Chen administration sent confusing signs. The Mainland Affairs Council promptly announced an end to President Lee's "go slow, be patient" policy and President Chen called for closer cross-strait ties.33 At the same time, however, Chen declared that he had never accepted any earlier agreement about defining one China, thereby rekindling the feud with Beijing over that issue.34 A year and six months into the Chen presidency the situation looked something like this: Chen had made some headway in overcoming his palpable lack of foreign policy experience. His poll numbers forthe conduct of foreign policy were all right. If he were to enter another campaign for the

30

Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

presidency immediately, his statesmanship would probably be a plus. On the other hand, the Chen administration had made numerous blunders in dealing with Beijing and cross-strait relations were not good. Chen had certainly not fulfilled one of his main campaign pledges, though the fault, many said, was mainly Beijing's. And future relations with China, on Chen's terms at least, did not look promising.

Black Gold Chen Shui-bian pledged during the 2000 presidential campaign to rid the country of "black gold," meaning criminal involvement in government and political corruption, and the links between the two. With cross-strait relations having faded as an issue until the last days of the campaign, and owing to the fact that the three main candidates took almost the same stance, black gold became the campaign's most salient issue.35 It was also a problem about which there had been profound and growing public concern, even outrage. On this issue, Chen clearly had the advantage. Money politics had long tainted the KMT because of its having long been labeled the richest party in the world and its having been notorious for vote buying while running a candidate, Lien, with deep pockets of personal wealth.36 Then the KMT tarred Soong with a corruption scandal and hurt itself in the process. In May, the newly installed Chen administration acted to fulfill its campaign promises and within a few months it established a good reputation for dealing with the problem. Within a year of taking office, the Ministry of Justice had investigated 3,917 cases of corruption, and 508 of these (involving 164 public officials) made it to court.37 During just part of this period, July 2000 to March 2001,1,200 people were indicted for graft, involving as much as US$194 million. Seven legislators, four mayors and magistrates, fifty-seven councilors and twenty-nine township chiefs had been prosecuted. Because of this, Chen's minister of justice got the highest public approval ratings of any cabinet head. Reflecting the new administration's success in eradicating black gold, the U.S. Department of State in its annual human rights report, declared that in Taiwan "political and personal pressures on the judiciary decreased significantly."38

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But the news was not all positive. Also, the new administration ran into a multitude of problems, and its political gains from attacking black gold diminished, bringing into doubt whether the anti-black gold campaign had momentum enough to have a lasting impact. The KMT bogeyman, in terms of it having created and profited from black gold, to a considerable extent faded as soon as the campaign was over. Many perceived that the party's money didn't matter anymore. It had not been a critical factor during the campaign; after all, the KMT's Lien fell in defeat. Also, not much was heard about the KMT's riches in following months. Liu Tai-ying, the notorious (to the DPP at least) manager of the KMT's funds, was out of a job when, a few days after the election, Lee Teng-hui was forced to step down from the KMT chairmanship. Liu, who was Lee's man, was not in the public eye for some time. And his replacement did not acquire much name recognition.39 Also, with the KMT gone, people began to ponder whether KMT rule and black gold were really synonymous. The electorate had not given this much thought during the heat of the campaign. It was simply presumed to be so. The answer now was that it was not, or not exactly at least. The KMT had been honest and clean under Chiang Ching-kuo, or at least it was moving fast in that direction. Black gold arrived with the Lee Teng-hui era.40 Then, since it was often said after the election that Lee had secretly, or not so secretly, helped Chen Shui-bian and wanted him to win, Chen became tainted to some extent by association.41 Finally, many of the top officials, as noted above, in the Chen government were recommended by Lee, and Chen respected Lee's advice and met with Lee in ensuing months. The Chen-Lee connection came to the fore again in mid-2001 when the former president volunteered to help the Democratic Progressive Party in the year-end election and followed up by creating a new political party to do that. At this time when Liu Tai-ying reappeared he was trying to help Lee and Chen and was reported to be trying to divert KMT money to both.42 It is also relevant to note that black gold became a serious problem coinciding with the increase of native Taiwanese participation in national politics. The Mainland Chinese (those who came from China after World War II with Chiang Kai-shek and who ruled Taiwan for four decades) espoused unrealistic, if not absurd, tenets of ideology, the central one being

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"liberating" China; but their political philosophy kept them from getting too deeply mired in corruption, or so it seemed. Anyway, it is true that corruption was more the mark of Taiwanese politicians who had no ideology. Local politics had also been noticeably more corrupt than national politics due to the nature of Taiwan's electoral system, factional politics, institutionalized vote buying, and a host of other reasons.43 The DPP was commonly known as a party that rose to power "from the bottom up" or via local politics. It was in control of most of local government before it won the national election. In fact, it gained majority control of local politics in 1997.44 In any case, having won the election in large part on the black gold issue, and neither the problem nor public concern about it having diminished, Chen felt an obligation to do something, and, as noted above, did. But his successes did not penetrate very deep. For a variety of reasons the new president was doomed from the start in terms of dutifully fulfilling his campaign promises. Chen first ran headlong into Taiwan's sticky judiciary. Like the judicial system in many other countries, Taiwan's legal system could delay, engage in nitpicking, and employ obstructionism to prevent almost any case from being heard or, for that matter most anything from getting done. And it did. Trying to reform it was not, it seemed, a task for a mere mortal. Further complicating matters forthe Chen government, many of the sitting judges were appointed by the KMT and were hardly sympathetic to the new president. In coming months, as politics became more polarized and the KMT became more obstructionist, the judiciary followed suit to a large extent.45 Another problem was that Taiwan lacked the legal mechanisms to root out corruption. It did not have a law allowing sting operations. Stings were needed if the Chen administration were to be effective in getting criminal elements and their operations out of government. Several other legal tools were either missing, new, or not especially strong: giving immunity for testimony against "bigger fish," forfeiture laws (to seize the criminals' or politicans' ill-gotten money), and disqualification laws to prevent convicted criminals from running for political office. All of these deficiencies undermined Chen's efforts to eradicate black gold.46 Add to Chen's burden the fact that the media did not have a spirit or mentality of being hard on crime. In fact, newspapers and television fre-

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quently referred to known criminals holding political office as "spiritual advisors."47 The press considered them interesting characters and often glorified their activities. A related problem was that some newspapers and television stations were pro-KMT or at least not sympathetic to Chen and did not give him much publicity for his positive efforts. Moreover, they frequently portrayed Chen as looking for crime and corruption in politics if it involved the opposition—never if it was in his own party.48 There were other problems that made dealing with black gold difficult, and gaining politically from eradication efforts less fruitful than might have otherwise been the case. Some were of President Chen's own making. The Chen administration early on experienced turf fights in the Ministry of Justice involving the Ministry's Bureau of Investigation. They lasted for some time after Chen took office and impeded efforts to get black gold investigations moving.49 To get around this problem President Chen established a task force-like committee in the office of the presidency to deal specifically with the problem. Critics, however, pounced on his action, saying that it was unconstitutional. This added to the perception advanced by the opposition, especially after the Fourth Nuclear Plant controversy (discussed below), that Chen himself did not respect the law. Further undermining President Chen's efforts to eradicate black gold was the fact that the judicial system (especially the enforcement part of it) was staffed largely by Mainland Chinese and they had close working ties with the intelligence services and the top ranks of the military, both also run largely by Mainland Chinese. They felt Chen's efforts were politically motivated. And in the context of feeling the sting of ethnic prejudice due to the DPP becoming the ruling party and perceiving Chen an advocate of Taiwan's independence, they did not cooperate. Worse still, a number of military officers, some with intelligence backgrounds, resigned in protest against Chen. Some even defected to China. The military and the intelligence services loyalty was thus questioned.50 Chen efforts to do anything about this underscored the complaints and in many ways made the situation worse. Chen at minimum faced a very serious distraction. Chen also tainted his own administration. Early in his presidency he appointed Peter Huang, a popular Taiwanese political activist, to a high level human rights advisory council. Huang was more than an activist though;

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he was notorious in the United States. He had tried to assassinate former president Chiang Ching-kuo (when he was defense minister) during a visit to New York in 1970 and was subsequently convicted of attempted murder by the state of New York.51 Meanwhile, another individual of questionable reputation, Wong Hsin-nan, who had some years ago sent a letter-bomb to Vice President Hsieh Tung-min, blowing off his hand, was serving as a DPP member of the Legislative Yuan.52 Adding to his image problems Chen was hit by personal scandals. In the spring, the president was accused of having a sexual liaison with his young and attractive interpreter, Bihkim Hsiao. Although the allegations were never proven, the story was widely reported in the media. One of the reasons was that the source of information about the liaison was allegedly Chen's own vice president. Vice President Annette Lu denied this and sued the magazine that reported her complicity in the case. But this only kept the scandal in the news for weeks and months and drew attention to the fact that Chen did not get along with his vice president.53 Shortly after this the press began reporting on Chen's personal peccadilloes, and several had more shelf life than would have otherwise been expected. Some said this reflected the fact that Chen's image as a "corruption buster" had already gone down the tubes. In mid-2001, Chen's son was reported to have acquired a posh position in the judicial section of the military by irregular means. His test score was not high enough to warrant him a slot. Then suddenly more positions were created. Soon after this Chen's daughter's boyfriend was observed driving a government vehicle (though he held no government job).54 Meanwhile, the Chen administration's most high profile corruption case did not win it many kudos. In 1994, Navy Captain Yin Ching-feng was murdered, prompting speculation that he was killed to cover up massive bribery connected to kickbacks for the purchase of several French warships. The case dragged on and was given considerable publicity during the 2000 election campaign, with the mistress of the former French Minister of Defense making a trip to Taiwan to "spill her guts to the media." The DPP used the case to paint the KMT as a party of corruption.55 The investigation was reopened in June at the Chen administration's behest and in October three military officers were indicted. Meanwhile, fingers pointed at some

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top brass and even former Premier Hau Pei-tsun who was Minister of Defense at the time the ship purchases were made. Hau and others were exonerated, but not before the case created deep resentment in the military about the Chen administration's tactics. The result was widespread cynicism in the ranks, as Chen seemed to have picked out the military as a special target for his own personal gain.56 In ensuing months there was continuous reporting on the case and the Chen administration's handling of it. But no formal conclusions were reached, giving the impression to some degree that nothing would ever be done.57 Chen's administration was sullied in yet a different way at this time by what seemed a serious case of political corruption, at least as seen from abroad. As a product of political wrangling and stalemate on the budget and other bills, the stock market fell dramatically during the early months of the Chen presidency. Chen did not act immediately. But then he ordered the National Stabilization Board to take action by investing large amounts of public funds in various stocks. It picked offerings or companies that it thought would help the market recover. However, information was leaked and some investors made huge windfall profits.58 There was nothing to make anyone think that Chen himself was involved; yet the scandal made the public wonder about the people he appointed to the Stabilization Board and profiteers' connections to the Democratic Progressive Party. Since so many people in Taiwan are invested in the stock market and most of them had lost fairly large amounts of money, the scandal had a measurable negative impact on Chen's popularity.59 Against this backdrop, when the government approved a long-discussed US$14 billion high-speed rail project that will connect Taipei and Kaohsiung and which will be the most expensive such project anywhere in the world, controversy bloomed. The bid went to a Japanese firm after a promise was made to give first bidding rights to a European group. Many raised eyebrows. The government then underwriting US$9 billion in loans for a "private" project connected to it seemed more suspicious. Meanwhile questions arose about Taiwan's banking system when it was reported to have a record number of non-performing loans in the third quarter. These were seen as new events that happened while Chen was president.60 A few months later, and at a time when preparations were being made for the

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year-end election, critics said the DPP was using state-run banks to help favored loss-making companies, as the DPP had accused the KMT of doing in the past.61 Underscoring the perception of the Chen administration's failure to curb corruption, in early 2001 the U.S. Trade Representative's office reported that, for the first time ever, corruption had become a barrier to trade. Meanwhile Taiwan fell behind Singapore, Japan and Hong Kong in an international survey on the scope of corruption in Asia.62 There was more: A year after the election that gave Chen Shui-bian the presidency, vote-buying, the most noticed form of corruption and the main item that Chen focused on in his anti-corruption campaign, was as rampant as ever. A large portion of the public expressed disillusionment. Vote buying by DPP members in the party's primaries drew attention to the problem, suggesting the ruling party was "like the old party" and nothing had changed.63 Taiwan's economic freefall in following months had the effect of diverting attention from black gold to a more serious problem. By year's end, people according to opinion polls, were more concerned about the economy than political corruption.64 At this juncture, a poll conducted in Taiwan recorded that 33 percent of respondents said the DPP had become more corrupt and 30 percent said they regretted voting for Chen.65 Late in 2001, the black gold campaign took on a new life. But it appeared patently partisan. Chen and the DPP focused on vote buying and the sources of the KMT's assets. Legislation was proposed dealing with both. The KMT responded by drawing attention to the DPP's vote buying during its primaries and questioning where money used by the National Stabilization Fund had gone.

The Economy During the campaign that brought Chen Shui-bian to the presidency, the economy was not debated extensively. Economic growth had been an issue in most previous election campaigns and it was almost always a topic that favored the Nationalist Party because of its stellar performance in creating the Taiwan "economic miracle."66 In recent years, however, voters had

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begun to take economic development and stability for granted. The environment, social welfare and other "counter-economic expansion" issues had in the meanwhile nearly matched economic growth in importance to the electorate. Also, in the months leading up to the March election, the Asia meltdown, which had adversely affected a number of other countries in the region, did not impact Taiwan, thereby engendering a feeling of complacency among voters.67 After the election, pundits said that the Chen victory might have a minor negative impact on the economy in the short-term as the new president needed to take measures to rid the country of black gold and they would be disruptive. However, in the long-term, they said, the effect of cleaning up the political system would be positive. Even a short-term slowdown did not seem to be a worry.68 Six months after the election and four months into Chen's presidency, Chen administration officials were praising themselves for managing the economy well. As a matter of fact, the government's economic data suggested considerable cause for both applause and optimism. Economic growth, as measured by the output of goods and services was 6.57 percent, up from 5.4 percent the previous year. Unemployment remained low: below 3 percent. The consumer price index rose only 0.33 percent (in August compared to a year earlier) and was well below the 1.6 percent that was forecast for the year. Even better than all of this, exports were up 24.3 percent from a year earlier. In an export dependent economy this was good news. Foreign exchange reserves were at a whopping US$113 billion. The only bad news was a slight fall in the value of the nation's currency (actually good news for exporters) and a rise in overdue bank loans. All in all the economy looked very healthy.69 But this was not to last for long. The next month saw what seemed the onset of an economic crisis. The Chen administration got into a vicious struggle with the legislature over the building of Taiwan's fourth nuclear power plant (a point discussed further below). Chen's Prime Minister resigned and the cabinet had to be reconstructed. The stockmarket index dropped by 40 percent in response. Other economic indicators began to or had already turned south. In his National Day speech on October 10, President Chen conveyed a message that some interpreted as "gloom and doom."

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He described his government as "like a patient after surgery." (See Appendix V.) Clearly economic problems seemed to stem from political problems, if not poor governance; and they were serious.70 Chen's spokespersons, however, quickly attributed the bad news to Taiwan's transition to a knowledge-based economy. They also charged that the KMT was pulling its funds out of the stockmarket to make it fall, and, together with the People First Party, were creating havoc by messing with the budget process and causing political (and economic) impasses for Chen wherever and whenever possible.71 These charges were true at least to some degree. But, President Chen's decision to kill the nuclear power plant also had very obvious bad consequences. It damaged Taiwan's credibility with foreign investors. It evoked worry about electricity prices and even supply. It created apprehension in the business community over the government's ability to handle the economy and its commitment to economic growth and stability. The government's pro-welfare budget being discussed at this time sent similar unsettling signals.72 Thus it was difficult to pinpoint blame. In any event, by year's end the stockmarket had lost 50 percent of its value. Since stocks were commonly used to secure credit banks began to experience serious problems. Defaults on loans skyrocketed. Private investment dropped. More capital flowed to China and elsewhere (by more than threefold compared to a year earlier) due to a loss of confidence in the future of the economy. The NT dollar fell in value and unemployment passed the benchmark 3 percent figure.73 The early months of 2001 witnessed a continuing deterioration of the economy. The situation, indeed, began to look grave. Just after Chen's first anniversary in office, the first quarter's growth figure was published: 1.06 percent. Many in Taiwan had never heard of this kind of "miserable" growth rate. Unemployment numbers were equally shocking. Joblessness topped 400,000 or 4 percent of the work force. Both figures were forty-year highs. Marking the exact date of the anniversary of the Chen administration's first year in office, one hundred workers from the Taiwan Motor Transport Company staged a protest demonstration in front of the Presidential Palace. The workers' union at the time said that 3,000 workers were facing job losses. Elsewhere, labor protests were increasing—some reportedly attracting ten

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thousand demonstrators.74 One critic noted that Taiwan's industries were closing down and going to China "in droves" and that Chen's ending Lee Teng-hui's "be patient, go slow" policy had made things much worse. "Mainland fever," which had infected Taiwan 50 to 80 times more than the U.S. and Japan, it was said, was "melting" Taiwan's domestic economy.75 The more economic data were analyzed, the worse the picture got. Intervening in the stock market by the National Stabilization Fund cost NTS200 billion (over US$6 billion). Labor insurance and pension funds had used an additional NT$300 billion. As a result, NT$350 billion was added to the national debt. Bad bank loans were said to total NT$I trillion. The government's policy of pressuring banks to roll over bad loans to companies in trouble in order to preclude a spate of bankruptcies sucked away funds that should have been used elsewhere (to make new loans to help start-up companies and assist good companies expand and modernize). Both domestic and foreign capital investment figures showed a serious decline—16.9 percent in the first four months of 2001. There was a rush of funds to China. Even excluding China, outward investment increased by 20 percent. All of this indicated a crisis in confidence in the government.76 The bad news caused the stock market to plummet further and evoked speculation that the NT dollar would drop to forty to the US dollar. All of this added up to a bad report card for the Chen administration and for the president himself. According to one poll, 60 percent of the population lacked confidence in the economy. Lien Chan declared that the economy would have done better had Chen slept twenty-four hours a day.77 The president's team blamed the bad economic situation on a stagnant U.S. economy and a drop in growth in the global economy.78 The problem with this explanation was that Taiwan's economic decline coincided with political paralysis caused in considerable part by the new administration's other problems, and President Chen seemed to lack the experience and ability to cope with the crisis. Also, China, now as big an export market for Taiwan as the United States and to many observers Taiwan's competitor (if not its enemy), was not experiencing an economic slowdown.79 In fact, just the opposite was the case. Finally, other countries in East Asia that were also especially dependent upon the global economy were doing better than Taiwan.80

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The fact that China was booming provoked special concern: that Taiwan's industries would move part or all of their operations to China. There were already 50,000 Taiwan companies manufacturing in China and more were going. Almost half, 49 percent, of Taiwan's information technology products were now being made in China, accounting for 60 percent of China's exports in that realm.81 Only one percent of the profits from these ventures were returning to Taiwan. This led Vice President Annette Lu to criticize the business community for creating a "fantasy" about China and Finance Minister Yen Ching-changto express concern about the "exodus of Taiwan's domestic capital."82 Clearly the Chen administration did not speak with one voice about the causes of the problems or the cures. Meanwhile, the government ignored its earlier promises to undertake tax reform and increase social spending. In September 2000, just four months into office, President Chen declared that economic development would be given a priority over social welfare.83 Speculation ensued that welfare and other social benefits would have to be cut significantly. Some were sliced; others were discontinued. Campaign promises were thus broken. During the last half of 2001, the economy continued its downward path, some calling it a freefall. The second quarter saw a 2.35 percent negative growth in the gross domestic product, the first such decline in 26 years (since after the first oil crisis). The Directorate General of Budget, Accounting and Statistics reported that the year would end with negative growth. This prompted the opposition parties to call for the resignation of the premier.84 Soon after this figure was published, Taiwan's exports were reported to have dropped 25.8 percent in August (after falling every month for six months) and imports were down 36.5 percent on the year (a new record). Both signaled an economy in recession.85 At this time business publications began reflecting pessimism about the economy. In late summer it was reported that nearly every part of the manufacturing sector in the last 18 months had registered a marked decline; and government help had not been very helpful due to the unwillingness of banks to lend.86 Union leaders complained about unemployment at the current level of nearly 5 percent and compared that to rates between 1.4 and 3 percent for the previous 20 years. Some asserted that many unemployed

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workers were not counted and charged that the government had understated the jobless rate by a considerable margin.87 Businessmen and the media began making comparisons with the economic situation in China and speculating about cross-strait relations in that context. They noted that China's economy had grown an average rate of 9.7 percent over the last two decades and Taiwan had experienced a comparable rate; but with China now growing at over 7 percent and Taiwan experiencing economic contraction, relations between the two would be affected to Beijing's advantage.88 Supporting this view were other economic figures: Taiwan's trade surplus with China was more than double its overall surplus over the past ten years, and Taiwan's foreign exchange position, it was reported, would be half what it is without a favorable balance of trade with the mainland. And China trade accounted for 0.5 percent of Taiwan's annual economic growth and 600,000 jobs.89 In response to Taiwan's economic doldrums, President Chen formed the Economic Development Advisory Council to make recommendations on fixing the economy and made promises to follow them. He tried to bring in business leaders, scholars and leaders of the opposition party. Top opposition leaders, however, perceived that Chen sought to pass the blame or use them and they did not accept. It thus pretty much proceeded without much opposition input. But there was some and when the Council finally made its recommendations it included some that were very unpalatable to Chen and contradicted his cross-strait policy and riled many in his party. (See Appendices IX and X.) Toward the end of the year, to what degree the suggested reforms would be implemented or would have a positive impact was uncertain. It was difficult to gauge this in the context of the economy becoming an election issue. Meanwhile, the bombing of the World Trade Center in New York severely damaged the U.S. economy and sent consumer confidence down. This impacted Taiwan. So did a devastating typhoon in Taiwan. The two events constituted a double whammy for the economy. Typhoon Mari, which hit Taiwan on September 17, killed 88 people and injured 208, while 13 were missing. Rain, which accompanied the typhoon, broke the record for a single day's precipitation in Taipei. Water filled the basements of 4,000 buildings, most subway stations and the central train station, affecting almost a million

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commuters. The government allocated US$63.6 million in relief and reconstruction, but it was unsure if this was even close to being enough.90 The two events sent the stock market reeling, causing a decline of 19.1 percent as of early October, or a loss of money equal to the central government's budget while putting the market below four thousand which many saw as a low benchmark. Stock market figures also revealed that foreign investors were pulling funds out of Taiwan.91 Fortunately the government had a huge foreign exchange reserve to use to prime the economy. But what if pump priming had little effect? Japan had been trying to stimulate its economy for more than a decade with patently little or no success. Some wondered outloud if Taiwan's government might engage in economic stimulus measures for a decade as Japan did. The government, in fact, was already doing this and the results were in doubt. The Chen administration had launched an NT$ 810 billion stimulus package early in 2001 but it had produced few positive results.92

Taiwan Politics In May 2000, Chen Shui-bian became president of a nation whose political system was a mixed (perhaps mixed up would be more accurate) presidential-parliamentary-cabinet one. The president of Taiwan (the Republic of China) is elected separately from the legislature and has special powers in the realms of defense and foreign affairs and is the symbol of state. He appoints a Prime Minister without approval of the legislature, He or she leads the government but can be removed by a legislative vote of no confidence, which then triggers an election—as in a parliamentary system. The cabinet has special powers and the legislature is dominant in the realm of domestic politics.93 The structure of Taiwan's political system was first set forth in the Republic of China's 1947 Constitution which sought to restrain executive authority.94 Chiang Kai-shek and his son Chiang Ching-kuo got around these restraints and were strong presidents because of emergency amendments to the Constitution (called the "Special Provisions") and other extra-constitutional authority, but, more important, because they both controlled the ruling

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party. Lee Teng-hui also had the latter advantage and was, like his predecessors, a strong president.95 In the 1990s, the Constitution was amended and the system became a more presidential one, or what many called a "semi-presidential system." The president was given considerable authority in the areas of nominations and in foreign and defense policy.96 However, the legislature also increased its powers. The system resembled the French Fifth Republic more than a presidential system such as in the United States. Yet, unlike the French system, which has mechanisms for breaking deadlocks during a time of "cohabitation," (when the president's party does not control the legislature), Taiwan did not have this. In fact, in the original Constitution neither the president nor the premier had the power to dissolve the legislature and the legislature could not issue a vote of no confidence.97 Various proposals were made to fix the system and the powers of no confidence and dissolution were added to the Constitution. But this seemed to indicate the system was moving from a presidential to a parliamentary system, though due to the president having control of the ruling party this was not really the case. Meanwhile the debate on fixing the system got diverted to such matters as the future of the National Assembly and the provincial government. The process was clearly incomplete. It was the general opinion that the Democratic Progressive Party would not soon control either branch of government and that systemic defects could be corrected at a later date. Taiwan's political party structure was also a problem. It was originally a one-party system. It then evolved into a one-party dominant one with independents also part of the political party make-up. However, by the late 1980s it seemed to be moving in the direction of a two-party system. The Democratic Progressive Party had by that time become the sole meaningful opposition party and began to compete seriously with the Nationalist Party. Yet Taiwan formally had a multi-party system and in some ways the electoral system and the election laws lent themselves to that.98 In any event, that is what emerged as Chen Shui-bian assumed the presidency. Taiwan's party system thus did not fit its political system, not a presidential one at least.99 Furthermore, the de facto three-party system that grew out

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of the presidential election (as a result of James Soong forming a new party) seemed inherently unstable and accentuated the disorders of divided government.100 Chen Shui-bian thus became the nation's chief executive in what was by almost any reckoning an unenviable situation. Some called it a political environment made for conflict and gridlock. The political system needed to be made either a presidential or parliamentary one. But that was not going to happen, not soon at least. Chen was thus a weak president and had to function as chief executive within the confines of an ill-conceived system and badly divided government.101 His party controlled only one-third of the seats in the legislature; the KMT had a majority. Making things even worse, his DPP was not accustomed to ruling and the Nationalist Party was not schooled in opposition politics. Finally, there was intense hostility between Chen and the opposition parties, which got progressively worse as time passed.102 Soon after he entered office Chen realized that he could not govern as a "DPP president" and thus proclaimed he was not going to be a "party president." He ended formal ties with the Democratic Progressive Party. He spoke of a "people's government." Yet he remained in many ways dependent on his party while he pursued cohabitation with the opposition. Chen appointed a member of the KMT, General Tang Fei, as his Premier. He chose a number of other cabinet members from the Nationalist Party and other political parties.103 However, in doing this he failed to work out an arrangement in advance whereby the parties, in particular the KMT, agreed to this. He apparently thought the opposition parties would cooperate with him in exchange for a certain amount of say in the political decision making process via these "representatives" or through some specific channels or agreements.104 In any case, this scheme did not work. Chen, some have suggested, might have strengthened his hand vis-avis the legislature by assuming a strong and up-front role in foreign and defense policymaking while leaving domestic matters to his Premier. He would not do this though. First, this would have been tantamount to abandoning his campaign promises (the most important of which dealt with domestic issues) while betraying his supporters and weakening his presidency. Second, "foreign policy" includes cross-strait relations and as noted

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above Beijing would have nothing to do with President Chen. Therefore, opportunities were limited. Chen faced still another problem: He could not find Democratic Progressive Party personnel in sufficient numbers with expertise to handle foreign affairs. In addition, KMT members in the foreign ministry and related policy making organs of government had civil service protection. Finally, Chen was further stymied by not having any experience in foreign affairs himself and not speaking English.105 In domestic politics Chen was burdened by his party's agenda even though he claimed he was not a party president. He had made campaign promises that came from his party's platform, and his credibility as president was based on implementing at least some of them. The most important one was ridding the country of black gold. But, as noted earlier, this was aimed mainly at the KMT, with whom he was supposedly cohabiting. Thus, the more he pushed his anti-corruption drive the worse relations got with the KMT and the more divided government became a problem.106 Chen soon found himself in a bind. In addition to the difficulties just mentioned, the KMT was bitter about the election defeat and did not happi ly accept the role of opposition, much less loyal opposition. In the legislature KMT members who were in a majority, assumed an obstructionist stance and tried with almost single-minded determination to undermine and weaken Chen's presidency. On various bills, especially those that were designed to improve the situation of workers, the poor and the low or middle class—and to fulfill DPP campaign promises (and Chen's)—Nationalist Party legislators voted for funds in excess, sometimes far in excess, of what the executive branch asked in an attempt to damage Chen's and the DPP's relationship with its constituency base and to create budget problems.107 The breakdown in cooperation between Chen and the opposition in the legislature (if there indeed really ever was any) collapsed in October when the president cancelled the US$5.5 billion fourth nuclear power plant by executive order. The nuclear power plant issue had a long and interesting history. Both Chen and the DPP had long taken an unequivocal stance against nuclear power. It was an important item in the party's platform and it was a topic where Chen had an identity. It also fit the DPP's protest-style of politics as it had organized public demonstrations against nuclear power over the years. Chen vowed during the campaign to stop the plant from being built and

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eventually get rid of all nuclear power.108 Thus his decision was in accord with his party's past and it was a campaign promise fulfilled. But there were very serious ramifications to the action he took. First of all, it was seen as a terribly clumsy move. In fact, it gave the appearance that Chen was declaring war on the KMT. President Chen had met with the KMT's chairman, Lien Chan, just hours before the decision was announced and had not told Lien what he was going to do. Lien was furious. Second, there were approximately US$2 billion in contracts that had to be paid, most of them to foreign companies, if building the plant (which was one-third finished) were to be cancelled. Third, not building the plant would create an electricity shortfall and shock the economy, or at least this is the way the KMT portrayed the situation. At minimum another type of plant would have to be built. Fourth, Chen seemed to violate the principle of separation of powers as the legislature had already approved building the plant. President Chen, the legislature thought at least, did not have the authority to cancel it. Finally, Chen's relationship with his premier was no longer workable since Tang Fei was on record as supporting the plant.109 The nuclear plant fiasco led directly to the opposition boycotting the Legislative Yuan for two months and then embarking on an effort to impeach Chen. The rationalization was that the president had violated the Constitution by disregarding legitimate and legal actions taken by the previous legislature. While the impeachment effort did not succeed (public opinion polls favored Chen staying in office), his ability to rule was brought further into doubt. Some observers noted that he had saved himself by apologizing for his errors, earning him the nickname "Mr. Apology." He was also accused by some in the media of having completely abandoned his principles (a charge many in the DPP concurred with) and of excessively watching public opinion polls before dealing with issues.110 In any event, Chen allowed the plant's construction to go forward. Chen, however, could find solace in the fact that the KMT's opinion ratings (due to its losing the election, sacking its chairman Lee Teng-hui, plus endless factional infighting) were lower than his. Public opinion about the Legislative Yuan, which had become Chen's almost implacable foe, was also at a nadir."' Also, most observers were predicting the DPP would gain

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seats in the legislature following the election in December; at the same time the KMT would lose seats and its majority. Thus, Chen could thus simply wait it out. Chen's second cabinet was more a DPP one, signaling that cohabitation had not worked and was being abandoned. But this made gridlock worse. Also it did not help resolve any of Taiwan's myriad political problems. The question then arose: What kind of government was Chen trying to build and what was the relationship between the two most important branches of government to be like? Chen had to try something new, but his choices were limited. In fairness to Chen the system was broken and this was not his fault. Yet his leadership seemed in disrepair as well and Chen had few answers. Chen had already decided that there was no hope of amending the Constitution, not in ways he wanted anyway. So he took the position that the Constitution was vague (which it was) about the president's power and relations between the branches of government among other things. The KMT advocated coalition government. Chen had gone partway, he thought, with cohabitation. He could go no further than that. Coalition government meant that the KMT would control the cabinet and thus the government and Chen would become a figurehead president. He thus made sounds about coalition government, but he seemed to want to consider it only after the election and if the DPP made significant gains. Taiwan's three-party system (in a multi-party framework) meanwhile also worsened Taiwan's political gridlock. Initially Chen had hoped he could get the support of either the KMT or the PFP; but that seldom worked. After the nuclear power plant fiasco it seemed to have little or no hope of working. It appeared promising that if the DPP and the TSU both performed well in the December election the party structure would evolve back toward a two-party system. But that was probably only a fifty-fifty probability or less going into the campaign. There were rumors and denials that Chen sought to make a deal with Soong and would offer him the premiership in return for his party's support."2 Many observers, however, perceived that Chen would pursue coalition politics only if it would work to his advantage and that was not certain. This caused further confusion.

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Evaluating the Chen presidency for its political leadership after its first eighteen months is indeed difficult. Chen suffered numerous setbacks and embarrassments. His usual reaction was to appeal to the people and engage in speech making. Supporters said he had no choice. Even members of Chen's party gave him low marks. The opposition was much harsher. Chen indeed did not accomplish much. Yet he survived a very difficult political situation and in many ways, and not just on a few occasions, chastened his enemies. His biggest claim to success as president was the fact that there was no one considered likely to replace him and early predictions (though only speculation) were that he would likely be reelected in 2004.

Conclusions Chen Shui-bian became president of Taiwan at a truly critical but very difficult time. It was a time of opportunity. It was a time of transition. But it turned out to be more a time of difficulty. However, many say that his, and Taiwan's troubles of the "Chen era"—meaning gridlock, the devolution of politics, an economic recession and more—should not be viewed as unusual when seen in the context of Taiwan's very rapid, perhaps too rapid, political modernization. Conclusions about this cannot be made yet. One need recall that some years ago fistfights in Taiwan's legislature and National Assembly were regular fare on television. Street demonstrations were also commonplace and some of them tied up traffic and worse, even causing people to die in ambulances on the way to the hospital. Perhaps one can explain a lot by simply noting that democracy has its costs. Indeed it does. And for Taiwan that cost may be higher than for other nations. Taiwan may have democratized too quickly. It did not have time to get ready for what happened in March 2000. To repeat, Taiwan's system was not prepared for divided government. The DPP was not ready to rule. The KMT was not prepared to be the opposition. It is hard to fault anyone for these things. Anyway it is too late to reverse the process. Still, when examining the issues it is painfully obvious that serious problems persist and need resolution. These issues, if not resolved, will have a negative impact on Taiwan and may affect other nations involved, including China and the United States.

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Regarding cross-strait relations, Chen Shui-bian came to the presidency with a lot of baggage. He had been an adamant supporter of Taiwan's separation from China. He had made a political career almost of promoting Taiwan's independence. He wanted Taiwan free from the KMT's idea that Taiwan was part of China and Beijing's plan to recover Taiwan. He won support from his party in large part for his views on this matter. It provided Chen and the DPP with a core identity and even, one might say, an ideology. Chen could not simply discard this when he became president. Nor could Beijing ignore his past. In addition, China's decision making process was fragmented and there was a reservoir of hostility toward Chen based on Chinese leaders' awareness of his past. This, of course, has to be seen against the backdrop of Chen's campaign promises, his flexibility, his good sense, the views of the business community in Taiwan, and pressure from the United States. Chen thus had to walk a narrow line as president. It was an unenviable position. And given other problems this was difficult. There were also risks involved. Chen could, and did, seek to improve relations with the United States to use as leverage against China. With the new Bush administration taking a harder stance toward Beijing this was easy. The spy plane incident of April 2001 helped. But this was taking a risk. Would Sino-American relations remain strained? Not likely. The relationship was too important to world stability for that. And the events of September 11 made it turn quickly. President Chen also had the option of using bad cross-strait relations to his advantage domestically. It had helped Lee Teng-hui win an election in 1996. It helped Chen get elected in 2000. Why not play the China card again? It also fit with playing the ethnic card. But this was a dangerous game and was certainly a path full of obstacles to overcome in the future. Chen also found the issue of black gold a good one to pursue after his election. Some said he was obligated to fulfill a campaign promise. Others said it was the right thing to do. It was good for Taiwan. But there was a strong temptation to politicize the efforts to eradicate political corruption. Also, even thought the legal approach was the correct one and arguably the best one in the long run, it was a slow process and Taiwan's legal system was not conducive to much success in the short run.

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Chen indeed made it to a large extent an anti-KMT campaign. Meanwhile he made friends publicly with Lee Teng-hui, who had overseen the KMT's march toward money politics. He closed his eyes at times to DPP misdeeds. As frustrations became worse and as the December 2001 election got closer in time, it became more a political matter than a legal one and it seemed less and less an objective endeavor. President Chen's handling of the economy was no doubt his worst suit. He and his people blamed the economic down turn on the recession in the United States and the slowing of the world economy. They also charged the KMT with manipulating the stockmarket as part of its efforts to derail the Chen administration in the legislature. Indeed Chen was right about this. But he was only half right, or less. A good portion of the blame was justifiably put on his unwillingness to compromise on the nuclear plant issue and with the opposition on other matters. Taiwan's economic problems, in terms of their timing, started with the nuclear power plant. Pessimism about the Chen administration's ability to handle economic issues, friction with China, his commitment to "socialist" programs (and his campaign promises in this area) were all additional contributing factors to the economic slide, and, of course, political gridlock. Since Taiwan's economic indicators fell faster and deeper than countries that Taiwan could be compared with or with which it competed, political paralysis—or lack of leadership as opposed to bad luck—looked to be in considerable measure a problem,. Chen could also blame the political system, and did. Taiwan had a mixed system. Divided government did not work and furthermore contributed to fierce partisanship and impasses between the executive and legislative branches of government. This President Chen inherited. And there was little hope of changing it quickly or easily. Moreover, President Chen could not remake the system; he didn't have the political clout to do that. Working within the system meant surrendering power and ideals. Translated: The opposition told Chen that he had to disregard how the voters had spoken in March 2000 or what he and his party thought the election meant. He could not do that. Perhaps a great statesman could have surmounted these difficulties. Some of Chen's opponents said this. This was not fair though. Still some-

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thing magnanimous needed to be done. Chen organized a committee to bring about reconciliation for the good of the country. As of the time of this writing it remained to be seen whether this had succeeded or not. In any case, what Taiwan needed to fix its political system was more; it required, it appeared, a constitutional convention or something similar. Taiwan needed either a presidential system or a parliamentary system.

3

Whither Cross-Strait Relations: Problems Generated by Taiwan's 2000 Presidential Election Sheng Lijun

I

n Taiwan's March, 18,2000 presidential election, the Kuomintang (KMT) government was defeated in a critical election for the first time in its fifty-five years in power. Its candidate lost to the pro-independence Democratic Progressive Party (DPP). Though not as dominant an issue as it was in the 1996 presidential election, Taiwan's cross-strait policy was a major issue in the election. Debates on the issue had attracted greater attention after President Lee Teng-hui announced his "two states" theory in July 1999.1 And it was an important campaign issue and remained a matter that garnered the concern of the government and the public after the election. It is the objective of this essay to assess the impact of this election and the Chen Shui-bian presidency on relations between China and Taiwan. This includes both the impact of relations on the campaign and post-election politics, but more of the latter.

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Candidates* Views on Cross-Strait Relations During the campaign, the three presidential front-runners, Lien Chan, Soong Chu-yu (or commonly called James Soong), and Chen Shui-bian, all deemphasized the unification/independence issue, as many voters feared armed conflict with China. Though once a vocal advocate of Taiwanese independence, Chen was now far less fervent about independence. In fact, he vowed that he would not declare Taiwan to be independent (assuming Beijing did not move to retake Taiwan by force) nor abandon the government's title of the Republic of China (ROC). However, his "Long live Taiwan independence!" chant heard in the campaign made many suspect that his new stance was not genuine and stemmed from political convenience. Furthermore, his remarks playing down or denying Taiwan's separation from China often appeared ambiguous, evasive and self-contradictory. While promising not to promote a referendum on Taiwan's independence, he supported the concept of having the Taiwanese people determine their own destiny. And while promising not to write Lee's "two states" theory into the Constitution, on one occasion he advocated amending the Constitution to give, in essence, legal effect to the theory. Finally, he refused to make a clear commitment to change the pro-independence clause in his Party Charter. James Soong stated that Taiwan, "with security and dignity," should seek to find a mutually beneficial model for integrating with mainland China. He suggested that the two sides sign a thirty-year non-aggression agreement in the presence of international witnesses. After this, China and Taiwan could come together under a "European Union-type arrangement" for another twenty years. Soong also advocated a referendum on the direction cross-strait relations should take. Lien stuck to the KMT's cross-strait policies. None of the three leading candidates advocated strongly the "OneChina Principle." All refused to accept China's "one country, two systems" formula for reunification. They all agreed that the Republic of China was an independent sovereign state and upheld, in one way or another, Lee's "two states" theory. Lien said that the theory was an accurate description of the status quo. Though stating that the theory had unnecessarily led to a deterioration in cross-strait relations and had damaged the trust between Taiwan

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and the United States, Soong, nevertheless, defined the cross-strait relation's as "quasi-international relations of corresponding sovereignty," or, "mutual non-jurisdiction and independent sovereignty." This seemed close to Lee's "two-states" idea. Chen claimed to be the only real defender of Lee's "two states" theory and challenged both Soong and Lien to mention the "two states" theory if they were to meet Chinese President Jiang Zemin. He even modified the theory, speaking of "special relations between two separate states." In order to win votes, all of the candidates fine-tuned their positions according to public opinion surveys. They also criticized Lee's "go slow and be patient" policy and advocated the immediate establishment of the "three links"—namely direct trade, transportation and postal services between China and Taiwan. Soong said that the ban on the "three links" with China had weakened Taiwan's potential advantage as an Asia-Pacific regional operations center, and he vowed to lift it. He advocated a conditional establishment of the "three links" and the immediate establishment of the "mini three links" (between the mainland and Taiwan's Kinmen and Matsu islands). Though previously a supporter of Lee's "go slow and be patient" policy, Chen now criticized the policy. He suggested that Taiwan should reduce restrictions on the "three links" and on investment in China, based on the principles of "reciprocity, market regulations, and equality." Lien, though associated with the policy, having been Lee's vice president and protege, distanced himself somewhat from Lee's position. He stated that the "go slow, be patient" policy was not an "unchangeable principle." He suggested that he would consider setting up a direct trade zone between China's Fujian Province and Taiwan's outlying islands of Kinmen and Matsu. All the three front-runners in the presidential campaign declared they were for the resumption of cross-strait talks. All said they were willing to enter political negotiations with Beijing under certain conditions. Chen suggested that Taiwan and China might conduct "comprehensive talks," but said that the issue of Taiwan's sovereignty was not negotiable. Also he suggested that any result reached during talks was not valid until the Taiwanese people sanctioned it. Soong was also willing to enter into political dialogue with Beijing. He took a similar position to Chen's, suggesting that

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the Taiwanese people had the final say regarding any agreement reached with Beijing. Lien expressed a willingness to enter the "second-phase" (in the Guidelines for National Unification), namely to conduct political talks with China on unification.2 All three candidates insisted on parity in negotiations with China. Regarding national defense, the three main candidates studiously avoided taking extreme positions. Chen and Lien issued specific policies on national defense. There were obvious similarities between them. They both suggested confidence-building measures (CBMs). Lien proposed establishing a mechanism of notifying and verifying military exercises conducted by each side, together with a communications hotline. Chen proposed "disengagement zones" in the Taiwan Strait. He also promoted a code of conduct at sea and in the air, particularly in the Taiwan Strait and the South China Sea. Soong mentioned CBMs and a hotline, but did not elaborate. Both Chen and Lien claimed that they accepted the U.S. offer of the Theater Missile Defense (TMD) system. Chen proposed abandoning a "purely defensive policy" and instead argued for the development of intermediate-range surface-to-surface missiles. Lien advanced a policy to acquire long-range, surface-to-surface missiles. All of the candidates' defense policies implied going beyond Taiwan's coastline. For them, the best operational strategy was to acquire the military capabilities to deter China and in so doing be able to retaliate against targets such as Shanghai and Beijing if Taiwan were attacked. They were keen on a comparative edge which Taiwan, they believed, enjoyed in information warfare (IW), and supported the idea of carrying out offensive IW operations against China if necessary. Promoting a digital or computerized armed force, Lien and Chen argued that Taiwan should maintain a "streamlined defense structure." Lien proposed reducing the number of armed force personnel to below 320,000, while Chen argued for a bigger reduction to 250,000. Soong was less specific. He was also more cautious and even skeptical on TMD, long-range missiles and the Taiwan Security Enhancement Act proposed by the U.S. Congress. Though he once said that he would support any measure conducive to increasing Taiwan's defense capabilities, including joining TMD, he expressed reservations about Taiwan's role in it during the campaign.

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The three leading candidates claimed they would, if elected, pursue wider international recognition for Taiwan. They stressed the idea of "Taiwan first" in dealing with China. Chen said he would seek a settlement to cross-strait disputes under the framework of the Charter of the United Nations, and would consider the matter of peace treaties with the mainland. He favored signing a non-aggression pact, but only under three conditions: (1) that China and Taiwan enjoy the same status; (2) that only peaceful means would be used to resolve differences; and (3) that both sides do not espouse any preconceived notion about a future China. He also suggested the establishment of permanent representative missions in Beijing and Taipei. Both Chen and Lien expressed a willingness to undertake a "journey of peace" to China to "meet with any Chinese Communist leaders." Chen also said that he would invite Chinese President Jiang Zemin, Premier Zhu Rongj i and China's top negotiator on Taiwan, Wang Daohan, to visit Taiwan. Lien vowed to continue the current pragmatic diplomacy while maintaining stable relations with China. He put forward four basic principles in solving "disagreements and conflict" between the two sides, namely, mutual respect, incrementalism, peace, and regular and open communications. Lien also announced a ten-point proposal as the mainstay of his mainland China policy. Early on during the 2000 campaign, Beij ing's strategy appeared to be to show no preference for any of the candidates lest it hurt that candidate. Privately, Beijing took the view that none of them (the three leading candidates) would be easy for China to deal with, and any one of them in power would be better than Lee Teng-hui. Lien and Soong were both against Taiwan's independence. But they would also take a strong position in favor of Taiwan's keeping its sovereignty. Lien, if elected, would likely be under Lee's control, at least for some time. Under attack from both the KMT and the DPP, Soong, if elected, could not afford to be seen to be soft on Beijing. Both Lien and Soong were viewed as more acceptable than Chen, under whose rule pro-independence forces in Taiwan would likely continue to grow. Beijing set up an ad hoc 24-hour "office" headed by Director of the Central United Front Affairs Department, Wang Zhaoguo, and Director of

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State Council Taiwan Affairs Office, Chen Yunlin, to closely monitor the election campaign. They kept in close touch with higher-up leaders. On January 28, 2000, Vice Premier Qian Qichen (considered by many China's top foreign policy maker) laid out China's basic positions: The two sides of the Taiwan Strait must engage in political talks under the "One-China Principle." •

"Taiwan independence" can only mean war.

•

The framework is "peaceful reunification" and "one country two systems" as well as the "One-China Principle."

•

Under the "One-China Principle," in negotiations on reunification, the two sides could discuss any issues, such as WTO entry, the "three links," ending the state of hostilities, Taiwan's international participation, its political status, and other topics.

•

China would adopt a more liberal approach towards its "one country two systems" policy with Taiwan than with Hong Kong and Macao.

•

China is now willing to discuss the issue of "international space for economic, cultural and social activities for Taiwan that suits it." Other countries should not do anything that would cause tensions or impede the reunification process. The United States should not sell Taiwan advanced weaponry (including TMD), and the U.S. Congress should not pass the "Taiwan Security Enhancement Act."3

Beijing restated (after a hiatus of nearly ten years): "We place our hopes on the Taiwan authorities and even more on the Taiwan people."4 This was a clear sign of its willingness to work with the new Taiwanese leader, although at that time China did not expect that Chen Shui-bian would win the election.

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On February 21, 2000, the Taiwan Affairs Office and the Information Office of the (People's Republic of China's) State Council dropped a bombshell, breaking a relatively quiet period in cross-strait relations (especially given that it was campaign time in Taiwan), when it issued an 11,000-word white paper, titled "The One-China Principle and the Taiwan Issue." (See Appendix I.) The impetus for a new policy had existed for some time. After Lee Teng-hui announced his "two states" theory in 1999, Beijing had felt that it had to make a riposte. China had to take the initiative and its policy statement had to be a strong one. Much of the document explained the "One-China Principle" and "one country, two systems" formula for reunification. It said that the Republic of China was "terminated" in 1949 and the People's Republic of China became the sole legal government exercising sovereignty over all of China, including Taiwan. It said that the Taiwan government was a local government.5 It warned against "foreign interference in China's internal affairs" and against foreign countries forging military alliances with Taiwan or selling weapons to the island. It was strongly critical of the United States' TMD plan for East Asia. The author or authors blamed Lee Teng-hui for the deterioration of cross-strait ties. The Paper stated: "Lee Teng-hui has become the general representative of Taiwan's separatist forces, a saboteur of the stability of the Taiwan Strait, a stumbling-block preventing the development of relations between China and the United States and a troublemaker for the peace and stability of the Asia-Pacific region." The White Paper also reiterated much of what Beijing said in its previous (and first) White Paper on the Taiwan issue published in 1994. What was new (and this was a major concession) was a proposal to resume cross-strait dialogue on an equal footing and with a flexible agenda. It likewise did not insist on Taiwan rescinding the "two states" theory. The international media overlooked these points and focused on the "three situations" (or the three "ifs")—conditions under which China would use force against Taiwan. These were: a grave turn of events leading to the separation of Taiwan from China by any name; a foreign invasion and occupation of Taiwan; and an indefinite delay of a peaceful settlement and reunification through negotiations.

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Most salient of the three "ifs" was the last one. Previous Chinese documents had listed only two situations: "Taiwan's independence" and "foreign intervention" as justification for using military force against Taiwan. Occasionally, Chinese officials talked about two more situations: large-scale social turmoil and violence against mainlanders by local Taiwanese, and Taiwan's acquisition of nuclear weapons. In October 1999, meeting a visiting delegation from Taiwan's Institute of International Relations, Chinese strategists from the Institute of Taiwan Studies of China's Academy of Social Sciences (CASS) added four other situations: (1) writing the "two states" theory into the constitution; (2) drafting something akin to a basic law to declare independence; (3) changing the Republic of China's flag or name; and (4) holding a referendum on independence.6 The White Paper was the first formal document in which Beijing added the provision under which force would be used if there were an indefinite delay in negotiations regarding unification.7 Yet it was not stated how long China would wait before resorting to force. The reason was obvious: the third "situation" was intended to create uncertainty and increase political pressure on Taipei. Otherwise, China would not have issued a White Paper to add another "situation." Taiwan had already given China many excuses to use force, most recently the "two states" theory, and China really did not need to list another "situation" as an excuse. The White Paper was also, as the Chinese leaders admitted, deliberately timed just ahead of Taiwan's presidential election to dampen talk of independence.8 Accompanying the White Paper was a Renmin Ribao (People's Daily) editorial on the same day, and aJiefangJunbao (People's Liberation Army Daily) editorial the day after. Though not identifying Chen Shui-bian by name, the editorials attacked "the leader of the group that has always advocated Taiwan's independence" (read: Chen Shui-bian) and alleged that a position paper that Chen wrote in December 1999 on Taiwan's Constitution was tantamount to a declaration of independence.9 They also accused him of deception: "One minute he is brazenly howling 'Long live Taiwan independence' while the next he is using beautiful and pleasant words to lie, saying that he wants 'good will, reconciliation, vigorous cooperation and everlasting peace' with the mainland." The author warned: "Under no circumstances should we be fooled by his sweet talk."10

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Presidency

As the election day drew near, and it was not obvious that either Lien or Soong would win, Beijing issued sterner and clearer warnings in an attempt to influence voters away from Chen. Chinese strategists asserted that war between the mainland and Taiwan would be hard to avoid if Chen was elected. They hinted that even if Chen did not declare the island independent, cross-strait relations would be tense and confrontational, which could eventually lead to war." On March 15, three days before the election, Chinese Premier Zhu Rongji issued a widely televised stern warning that "Taiwan's independence means war."12 (See Appendix II.) Beijing not only tried to influence the election but also accused the U.S. of doing so. Leading Chinese Taiwan experts in both Beijing and Shanghai, such as Xu Shiquan, President of the Institute of Taiwan Studies of CASS, and Zhang Nianci, Director of East Asia Institute in Shanghai, blasted the United States for "covert support" of Chen Shui-bian. They said that when the three-way struggle for the presidency (between Lien, Soong and Chen) promised no obvious winner, the U.S. made overtures that steered "hesitating" voters to cast their ballots for Chen "at the last moment."13 Washington denied any such role. During the campaign the United States claimed that no matter who won the presidential election, it would accept the result. However, it added that the U.S. expected the "new government" to act in a responsible and practical manner, encourage cross-strait dialogue, and reduce tension between Taipei and Beijing.14 It said that the United States would adhere to the "one-China" policy and warned the presidential candidates that to provoke Beijing any further would risk loss of U.S. support. The Clinton administration clearly wanted to avoid a crisis during the year of a U.S. presidential campaign.15 In the United States, 2000 was also an election year, and China policy had already become a campaign issue. If a Taiwan crisis erupted, China could be the determining issue in the American presidential campaign at the expense of the Democratic presidential candidate, Al Gore. Gore, it was thought, would find it difficult to parry a strong Republican challenge to current policies towards China, Taiwan and East Asia as a whole. This would seem to indicate Washington favored Lien or Soong. However, with successful lobbying by the DPP in recent years Washington was

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much less worried about a provocative Chen Shui-bian. In fact, Chen was not seen in Washington policy-making circles as dangerous. The Clinton administration was more concerned that Lee Teng-hui, before leaving office, might try to exacerbate cross-strait tension and get the United States involved in a military conflict. Thus, the United States exerted pressure on him not to take any actions or make any decisions that would affect Taiwan's relations with China during the end of his term. As Lee had sometimes refused to meet certain U.S. officials (notably in the State Department), whom he called "Beijing's running dogs," Washington sent a House of Representatives delegation to visit Taiwan in January 2000. It was headed by Matt Salmon, Lee's close friend and a member of the International Relations Committee and its Asia and Pacific Affairs SubCommittee. While in Taipei, Salmon told his host that the United States did not want to hear any provocative statements from Taiwan's leadership. During his meeting with Lee, Salmon asked Lee to remain cautious and prudent in his speeches regarding cross-strait ties. He also told Lee that the United States would not provide any "answer" to cross-strait issues: "Such issues can be resolved only by the people on both sides of the Taiwan Strait themselves." Salmon, in sync with the Clinton administration, did not want to see the United States "sucked into a needless conflict." Later, directly referring to Lee's "two states" theory, he said: "I believe the comments he made in July [1999] were extremely hurtful to relations."16 During the campaign Washington exerted pressure on China as well. It feared that because of internal political pressures Beijing might up the ante against Taiwan as a means whereby Beijing could divert attention away from economic and social problems. Washington warned Beijing that any use of force against the island would be regarded "with grave concern."17 Any repeat of the military "exercises" that occurred before Taiwan's 1996 presidential election, officials in Washington told Chinese leaders, may damage China's hope of receiving Permanent Normal Trade Relations (PNTR) due to strong feelings in the U.S. Congress. (Congress deliberately postponed its voting on China's PNTR to one week after the new President's inauguration.) In fact, China did not hold military exercises in the Taiwan Strait as it did in 1996. Noting this, Washington noted that Beijing had been "relatively

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restrained." Admiral Dennis Blair, Commander-in-Chief of the U.S. Pacific Command, stated at the time: "The rhetoric is more heated than the military [threat]."18 His view was confirmed by new U.S. high-resolution satellite photographs that showed little evidence of a Chinese military build-up at airfields within striking or non-refueling range of Taiwan.19 Top U.S. intelligence and military officials meanwhile opined that China did not have the wherewithal to launch an invasion of Taiwan, and would not for some time. President Clinton stated that Beijing was "just playing hardball to try to influence the election."20

Chen Shui-bian's Election Victory On March 18,2000, 82.69 percent of eligible voters in Taiwan participated in the presidential election. Chen won 39.30 percent of the votes, followed by James Soong with 36.84 percent and Lien Chan with 23.10 percent. The results of the election were noted everywhere. The response outside Taiwan is quite instructive, especially in the United States and in China. U.S. President Bill Clinton issued an official statement congratulating Chen Shui-bian. He said the election "clearly demonstrates the strength and vitality of Taiwan's democracy." He noted that Taiwan and China should renew peaceful dialogue: "The United States strongly supports such dialogue and is committed to promoting peace, stability and prosperity in the region." He added that the United States would continue to conduct close unofficial ties with Taiwan's people through the American Institute in Taiwan "in accordance with the Taiwan Relations Act and our one-China policy."21 Clinton, however, also reaffirmed America's "one-China policy." None of this seemed anything new. One thing was though. What was new, and of significance, was that this was the first time that a U.S. president issued an official statement to comment on, and congratulate the winner of, a presidential election in a country whose government the United States does not officially recognize. In fact, this was a major shift from 1996 when official U.S. comment was confined to a government spokesman who commented briefly on Lee Teng-hui's presidential election victory. Many other countries also made statements of congratulation but also reaffirmed their "one-China" policy. Many stated their hope for peace and

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stability across the strait. In some cases the messages carried more salience. Among them, the Japanese and Australian responses were made at a higher government level than they had been in 1996.22 This pleased China because the one-China statements and warnings were stressed over the congratulations. Beijing was, perhaps, most satisfied with Russia's response, which was made only by an unnamed Foreign Ministry official through the Interfax News Agency. He underscored Russia's refusal to acknowledge Taiwan's independence: "Moscow builds its relations with Taiwan on two basic principles, the main one of which is the principle of'Four No's'.... The 'Four No's' are 'no' to Taiwan's independence, 'no' to the concept of 'two Chinas' or 'one China one Taiwan', 'no' to Taiwan's participation in international organizations in which only sovereign states can be members and 'no' to arms sales for Taiwan."23 China's own response is even more telling. Before the election, China worked to achieve what it considered to be the "three not's": Lee Teng-hui should not stay for another term; the "two states" theory should not be incorporated into the constitution; and Chen Shui-bian should not be elected. Its hope (and its prediction) had been for a Lien Chan election victory. From the end of February 2000 onwards, however, China became more and more concerned with the looming possibility of a Chen victory. As soon as Chen was proclaimed the winner the evening of 18 March, the Political Bureau of the Chinese Communist Party (CCP) held an urgent meeting. It instructed both the Central Taiwan Affairs Office and the Taiwan Affairs Office under the State Council to issue a short statement (announced on Chinese television and radio at 10 o'clock that same evening) that Beijing would "listen to what Chen says and watch what he does," and that the results of the election "will not change the status of Taiwan as a part of China."24 The next day, an enlarged meeting of the Political Bureau was held. At the meeting, Chinese President and CCP Secretary General Jiang Zemin put forward a sixteen-character basic policy line, namely renzhen guancha [observe closely], naixin dengdai [wait with patience], buji buzao [guard against impetuosity], and baochi gaoya [maintain high pressure].25 On March 20, Jiang Zemin made a public statement saying that China takes the view that "whoever is in power in Taiwan is welcome to the mainland for

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talks," and that "we may also go to Taiwan." But there must be a basis, he said; i.e., the One-China Principle must be recognized. "Under this rubric, we can talk about anything."26 In late March, Chinese leaders called the directors of Taiwan affairs offices in from the various provinces for a meeting in Beijing and at that gathering issued a new policy, called the policy of thirty-two characters, which read "tongyi sixiang [unify thinking], jianchi yuanze [uphold principle], lengjing guancha [observe calmly], fandu cutong [oppose independence and promote reunification], yizhan cuhe [adopt force to promote peace], buji buzao [guard against impetuosity], baochiyali [maintain pressure], and liangbian tanpan [bilateral talks]."27 China's leadership declared that recognition of the "One-China Principle" was the "real test" of whether Taiwan's leaders were advocating independence or reunification. China was prepared, it was announced, to hold talks with Taiwan's "new leader" on any issue, as long as that leader recognized "one China." More specifically, Beijing would wait for Chen's inauguration speech on May 20th to see if he agreed to accept the "OneChina Principle" before deciding on its next step. It could not accept Chen's stance that "one China" was "a topic for discussion," rather than a guiding principle.28 Meanwhile, China maintained pressure on Taiwan. However, despite some heated rhetoric, there was no military show of force by Beijing. This followed the internally circulated central guideline of "dou er bupo, ya er bu bian [contending but not destroying; coercing but not crashing]."29 Putting this policy in perspective, China has long had a deep distrust of the DPP due to its open advocacy of Taiwan's independence as written in the DPP charter. Chinese leaders, due in large part to the sensitivity of the Taiwan issue and the fact that the military in China expressed a very hostile attitude toward Taiwan, could not make any meaningful concessions. Beij ing thus refused to have any official ties with the DPP as long as they felt it advocated Taiwan's independence. At this juncture Beijing's past dealings with the DPP came into play. Chinese leaders needed to look back for reference. Think tanks in China had done research on the DPP soon after its inception in September 1986

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and made proposals to open contacts with the DPR Beijing had decided to try this in 1993 and in March of that year DPP leader, Chang Chun-hong, met Chen Andong, deputy director of the Third Division of the CCP United Front Work Department in Shenzhen and Wang Daohan, Chairman of China's Association for Relations Across the Taiwan Strait (ARATS). Wang Daohan also met Chang Chun-hong, Chen Zhongxin (in Chinese pinyin) and other DPP leaders on several other occasions, though not in any official capacity.30 The following year, the CCP United Front Work Department announced what appeared to be a new policy: As long as these people are not acting on behalf of the DPP, they are welcome to start investment projects in the mainland or to conduct factfinding tours. But they will not be entertained if they come here to discuss the issue of Taiwan independence. Mainland China is maintaining some contact with the DPP, but it cannot be considered a contact between two parties. China is maintaining personal contact with individual members of the DPP but not with the party as a whole.31 After 1995, there had been some adjustment in China's policy towards the DPP. President Jiang Zemin, in his eight-point proposal in January 1995, invited representatives from "all the parties and groups" in Taiwan to participate in the reunification talks. He no longer mentioned negotiating only with the KMT, as had been the case before.32 In May 1996, Jiang noted that if the DPP would give up its pro-Taiwan independence stand, China would engage in dialogue with it.33 At the 15th CCP National Congress in September 1997, Jiang repeated this stance with only a slight modification, saying that China "welcomes all the parties in Taiwan and people of all the circles, except those who stubbornly stick to Taiwan's independence, to visit the mainland to exchange views on cross-strait relations and reunification matters"34 (italics added). As early as 1996, some Chinese strategists had argued in closed-door meetings that the prospect that the DPP might become the ruling party might not be a bad thing for Beijing. The KMT, they said, might feel compelled to liberalize its mainland policy. If it did, that would intensify conflict between the KMT and DPP. Meanwhile, being the ruling party, the DPP

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would have to compromise its pro-independence stance in order to maintain stable relations with China, win public confidence in Taiwan, and maintain international investment and commercial links. This would trigger internal debate and probably disagreement within the DPP. The DPP's conflict with both the New Party and the Taiwan Independence Party meanwhile would intensify. All this would increase American and other countries' apprehension about a possibly uncontrollable conflict between China and Taiwan that would destabilize East Asia. These countries would then exert pressure on the DPP government. Thus, the DPP would not go too far, nor become too radical, if it were voted into power. What is more, said Chinese academics, the DPP did not have enough financial and personnel resources to rule effectively. In short, a DPP president would put Beijing in a better position to influence Taiwan's politics.35 Despite hearing these different voices, and perhaps agreeing, Beijing preferred to maintain what it called a "gray area" or a distance from the DPP, as long as its old rival the KMT was in power. Chinese leaders also had in mind reasons to be apprehensive of the DPP. The DPP's periodic radical actions made Chinese officials feel that it was not yet time to "make a deal" with the DPP.36 Hence, come May 2001, Chinese leaders did not have much time to formulate new policies. In addition, domestic constraints were stronger than usual at that time. So Beijing laid down its so-called three-point principle regarding the DPP: (1) no party-to-party contact before the DPP scraps the independence clause in its Party Charter; (2) no contact with important DPP leaders who are "stubborn advocates of Taiwan independence;" and (3) other individual members of the DPP, however, may tour the mainland and visit their relatives and may also contact relevant individuals in the mainland, but no visiting DPP delegation will be entertained.37 As president, Chen Shui-bian has clearly seemed to want better crossstrait relations. On the surface at least, Chen has shifted even further than during the campaign from his, and the DPP's, radical advocacy of Taiwan's independence. In fact, Chen has relieved popular worries over a military clash in the Taiwan Strait. Chen's new positions have already helped to reduce the tension between Beijing and Taipei that had erupted following

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Lee Teng-hui's announcement of the "two states" theory in July 1999 and still affected Beijing's feelings toward Taiwan. While appreciating this shift, many in China would like to know whether this is a tactical adjustment to gain temporary breathing space so that Chen can consolidate his power and become strong enough to challenge Beijing on the reunification issue, or whether it is a prelude to the abandonment of his pursuit of Taiwan's independence. The difference between the two, to Beijing, will determine whether there is peace or a war in future. Chen's speeches and his policies on issues relating to independence or even unification are instructive and thus need to be examined. The crux of the current cross-strait situation is whether the Chen government will accept and practice the "One-China Principle" that the previous KMT government has maintained for more than five decades. To Chinese leaders in Beijing, Chen and the DPP have so far not done so. In his inauguration speech on May 20,2000, Chen mentioned "one China" only once. He said: "Leaders of both sides have the wisdom and creativity to deal together with the issue of a future 'one China' [gongtong chuli weilai 'yige Zhongguo' wenti].,m In so saying, Chen implied that at present there is not "one China." This was in agreement with his earlier position that that both sides should take "one China" as an issue for discussion, not as a principle.39 As for the "future one China," Taipei and Beijing would jointly deal with it. He did not say how or even whether this "future one China" includes Taiwan. His promise to "deal with this future one China" did not mean to China, or, in fact, most observers that Chen is going to promote Taiwan's reunification with the Chinese mainland, either now or in future. Chen refused to accept the "one-China policy" on the grounds that the people in Taiwan would not agree to Taiwan being part of the People's Republic of China. This argument, however, was not without flaws. China's "One-China Principle" had previously been composed of three sentences: There is only one China in the world; Taiwan is a part of China; and the government of the PRC is the sole legal government representing the whole of China. Beijing did not say that Taiwan had to become part of the People's Republic of China. Moreover, in January 1998, Beijing changed its one-China proposal to Taiwan. A high official said:

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Before the realization of reunification and in handling affairs concerning inter-straits relations, especially during the talks between the two sides, the One-China Principle should be upheld, namely that there is only one China in the world, Taiwan is a part of China and China's sovereignty and territorial integrity are not to be separated.40 Here, Beijing replaced the third sentence of the previous definition of the "One-China Principle" ("The government of the People's Republic of China is the sole legal government representing the whole of China"), with a new one—"China's sovereignty and territorial integrity are not to be separated." In August 2000, Beijing went still further. The second sentence of the definition of the "one-China Principle" ("Taiwan is a part of China") was replaced with a new one: "Taiwan and the mainland are both part of China."41 Obviously, Beij ing wanted to make it easier for Taiwan to accept the "OneChina Principle." On April 25,2000, vice chairman and secretary general of the Association for Relations Across the Taiwan Strait (ARATS), Tang Shubei told Taiwanese correspondents that: "We hope that the Taiwan side accepts the One-China Principle, i.e., the practice since 1949."42 The "practice since 1949" is that while the People's Republic of China claims to be the sole legal government representing China, the Republic of China makes the same claim. With this gesture, Tang sent the message to Chen that China hoped his new government would follow its predecessor and agree to the "OneChina Principle," though it may claim this "one China" to be the ROC (though Chen has not actually done this). Shortly before Chen's inauguration, Liang 'an Guanxi (Cross-Strait Relations), a journal published by the State Council, pointed out that "one China as a principle should be upheld, though its content, namely what and who is this one China, could be discussed."43 In his inauguration speech, Chen also failed to answer Beijing's request to state that he is Chinese (zhongguoren). He used the word huaren (in talking about "all the huaren both overseas and at home"). The English word "Chinese," when referring to the people, is translated in two different ways, huaren and zhongguoren. The two carry different political connotations. For example, Singaporeans of Chinese descent call themselves huaren (Chinese) but not zhongguoren (also Chinese) because Singapore

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is not part of China but its people (over seventy percent) are of Chinese descent. By refusing to call himself a zhongguoren (Chinese), Chen created more suspicion in the eyes of China that he is denying that Taiwan is part of China. His elected deputy, Vice President Lu Hsiu-lien, and the Mainland Affairs Council (MAC) Chairperson, Tsai Ying-wen, meanwhile publicly denied that they are zhongguoren (Chinese).44 They even refused to follow Lee Teng-hui's example to say they are Taiwanese as well as Chinese. During his inauguration, Chen announced what has been termed the "five not's": not to declare independence, not to change the national title, not to push for the inclusion of the "two states" description in the Constitution, not to promote a referendum to change the status quo in regards to the question of independence or unification, and not to abolish the National Unification Council and the Guidelines for National Unification.45 However, he attached two conditions. First, he stipulated that these apply "during my term." In other words, he did not indicate what would occur after the first "four years." (As noted earlier, some think Chen needs stability for a few years to establish a strong power base at home before he can challenge Beijing.) Second, Chen stated the "five not's" stand "as long as the CCP regime has no intention to use military force." The "intention to use military force," instead of the "actual use of military force," allows for some very wide interpretation. In addition, as many in China were quick to note, "not to declare independence" does not mean "not to promote independence." Leaders in Beijing were thus suspicious. Going further with this analysis, "not to include the two states theory in the Constitution" does not mean that Chen rejects the theory. In fact, a member of Taiwan's Mainland Affairs Council stated that dropping the wording of "two states" theory did not mean that the government has abandoned the theory and would not change the fact of China and Taiwan being "two states." Furthermore, "not to abolish the National Unification Council and the Guidelines for National Unification" does not mean Chen is going to carry out the guidelines or regard them as the basis of his mainland policy. In fact, Chen's later statement that unification should not be the only choice for Taiwan is incompatible with the Guidelines that list unification as the only target.

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Chen's "conciliatory" gestures have also appeared to China as "one step backward two steps forward." For example, he proposed three principles relating to opening cross-strait dialogue: to negotiate on the basis of equality; to resolve disputes by peaceful means; and to establish no pre-set conditions on the future of cross-strait relations.46 A close study of the original Chinese text of these principles reveals something quite significant. Most international media translated Chen's second principle as "to resolve disputes by peaceful means."47 But the original Chinese text reads "to solve disputes by applying United Nations peaceful means and according to the United Nations Charter."48 Since Article 2(7) of the UN Charter prohibits intervention in the domestic affairs of a member state calling on the UN Charter to solve the dispute, Chen seemed to suggest Taiwan is a UN member-state or at least should be. As for the principle "to negotiate on the basis of equality," Chen did not state whether his use of the term "equality" is more compatible with China's notion that the "two sides shall negotiate on equal footing," or with Lee Teng-hui's notion of two sides being "two equal political identities" (which eventually evolved into the "two states" theory). The third principle, "no pre-set conditions," is actually an incorrect English translation. The original Chinese wording "buyu shefan xiang" should be translated as "no pre-set direction." His third principle then should read "no pre-set direction for the possible development [in cross-strait relations] in future." In other words, reunification should not be the only choice and Taiwan's independence should also presumably be an option. Again this is something on which China cannot agree. In the past, Taiwan only talked about how and when unification should be achieved; it never compromised on unification as the sole target as is stated in its Guidelines for National Unification. Despite Chinese pressure, Chen reaffirmed this different (from the unification guidelines) position three months later and went even further. He declared on several occasions in late August and early September that the 1991 National Unification Guidelines had been adopted "not through a democratic process," and were, therefore, "not an unchangeable totem." Stressing that unification was only "a choice" and not "the only choice" for

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Taiwan, he said he would consult the people on how to revise those guidelines.49 He said: "It is against the people's will to list unification as the only choice, as the KMT government has done, for Taiwan's future and in crossstrait relations development."50 He also showed his reservations about the guidelines by declining to assume the chairmanship of the National Unification Council (which President Lee Teng-hui held).51 Chen Shui-bian's position on the 1992 consensus on China is also revealing. At the time, Chen refused to acknowledge the 1992 consensus (between Beijing's Association for Relations Across the Taiwan Strait and Taipei's Straits Exchange Foundation) of "one China." Then, he denied that a "1992 consensus on one China" existed; rather there was only a "1992 spirit," which, he said, "means dialogues, exchanges and shelving disputes."52 He called on Beijing to resume cross-strait talks based on such a "spirit," instead of on the "1992 consensus on one China" that Beijing promotes. As a matter of fact, on November 16, 1992, Taipei and Beijing reached a verbal consensus on the "One-China Principle" in a discussion between ARATS and SEF. China's ARATS said: "Both sides of the Taiwan Strait adhere to the One-China Principle, seeking national reunification. But the political content of the one China will not be involved in their talks on practical matters."53 Taiwan's SEF said, "In the process of both sides of the strait making common efforts to seek national unification, although both sides adhere to the One-China Principle, they have a different understanding of what this one China is."54 Obviously, the two sides did reach a consensus on one China, though each side had different interpretations of this "one China." KMT chairman Lien Chan, former MAC chairman Su Chi, Taipei Mayor Ma Ying-jeou and other officials in the KMT government involved in the ARATS-SEF meetings publicly acknowledged that a consensus on "one China" is a fact.55 Adhering to the "One-China Principle" and the 1992 consensus on one China, the two conditions Beijing is now demanding of Chen's government, is currently at the heart of the tussle going on across the Taiwan Strait. To the ruling DPP, acknowledging "one China" means, as Vice President Lu Hsiu-lien describes it, "capitulation." Hence, the new government has tried hard to avoid the "one-China" issue. At the same time, it is trying to avoid tension in the strait. This is a difficult act.

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The Chen administration has resorted to ambiguity and a play on words to deal with this contradiction. Its announcement of the "three acknowledgements and four suggestions," and Chen's New Year speech (see Appendix IV), are the essence of this policy of ambiguity. To avoid the "one-China" issue, Chen, in November 2000, made a proposal of "three acknowledgements and four suggestions," drafted by the Supra-Party Panel on Mainland Affairs.56 The panel, headed by Academia Sinica President Lee Yuan-tseh, was established to advise the president on Taiwan's mainland policy. It is not widely representative since the three major opposition parties refused to join it. As its formal role is similar to that of the National Unification Council, it has been the focus of criticism from the opposition parties who say that the two organizations overlap and Chen intends to "defunctionalize" the National Unification Council. Lee Yuan-tseh's group urged the President to use the ROC's 1947 Constitution to find a way to accommodate Beijing's insistence on "one China" without actually having to utter the words "one China." Beijing immediately criticized this.57 The three major opposition parties in Taiwan derided the recommendation as a "conclusion without conclusions."58 The KMT dismissed the recommendation as "irrelevant," a "play on words" and "a manifesto of non-agreement" among the panel members.59 The People First Party (PFP) said the panel had "come full circle" without making any breakthrough in getting Chen out of the political mire of his own making.60 The New Party (NP) said the recommendation managed only to "agree to disagree," far from solving the problems plaguing Chen and "no less puzzling than the questions themselves."61 Actually, the recommendation was aimed more "inward" than "outward." In other words, rather than pleasing Beijing, Taipei used the ambiguous wording in this recommendation to prevent an internal national split on the "one-China" issue (that Beijing could use to divide and rule). There have long been disagreements in Taiwan regarding how to proceed with crossstrait relations, and the DPP has held that this lack of consensus has made it difficult for the people of Taiwan to develop a strong consciousness of, and confidence in, their nation. This, it is said, has had a very severe impact upon the DPP's effort at nation-building.

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One reason for Beijing's opposition to the recommendation was its failure to clearly endorse the "One-China Principle" and the 1992 consensus on "one China." Instead, the recommendation was to call on Chen Shuibian to "respond to Beijing's 'one-China' claim...according to [meaning using] the Republic of China Constitution." Here, there are two key points. First, by asking President Chen to "respondto Beijing's 'one-China' claim," the recommendation actually described the "one-China" claim as something "belonging only to Beijing." Hence Taipei is only responding to Beijing's request. This implies that Taipei does not currently espouse the "one-China" position. Second, in place of a clear endorsement of "one China," the recommendation asks President Chen to act "according to the Republic of China Constitution." The heart of the matter then is: Does the Constitution contain a framework for "one China?" When this question was asked at a press conference, Mainland Affairs Council (MAC) vice chairman Chen Mingtung gave a vague answer: "This is a constitutional issue, which should be interpreted by constitutional bodies. MAC won't comment on that."62 The ruling DPP subsequently claimed that any decision made by the panel based on "one China" would be against public opinion.63 Obviously, Beijing was not satisfied with the Chen administration's vague position on "one China." These issues came up again in President Chen Shui-bian's New Year speeches. (See Appendices VI and VII.) One point in the recommendation of "three acknowledgements and four suggestions" was to ask Beijing to resume cross-strait talks without Taipei clearly agreeing to the One-China Principle but only to the vaguely worded ROC Constitution, which allows various interpretations. This view or proposal appeared in Chen's speeches on New Year's Eve and again on New Year's Day of 2001. In both, Chen proposed revising the "no haste, be patient" policy with a new vision of "active opening and effective management." As for the key issue of "one China," he said: "According to the Republic of China's Constitution, 'one China' was originally not a problem." He proposed that "the two sides should start from economic, trade, and cultural integration, and build mutual trust on a gradual basis so as to seek lasting peace and build a new mechanism for political integration."64 He went on to say: "It has always been my

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personal view that peoples on the both sides of the Taiwan Strait originally belonged to one family.... Since wanting [sic] to live under the same one roof, [we] should understand and help each other,...."65 The word "originally" is important here. It implies that "one China" is a problem at the present time though originally it was not. It seems no coincidence that he used the word "originally" for the second time in his New Year speeches when he said: "It has always been my personal view that peoples on the both sides of the Taiwan Strait originally belonged to one family." He left open the question whether now they still belong to the same family. He continued to say that "Since wanting [sic] to live under the same one roof, [we] should understand and help each other...." Here, Chen deliberately avoided making clear who wants to live under the same roof. In other words, it may mean that it is not Taiwan but Beijing that wants people on both sides of the strait to live under the same roof. "Living under the same roof," moreover, does not necessarily mean reunification, but instead is as ambiguous as the term "integration" which he used in the same speech. Chen said: "The two sides should start from economic, trade and cultural integration, and build mutual trust on a gradual basis so as to seek lasting peace and build a new mechanism for political integration.'" Here, the word "integration" is subject to many different interpretations. It may mean federation, confederation, or even commonwealth. DPP chairman, Hsieh Chang-ting, said that his understanding of "integration" was that it meant the political entity of Taiwan would not disappear. This is different from unification, but "duo zhongyou tong, tong zhongyou duo" (independence among unification and unification among independence).66 In the same speeches, Chen also rejected, just as Lee Teng-hui had done, Beijing's demand to start political talks and dialogues. This was evident when he said: "The two sides should start from economic, trade and cultural integration" first, in order to "build mutual trust on a gradual basis" before "seeking lasting peace and building a new mechanism for political integration." In spite of all this, Chen must be given some credit for flexibility, which so far has helped relax cross-strait tensions. But the question is: What's next? The future of cross-strait relations depends, say Chinese leaders in Beijing, on whether there are "two consistencies." The first is whether

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Chen will go on to elaborate and concretize his broad and abstract crossstrait framework in accord with his so-called "good-intentioned" New Year speeches. The second is whether or not the ruling DPP will adjust its policies to fit with Chen's policy line. Clearly, Taiwan needs to do more and is now at a crossroads. Without these "two consistencies" in follow-up actions, Beijing will not be convinced of Chen's desire for improved relations. What is worse, Chen's words may be interpreted by Beij ing as a tactic to buy time or to cover-up his pursuit of independence. If so, cross-strait relations will likely deteriorate.

China Assesses Chen and His Situation With Chen's surprise election victory, China, many of its officials thought, had to step out of the "gray area" to face the DPP "eyeball-to-eyeball" ("duan bin xiangjie") earlier than it expected. Some noted Chen had long been an advocate of Taiwan independence. Others said he is, to use the expression of one Chinese leader, "zhisuojin tuF (flexible and pragmatic). Most Chinese leaders viewed Chen as preferable to Lee. A Politburo member drew an important distinction between Lee Teng-hui and Chen: "Lee Teng-hui is driven by a set of misguided beliefs and is hard to change. While being a Lee disciple, Chen Shui-bian often waffles. He may flip-flop according to circumstances."67 After his election, Chen Shui-bian made more "conciliatory" gestures to Beijing. But Beijing has doubted his sincerity. His flexibility has not been seen in China as the abandonment of his pursuit of independence, but, as Chinese Vice Premier Qian Qichen put it, only a "change from a pursuit of overt independence to a covert one." Qian said this was because of his current weak power bases at home.68 Chinese strategists noted that Lee Teng-hui was also "very conciliatory" when he was weak. After consolidating his power base beyond any serious challenge in late 1993, he became a hard-liner. Beijing suspects that Chen may follow Lee's pattern. Obviously, Beijing's bitter memory of Lee Teng-hui has greatly influenced its reading of Chen's gestures and actions. There were different voices within the camp of Chinese strategists. Some argued that Chen personally is not as ideological regarding Taiwan's

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independence as was Lee Teng-hui. Given Taiwan's political reality, they said, he has done what he could to shift from the line of Taiwan independence. In fact, after Chen's conciliatory New Year speeches (see Appendices VI and VII), Beijing seemed to have second thoughts about Chen. China took and is still taking a hard position on dealing with Chen. This, to use the expression of Chinese strategists, was less targeted at Chen himself, but more at "the independence forces as a whole led by the DPP." In other words, even if Chen personally had given up the pursuit of an independent Taiwan, it is of no use to Beijing because the ruling DPP has not yet done so, and independence forces as a whole have not yet collapsed. To assess the situation realistically, "flexible and pragmatic" as he is, Chen Shui-bian is unlikely to change too much and too quickly. The DPP will not allow him to do that. The workings of the party dictate that. The DPP is a loose political alliance made up of various factions. No leaders or factions can dominate. Leaders of different factions will almost inevitably be voted into the party chairmanship in turn, and for short terms (one year originally, and two years for one term at present). Thus, the chairman does not have much power. Its decision-making has been long affected by inter-faction bargaining and consensus making. The situation is now more difficult due to the ever-growing power of local party branches (containing more and more local leaders in cities and counties after the DPP won more local elections, especially in 1997, and more and more DPP legislators).69 In a situation of tension with Beijing, Chen needs party unity. However, if he makes any meaningful concessions on China policy, what unity there is in the DPP will evaporate and Chen will find it very difficult to obtain support from the DPP. If he fundamentally changes his pursuit for independence, he will no doubt lose DPP support. There is another way of looking at Chen's dilemma: Political reality does not permit Chen to shift too much from the "left"—Taiwan independence fundamentalists—to the middle, much less the "right"—pro-unification. Those in the middle, i.e., those who want to keep Taiwan's status quo, compromise a large part of the votes. Yet, if Chen moves too much to the "middle," he will lose support from those Taiwan independence advocates

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on the left. They have long supported almost whatever he says and does. The new votes he may get from those in the "middle" are not so reliable because they only support Chen when he expresses what they think are correct policies. In other words, they are issue-supporters; unlike people on Chen's left, they do not support whatever he does. Understanding this situation, Chen will hesitate to move too far and too quickly to the "middle." An analysis of voting trends and the condition of Taiwan's democracy are also important factors in Chen's calculations. Certain trends dictate that Chen not go beyond the "middle." Most important of these trends are the outlooks and voting tendencies of young people. During the 1996 presidential election, 21.2 percent of the overall vote went to the DPP's candidate. This figure rose to 39.3 percent in 2000. Young voters, aged between 2039, comprise 50.5 percent of the total (24.8 percent in the 20-29 age group and 25 percent aged between 30-39),70 some 6 percent more than in 1996. Young voters thus made the difference. It is worth nothing that they have few emotional ties with the mainland and the majority of them voted for Chen. Will they will remain Chen and DPP voters? Clearly Chen sees that he must keep their support.71 Chen also has to give considerable concern to the state of Taiwan's democracy. It is fragile because it is weak in three essentials: civil society, core values of the society, and state building. Each is worth examining in the context of Chen's situation. In a mature civil society—the base for a stable democracy—the intelligentsia, as well as businessmen, are highly independent politically. This is not the case in Taiwan. In a mature civil society, there should also be strong commitments, i.e., broad social connections rather than the limited family or ethnic connections to form political ties as is the case now in Taiwan. In other words, there is lacking a horizontally connected strong "civil power" within the social system. Rather there is a dominant vertically connected social structure comprised of family and ethnicity. As a result, despite the impressive progress of democracy on the surface, the democratic foundations of the society remain weak. Hence, a change of government such as Taiwan has just experienced brought severe political and social upheaval, and that will continue to confuse and dislocate society for some time to come.

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Likewise, a stable democracy cannot be built on broken societal core values. A disintegration of societal values will shake the system. It will likely be followed by social confusion, unrest and even state collapse, just as happened to the former Soviet Union in the early 1990s. U.S. democracy has been stable because of its core values. Freedom, democracy and human rights have remained strong basic beliefs since its founding. Americans are divided in their views on certain social issues such as race, gender, social violence, crime, etc. These issues, however, are not as divisive and explosive as the issue of unification versus independence in Taiwan. Moreover, state-building in the United States (already underway for more than 200 years) is strong enough to withstand the impact of controversial issues whereas the newer state-building process in Taiwan is not. The DPP becoming the ruling party in Taiwan has obviously intensified societal divisions over the key issue of unification versus independence. For example, the number of overseas ROC citizens who came back for the celebration of National Day in 2000 was a record low. Dozens of generals resigned or retired after Chen's election. Chen is faced with the problem of how to work with a military that fundamentally opposes the DPP position on Taiwan independence, and the fact that an overwhelming majority of the officer corps did not vote for him.72 Chen Shui-bian himself pointed out: "Taiwan's danger does not lie on the side of China or the United States but on Taiwan itself. In other words, the danger is that there is no consensus regarding who is the enemy and who is the friend."73 State-building in the more formal sense is also important. When it is very weak, as in Indonesia and some African countries, democratization will fail and the result will be chaos. Taiwan's weak state-building has been vividly demonstrated by rampant "black gold" politics. The population of Taiwan has experienced deep concern about it and it was the most salient campaign issue in the 2000 election. The weakness of state building is also demonstrated in the structure of government. The Constitution, which features an uneasy distribution of power between the president, the premier and the parliament, has produced gridlock due to divided government. Most of the DPP's reform efforts have failed because of the opposition from the uncooperative KMT-dominated legislature.

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To understand more clearly what is happening in Taiwan in terms of Taipei's ability to deal with China, a look back is instructive. Lee Teng-hui had the confidence to say "no" to Beijing because of a strong internal political cohesion in Taiwan. As KMT chairman, he controlled the KMT. As the first Taiwanese president, he enjoyed the trust of and got support from native Taiwanese and the DPP. Chen, in contrast faces serious political division and strife between the DPP and the opposition parties and even lack of unity within the DPP. The very makeup of the DPP indicates that this situation cannot be changed quickly or easily. The DPP does not have enough competent technocrats and lacks experience for effective governance and economic management. What is worse, its party culture, the product of long years of grassroots opposition, makes it difficult for the DPP to adapt quickly to its new role as the ruling party. It still resorts to the methods it used when it was in the opposition, such as mobilizing the masses to come all the way from southern Taiwan to demonstrate in the streets of Taipei in order to show the magnitude of the "people's voice" to use as pressure against the KMT-dominated legislature. As the ruling party,'it should refrain from such tactics, as this will only intensify social divisions and tension. An opposition party should rely on those masses at the grassroots level for votes. Once voted into power, that party should make use of and rely on social elites for effective governance and help unite the masses at the grassroots level with those elites. One should also be aware of the fact, and leaders in Beijing certainly understand this, that Chen's election has hindered the development of Taiwan's independence movement. If the DPP had remained out of power and continued to mobilize at the grassroots level, the independence movement would probably have grown. But, after Chen's election, due to international insistence on "one China" and Beijing's pressure, he has had to shift from the "left" to the "middle" by adopting a position he calls "middle road." The DPP chairman Hsieh Chang-ting said: "As a ruling party, it is inevitable for us to adopt a 'middle road,' in order to follow current social trends and win recognition from mainstream voters."74 The Taiwan independence movement has thus been confused, divided and weakened. Hsieh's announcement that the DPP did not rule out unifi-

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cation caused further tension in the DPP. So did Chen's call, in his New Year speeches, for political integration with China. Hsieh mirrored the problem when he said that "the public may no longer distinguish the DPP from other parties in terms of our advocacy of Taiwan independence or our stance on cross-strait relations."75 The DPP indeed is now losing some of its traditional supporters, those who favor separation from China.76 The DPP is also facing other centrifugal forces. The party has long been made up of different factions. The major reason why it did not break up in the past was that those factions shared two things in common. One was their aim to obtain state power, which required unity in the party. The other was the party's two main ideological tenets: Taiwan's independence and democracy. The DPP used the appeal of Taiwan independence to get votes from Taiwanese who resented mainland China and viewed the KMT as an "alien regime." It used the appeal of democracy to get votes from both local and mainland Taiwanese that disapproved of the non-democratic one-party rule by the KMT. Taiwan's independence and democracy were core and life-long pursuits for only some DPP leaders. To the rest, they were only political convenience to obtain state power. In other words, while they were the ends for some leaders, they were the means for the other. Grasping state power was the only aim all the factions shared, which accounted heavily for their unity. Once in power, however, factional differences and tension have developed rapidly. The appeal of democracy, though effective in the past, cannot be used now as the KMT is no longer the ruling party. And the Chen Shui-bian government cannot openly appeal for Taiwan independence due to Chinese and international pressures, and has to claim to move from the "left" to the "middle road." The result is confusion among those Taiwan independence advocators and loss of their support. A survey by Taiwan's cable television TVBS, conducted on March 15,2001, found that about 30 percent of Chen's supporters said they had regretted their decision to vote for Chen.77 After losing the two basic ideological principles, the DPP is now more and more resorting to creating vested interests among its membership and supporters as a means for internal cohesion, as the KMT had done before. This leads to corruption, which is hated by those DPP ideologists who value

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independence more than power. The DPP unity is thus becoming more and more fragile. Another factor taken into consideration in Beijing after holding decisions on Taiwan in abeyance was Taiwan's deteriorating economy. Taiwan is now facing the worst economy in almost thirty years. International and local confidence on Taiwan's economy has deteriorated. Taiwan's stock market has plunged from nearly 10,000 points at the time when President Chen Shui-bian stepped into office on May 20, 2000 to around 3,800 by September 2001. In early 2001, Taiwan's statistics bureau came with the stunning data showing that Taiwan's economy only grew 1.06 percent in the first quarter of 2001, its most feeble performance in twenty-six years.78 The unemployment rate rose for the tenth consecutive month to a record level of 4.92 percent in July 2001.79 This makes Taiwan vulnerable to China's economic pressure. Taiwan's exports, which make up about half the economy, posted their biggest annual drop on record in July 2001. Shipments fell 28 percent from a year earlier to US$9.7 billion. That was the fifth straight decline and the biggest in twenty-five years. Imports dropped a record 32 percent to US$9.2 billion. Exports of electronics, which made up the biggest share of sales, declined 43.5 percent in July to US$1.7 billion, after dropping 29 percent in June. Exports of mobile phones and other telecommunications goods slid 27.9 percent to US$1.3 billion, compared with a 16.5 percent decline in June.80 Taiwan's gross domestic product (GDP) shrank 2.35 percent in the second quarter of 2001, compared to the same period a year ago. That was the first decline in twenty-six years.81 In August 2001, Taiwan's GDP growth was forecast to slow to 2 percent for the year, down from the average of more than 6 percent that Taiwan enjoyed over the past thirty years.82 The deterioration of Taiwan's economy that began in early 2001 accelerated the already massive flow of Taiwan investment capital into China. China soon became the destination of half of Taiwan's total foreign investment.83 Making this even more alarming from Taipei's point of view, high-tech companies accounted for more than 50 percent of Taiwan's mainland-bound capital transfers. And this has been expanding, leading to an exodus of lower-, medium- and upper-stream firms to the mainland.84 Also,

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the real outflow of funds and high technology is likely much more than officially recorded. For example, at the end of 2000, only about US$200 million in loans from Taiwan's major banks were recorded as flowing to the mainland, much less than the actual amount, which was at least US$71.54 billion.85 Making the situation even more serious for those in Taiwan who feared becoming dependent on mainland China, according to Taiwan's finance minister, by late 2000, only 0.63 percent of the funds invested in the mainland had flowed back to Taiwan.86 All this alarmed people in Taiwan who started talking of the economic "hollowing out" of Taiwan, and economic dependence on China. Meanwhile economists stated that the "dependence rating" (of Taiwan on China) had increased from 2.28 percent in 1987 to 24 percent in 2000.87 Taipei is painfully aware that its ability to engage in confrontation with China depends upon its economic prowess. This, however, is in decline. As a result, Taiwan, in particular President Chen and the DPP, seems at a loss about how to cope. To energize its slumping economy without expanding commercial ties with China, Taipei has launched "8,100 public construction and investment projects." This stimulus package includes NT$810 billion for public infrastructure arid investment for the fiscal year 2001. However, it will probably do very little to fix the economy.88 If past such efforts are a guide, stimulating domestic demand cannot be taken as the primary solution to Taiwan's overall economic slump. Taiwan's experience since the late 1990s has demonstrated that increased government expenditure has made little contribution to domestic economic growth. Taipei must come up with clear industrial policies, improve the investment environment, encourage local industries to upgrade and restore public confidence. At present, Taiwan's economy is being adversely affected by four serious difficulties: (1) government incompetence and fierce internal political strife; (2) a slumping international market; (3) a bubble economy; and (4) economic upgrading. The first hindrance cannot be solved overnight given the current deadlock in Taiwan politics. As for the second one, Taiwan has long been relying heavily on the American and Japanese economies. It is

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currently uncertain how soon the U.S. economy will recover. Even if it rebounds soon, Japan will probably take a fairly long time to get out of its current economic doldrums, because its economic difficulties are not merely a result of policy errors but also arise out of its outdated economic structure.89 Third, Taiwan may take a long time to cure its bubble economy. Some people deny the existence of such a bubble economy. However, prominent Taiwanese economists, such as former head of the ROC's Control Yuan, Wang Tso-yung, and Taiwan's Formosa Plastics tycoons, Wang Yungching and Wang Yung-chai, insist that it is real. In their view, the serious flaws in Taiwan's economic structure, especially the banking system, are also hindering Taiwan's quick economic recovery.90 Fourth, time will also be needed to meet the challenge of industrial upgrading. Taiwan has long talked about moving into more capital and less labor intensive products, but so far these policies have not been implemented. Even if implemented successfully Taiwan will face the problem of competing with the advanced industrial countries. Some experts have pointed out that it would take at least ten years before Taiwan can solve these problems.91 And China will probably not make things easier. For example, Beijing will do whatever it can to ensure that Taiwan never becomes, as Taipei desires, a regional economic center. The reason is apparent. As former vice chairman and secretary general of ARATS, Tang Shubei, once said, Beijing interprets Taiwan's plan for making Taiwan a "Asia-Pacific operational center" as having another motive: to promote Taiwan's independence. Therefore, Beijing has formulated the strategic principle of "stabilizing Hong Kong and developing Shanghai" as regional economic centers "to defeat Taiwan's plot of building the 'Asia-Pacific operation center.'"92 With its growing economic strength and Taiwan's dependence on China for its financial health, Beijing will be able to do this and more. Taiwan faces other vulnerabilities. Wary of being over-dependent on China economically, Lee Teng-hui in August 1996 adopted a "no haste, be patient" policy regarding investment in the mainland. However, the international and local economic and political pressure upon the Chen Shui-bian government to abandon the "no haste, be patient" policy and to open the

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three links mounted. As a result, the Chen administration has not been able to continue this policy. For example, the U.S. Chamber of Commerce in Taiwan, the Taipei European Business Association, and international corporations like Dell Computers and IBM, said in August 2001 that unless Taiwan established the three links with the mainland they would move their Asia Pacific regional purchasing headquarters to Hong Kong. Continued delays will reduce Taiwan's attractiveness to foreign capital investors.93 Under pressure, Chen formed an advisory panel in mid-2001, made up of lawmakers, academics, officials and business leaders. The panel held an Economic Development Advisory Conference in late August 2001 that passed 322 resolutions based on a consensus of its 120 members, one of which was to urge the replacement of Lee Teng-hui's "no haste, be patient" policy with a new one called "active opening and effective management."94 The Conference also proposed that, for a start, six ports in Taiwan be allowed to conduct direct trade with China.95 Chen promised to implement these resolutions.96 These proposals would presumably allow Taiwan's less efficient industries to move to China while Taiwan retains R&D and high value-added manufacturing on the island and uses its geographical location to become a regional operations center and global logistics center. To be such a center, Taiwan must build ties with China. While extending this economic "arm" to reach into the mainland, it also extends the other "arm" to pull in international corporations to set up their headquarters in Taiwan and use Taiwan as the bridge to the mainland. But will this work given China's opposition mentioned above? Beijing seems to be in control, not Taipei. Chinese leaders can obviously put roadblocks in the way or make conditions (especially political ones) unpalatable. When he was in New York in June 2001, Chen asked the American business community to form with Taiwan a "strategic alliance of international corporations." In other words, he called on international corporations to combine with Taiwan businesses and then move to China. The purpose was to establish Taiwan as the Asia-Pacific operations center and a global logistics center.97 As Taiwan's Taipei Times pointed out:

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Such a strategy intends to closely integrate Taiwanese trade interests with the national interests of other countries. When there is a change in the situation in the Taiwan Strait, it will attract international attention.98 In early September 2001, China punished investment bank Credit Suisse First Boston (CSFB) for inviting Taiwan's finance minister to conferences in Hong Kong and Europe. The conferences were designed to help Taiwan attract foreign investment. Accusing it of "political misconduct," China removed CSFB from its list of investment banks chosen to share in underwriting multibillion-dollar stock offerings for two state-owned giants, China Unicom Group, China's second-largest mobile phone provider, and China Aluminum. China's move led two other investment banks, Goldman Sachs and Merrill Lynch, to drop plans to sponsor a similar promotional tour of the United States." Chinese Finance Minister Xiang Huaicheng said: "This [practice by CSFB] was not purely a business activity. No shares were issued; no bonds were issued. It merely wanted to whip up public opinion for the local Taiwan government around the world."100 Beijing warned that "if it [foreign business] goes against the very principle ["one-China" policy] and treats Taiwan like a country [or] as a government...we must show some kind of dissatisfaction."101 This "punishment" reflected Beijing's strategy of sabotaging Taipei's effort to establish a "strategic alliance of international corporations" and build Taiwan into a regional operations center and global logistics center. As a matter of fact international corporations, if they are convinced that their ties with Taiwan will adversely affect their business prospects in China, will be unlikely to establish their business headquarters in Taiwan or think of Taiwan as a bridge to China. China is meanwhile encouraging them to use Hong Kong as the base or to set up their headquarters directly in Shanghai and other Chinese cities. Taiwan's ability to struggle with China is based on its strong military and political strength, which in turn is based on its social cohesion. But social stability is fundamentally decided by its economic strength or health. As Lee Teng-hui said in August 1999, whether Taiwan could stand up against China in the future would fundamentally depend on its own economic de-

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velopment.102 To control or even cripple this economic foundation for political independence is exactly what Beijing is now doing. And Beijing seems to realize the importance of its success so far and looks to the future for more. A case in point is a change of one of Beijing's promises. On September 30, 1981, Ye Jianying, chairman of the Standing Committee of China's National People's Congress (NPC), announced a nine-point proposal for solving the Taiwan issue. They are 1. unfettered movement, trade, and communications between Taiwan and the PRC; 2. autonomy for Taiwan and the retention of Taiwan's own armed forces; 3. a role for Taiwan officials in the PRC's national political system; 4. retention of Taiwan's capitalist economy; 5. financial aid for Taiwan from the central government when in need; 6. freedom for people from Taiwan to settle on the Chinese mainland; 7. a profitable role for Taiwanese capitalists in China's economic modernization; 8. talks between the KMT and the CCP for reunification; and 9. the welcoming of proposals from the masses on how reunification should be accomplished.103 In the recent Chinese elaborations on these offers, numbers five and seven are missing. In July 2001, Chinese Vice Premier Qian Qichen made "seven guarantees" to Taiwan. He said that after reunification, Taiwan would continue to do the following: use its own currency; keep its troops; be an independent region for customs and tariffs; continue to keep its government framework; the mainland would not take even one cent from Taiwan and will not use Taiwanese capital; Taiwan people and businessmen will hold on to their property and Taiwan's government officials will remain independent from the mainland's and no mainland officials will be dispatched to Taiwan.104 Two months later, Qian Qichen reaffirmed his offer. He said: Taiwan may continue to use the New Taiwan Dollar, retain its armed forces, maintain its status as a separate customs territory and keep its govern-

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merit structure. The mainland will not levy taxes in Taiwan, not even one cent, nor will it take any money from Taiwan. The way of life of the Taiwanese people will remain unchanged and Taiwan's entrepreneurs will have their properties intact. Taiwan will make independent choices on personnel matters and the mainland will not send any official to take office in Taiwan.105

Qian's not mentioning Ye's points five and seven seems significant. Beijing now only promises not to tax Taiwan after reunification; but it no longer promises to give Taiwan "financial aid" and a "profitable role" for its businesses. Beijing has come to realize that the huge wealth that Taiwan has accumulated has made Taiwan feel that it is better than the mainland and this feeling encourages anti-reunification sentiment. While no longer promising Taiwan "financial aid," Beijing is helping Hong Kong to become a regional economic center. Since the Asian financial crisis which started in the late 1990s, China has lent Hong Kong substantial money to stabilize its currency and stock markets, and expand its exports. In mid-2001 when Hong Kong, like Taiwan, was faced with economic difficulties because of the slumping international market, China came to Hong Kong's rescue. Beijing urged its various local governments to boost their exports via Hong Kong to help its re-export business. It also adopted a series of other measures to help revive Hong Kong's slowing economy.106 It did little to help Taiwan. Meanwhile, Beijing's assistance to Hong Kong hurt Taiwan economically. Through this, Beijing is sending a clear message to international corporations: "Set up your headquarters in the mainland or in Hong Kong. If in Taiwan, we won't help." Under pressure, few international corporations, if they want to pursue the huge mainland market, will answer Chen Shuibian's call to use Taiwan as the bridge and "combine with Taiwan business and then move to China." It appears as one Chinese official said: Chen's proposed "strategic alliance of international corporations will not work," and Taiwan's "international business arm will be cut off." If its "international business arm" is lost, expanding commercial ties with China will hardly matter. Again Beijing's stance is telling. Beijing now does not feel the urgency, as it did once before, to open up. There are

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several reasons. First, without formal links, Taiwanese investment will still find its way to the mainland as it has been doing for the past decade anyway. Second, links mean much more to Taiwan's economy, which is now in a bad shape, than to China's, where huge international investment keeps flowing in and will even more so after China is a member of the World Trade Organization. Third, establishing direct cross-strait commercial relations will hurt Hong Kong, which is now facing a slowing-down economy, as much transshipment and re-export will be diverted from Hong Kong. In addition, links, in certain respects, do not serve China's own economic interests. For example, at present, China does not have enough capacity to cope with the increasing volume of its air and sea cargo. Shanghai is now building Yangshan Harbor. By 2005 when this harbor is completed, its container handling capacity will increase from 5.61 million 20-foot equivalent units (TEU) in 2000 to 10.6 million TEU.107 In comparison, Taiwan's (mainly Kaohsiung Harbor) container handling capacity was 4.1 million TEU in 1986, and 5.23 million TEU in 1995 for Kaohsiung.108 As Morris Chang, the chairman of Taiwan Semiconductor Manufacturing Corporation (TSMC) says, Kaohsiung harbor has only "a six-year niche" before new port facilities in Shanghai begin operations.109 An immediate and full opening of links with Taiwan does not help China's plan to make Shanghai, (instead of Kaohsiung) a regional transportation center. Rather, a gradual opening may serve China's interests better. Therefore, China is insisting adamantly on Taipei's acceptance of the "One-China Principle," before links can be established. Beijing has already stated its position clearly: Because Taiwan's Economic Development Advisory Conference failed to mention the "One-China Principle," reunification, or the 1992 cross-strait consensus regarding "one China," Beij ing refuses to conduct official negotiations with Taipei. China's Vice Premier Qian Qichen said that China supported the immediate reopening of direct trade, transport and postal links with Taiwan. But he also asserted that Taipei must accept the "One-China Principle."110 China's official Xinhua News Agency declared: "If it is assumed that the 'one-China' principle and the '1992 consensus' can be avoided by merely talking about economic issues, it would be unpragmatic and cannot be done."1"

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In the past, the three links were Taipei's bargaining chip vis-a-vis the mainland. Now it is the opposite. Whereas, in the past, Taipei refused to open the three links unless the Beijing government collapsed (as in the era of Chiang Kai-shek and Chiang Ching-kuo) or treated Taiwan as a political and sovereign equal (as in the era of Lee Teng-hui), now Beijing insists that Taipei must accept the "One-China Principle" before establishing links. Taipei's refusal to accept the "One-China Principle" will thus make the three links impossible. This will engender mounting pressure from the opposition and business community to do something to accommodate Beijing. But this creates a dilemma. Taipei's acceptance of the "One-China Principle" will divide the DPP and the pro-independence forces in Taiwan. Some observers report the situation is this: Taiwan must reorganize its closed, debt-ridden financial markets if it wants to become a financial base. Taiwan—mostly a maker of goods which outsiders design and sell—must learn to design services for China. Taiwan's geographic proximity to China cannot convince international corporations they should not move their headquarters to the mainland. Neither is it certain whether Taiwan's domestic economy can become an important source of bio-technology or advanced IT research and related development and production on its own. Its companies remain much better known for application than for innovation. Taiwan has many assets, including a skilled engineering force, familiarity with world markets, entrepreneurial experience and social stability. It has met previous economic challenges and moved up the industrial scale. This could happen again; but this time, many note, Beijing has to help."2 Will Beij ing help? Hardly. It has promised not to tax even one cent from Taiwan after reunification; but it will not promise financial aid and economic help. Strategic considerations, as discussed above, constitute only one reason for Beijing's stance. Internal opposition has also to be taken into account. Serious domestic complaints are heard because Beijing is giving economic help to Hong Kong. If Beijing gives such economic help to Taiwan before reunification or without enough evidence to convince its people that Taipei will henceforth pursue unification, domestic opposition will be significant. No Chinese leaders will take such a political risk. Beijing is pursuing a policy, described by Lin Chong-pin, vice chairman of Taiwan's MAC, as "suffocating us on the diplomatic front, suppressing

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us on the political front, hollowing out our economy, waging a battle for reunification socially and intimidating us militarily."3 Indeed, China will keep a close watch on Taiwan's economic developments in order to overtake and "defeat" Taiwan. A rising China paralleling a growing depletion of Taiwan's economic strength will impact Taiwan's social stability, its military modernization, and, hence, its political future. Both Beijing and Taipei know this.

China Uses Political and Military "Pincers" Beijing is applying political pressure on Taipei. Chinese leaders, in applying what some call "political pincers" on Taiwan, perceive the situation this way: If Taipei accepts the "One-China Principle" as Beijing demands, the pro-independence forces, as well as possibly the ruling DPP, will collapse. If it rejects it, Beijing can use the "one-China" appeal to divide Taiwan politically and President Chen's rejection to justify refusing to resume crossstrait dialogue, holding military exercises, denouncing Taiwanese leaders holding independence views and more. Currently, tension serves Beijing's interests. It divides Taiwan politically and weakens international and domestic confidence in Taiwan's economy. Having a weak power basis, the Chen government badly needs breathing space for power consolidation. Beijing will not give it the time. The DPP, Beijing hopes, will be forced to accommodate China, and Taiwan independence fundamentalism will be marginalized. If this happens, there is no need for China to use force. With this strategy in mind, Chinese Vice Premier Qian Qichen suggested a five-point approach to deal with Chen Shui-bian: • • • • •

Seek concessions from Chen by applying pressure on many fronts. Foster alliances among anti-independence forces in Taiwan. Expand contacts and dialogue with all Taiwan political parties outside the DPP orbit. Exert great efforts to win over the Taiwan people. Stick firmly to the "one-China" principle.'l4

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For the short-term, Beijing will probably apply specific kinds of pressures (on the DPP) and give concessions (to the opposition). Beijing's objectives are clear. First, China wants to limit Chen's political space. Second, it hopes to confuse the DPP (and the United States as well). Third, China seeks to divide pro-independence forces and foster a coalition between pro-reunification forces. Fourth, Beijing wants to diminish the prospect of the DPP's winning the December 2001 legislative and local elections so that Chen will be faced, for the rest of his term, with a difficult constraint— continued domination of the legislative by the opposition. Fifth, China hopes to emasculate Chen's will and capability to push for independence by confronting him with neiwai jiaokun (internal trouble and external pressure). Considerable evidence suggests that Beijing has been and will be in the future more successful in using economic weapons against Taiwan than political ones. This is true except for the fact that the "Taiwan issue" cannot be viewed in isolation or simply as a struggle between Beijing and Taipei. In Beijing's mind, the cross-strait tussle has always been a China-U.S. issue, though it is called "the Taiwan issue" in public. To Chinese leaders, if China had been capable of "persuading" or "deterring" the United States from intervention, the matter would already have been resolved long ago. Taiwan was not in the past, and is not now, strong enough militarily to stop China. Taiwan would surrender if not for the U.S. Beijing's Taiwan problem is thus a U.S. problem. To deal with the U.S., China needs to be stronger militarily. This means deterrence. For this purpose, the PRC is further developing intercontinental ballistic missiles—Dongfeng-31 " 5 and Dongfeng-41—that will be equipped with low-power propulsion technology, a new technological breakthrough that can alter the path of offensive missiles."6 In other words, these Chinese missiles can change their flight directions from designed points at different angles, thus making them difficult for U.S. Theater Missile Defense (TMD) or National Missile Defense (NMD) systems to intercept. Dongfeng-31 missiles, with a range of 8,000 kilometers, and those of the Dongfeng-41 type, with a range of around 12,000 kilometers, can be MIRVed or MRVed."7 The Dongfeng-31 and the futuristic Dongfeng-41 are solidfuelled, vehicle-mounted, vehicle-erected and vehicle-launched, giving China more strategic deterrence than it has previously had. China's second-gen-

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eration nuclear force, to be deployed over the next 10 to 15 years, will thus be far more mobile, accurate and reliable than its current force."8 The People's Liberation Army currently has seventy-seven submarines in service. Among them, there are seventeen nuclear attack submarines (designated 091 and 093), and five 092 submarines orA7a-class ballistic missile nuclear submarines (SSBN). It started the 094 SSBN project at the end of the 1980s. At least three 094s have been recently commissioned."9 It is believed that China will soon have at least six such SSBNs. Compared with the 092, the 094 is much safer, quieter and more mobile. The 094 is equipped with C41SR system and the Julang (Great Wave)-II missiles (i.e., Dongfeng-31), with a range of 8,000 kilometers. The 094 can launch missiles from underwater; the older model 092 cannot do submerged-launching. The 094 reportedly can carry up to sixteen missiles that can be MIRVed or MRVed with three to six warheads on each. In other words, one 094 could launch ninety-six missiles. If the PLA builds at least six 094s as reported, it can attack 576 targets all over the world at the same time.120 In mid-2001, PLA submarines launched Julang-21A ballistic missiles (SLBMs) and hit targets 5,000 kilometers away. They were shot simultaneously from three different locations in the South China Sea, the East China Sea and the Yellow Sea, and all fell within the radius of fifteen meters demarcated as their respective targets.121 China has made the development of satellites a top priority. Its aim is to form an "outer-space fleet" of big and small satellites. Its earlier sensing satellites used photographic film to be sent back in canisters. Its new reconnaissance satellite uses high-resolution electro-optical imagery technology. The new satellite employs digital-imaging technology to relay pictures to ground stations. Its resolution is about nine feet, less than U.S. reconnaissance satellites but comparable to the clarity produced by several U.S. and European commercial imagery satellites now in use. It is more than sufficient for strategic targeting.'22 In January 2000, China launched a military communications satellite, part of a new command-and-control network designed to link its forces for combat. These satellites will be netted to airborne and ground-based sensors to give the PLA ballistic missiles, cruise missiles, aircraft, and ships a seamless tactical-to-strategic targeting capability.123

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These Chinese spy satellites can find, trace and identify military vessels. They could be used to guide "saturated" missile attacks against, for example, aircraft carriers well before they approach China's coast. China not only has the capability to detect and track most satellites but also has anti-satellite (ASAT) capability. It has a highly developed electrooptic industry and the ability to field laser weapons. Chinese experts in their local newspapers have revealed that China has acquired the capability to destroy a satellite's optical sensors with lasers.124 China's laser guns are vehicle-mounted and highly mobile. They can be targeted against ballistic missiles, cruise missiles, stealth fighters and vessels on the sea.125 By April 2001, China had acquired the capability to launch a "parasitic" ASAT minisatellite that would attach itself to a satellite to distort information, alter data, and shut down vital operations of the opponent's satellite.126 It may also be developing jammers against Global Positioning System (GPS) receivers. China's ASAT capability will pose serious challenges to the space-based laser weapons that the United States is now developing as part of its NMD to knock down China's missiles at their boosting stage. The PLA has an aggressive new program to develop exotic high-tech weapons, titled Project 1-26, which was initiated in January 2000. This program involves dual-use space and information technology, and exotic weapons such as miniaturized nano-weapons.127 These efforts will no doubt add to China's deterrence vis-a-vis the United States. To deter or at least endanger U.S. aircraft carriers, the PLA is fielding a new Passive Coherent Location (PCL) system, a revolutionary new antiaircraft early-warning defense system that can detect U.S. stealth aircraft, including the F-l 17 bomber and even the futuristic F-22 fighter.128 In addition to purchasing the Russian Sovremenny class destroyers, whose sea-skimming supersonic medium-range SS-N-22 Sunburn missile is designed specifically to get through a U.S. Navy destroyer screen to attack a carrier, the PLA is also improving its own SSMs and cruise missiles. Its cruise missile is now both accurate and difficult to intercept: With a range of 2,000 km, it is capable of hitting a target accurately to within five meters,'29 while being able to change directions three times at angles greater than 35

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degrees on flight.130 In its exercises in May 2001, the PLA successfully launched air-launched cruise missiles. The PLA also claims to have an arsenal of secret weapons, "the most advanced in the world, including laser weapons to disable the laser guidance systems of America's F-l 17s.'"31 For the past ten years it has been working on a new generation of nuclear weaponry based on a new theory of nuclear physics.132 According to Danny Stillman, a well-known American nuclear physicist at the Los Alamos National Laboratory,133 "they [the Chinese] are right up with us on [nuclear] weapons design.... They have instrumentation that we have never developed."134 The PLA has developed neutron bombs and miniaturized nuclear warheads. It developed the concept of a miniaturized nuclear warhead as early as in the mid-1970s, but did not have the computer capability to design it until the late 1980s. It successfully tested the device in 1992.135 By the mid1990s, it was already capable of making a tactical nuclear warhead as small as 500 tons of TNT, which would be a very effective deterrence against U.S. aircraft carrier intervention.136 Similarly, China has made efforts to boost its military pressure on Taiwan. The PLA has placed high priority on the development of land-attack cruise missiles (LACM) for medium-to-long-range missions. It had only one theatre missile brigade in 1995; the number has since grown to three and is expected to total seven between 2005 and 2010.137 (A PLA missile brigade usually has sixteen transporter-erector launchers and a stockpile of up to ninety-seven missiles.) By mid-2001, the PLA had about 350 missiles within striking range of Taiwan and was on track to add fifty new missiles a year.138 It had five short-range missile bases within striking range of Taiwan: bases in Leping, Yong'an, Jiangshan, Xianyou, andNanping.139 China's official aerospace publications recently indicated that the PLA has developed two land-attack missiles: Chang Feng and Chang Feng-I. Similar to the U.S. Tomahawk LACM, the Chinese versions employ technologies such as GPS/Inertial mid-course guidance and most critically, terrain contour matching to increase its accuracy. The range of the Chang Feng missile is believed to be 600 kilometers and it is accurate to within 15 meters. Chang Feng-I has a range of 1300 kilometers and is accurate to within 5 meters. When the PLA fields these cruise missiles and more advanced

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Hong Niao LACM (Hong Niao-3 can fire a distance of 2,500 kilometers), Taiwan's military situation will worsen.140 China has recently deployed Russian-made S-300PMU1 and S300PMU2 surface-to-air missile batteries, which have a minimum range of ninety kilometers. Since they are deployed in Longtian opposite Taiwan they will severely challenge Taiwan's air operations in the Taiwan Strait. China has also successfully developed a series of its own anti-aircraft missiles, including the Hongqi (Red Flag)-9 and the Hongqi (Red Flag)-7. Other such missiles deployed include the SA-2, SA-10 and SA-15.141 China has also acquired the co-production license for the Russian Zvezda Kh-31P missile. This missile is specifically designed for use against the U.S.-made Patriot and Aegis systems that Taiwan has or might obtain. Beijing is reportedly developing FT-2000/2500 missiles (dubbed as AWACS killer) based on Russia's S-300PMU missiles, which are capable of homing in on radiation emitted by Taiwan's E-2s. Such a development would pose a serious threat to Taiwan's air space and ground radar stations. China has also acquired Russian-designed anti-AWACS missiles, dubbed K.S-172/ AAM-L; these are capable of being launched from a jet fighter. Taiwan's E-2Ts, future P-3s, and land-based and (future) sea-based missiles would then be subject to China's anti-radiation missile threats.142 The PLA has increased its inventory of M-9 and M-l 1 ballistic missiles and started deploying another 200 to 300 state-of-the-art missiles targeted at Taiwan.143 According to a recent Pentagon report, China could amass more than 650 such missiles targeting Taiwan by the year 2005, thereby neutralizing Taiwan's air superiority within forty-five minutes.i44 The PLA Air Force has its own airborne warning and control system (AWACS),145 and may soon acquire a few advanced Russian Beriev A50E aircraft. This system is capable of coordinating up to thirty of China's aircraft at one time and tracking 200 targets over an 800-kilometre radius, much larger than the 300 kilometers of Taiwan's E-2T.146The A-50, coupled with Su-27SK, Su-30MKK and Su-27UBK advanced jet fighters deployed in the air bases in Wuhu, will greatly improve the PLA's air control. The Chinese AWACS capability could also be integrated into its land-based and sea-based missile launching systems, increasing the accuracy of its missiles against Taiwan.147

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Similarly, the PLA's deployment of advanced diesel-electric submarines, such as the Russian-designed 636-series, and destroyers, such as the Sovremenny equipped with Sunburn and possibly longer-range Yakhont missiles, will further improve its naval capabilities. The PLA Navy (PLAN) is reportedly considering buying two more Sovremenny-class destroyers. To improve its sea-lift capabilities, China has renovated part of its huge commercial fleet for both civilian and military use. Apart from conducting military activities, such as personnel and armored vehicle transportation, surveillance, electronic interference, mining, floating bridge construction, and medical service, these ships can fire rockets that can cover up to 180 kilometers (more than the width of the Taiwan Strait). They can also carry containerbased vertical-launched missiles, anti-aircraft missiles (including Hongqi 61 and Feimeng 80), and shoulder-launched anti-air Hongying 5A missiles.148 Beijing is further developing information and electronic warfare capabilities, such as computer hacking (by introducing misleading information, altering data, shutting down vital operations in opponents' computerized control and command systems, or planting computer viruses), electronic weapons (procuring state-of-the-art intercept, direction finding and jamming equipment), directed-energy weapons (laser guns to paralyze satellites, micro-wave beams, particle beams, high energy radio frequency [HERF], acoustic cannons, plasma guns, high energy ultrasonic weapons, subsonic wave weapons), and non-directed energy weapons (electro-magnetic pulse [EMP] and its miniature technology). These weapons will enhance the PLA's technology edge over Taiwan and complicate U.S. intervention. The PLA has acquired the technology to make EMP miniature warheads, which could shut down all electronic systems on Taiwan, from communications systems to cars or petrol stations before an invasion, without casualties and without affecting neighboring regions.149 According to a recent U.S. congressional report, the PLA has rapidly advanced its joint-force operations. Its recent exercises have demonstrated "significant new joint-service war-fighting skills 'under high-tech conditions' that are steadily altering the balance of power in the Taiwan Strait." The most impressive is the PLA's recent progress in the communication as well as command-and-control areas. It has made rapid advances in utilizing a national "plug-and-play" fiber-optic civilian

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Relations

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telecom network to thoroughly secure its military communications.150 And the PLA has built a nation-wide fiber-optic network, made of "eight verticals" (North-South fiber-optic lines) and "eight horizontals" (East-West fiber-optic lines).I5' The trajectory of Taiwan's moves towards independence since the end of the Cold War has made China increasingly impatient and led it to speed up its military modernization. This modernization aims more at deterrence than at a war. While China is still watching for Chen's next step, a highly accelerated Chinese military modernization is sure to come. Taiwan has played, and will continue to play, a role in China's military modernization by default. It has provided the PLA with a clear target for its modernization. With a clear focus or target, the armed forces will more easily catch up. In the 1950s and 1960s, though China was very poor, it nevertheless took many by surprise in turning out its own nuclear weapons, satellites and longrange missiles. Its clear focus and strong determination played a crucial role. Taiwan is now playing this "catapult role," though unintentionally, in pushing the PLA's faster modernization. Some people hope that Taiwan's military buildup, together with the U.S. NMD and TMD, will engage China in a costly arms race and eventually bring about its collapse, just as Reagan's Star Wars program supposedly helped cripple the Soviet economy. This is a fallacious argument. The theory that diverting resources from its economic development to a military build-up caused the Soviet collapse is misleading. Actually, military spending could, if well-arranged, bring about a faster economic modernization by facilitating breakthroughs in technology and quickly converting that technology for civilian use. The Soviet Union did not collapse because of military overspending; apart from political and other reasons, it died because of the excessiveness and distorted pattern of its military spending. It failed to develop a mechanism that could quickly and efficiently convert breakthroughs in its military technologies to civilian use so as to strongly promote overall industrial development. It also made the mistake of playing by American rules, which were to comprehensively upgrade and excessively produce all weapons and weapons systems in the direction where the Americans were developing them even when the Soviet Union could not afford to do so.

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If China plays the game by sticking to its own rules, it will develop a few well-chosen, low-cost but very effective weapons technologies for asymmetrical deterrence. In that case, it will avoid producing many glaringly expensive weapons, and it will not be exhausted like the Soviet Union. There is not much of a difference between the potential of paralyzing the opponent ten times and that of hundreds of times. The United States, as the global leader, may need the latter capability. As for China, the former is enough. This could be the philosophy underlining the principles for PLA weapon procurement and production: "shao shengchan, duoyanzhi" (less weapon production, more military R&D), "xiao piliang, gao shuiping,, (produce only a small quantity of weapons but seek higher technological level), and "shao chubei wuqi, duo chubei j is hu" (maintain fewer weapons but more weapon technologies). Therefore, China's leaders may believe that instead of "economic security," there should be "security economy"—using security needs to promote a faster economy. For example, the PLA's modernization at this stage will stress electronic information technology and precision heavy machinery. Breakthroughs and resources (including talent and education) spent in these two areas will break the bottleneck not only of China's military modernization but also of its economic development. The significance of such choices for China's rapid and sustained rise is immense. In this sense, with Taiwan as the target, China could have a much faster military as well as economic modernization. One sideline advantage is that Taiwan (as well as the NMD and TMD pushes) as the claimed target of a "forced" military modernization response will make it more difficult for other countries to speak convincingly of a "China threat." Once China has enhanced its military leverage against Taiwan, its deterrence against other big powers would also be enhanced, as will its position in the region and the world. At the same time, the Taiwan issue, if handled well, will arouse strong patriotism (instead of national split) that China could use for its internal cohesion. Taiwan's political challenge may, sooner or later, also push China to improve its governance (in the areas of democracy and human rights improvement, and anti-corruption) and its policy-making efficiency. This will, as a side effect, comprehensively enhance its hard power and soft power

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as well. Competition makes man tough and country as well. In other words, China could turn the Taiwan issue from a liability into an asset, depending on Beijing's political wisdom and skill. Should the latter come true, Taiwan would then be a blessing in disguise for China's rise. For the prospect of cross-strait ties, a war is unlikely for the near future. This is not only because Chen Shui-bian will continue to soft-peddle his relations with Beijing, but also because of China's unswerving commitment to its economic modernization at home. Moreover, China believes that time is on its own side. By mainly using the political and economic "pincers," backed up by military deterrence, China has the confidence to solve the Taiwan problem gradually but eventually. It mainly uses the military build-up as deterrence, but not for war, to slow down Taiwan's drift towards independence. This deterrence also serves as a catalyst, in cooperation with China's political and economic "pincers," for favorable political and economic chain reactions inside Taiwan. Those "chain reactions," as China hopes, will help to emasculate Chen's will and capability to push for independence by besetting him with neiwaijiaokun (internal trouble and external pressure). To Beijing, the real challenge is not from Taiwan whose pushes, by themselves, are manageable, but from the United States. Indeed, after a year in power, the DPP has found that it has come up against great resistance at home, while it enjoyed strong support from the United States. An opinion survey in June 2001 done by the DPP government showed that the Taiwanese who support eventual unification have been on the rise. More significantly, support for China's "one country, two systems" as a unification model rose to an all-time high of 16.1 percent, up from 12.2 percent in December 1999.152 According to the opinion survey conducted in the same month by Taiwan's popular cable television station TVBS, 31 percent of Taiwanese were in favor of China's "one country, two systems" model for reunification.153 With a political and economic mess at home, Chen's popularity has fallen from 80 percent in June 2000, i.e., his first month in office, to 60 percent in his second month, then to 55.11 percent in his third month in office, and to 34 percent in late February 2001,154 Meanwhile, stronger support for the DPP government has come from the United States. After selling Taiwan a large arms package and giving it

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clearer security commitment in April 2001, the United States gave a warmerthan-ever reception to Chen Shui-bian during his trip there in May. At almost the same time, the U.S. spoke of upgrading relations with Taiwan to a quasi-official level, treating Taiwan as a major non-NATO ally (MNNA), and pushing for further military integration with Taiwan. These initiatives by the Bush administration have complicated China's strategic scenario on the Taiwan issue. Whether China will continue to apply the political and economic "pincers," instead of resorting to a war, in its handling of the Taiwan issue depends heavily on whether China has the confidence to stabilize its relations with the Bush administration. At present, it has.

4

The Democratic Progressive Party's Factional Politics and Taiwan Independence Chao Chien-min

C

oncerns were raised in China when Chen Shui-bian of the Democratic Progressive Party (DPP) was elected president of Taiwan (officially called the Republic of China or ROC) in March 2000. The main reason was his pro-independence stand. On the eve of that election, Chinese Premier Zhu Rongji warned Taiwan voters to think twice before casting their ballots for the "candidate of independence" lest they regret it afterwards.' A year and a half after this stunning election, relations across the Taiwan Strait seemed stable. Then the President's party, the DPP, managed to dislodge the KMT as the single largest party in the parliament after the election at the end of the 2001. Commenting on the results of the election, a spokesman from Beijing's Office of Taiwan Affairs reiterated the old policy that Chen and his administration would have to return to the "one-China" principle before contacts could be resumed between the two.2 Chen has been lauded for his moderation and caution in handling crossstrait relations. On the campaign stump, candidate Chen struck a conciliatory tone by saying that "Taiwan has de facto sovereignty and its name is the ROC according to the Constitution."3 This was considered a major break

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from the belligerent independence rhetoric the party had held previously. In his inaugural address, President Chen tried to calm critics skeptical about his intentions by pledging "five nos."4 The new administration under his leadership would not: declare independence, abrogate the official name of the country, incorporate the "state-to-state theory" into the constitution, hold a referendum on the issue of independence, or revoke the National Unification Guidelines and eliminate the National Unification Council (NUC). In an address delivered on New Year's Day, 2001, Chen surprised many when he proposed that the two sides should base their efforts on economic, trade and cultural integration and stride for a new framework of "political integration" and eternal peace.5 Beijing has not yet reciprocated these conciliatory gestures. Actually, Beijing seems to have concluded that, notwithstanding the rhetoric, Chen is essentially leading Taiwan gradually toward independence.6 One reason for their view was the vacillation that has characterized Chen's China policy. Chen often said things and retracted what he had said, sometimes almost immediately afterwards. As an opposition parliamentarian, Chen was known to have rejected the "one-China" principle—claiming that it was the People's Republic and had nothing to do with Taiwan. In the run-up to the presidential election, candidate Chen promised that once in office the issue could be put on the negotiation table. Since taking office, however, he has been running the gamut from a "future one China," to "one China, different interpretations," to the latest "there is no problem with the issue of China according to the ROC constitution." His assertion that there was only a "spirit of pursuing negotiation to resolve problems" rather than "consensus with regard to the 'one-China' issue" at a 1992 meeting between representatives of the Strait Exchange Foundation (SEF) and Association of Relations Across the Taiwan Strait (ARATS) confounded the issue even more.7 This lack of consistency can of course be explained by the DPP's lack of experience in governing. The party has had difficulty convincing people that it is mellow enough to create a safe environment in the Taiwan Strait area. The problem is further complicated by the fact that Chen garnered only just over 39 percent of the popular votes (less than 3 percent above another candidate) in the election and that his administration has to face, at

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least at the outset, a parliament, the Legislative Yuan, in which his party maintained barely a third of the seats. It is this reorientation from a politicscentered party to suit an economic-centered society that makes the party feel most uneasy.8 In this article the author argues that it is the DPP's factional maneuvering that has been the essential driving force behind Chen's indecisiveness. The writer will explore the DPP's factional past amid the debates concerning policies towards the Mainland that the party has engaged itself in. The article will conclude by suggesting that the reason behind Chen's failure to break the stalemate in the relations across the Strait of Taiwan, as he promised on the campaign road, is mainly caused by opposition coming from the fundamentalist Taiwan independence advocates in the DPP who do not want to give up the independence stand that they had held previously.

Factionalism an Ingrained Problem for DPP One of the major goals of the DPP has been the creation of a new Taiwan identity. However, the party has been dogged from the very beginning by a binary vision on this particular issue, one for immediate independence and the other for a more relaxed policy. The opposition movement started with a few members participating in the electoral process to become representatives of assemblies and local government administrators. Starting from the late 1970s, magazines became major venues for the opposition. Among them, the most influential one was the Formosa magazine. Formosa started publishing in August 1979 and had reached a circulation of around 100,000. The focus of the monthly magazine was on democracy and to most of the contributors it seemed to be easy to combine it with a Chinese identity. It was even a common claim that a better democracy might be molded out of Taiwan by combining it with Chinese culture.9 For them, all people in Taiwan had at one point immigrated to the island from the mainland and thus should strive together towards freedom and happiness. Four months later, a violent riot broke out in the southern port city of Kaohsiung following a demonstration organized by the Formosa group to commemorate Human Rights Day.10 Consequently, most of the leaders of the magazine were arrested and put in jail.

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In 1984 and 1985 there was a surge of opposition magazines. One of these magazines had the English title The Movement (xincaoliu, or the new tide). The magazine did not have a circulation of the size close to that of Formosa, but it attracted many important opposition politicians to its editorial board. The Movement introduced a new view on the status of Taiwan identity. Taiwan was now to a larger degree an integral part of the world as opposed to being merely a part of the Chinese cultural sphere. Democracy was still important but Taiwan independence and the role of the Taiwanese as victims of the arbitrariness of the Mainlanders had become a far more prominent concern." By the time the DPP was formed and convoked its first congress in 1986, it was Kang Ninxiang, a member of the Legislative Yuan, and his faction of moderates, and the New Tide faction (xincaoliu xi), members basically from The Movement magazine who are radical in ideology, who took the lion's share. The Formosa faction (meilidao xi), formed by families and defense lawyers (including Chen Shui-bian and Frank Xie, the current Chairman of the Party) involved in the Kaohsiung Incident, was marginalized due to the fact that most of its leading persons were imprisoned. The release of two prominent DPP figures, Huang Xinjie and Zhang Junhong, in May 1987, benefited the moderate Formosa faction,12 setting the stage for a party in which three major factions would dominate the internal policy debates. But the legacy of the Kaohsiung Incident, and the fact that almost all senior DPP leaders were members of the faction, make the Formosa leaders the most dominant force to reckon with. The situation did not change until 1991 when many members of the overseas independence movement based in the United States were allowed to return. By allying with overseas independence fundamentalists, who were extreme militants (who would not rule out violent revolution as a means to fulfill their goals), the radical New Tide faction finally became the most dominant force at the fifth DPP Party Congress held in October 1991 for the first time. Two new minor factions were formed in 1992, playing a conciliatory "third party" role. Then legislator Chen Shui-bian split from the Formosa in that year and formed, together with Annette Lu, now the Vice President, his own Justice Alliance. Frank Xie, who had been close to the radical New

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Tide, coalesced with a few heavyweights including Yao Jiawen (former DPP Chairman elected at the Second Party Congress in 1987) and Shi Mingde (former DPP Chairman elected at the Six Party Congress in 1994), and formed the Alliance for Laissez-faire Nation, for the purpose of gaining seats in the year-end election in the Legislative Yuan. The Kang Ninxiang Faction, however, started to fizzle out when the party convened its third congress in 1988. A more enduring two-plus-two pattern emerged. But internal power struggle within the Formosa faction, pitting the two most influential politicians and close allies, Xu Xinliang and Chang Junhong, against each other for the party chairmanship at the Seventh Party Congress in 1996, decimated the faction. Although Xu defeated Trong Tsai of the Alliance for Laissez-faire Nation and won the chairmanship, the faction gained only three seats from the eleven-seat Central Standing Committee. The most powerful faction of the DPP was thus reduced to the smallest. (See Tables 4.1 and 4.2.)13 It became inevitable that the party would head towards the radical end of the ideological spectrum. Table 4.1. Major Factions within DPP and Their Key Leaders, 2001 Factions Formosa faction

Key Persons Huang Xinjie (former DPP Chairman, deceased) Xu Xinliang (former DPP Chairman, withdrew from DPP) Zhang Junhong (formed his own faction, the New Century)

The New Tide Faction

Qju Yiren (Secretary General, the Executive Yuan) Wi Nairen (Secretary General, DPP) Lin Zhuoshui (member, the Legislative Yuan) Hong Qicang (member, the Legislative Yuan)

Alliance for Laissez-faire Nation

Frank Xie (DPP Chairman) Yao Jiawen (former DPP Chairman) Shi Mingde (former DPP Chairman, withdrew from the party)

Justice Alliance

Chen Shui-bian (ROC President) Annette Lu (ROC Vice President)

Table 4.2 Seats Won by Different Factions in the DPP Central Standing Committee, 1986-2000 Party Congress

1st

2nd 2nd

3rd 3rd

4th 4th

5 5th th

6th 6th

7th 7th

8 th 8th

9th 9th

1986

1987

1988

1989

1991

1994

1996

1998

2000

§

Factions

S

Pan-Formosa

0

4

5

5

4

4

The New Tide

5

2

2

5

5

2

Alliance for Laissez-fair Nation

1

3

3 3

3

0 2

&

2

2

4

£ 3

Justice Alliance

1

Other

6

Total

11

5

4 11

11

3

2

1

13

11

II

2

3

11

11

2 1

2

3

11

Sources: Huang Defu, Minjuijinbudang yu taitvan diqu zhenzhi minzhuhua (DPP and the Democratization in the Taiwan Area) (Taipei: Shiying Publishing Co., 1993), p. 8 1 ; Liu jincai, Dtidan xijin? jiejiyangren? Minjindang dalu zhenche poxi (Go Westward Boldly? Or No Haste, Be Patient? An Analysis of DPP's Mainland Policy) (Taipei: Shiying Publishing Co., 1998), Chapter 4; Zhiyou shibao (Taipei: Liberty Times) July 20, 1998, p.2.

jg. re 5 re 3 C JJ §

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107

Transition Towards Radical Independence It is evident that from its inception the DPP has been split ideologically between the moderates and the radicals. The schism centered around Taiwan's status in relation to China. A central issue evolved from this: the concept of zhumin zhijie, or plebiscite by the inhabitants, in which claims shifted from the creation of a new and independent country known as the Republic of Taiwan to that of Taiwan being a de facto independent country with no need to further prove its status. On top of that, the position on Taiwan independence was not unanimous, at least not in the period before and shortly after the party was formed. Actually, suggestions for actively engaging China and even unification were not uncommon in the early years. As an opposition movement loosely bound under the name dangwai (literally outside of the KMT party), the moderates, contradicting the radicals, didn't want to challenge the KMT's "one-China" policy. Nevertheless, voices were heard from both camps calling for an end to the government's "three nos policies"—Taiwan would not enter any negotiations with China, nor conduct direct communications and make any compromise with China.14 One can certainly detect political motivations behind the opposition movement's objection to the KMT's mainland policy. As a newly emerged political force, dangwai was trying to copycat rules of party politics, and some within the opposition camp believed that an end to the KMT's strict policy might alleviate to some extent the isolation that Taiwan had found itself in since severing formal diplomatic relations with the United States in January 1979. But it also reflects the reality that the opposition movement really started out as a democracy movement, and to actively engage China not only did not contradict that goal but also might actually help the cause. In the early years, many joined the opposition with the conviction that democracy and the end of the KMT's autocracy were worthy causes and the creation of an independent country separate from China was a deviation from that conviction. It was out of this conviction to discontinue KMT rule that the older generation of the democracy fighters joined forces, Mainlanders and Taiwanese. It is therefore no surprise to learn that some senior DPP politicians like Fei Xiping, Zhu Kaozhen, and Lin Zhenjie, all mainland-

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ers and members of the Legislative Yuan once, craved for unification, Chinese federation or confederacy in the late 1980s.15 However, as democratization gathered momentum with localization (Taiwanization) as the main driving force, things started to change. As the elements demanding unification were gradually squeezed out of the party, differences over the pace of Taiwan independence and relations with China started to widen. At its first Party Congress in November 1986, a clause was added to the DPP charter stating that "the future of Taiwan should be decided by its inhabitants." This simple statement pushed the issue of self-determination to the fore. But differences remained as to how and under what conditions a plebiscite should be used. To the moderate Formosa group and its allies, self-determination was only one way to demonstrate that the people of Taiwan had the final say in choosing their destiny and independence was just one of the options; but for the radical the New Tide faction, "selfdetermination" was equivalent to independence and had to come before any authentic democracy could be realized.16 The first major test for the faction-torn DPP decision-making process in the DPP came in 1988 when disagreements surfaced in a Party Congress. While debating a possible amendment to the party platform to incorporate the sensitive subject of "freedom of Taiwan independence," radicals led by party chairman Yao Jiawen demanded that the future of Taiwan "be handed back to its people" and that the DPP must "point out a direction for the people of Taiwan."17 Supporters cited favorable public opinions conducted by the Party machine to bolster the inclusion. The moderate Formosa faction, however, called for caution and advised against any revision. Faced with this dilemma, two minor factions under the stewardships of Chen Shui-bian and Frank Xie came to the rescue with two separate compromise proposals. In the end, a conciliatory and now famous "four ifs" were conceived.18 The DPP, it was purported, reserved the right to exercise independence (1) if the KMT and the CCP entered negotiation without the DPP; (2) if the KMT betrayed the interests of the Taiwan people; (3) if the CCP attempted to conquer Taiwan by force; and (4) if the KMT refused to implement authentic democracy.

The DPP's Factional Politics and Taiwan Independence

10 9

Taiwan's democratic experiment received a boost with the arrival of the new native Taiwanese president Lee Teng-hui in 1988 and a new wave of democratization in the former socialist states in Eastern Europe and the Soviet Union. This hastened change in the DPP at the turn of the 1990s. As a consequence, the party took a drastic turn towards radicalization, strengthening the New Tide faction in the process. It was obvious that the influences of the New Tide and the "third force," comprising the two minor factions, were on the rise at the expense of the previously dominant Formosa faction (see Table 4.2). The return of the more radical independence advocates at the beginning of the 1990s from abroad further tipped the balance. The National Assembly and Legislative Yuan elections held in 1991 and 1992 respectively, in which the old "tenthousand-year parliament" (wannien guohui) was structurally rejuvenated, helped boost the confidence of the young political party.19 Externally, factors converged to give rise to unrealistic expectations out of which a radical Taiwan nationalism was conceived and nurtured. These factors included the aversion the international community displayed towards China after the suppression of the student movement in Tiananmen Square in 1989 (known throughout the world as the Tiananmen massacre), the collapse of the former Soviet Union, and the relative improvements of Taiwan's standing internationally, manifested by the sale of the F-l 6s by the Bush administration in 1992 and the subsequent revision of U.S.-Taiwan policy by the Clinton administration in 1994.20 These factors together gave a false sense of security to some in Taiwan and convinced them that the time was ripe to start a new nation. Over the next few years, the radical New Tide faction displaced the Formosa faction to become the most dominant faction in the DPP. Consequently, overtures made by the party's top echelon to China were irrevocably reversed. The first sign of this sea change surfaced in 1990 when the radicals decided to redefine the notion of the country's sovereignty at the Second Central Committee Plenum Meeting of the Fourth Party Congress so that a more separate identity could be carved out vis-a-vis China. To counter China's "one country, two systems" offensive and to show its disapproval of the newly-created National Unification Council by the KMT govern-

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ment, the New Tide faction pressured the government to declare that the sovereignty of Taiwan "does not extend to the Chinese mainland and Outer Mongolia," and to urge the PRC to publicly recognize Taiwan as a sovereign country. In the end, a resolution was passed granting the exclusion but using a less abrasive phrase "de facto sovereignty," rather than "original sovereignty."21 Another major transition came in August 1991 when the newly-formed DPP adopted a draft constitution for a future new country it called the "Republic of Taiwan." This was viewed as a major step towards severing relations with China and achieving the status of de jure independence. Two months later at the Fifth Party Congress, Lin Zhuoshui, a parliamentarian deemed the foremost Taiwan independence theorist, proposed revising the party platform on behalf of the New Tide faction. It called for "establishing a fully independent sovereign nation by the name of the 'Republic of Taiwan.'"22 Xu Xinliang, a heavyweight from the Formosa faction campaigning for the Party Chairmanship, reversed a long-held position favoring de facto independence and endorsed the radical proposition in order to garner support from the opposition camp.23 The Congress then passed a resolution proposed by Chen Shui-bian to include the notorious "independence clause" in the platform and added a condition: requiring a plebiscite before a new sovereign country was formed. It was further decided that the term CCP referred to in the party platform should contain a more "sovereign" idea encompassing the People's Republic of China. From then on the party was stigmatized as a party for independence. The DPP had thus shifted from a position advocating a "plebiscite by the inhabitants of Taiwan," without stating any presupposed conclusion regarding independence, to one embodying a fanatical Taiwan nationalism in which nation-building was preeminent.24 From then on, the issue of sovereignty and the creation of a new identity dominated the debates within the Party. The radicalization of the party forced some moderates to beat retreat. By June of 1991, people like Fei Xiping, Zhu Kaozhen, and Lin Zhenjie who had expressed "greater China thinking"—calling for unification, Chinese federation or confederacy—cited prevalence of Taiwan independence thinking within the party as their reason for bowing out of the party.25

The DPP s Factional Politics and Taiwan Independence

1 1 1

At this moment, it was ultra-clear that there were two forces within the DPP competing for both ideological as well as political supremacy. (See Table 4.3.) For the moderate Formosa faction and its allies, economic relations with the Chinese mainland were critically essential to this island's future, and Taiwan should take advantage of the geographic proximity and the complementary nature of the two economies. Equipped with a free market economy and liberal democracy, Taiwan should be confident to exTable 4.3 Idealogical Differences between Moderates and Radicals

Ideological Orientation

Strategies

Taiwan/China Relations

Attitudes towards KMT

Means to power

Pan-Formosa Faction

The New Tide Faction

Economics determinism

Politics first

Taiwan and China have complementary interests

National security before economic interests

Proactive

Defensive

Taiwan's existence and people's livelihood have precedence

New national identity

Dadan xijin (westward policy)

Quiangban jianjin (selfstrengthening and go slow with China)

Keep China in check with commercial interests

Keep China at a distance

Democracy more important

Democracy on par with

than sovereignty

sovereignty

De facto independence

De jure independence

Plebiscite by the inhabitants

Plebiscite equates independence

KMT an outside regime but changing

Outside regime, hard to change

Willing to get involved in KMT-led government

Refuses to participate (such as National Affairs Conference and National Unification Council) in KMT-led government

Peaceful means through elections

Peaceful revolution, mass movement

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pand westward (dadan xijin). As for political relations with China, Taiwan was quite content with its de facto sovereign status. Should there be any change of that status in the future, it is going to be decided by all inhabitants of the island through the comprehensive mechanism of a plebiscite. For the radical the New Tide faction, to create a separate Taiwanese political identity distinct from that of China's is the uttermost important task for the people of Taiwan. In order to realize that goal China should be kept at a distance, economically and otherwise. What Taiwan ought to do, according to this group of people, is to strengthen itself and to withstand unification pressures coming from the other side of the Taiwan Strait. So the policy of qiangbanjianj in (self-strengthening and go slow with China) was affirmed. The KMT was indeed an "outside regime" and for that reason the party should try its best to avoid having any relations with it. To stay put and maintain the status quo is far from enough. Taiwan, they said, needs to strive for the establishment of an internationally recognized sovereignty.

From "Old Independence" to "New Independence" In the early 1990s, the radical and militant bent of the DPP met with resistance from both within and without the party. This prompted DPP leaders to rethink their strategy. The first challenge came from a reinvigorated and rejuvenated KMT. After a shaky start, President Lee Teng-hui gradually consolidated his power base against the old-guards within his party. Lee's drive to democratize Taiwan and the localization initiative innate in the process blurred the heretofore ideological differences between the party he was leading and the biggest opposition party, the DPP. To the latter, the KMT was no longer an "outside regime" run by an elite group who had fled from China and were estranged from the masses. Lee's expressions such as "sad to be a Taiwanese,"26 "the new Taiwanese,"27 and "popular sovereignty" were greeted with trepidation by the DPP as they saw their legitimacy platform being hijacked by the KMT. On the other hand, the radical ization of the DPP as well as Lee's localization drive deepened the misgivings of right wingers in the KMT over the direction that Taiwan was heading. The founding of the Chinese New Party

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(later the New Party) in August 1993 and the subsequent election for the mayor of Taipei in 1994 had a similar effect. Two years later, after the first direct presidential election in 1996, the DPP was forced to make another round of adjustment. The defeat of the DPP candidate Peng Ming-min in the presidential election and the firing of missiles near Taiwan shores by Beijing on the eve of the election were catalysts for the change. The moderates worried about the emergence of radicalism. Former Party Chairman Xu Xinliang broached the idea of a new Taiwan nationalism in an attempt to differentiate it from the old type of nationalism. The old nationalism, according to Xu, was defensive, timid and full of hatred, while the new one was based on self-confidence, open-mindedness, and aggressiveness. Xu questioned the wisdom of building a new nation in the light of Taiwan's tumultuous relationship with its giant neighbor, China. The key to Taiwan's future, Xu argued, was to forge a close bond between the people and the government through economic ties so as to suppress the old problem of identity.28 .

Xu's arguments set in motion a new round of debate within the DPP, and the old paradigm of Taiwan independence gradually gave way to a new line of arguments in which pragmatism was added to the equation for the first time. The well-being of the people of Taiwan and the building up of the island's aggregate strength were placed on par with sovereignty as major DPP concerns in strategizing Taiwan's relations with its neighbor across the Strait. The most dramatic change came when Shi Mingde, then Party Chairman and once a die-hard radical independence advocate, made a shocking announcement while visiting the United States in September 1995 that, once in power, there was "no need for the party to declare independence." This triggered a second round of debate over the party's stand on independence and the question of national identity. Some deemed the announcement a "paradigmatic revolution" in the evolution of the movement for Taiwan independence,29 and the forsaking of the old conviction of seeking a new sovereign entity. Even Lin Zhuoshui felt compelled to rephrase his previous position by saying that "sovereignty is already attained but the goal of nation-building is yet to be fulfilled."30

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The new theory called for an end to the old position that Taiwan's status remained open after Japan ended its colonial rule. To bring down the political establishment (meaning the KMT) was no longer a priority; nor was it a priority to "build a new country." Instead, crafting a new image more appealing to the majority of voters took precedence, as the DPP started preparing for a possible power changeover. DPP candidate Peng Ming-min's humiliating defeat in the 1996 presidential election, getting only 21 percent of the popular votes cast, was what prompted this round of debates. Deputy Director of the DPP Cultural Department Zhou Yizen issued the "Program of Taiwan Independence for the New Generation" in May 1996, challenging the "old Taiwan independence" publicly. As Zhou contended, Taiwan independence should not be based on hatred towards China, or towards the "regime from outside" (meaning KMT), nor on the creation of a new name and flag.31 In other words, Taiwan independence should not be promoted based on an unrealistic dream; rather, it should be pursued because of the "utilities" or advantages that it is going to bring to the people of Taiwan. Therefore, with a pragmatic attitude of engaging China and a wholesome mentality of hope and pride, the people of Taiwan can overcome the antipathy endowed on them by unfortunate historical events. It is time to bid farewell to idealistic Taiwanese nationalism and embrace democracy, as one official put it, something the opposition has been fighting for decades. Maintenance of the status quo thus emerged as the new consensus among the younger generation of the DPP. Table 4.4 shows the metamorphosis of Taiwan independence in the mid-1990s. The changes were very much a reflection of the factional divergence in the party. It is apparent that the hope for electoral victory was the catalyst behind the transition. But external pressures had no doubt also helped facilitate the change. President Bill Clinton's visit to China and the reaffirmation of the "three nos policy" (the U.S. would not support Taiwan independence, one China, one Taiwan, nor Taiwan's quest for membership in international organizations with statehood as requirement) disheartened Taiwanese. This prompted the DPP Central Standing Committee to issue a statement reaffirming Taiwan's de facto sovereignty while asserting that any change of that status would require popular balloting. The notorious "plebiscite for independence" was thus recast as "referendum for unification."

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Table 4.4 A Comparison of the Old and the New Independence Movements New Taiwan Independence

Old Taiwan Independence

De facto independence

De jure independence

Maintain status quo (ROC on Taiwan)

New country by the name of ROT

Relations with China

Engagement

Separation

Strategy

Peaceful reforms to protect Taiwan (gesinbaotai)

Social revolution and overthrowing the "outside regime"

Mentality

Pragmatism, hope, democracy

Idealism, hatred, nationalism

Taiwan's Status

The DPP's Victory and the Reformation of Factions What happened in March 2000 understandably had a profound impact on the DPP and its factions. Chen Shui-bian's unexpected victory and the DPP's becoming the ruling party fundamentally altered the party's factional configuration and hence, its modus operandi. For the first time in the party's history, there was a person who commanded authority above the party who transcended the factions. However, the restructuring appeared to be in form rather than in substance. As head of a minority government, President Chen had wanted to organize an administration on a non-partisan basis, a "cabinet of all people" {quanmin neige). The decision to pick General Tang Fei of the KMT as the Premier was evidence of that policy. Faced with strong opposition from the KMT-dominated Legislative Yuan, Chen needed to build a working alliance with opposition KMT legislators sharing a similar ideology. Unfortunately, these policies did not receive unanimous support from within the DPP. Consequently, six months into his presidency Chen was forced to accept Tang Fei's resignation to take the blame for the flip-flop over the construction of the fourth nuclear power plant.32 Restrained by factional considerations and hindered by the fact that the radical New Tide faction had the lion's share of influence in the intra-party power game, as it held many important positions such as the secretary generalship of both the Party and the cabinet, the President balked at making resolute decisions.

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The flip-flops undoubtedly provided ammunition for Chen's opponents, fermented new resentment across the Strait and created alienation within his own party. The weakening of the moderate wing in the DPP put Chen in a very difficult position. Former Party Chairman Xu Xinliang, a major force in the Formosa faction, resigned from the Party to take part in the 1996 presidential election, only to lose to Peng Ming-min in the primary. Some heavyweights within the faction, including Zhang Junhong, split from the faction to form the New Century faction in 1998 because of dissatisfaction with the Party's strategy to ally with the KMT and its engagement policy with China designed by Xu. The Formosa faction eventually ceased to be a credible political force (see Table 4.1). Today, faced with a single-dominant faction with a radical ideology, Chen Shui-bian's hands are tied. To show support for the president and to better position themselves for maximal political gains, four small factions formed the Mainstream Alliance faction soon after the election. The dominant New Tide faction and the New Century faction, a weak remnant of the once mighty Formosa, coalesced to form a second "power bloc."33 But the redrawing of the factional map did not resolve the chronic problem of intra-party differences.

DPP Factionalism and Chen Shui-bian's China Policies Chen Shui-bian's policies toward China have to be understood in the context of factional politics within his own party. The first casualty was the party's stance on the "one-China" issue. The Resolution on the Future of Taiwan, passed at the Second Plenary Meeting of the DPP Eighth Party Congress in May 1999, stated unambiguously that Taiwan should forsake the "one-China" principle to avoid confusing the international community and to avoid facilitating a hostile takeover by the PRC. The party's leadership on the left had constantly warned their followers of self-destruction should the principle be accepted. Consequently the president on different occasions described himself as "ethnic Chinese," dodging the term "Chinese."

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Dr. Lee Yuanze, the highly respected head of Academia Sinica, who was believed to have helped tip the balance towards Chen at the last moment of the presidential election campaign by publicly throwing support behind him, was scorned by DPP hard-liners when the Cross-Strait Crossparty Advisory Group (CC AG), a task force commissioned by the president to formulate a consensus under Lee's stewardship, pointed out that the "one-China" issue was something the new administration could not run away from.34 DPP chairman Frank Xie, who, along with the president, was one of the most respected politicians in the ruling party, suffered the same fate when he suggested that unification could be an option.35 In trying to break the Beijing-Taipei stalemate, Xie proposed sticking to the ROC constitution as a way to counter Beijing's insistence on "one China." For this, Xie was censured by members of his own faction, who demanded that he adhere to the party line when speaking on behalf of the party.36 Realizing cross-strait relations were the Achilles' heel on his way to the presidency, candidate Chen carefully paraphrased Anthony Giddens's "the third alternative"37 and crafted the "new middle of the road" {xin zhongjian luxiari) policy during the 2000 presidential campaign, promising moderation in making policies towards China. In his 2001 New Year's address, President Chen proposed that the two sides should "base their relations on the current economic and cultural integration, build up mutual trust, and work towards a new framework of political integration which would sustain eternal peace."38 (See Appendix VII.) The proposal was considered far-fetched, given DPP's lack of consensus on China policy. But it did not come out of the blue either. In the 1999 Resolution on the Future of Taiwan, the party vowed to build "special relations" with China. Veteran party leader and former Chairman Lin Yixiong suggested "common tariffs," "free trade zone," and a "common market" as possible scenarios that the two sides may enter.39 Another former party chairman Shi Mingde coined the term "Great Chinese Confederacy."40 These previous proposals no doubt have helped soothe repercussions that might have been generated out of the bold initiative of "political integration." However, dissent expressed by members of the radical New Tide faction as well as the militant fundamentalists, including the Taiwan

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Independence Part {Jianguodang) and Taiwan Presbyterian Church (which had long taken a pro-independence stance), forced Chen to back away.41 For people like Peng Ming-min, Lee Cheng-yuan, former head of the Taiwan Independence Party, and Lee Hong-xi, President's teacher at the National Taiwan University Law School, President Chen has already given in too much on the issue of "one China" when he pronounced the "five nos" at inauguration and thus backpedaled the position of Taiwan independence. There was some concern within the party that as long as the "independence clause" remains in the party charter, there will be trouble. Over the years, the moderates had been urging revision of the "independence clause" in order to alleviate pressure on Taiwan and the party from outside and to reduce misgivings from potential voters. For them, the reason for not pushing for a total obliteration of the independence position was a strategic one that would enable the party to gain leverage vis-a-vis Beijing's incessant demands. Shen Fuxiong, a member of the President's Justice Alliance faction and an eloquent legislator with an island-wide reputation, once proposed revision of the clause. It was not unanimously endorsed and no revision was made at that time but it helped spur a rethinking about the once sacred credo of Taiwan independence within the party. Rumor was rife that soon after the DPP won the presidential election, Chen Shui-bian would change the policy. In fact, he urged Chen Zhaonan, a member of the New Century faction, to "test balloon" the possibility of getting on with the revision.42 The proposal was dropped when the radicals expressed opposition and the government chose to remain mum as a result. Nevertheless, Party Chairman Frank Xie and veteran politician Zhang Junhong expressed support. For these politicians, a plebiscite for independence should be defensive in nature. As long as Beij ing does not use force as a means of resolving differences, there is no need for Taiwan to resort to the use of a plebiscite. Hence, to trade independence for a no use offeree pledge from Beijing was highly recommended by the moderates. As for the New Tide, the goal of independence has been an "untouchable" shengzhupai (a sacred tablet) policy. Chen Shui-bian's promise of "five nos" had already, in their view, constrained the "independence clause," and therefore there was no need for further amendment.

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However, on the eve of a crucial election to renew the parliament and local administrators held in December 2001, Taiwan's stock prices had dropped almost 50 percent since the DPP became the ruling party, its currency devalued to the lowest rate in seventeen years, unemployment surged to an all-time high of 5.3 percent, and the real estate market had plunged precipitously. The economic slump had forced the new administration to take Draconian measures. Domestic business tycoons such as Morris Chang, the chairman of the world's largest chip maker, the Taiwan Semiconductor Manufacturing Company, had reversed his decision not to make large investments in the mainland in the near future announcing that he now sees the mainland market as "irresistible."43 Well-known multinational corporations with interests in Taiwan such as Dell heightened the anxiety by purporting that unless the problem of direct shipping is resolved, the company is going to relocate its Taiwan headquarter to either Hong Kong or the mainland.44 Confronted by the unprecedented economic woes, president Chen Shuibian convened a meeting of the newly-formed cabinet-level Economic Development Advisory Conference in August 2001 to find answers. The month-long conference ended with a decision to replace the "no haste, be patient" policy with an "active opening and effective management" policy. Over all, 332 "consensus decisions" on taxation and finance reforms, including 36 aimed at developing closer economic ties with China, were passed. Among them, the most significant one was the lifting of the US$50 million cap on single investments in the mainland and the limit on total investments there by listed companies. It also urged the government to actively pursue direct trade, transportation and postal links, the so-called "three direct links" with the mainland.45 It was thought that the president resorted to the unorthodox decisionmaking mechanism to circumvent possible opposition by the extreme fundamentalists within his own party. The New Tide faction had basically supported the shift of policy. However, speaking on behalf of the fundamentalists, Vice President Annette Lu expressed her unhappiness by criticizing the president, saying that "those in charge should have the courage and consciousness to face history."46

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Future Developments The surge of radicalism in the early 1990s in the DPP had been a cause of concern for Beij ing as noted above. The moderates had lost out in the power struggle to the radical New Tide faction, which has since demonstrated extraordinary capabilities in maintaining party discipline.47 Ironically, the moderates' position on the sensitive issue of Taiwan independence was adopted by the radicals. This was especially evident after the DPP became the ruling party and the New Tide emerged as the major force with which to contend within the party. However, a small group of fundamentalists sticking to the original goal of Taiwan independence continued to hold sway in the making of the Chen administration's policy towards China. From Beijing's point of view, the present situation is precarious at best. For Beijing, Chen Shui-bian is devious and untrustworthy. Qian Qichen, China's vice premier and the second in command in the CCP's Office of Taiwan Affairs, said in July 2000 that both Taiwan and the mainland are parts of China. This replaced the more conventional "there is one China in the world and Taiwan is a part of it." It was the first time that a major policy maker had made such an inclusive definition of China, and can only be interpreted as a reflection of the consternation on Beijing's part. Although the DPP has gradually redefined the terms of independence by stressing preservation of the status quo over reconstruction of a new entity, it is highly unlikely that Beijing would find this acceptable. Chen Shuibian's inconsistency has furthered Beijing's misgivings. Chen had formally reaffirmed in his 2001 New Year's address the "one-China" creed, albeit conditional on the ROC constitution,48 but Beijing has not made any favorable response. Secondly, Chen's attitude towards the National Unification Guidelines, a document enacted by former president Lee, is an indication of his stand on the independence issue. In his inaugural address, Chen pledged not to revoke the document. In his 2001 New Year's speech, President Chen stressed that he would "establish a new mechanism or readjust the old ones [meaning the National Unification Guidelines and the National Unification Council] as soon as possible." But so far nothing has happened. Neither the document nor the Council is annulled, although they have become less important.

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On top of his pronouncements of "one China according to the ROC Constitution" and the possibility of resuming the NUC meetings, President Chen had painstakingly coined the term "political integration" in his 2001 New Year's address, only to withdraw it later. It thus seems that President Chen has tried to chart an eclectic line to please both Beijing and DPP supporters. What has happened suggests that he has failed on both accounts. Factional restraint has limited Chen's ability to create a breakthrough in cross-strait relations. Beijing's response to his first anniversary address in May 2001 (see Appendix VIII) in which he declared that he would start negotiations with Beijing on any issues and at any place, and that he would like to attend the annual APEC meeting to be held in Shanghai in November 2001 to meet with President Jiang Zemin, was rather cool.49 A "new five nos policy" (military procurement from and transit through the U.S. are not to be taken as provoking China; the ROC government would not miscalculate the situation in the Taiwan area; Taiwan is not a pawn of any country; the Chen government will not spare any effort in improving relations with Beijing; cross-strait relations is not a zero-sum game50) made by Chen on a trip to Central America in May 2001 was met with a large-scale military drill on an island near Taiwan. Whether Beijing would alter the policy of "listening to his words and watching his deeds" was, said one observer, the thing to watch next. Beijing has made it very clear that unless Taipei reverses its current policy and reverts to the "one-China" consensus reached between the two sides in November 1992 that bilateral relations are unlikely to be normalized. Whether the Chen Shui-bian administration would respond to that call is contingent to very large degree upon what positions the radicals within the DPP take. So far there is no sign that the radicals are ready to make any concessions on this issue. Pressures are mounting. One year after taking power from the KMT, the DPP has found itself in an extremely unenviable situation. The economic growth rate is at a low not seen in decades; the unemployment rate is the highest since the government started tabulating it; a new wave of "mainland fever" is haunting the island as a large amount of Taiwan capital is flowing west to the mainland market (latest statistics say more than 43

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percent of companies listed on the Taiwan stock market have established footholds on the other side of the Strait). More and more engineers, managers, and college graduates find China an attractive job market (it is estimated that the number of Taiwan business and staff Hvingthe mainland is growing rapidly and Shanghai alone accounts for 350,000 Taiwanese).51 Domestic confidence has reached a new low as uncertainties over the future of the island mount. Thus, support for the "one country, two systems" formula, a propaganda gimmick designed by Beijing in the early 1980s to allure Taiwan back to the mainland fold,52 reached a record high (in three polls conducted in mid-2001 by Taipei media organizations, between 29 and 33 percent of Taiwan residents said that they could live with the model; previous such figures were all below twenty percent). For a party which started out in local politics mobilizing the masses and winning elections as the only means that it knew for grabbing resources away from the once mighty KMT, these pragmatic pressures might speak aloud to the decision-makers of DPP, moderate or not. The DPP may find some consolation in winning the 2001 year-end elections and in the emergence of the party as the largest political force in Taiwan. The party grabbed 87 seats compared to the KMT's 68 seats in the 225-member parliament, an increase of 20 seats. Voters seemed intent on giving the fledgling ruling party another chance. The message that the voters sent to President Chen concerning cross-strait relations was unequivocal: there is no need to change. If that is the message, then the mandate that many pundits expected presented to Chen to further adjust his policy towards Beijing by a less than an overwhelming victory was lost. It is henceforth less likely that the Chen administration would make any drastic overtures to lure Beijing back to the negotiating table.

5

Dynamic Stability in Beijing-Taipei Relations George W. Tsai

The Need for Peace and Stability

W

hile the term "dynamic stability" used in the title of this chapter may appear to suggest the presence of a considerable degree of instability or element of crisis in cross-strait relations that might evolve into a direct conflict or perhaps even military confrontation, this is not really the case. The concept rather describes a situation that appears dangerous, but, as the author will argue, is actually not so threatening. The reason for this is that various considerations restrain all the players from pushing their demands too far. This is true even though both Beijing and Taipei adhere to certain non-negotiable positions that make resolvingthe standoff virtually impossible. Maintaining peace in the Taiwan Strait is certainly not only in the interests of Taiwan, but is to the advantage of China for a host of reasons (though Chinese leaders, especially the military brass, often suggest otherwise). In addition, all the neighboring Asian countries and the international community likewise consider tranquility in the Taiwan Strait desirable, if not vital, to a peaceful region and world. There are at least three sets of arguments that can be made for the socalled Taiwan Strait "flashpoint" (as many students of strategic issues call

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the area, suggesting an explosive or tinderbox condition) being, rather than a tinderbox, a situation of dynamic stability. The author will elaborate on these points below. First, China needs a peaceful environment both internally and externally to sustain its impressive twenty-plus years of economic growth. Moreover, to Chinese leaders China's economic miracle is far from over. They want the country to continue to grow and become a rich country. A stable, or at least more predictable, cross-strait relationship will indeed enable Chinese leaders to continue to focus on China's domestic matters, especially its prospering, but in many ways fragile, economy. It will also help Chinese leaders rein in China's hawkish military leaders and dampen their demands for bigger budgets and more arms, which take money away from development projects. Furthermore, a stable relationship across the Taiwan Strait, especially if it is under China's contrived and sometimes seemingly insincere efforts, will certainly help boost China's image among Taiwan's populace and help further woo investments from the island, which totaled US$177.5 billion in March 2001.' Trade (due to the imbalance in Taiwan's favor) has a secondary desirable effect: It encourages Taiwan's investment in China. It has other important benefits and notably has increased markedly in recent years. Second, leaders in Taiwan face a similar situation. While it is true that the Kuomintang (KMT) in recent years has become more localized, and the Republic of China has been "Taiwanized" under Lee Teng-hui and Chen Shui-bian, no key leader in Taiwan, including perhaps most of all, President Chen, can afford to let cross-strait relations deteriorate beyond repair. As opinion polls have repeatedly shown, the people, regardless of their views on independence or unification, want a stable cross-strait relationship.2 In fact, most people in Taiwan (the very large majority according to many polls conducted over a long period of time) prefer to keep the status quo. Most do not favor or support independence. Most do not oppose negotiations with China even though they do not favor unification, at least in the near term. What they do insist on, however, is negotiating with the mainland on an equal footing, at least in a comparative sense; in other words, keeping the nation's sovereignty if and until they decide otherwise. They demand

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the right to choose. Most important, in the context of Taiwan's current politics, they do not want President Chen to provoke a risky or unnecessary conflict with China. The ruling Democratic Progressive Party (DPP) and the shrewd, legally trained President Chen both know where the limits are in dealing with Beijing and what the majority wants. Chen's situation is not unlike Jiang Zemin's. And like his predecessor Lee Teng-hui, Chen also thinks he can take advantage of a stable relationship between the two sides to consolidate his power at home. Chen likewise understands that he must not waste time and energy quarreling with China and needs to concentrate on resolving the immediate domestic economic and political problems currently plaguing Taiwan. This simple fact helps explain, at least in part, why he declared the so-called "four-nos and one-without" (si buyi meiyou) in his inauguration speech on May 20, 2000.3 Adding pressure on President Chen not to create any new fiction in the cross-strait relationship is his realization that Taiwan's economy, now in a serious recession, depends even more on good relations with China. Chen is understandably under duress from business leaders and those aware of the state of the economy to seek some sort of rapprochement with China. The consensus reached in the Economic Development Conference in August 2001 is a case in point. The delegates advised the government to scrap the "go slow, be patient" (jieji yong ren) policy, which Chen inherited from Lee's reign, toward China. Chen accepted this recommendation among others. Also, to avoid being depicted as the troublemaker either by the United States or China, as Lee was frequently called, Chen has to show his goodwill and flexibility in dealing with the People's Republic of China. Chen has to demonstrate his sincerity by seeking a rapprochement with China on the one hand, while not giving up his principles or pro-independence ideology on the other. It is true that Chen is "sandwiched from within and without" as observers in Taiwan often say; hence, he cannot antagonize Beijing and thus provoke a confrontation. Chen is walking on a tight rope while trying to mold himself into a so-called new "middle-of-the-road" leader, as he has promised to do.4

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Third is the U.S. factor. Although often criticized for its lack of consistency in its policy towards China, the United States' China policy as it relates to Taiwan has shown a good deal of consistency over the years. U.S. policy toward Taiwan (in the context of United States-China policy) is founded on the three Communiques of 1972, 1978, 1982 and the Taiwan Relations Act of 1979. The four "pillars" of U.S. policy toward both China and Taiwan can be best summarized as: first, there is but one China; second, Taiwan is part of China; and third, the U.S. demands a peaceful resolution of the "Taiwan issue" and seeks to encourage cross-strait dialogues.5 Out of consideration of its own national interests and what it considers a just policy, what the U.S. will nottolerate is either side alteringthe dynamic status quo unilaterally, especially by non-peaceful means. There are compelling reasons for these policies. First, tensions across the Taiwan Strait in recent years have repeatedly reminded Americans of the need to handle the so-called "Taiwan issue" with extreme care or risk being dragged into an unexpected war with China. Yet, Taiwan's security is America's "grave concern," as explicitly written in the Taiwan Relations Act. It is, in short, America's responsibility. The U.S. cannot afford to offer Taiwan a blank check and let it provoke a confrontation with China; yet if Washington were to fail to live up to its obligations to Taiwan, U.S. relations with other countries and its credibility in East Asia and probably throughout the world would be sullied beyond repair. Second, the U.S. needs China's huge potential market and cooperation on a host of international matters. This is more true since September 11. For years, although people have been debating the merits of strategic clarity, tactical ambiguity and/or vice versa toward China, it has been obvious that a stable cross-strait relationship is an advantage to the U.S. not only in terms of its national interests, but also to regional security. Hence, it is a first priority of the Unites Stated to avoid the emergence of a power imbalance and the concomitant instability in the Taiwan Strait it will cause. The above factors, among several other minor ones, will restrain all members of the "triangle"—Taiwan, China and the U.S.—from destabilizing relations across the Taiwan Strait. All of the players understand there is an invisible line, or limit, beyond which they cannot go and tension has to be kept down. At the same time, however, the interwoven internal and external

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factors on both sides are making even the maintenance of the status quo extremely difficult, if not impossible. Looking at the situation in longer terms, while the danger of war is not so imminent as some have suggested, it is still real. The situation may fly out of control if something is not done. The best way to achieve a rapprochement is, of course, through dialogue and contacts, which all three players seem genuinely keen to embark on. But, since both rival regimes have set certain preconditions that make it impossible to recommence talks, there is a current impasse that is unlikely to see any breakthrough in the near future. The big question is: What are the salient obstacles and possible solutions?

Opposing Principles Espoused by Beijing and Taipei The one-China principle is the cornerstone of China's cross-strait policy. For Beijing, Taiwan is part of China. China's sovereignty and territorial integrity are non-negotiable; thus, Beijing has in the past and seeks at the present to thwart any Taiwanese move toward independence. Chinese leaders want, furthermore, to secure Taiwan's promise in principle that it will implement unification. How and when unification is undertaken is negotiable, they say, but Taipei should agree upon the principle of eventual unification. Otherwise, say officials in China, there is no basis for the resumption of talks; nor can cross-strait relations be amicable. Furthermore, since Taiwan is China's territory it is simply inconceivable to Beijing that any dialogue, or political talks, between the two sides be defined as negotiations between two sovereign nation-states. To Beijing, Deng Xiaoping's "one country, two systems" formula must serve as a basis for talks and for Taiwan's eventual reunification with China.6 Jiang Zemin's "eight points" elaborate on China's definition of one country, two systems. To Chinese leaders, Jiang's points also constitute a new soft approach toward Taiwan. They are reasonable and, in fact, conciliatory. Beijing refuses to give up the right to use force and sees this as reasonable inasmuch as the problem is a "domestic" one, and "foreign forces" have and are interfering. As Beijing has always argued, the military pressure applied to Taiwan is not aimed at the average people on Taiwan, but should

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be interpreted as preventive measures to keep in check foreign interference and a few advocates of Taiwan independence. The only "concession" Beijing has made so far is the "one China, different interpretations" consensus, reached between China and Taiwan when representatives of the two sides met in Hong Kong and talked in 1992.7 "One China," whether in the future tense or progressive tense, is the nonnegotiable principle. Different interpretations, however, exemplify Beijing's tolerance and/or its willingness to face the reality that its political authority does not exist in Taiwan. In other words, China's one-China principle is non-negotiable, but its meaning, especially the different views of this principle in Taiwan and China, is something that can be discussed. Presumably, in the future China will keep this policy and Beijing will make concessions in allowing different views (or definitions of "China"), but will not budge regarding acceptance of the principle. Without admitting or accepting this starting point, China has argued, the substance of international agreements reached during and after China's entry into the United Nations in 1971 would be nullified. Quite naturally, China, under no circumstances, will be able to accept these consequences and thus entertain any direct and meaningful official talks if the principle itself is not accepted (even though not defined) first.8 To define its view more specifically, Beijing insists that the People's Republic of China is the sole legal representative of China in the international arena, but will refrain from saying this during meetings and talks with Taiwan.9 It will "negotiate" with Taipei as if it were a nation-state, but it will not allow talks or meetings to be defined this way. It will take no action in response to Taipei's claim that it possesses national sovereignty, but it will not allow it to do so in any forum where Beijing's representatives are present nor allow Taipei to participate in any international organization that presumes the sovereignty of its members. These are its rules. To put this in perspective and help students of cross-strait relations understand the intricacies of the matter, we need to be aware of China's negotiation style and tactics. As Mao used to remark, "We should be firm in principle; we should also have all the flexibility permissible and necessary for carrying out our principles."10 "Strategically we should despise all our enemies, while tactically we should take them all seriously."" We may

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thus, suspect that seeking to establish the strategic high ground at the outset and insisting that the Taiwan issue be resolved within the framework set up by the People's Republic of China constitutes a "higher strategic perspective." Discussing China's policy of seeking the high ground before negotiations, it should be noted that while the West uses a rule-setting approach to deal with China, Beijing employs agenda-setting tactics to frame Taiwan discussions. From China's point of view, if Taiwan wants to negotiate, or resume talks with Beijing, then it should at least accept the basic principle set by Beijing. By doing this, China can use the one-China principle and the non-interference (in its domestic affairs) policy to block foreigners—especially the U.S. and Japan—from "interfering" in the "Taiwan issue." Here it is useful to distinguish the different nuances of the situation as seen from Taiwan, China and the United States. While Beijing insists on the so-called one-China "principle," the U.S. sticks to its one-China "policy," and Taiwan adheres to the one-China policy—the date to be decided later and if the people of Taiwan want it. For Beijing, the "Taiwan issue" should, and can only, be resolved by the Chinese themselves. Beijing's view in this case may be said to be founded on the view that without foreign encouragement and recognition, Taiwan's de jure independence will become meaningless while its de facto independence will lead nowhere. Taiwan can easily be tamed or intimidated at Beijing's will if it is without foreign support, be it moral or logistic. Its refusal to renounce the use of force serves to create a box or parameter within which discussions on Taiwan should be kept. From Beijing's perspective, the missile crises of 1995 and 1996 convinced both the U.S. and Japan, the two major powers Beijing believes to support the Taiwan independence movement, the former overtly and the latter covertly, that China's determination to use force against Taiwan if it declares independence was real. That China was prepared to shed blood, if necessary and if the United States and Japan should try to move Taiwan away from the oneChina framework, was the message from Beijing. To an extent, Beijing made its position clear. Its actions certainly served to remind the U.S. and other countries that China is serious about its sovereignty and territorial integrity. Once the possibility of foreign interference and hence Taiwan's

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inching towards independence is diminished, or terminated, everything can be opened for discussion, was the rest of the message. From Taiwan's perspective, however, the one-China principle is something that should not be treated as a first principle. As some have pointed out, though China wants negotiations to be based on or to begin from a seemingly harmless abstract principle, there is nothing to stop it from enlarging the interpretation of this (one-China) principle in the future to suit its own interests.12 Many in Taiwan feel that talks should focus on the practical resolutions to problems rather than agreeing on first principles. Only in this way can anything be accomplished. Also as a starting point something, no matter how small, should be accomplished. In other words, to Taipei, negotiations have some tangible result. Future negotiations should thus build on the accomplishments of past ones. There are indeed other views reflecting Taiwan's pluralist society. Some in Taiwan insist the one-China principle impinges on Taiwan's sovereignty, dignity and security.13 Annette Lu, the vocal and pro-independence vice president, pointed out on August 15, 2001, that to accept the one-China principle and the 1992 consensus means that Taiwan will fall into Beijing's trap.14 Sooner or later then, Taiwan will be at Beijing's mercy according to this view. Obviously sensing that the one-China principle is or could be a ploy, Chen Shui-bian and his government have so far refused to touch on the sensitive issue except to say it can be discussed. Translating this into tactics, the Chen government declares that Taiwan's independence is a possible future solution to the cross-strait impasse. It is thus an instrument to counterbalance both China's principles and its threats. Certainly Chen and the DPP want to keep this "back door" (the choice for independence) open for Taiwan and will not make any real commitment to reunification. Taipei's negativity may hence be described as: "One China" (yi ge zhongguo) is an "issue" (yi ti) for discussion, but not a principle (yuan ze) as demanded by China. With regard to the 1992 consensus, reached between Taiwan and China, Chen's government insists that there was only a "1992 spirit" (jing shen) instead of a "consensus." (gong shi). At best, there was only a consensus that there was no consensus. When the KMT was still in power, it emphasized the "different interpretations" (ge zi biao

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shu) part instead of the "one-China principle" contained in the 1992 agreement. But for Chen's government, even the idea of different interpretations is not acceptable and thus has to be discarded. More accurately, Taiwan's starting point (or high ground) is the right of peoples to self-determination. DPP leaders, and Chen himself, have long cited this principle or right as stated in the Atlantic Charter and the United Nations' Charter. They often assert that World War II was fought for this right. Some say that this principle should have been applied in 1945 and was not, and a bloody revolt in February 1947 was the consequence. They called for self-determination during the period of KMT rule; and, it seems they won in March 2000. They do not intend to abandon their "sacred right" now. President Chen and the DPP also invoke the "privilege" of Taiwan being a democracy. This they inherited from the previous government. What this means is that Taiwan has democratized and thus deserves to be regarded as a special or "good nation" for its domestic accomplishments and accorded the right in terms of its international situation and its relationship with China to decide its own future. Translating this into a policy regarding seeking an improvement in crossstrait relations, for Taiwan, everything is negotiable and Taiwan is ready to talk with China as long as there is no precondition.15 Chen Shui-bian also believes his policy of "no provocation and no irritation" has worked, and he is confident of subsequently pursuing better cross-strait relations and breaking the stalemate.16 He could either be terribly wrong ortoo naive to believe such a complicated issue can be resolved easily like that. Yet, for Chen, Taiwan is not afraid of negotiating. It wants to do so from a superior moral position while at the same time maintaining a gentle, non-aggressive approach without compromising its sovereignty and dignity. Is this realistic? It is difficult to say. Some in Taiwan have long thought time is on Taiwan's side. Those who believed this to be so adopted a strategy of delaying, for as long as possible, the negotiating process while waiting for favorable changes (yi tuo dai biari) to take place. Some say it was a process of trading time for space (yi shijian huan qu kongjian). But things are different now. Many believe Taiwan is instead now racing against time. If time is not on its side, some

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say Taiwan must be determined to struggle to gain some kind of comparative advantage and to seize the initiative in the event of any encounter with China. However, Taiwan's bottom line at this moment is: Do not irritate China and provoke a confrontation; show as much "goodwill" as is not costly. The logic behind Taiwan's behavior is that Taiwan is hoping that China might either become weaker and disintegrate, or become more democratic and rational. Mounting internal and external pressures in China may weaken the regime. Chinese officials could even see China facing anarchy and breaking up. Alternatively, China will survive, but its leaders will pursue stabilizing policies and will avoid trouble with or over Taiwan. In either case, Taiwan will benefit and will be able to start negotiations with China from a position of strength, whether for unification or independence. Second, with time, Taiwan is hoping for greater acceptance of its cause by the world community. With international moral support, and especially U.S. logistic assistance, Taiwan can be more confident about standing up to China. In the meantime, the Taiwan government is also making efforts culturally to alienate the populace from China further, thus paving the way for Taiwan's eventual independence. China has sensed the danger of the socalled Taiwan "cultural independence" {wen hau tai du) movement, and it has mobilized the media, officials and scholars alike to criticize this tendency. However, China finds it difficult to suppress this movement at will because Taiwan is not within its reach or under its jurisdiction. Beijing thus worries that if the Taiwan issue remains unsettled indefinitely, when the old generation fades away and the younger generation has less emotional attachment to China, Taiwan might gradually drift away. This tendency might help explain Beijing's strong sense of impatience and eagerness to resolve this matter at an earlier date. To sum up, the principles and policies adopted by both parties are clear. Although both claim everything is negotiable and both are ready for discussion, neither is willing to give up their seemingly reasonable and moral principles. China's condition for starting negotiations is Taiwan's return to the one-China principle, but Taiwan's is based on no precondition at all. From Taiwan's perspective, China is using the "rule and agenda setting" approaches to corner Taiwan into accepting the one-China principle; for its

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part, Taiwan is determined to break out of China's stranglehold at all costs. While Taiwan is taking a less provocative approach to deal with China, it has no intention of discarding its dignity and sovereignty easily. The deadlock has thus arisen and remains to this day. Both sides are unlikely to resolve the stalemate unless each changes its way of thinking about the principles each holds. Alternatively, as time goes by and the balance of power tilts to one side, one or the other may be forced by circumstances to compromise. Before concluding this section, we can use a metaphor to illustrate how complex the situation is. The relationship between Taiwan and China is like an unequal boxing game. In terms of sheer size and population, while China is the heavyweight boxer, Taiwan is only a lightweight competitor. Theoretically, the two should not be put together to fight in the game, but they are. While China wants to set up the rules and agendas of the game, and the socalled one-China principle is like the ring, Taiwan has sensed that if it continues to fight against China within the one-China framework, it will certainly lose. Thus the "one-China" trap must be broken by any means. This can probably explain why, during thefight,China sometimes sees Taiwan jump outside the ring and refuse to return to the "unfair framework." But from China's perspective, if there is no such consensus, or at least "understanding," no matter whether it is fair or not, then there is no game (dialogue or negotiations) at all. The U.S. role in the game is similar to that of the referee. While America should guarantee the game will proceed fairly and smoothly, it in fact is more inclined to help Taiwan, the underdog in the game. For some Americans, Taiwan is a role model of democracy, although there is still more to come. The U.S. can feel proud of Taiwan because America helped plant the seeds a long time ago and China can emulate Taiwan in the future. Also, Taiwan's survival and prosperity can be a useful lever to balance China's threat if it grows out of control; thus, the referee is willing to help Taiwan on the one hand, but it also finds itself framed by the rules of the game, the one-China principle, on the other. The U.S., in fact, finds itself put in a very awkward position and understands there is really no solution to this stalemate in sight.

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Different Approaches Employed By Both Parties With regard to their respective principles both China and Taiwan have "dug in," refusing to budge. Both, however, also understand that whether it is to break the stalemate, or to counterbalance domestic and external pressures, or even to put on a display of goodwill and sincerity, they will have to adjust their approaches and exercise flexibility from time to time. It is more than obvious to any sensible Chinese leader that Taiwan's unification with the motherland is as desirable as it is compelling; but it is also unrealistic at this time. Some understand this and admit, in private, that a premature unification will be a disaster for both Taiwan and China. Some Chinese scholars even agree that as long as Taiwan remains in China's sphere (meaning essentially that Taiwan does not seek a de jure separation from China), its presence and its experiences in pursuing democracy can be an asset for China's future.17 Furthermore, there would be capital flight, a massive refugee situation (with people from Taiwan fleeing) and other negative events occuring if China were to attempt to force Taiwan's unification now. Beijing would surely have difficulties ruling Taiwan and likely Taiwan would be seen throughout the world as a human rights concern. Hence, there are many downsides in China's gaining Taiwan too soon. However, in the face of demands for independence in Taiwan and pressures on the government in China, China's topmost priority now is to prevent Taiwan from going independent and ultimately (at least going through the motions) to effect reunification (fang du zhongyu cu long). It has to act when it is challenged or when it perceives a challenge (again in light of domestic politics and the views of the military and the hard-line left in China). The issuance of the White Paper in 2000, which caught the major parties by surprise, at least in words pressured Taiwan to enter into negotiations at an earlier date. This suggests that Beijing's patience has limits. (See Appendix II.)18 Its issuance came less than two months before Taiwan's presidential election. Beijing intended to minimize Chen Shui-bian's chance of winning the election.19 It mirrored the fact that some Chinese leaders perceived that time was not on China's side in the matter. It failed and Chen was elected.

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In August 2000 and March 2001, Chinese vice premier Qian Qichen (also the deputy director of the Taiwan Affairs Leading Group, a government agency in charge of Taiwan affairs), said twice that there was but one China and both Taiwan and the mainland are part of China, adding that China's sovereignty and territory were inseparable. With these statements, some argued that Qian implicitly sent an important signal to the Taiwanese authorities.20 Qian was implying that Beijing was willing to treat Taiwan on a more equal footing, although Beijing still insisted that the People's Republic of China is the sole legal representative of China in the world. What is significant is that Beijing deliberately avoided using terms that would make Taiwan feel humiliated and was in fact extending a friendly overture to Taiwan. People generally believed this was as far as Beijing would go. Some even argued that the ball was now in Taiwan's court.21 In addition to other political considerations, Beijing has concluded that unlike certain pro-independence fundamentalists who have strong ideological inclinations, Chen Shui-bian is a political opportunist, and therefore constant pressure can keep him in check. However, if the pressure is lifted, Chen will drift back to his previous pro-independence mode. From Beijing's point of view, the pressure, such as military intimidation and efforts to keep Taiwan diplomatically isolated, has to be serious, or be perceived as serious, or it will become counterproductive. On the other hand, if the pressure is too heavy and is seen as unreasonable, Beijing will encounter a backlash in Taiwan and from the international community. In a sense then for China, pressuring Taiwan is like playing a sophisticated game of pull and haul, although it has already won the upper hand. As of the fall of 2001, Beijing has adopted a wait-and-see policy toward Chen and his administration. The term employed was: to "listen to what he says and observe what he does" {ting qi yon guan qi xing). To people who were familiar with this Chinese idiom, they understood the terms "listen to what Chen says" and "observe what Chen does" as one thing. But in Communist dialectics, the idiom can be two different things. As some local news reports have suggested, China has already heard all Chen's words (gestures of goodwill) in the past one and a half years and the first stage is now over. What Beijing is waiting for is Chen's deeds. In other words, good

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words are not enough; Chen has to take some real actions to convince Beijing he really means business. Chen, however, is reluctant to do so for various reasons. As stated earlier, Chen's hands are tied. Fundamentalists in the DPP, mainly the New Tide faction, are very upset about Chen's policy adjustments. Although Chen vowed that his administration and policies would reflect the general will of the populace, and he was going to take the so-called "new middle road" (xin zongjian luxiari), he has drifted from one side to another on the issue of cross-strait relations. The decision to cease the construction of the Fourth Nuclear Plant was an example, and the statement of "Long Live Taiwan Independence"(taz du wan sui) in front of a pro-independence group was another. People in Taiwan, not to speak of those across the Taiwan Strait, easily got confused. Partly because of the ongoing power struggle in Taiwan, and partly because of the upcoming power transition on the mainland, Beijing is in no hurry to resume talks with Taiwan. Beijing also wants to avoid giving the impression (to the outside world) that Chen's recent policy of showing goodwill with no substance is acceptable. China has no intention of helping Chen. To wait until Chen bends under both internal and external pressures from within and without, or until there is a reason to make a policy change, apparently serves Beijing's interests best. Again viewed from the perspective of the People's Republic of China's approach to such situations, China can be seen as employing united front tactics against Taiwan: to strive for the support of the majority against the minority; to distinguish the main from the secondary enemies; and "to use tomorrow's enemy against today's enemy." This explains why Beijing distinguishes Chen Shui-bian's personal views from the policy adopted by his government, and separates Chen's views from that of DPP fundamentalists. By doing this, China provides both sides a way out of the current stalemate, not only for itself but for Taiwan as well. Chinese leaders can postpone taking action on the "Taiwan issue" by explaining to those who want a more aggressive policy that the conditions (the correlation of forces) are not yet right. They can give Chen the chance and/or press him to break further from his past and certain elements in his party.

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At the same time, Beijing is using Taiwanese civilians, businessmen and entrepreneurs to apply pressure on the Chen government. For example, China has refrained from dealing directly with Taiwan's central authority and instead has increased its contacts with local officials and legislators from Taiwan. Beijing has tacitly scaled down the role played by Taiwan's semi-official Straits Exchange Foundation and strengthened contact with non-official Taiwan organizations. On the economic front, although Beijing is making every effort to woo Taiwanese entrepreneurs, it does not hide its displeasure towards, and has made it known its intolerance of, pro-independence Taiwan businessmen. In short, China's intent is to divide and conquer. Externally, in its view, as long as the one-China principle becomes a norm accepted by the important players, Taiwan's independence will lead nowhere. Internally, Beijing employs united tactics against Taiwan: separating the political elite from the mass, distinguishing local (government) from the central, using businessmen to lobby government officials, and showing its apparent goodwill. By doing this, Beijing hopes to force Taiwan into negotiations from a weak position. Then it can resolve the unification problem once and for all. What are Taiwan's counter-responses? Chen is walking on a tightrope, on the one hand trying to balance the differences within his party and on the other appeasing an apprehensive public. Chen does not have the luxury of irritating China and alienating America. Thus Chen has taken to making very accommodating statements. In addition to his inaugural speech last May (Appendix IV), Chen announced the possible "integration" of Taiwan and China in the long run on the eve of Chinese Lunar New Year in February 2001P That was ostensibly as far as he could go. Although it remains unclear what he meant by integration, he has repeatedly made statements that sound good and make it appear he is willing to talk and that relations with China are stable and unthreatening and may even be improved in the near future.23 Where will the president go with this? Over the last one and a half years, however, Chen has been seriously bogged down by internal problems. In many respects he is still trying to consolidate power. Due largely to the lack of experience, limited depth and breadth of knowledge, and inter-

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ference from the opposition, Chen and his administration do not have the ability to deal with China. Although some suspect he might want to use a breakthrough in cross-strait relations as a diversion or ploy, there is no evidence to show that he and his government will be able to do anything meaningful to improve cross-strait relations. The DPP has no intention to revise fundamental tenets of its pro-independence party line. Chen will not admit he is Chinese. He will not convene the National Unification Council. 24 In short, there is not much room left for Chen to maneuver. Or so it would seem. However, on many occasions in the past Chen has shown that he was able to make adjustments and compromises when necessary or when the price was right. Chen has appeared to be very "flexible," at least in words, and has never hesitated to raise trial balloons. Politically, he does not rule out the possibility of establishing a confederation or a commonwealth to deal with the tension between the two sides.25 Economically, a common market arrangement has been proposed by former premier Vincent Siew and supported by President Chen. It seems a good idea on the surface.26 But in reality, it might not lead to anything better in cross-strait relations. As far as Taiwan's political spectrum is concerned, if we describe pro-unification as right and pro-independence as left, the evidence suggests that Chen is trying to move to the center, or at least the center-left, in order to win the support of the majority while placating the left. Currently, Chen is hoping that Beijing will eventually agree—voluntarily or not—to put aside its demands that he accept the one-China principle (or allow it to be a point of discussion rather than a prerequisite of talks) and resume dialogue. Based on the outlook, negotiating style, and domestic constraints facing the Chinese Communist Party, it is highly unlikely that Chen will see his dream come true. Although critical of the KMT's mainland policies when he was in the opposition camp, Chen is employing many of their tactics now that he is in power. Tactically, like his predecessor, Chen favors an indirect, incremental approach to dealing with China. In addition, he insists on a foreign guarantor, central-to-central and local-to-local governmental dealings, and putting economics before politics. With the three mini links (xiao san tong) and increased exchanges at city levels, Chen

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hopes for more contacts with the mainland if the response from China is favorable.27 Although playing with words and showing a lot of superficial goodwill without actually committing to anything substantial, Chen understands the importance of confidence building. He and his prime minister even mention the possibility of establishing some sort of interim agreements with the mainland.28 The recent announcement of "vigorous liberalization and effective management" implies that his government is going to take concrete steps to abolish the "be patient, go slow" (jieji yong ren) policy soon,29 and the three direct links will be implemented gradually early next year.

What Next? Given China's and Taiwan's current positions, the question needs to be asked: Will cross-strait talks ever be resumed? And if they are, will they be productive? To answer these questions, at least four major factors must be considered. First is the matter of the evolution of Taiwan's domestic politics. So far, the Chen administration has encountered challenges from both within and without, both politically and economically. For months before the December 2001 parliamentary election, campaigning took much of his time and attention. Now he is running for another presidential term in 2004. His chances for re-election will be bleak if he is unable to revive the stumbling economy and secure political rapprochement with the opposition. The election in December 2001 has created a new political environment in many ways. The competition among the opposition parties and between them and the ruling DPP is serious but also complex. Lee Tenghui's decision to support the Taiwan Solidarity Union makes the Taiwan political scene even more complicated and unpredictable. Lee promised to help stabilize Taiwan's domestic politics so that President Chen could concentrate on the revival of its troubled economy. But this seemed a mission impossible and still does. Lee became a source of influence but also controversy. It is widely perceived that his influence will diminish in coming months. This adds another element of unpredictability to Taiwan's politics. It is difficult for the Chen administration to resist Lee's help. Lee has money,

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friends, and influence. But Chinese leaders in Beijing dislike Lee, and using Lee's assistance will likely make cross-strait relations more tenuous. The depth of Lee's influence and how long it will last are also meaningful questions. Although it is still premature to make predictions on the outcome and subsequent effects of the December election, it is widely perceived that even after the election, Taiwan's political and economic situations will not be improved much in the short run. On China's part, Beijing is unlikely to agree to any talks with Taiwan given the current situation. Chinese leaders want to avoid being seen as endorsing Chen's current policy and thus helping him. China will thus most likely take a "hands off' and "wait and see" approach, at least until the power struggle in Taiwan is settled. People sometimes joked that in the 1970s when China was indulged in political turmoil, the Cultural Revolution, Taiwan concentrated on economic development. Now the trend is somewhat reversed. While China is determined to pursue further economic growth, Taiwan has fallen into a divisive and enervating political power struggle. China thus feels time, at least in this regard, is more or less on its side. Taiwan does not see the situation this way. The power transition in China is seen as a serious problem and one likely to contribute to Taiwan's reluctance to enter into any dialogue with Beijing at this stage. Taipei wants to be certain any agreements reached will be followed. From Taiwan's point of view, the leadership succession in China will not be completed until late 2002. After that a new group of fourth generation leaders will need time to consolidate their power and formulate their own policies (perhaps new ones) toward Taiwan. Even after this is done leaders in Zhongnanhai may have less energy to deal with the Taiwan issue than current leaders. Thus, Taiwan does not expect any meaningful talks with the Chinese side any time soon. That explains in part why Taiwan has so far only shown goodwill, but has taken no concrete action. Then there is America's role. The new Bush administration's China policy is still evolving. Both Washington and Beijing have been testing the water to see how far they can go. Although no drastic change of U.S. policies toward China or Taiwan is in the offing, the tone and emphasis are quite different from that of the Clinton administration. The discussions on

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arms sales to Taiwan in April were important indicators to measure the future relationship among the three parties. A better and stabilized relation between Washington and Beijing, without being at the expense of Taiwan, has helped reduce tension across the Taiwan Strait. However, if U.S.-China relations further sour, then tension across the Strait will increase and the possibility of resuming talks will be out of the question. It is generally perceived that the Bush administration has and will continue to treat Taiwan with more respect and dignity than the Clinton administration. It will not resurrect Clinton's "three nos" policies to Taiwan again. Nor will it openly oppose Taiwan's efforts to re-enter the United Nations. But U.S. policy toward both China and Taiwan will eventually move away from a pro-Taiwan tilt back to "normal." Washington cannot pursue an unbalanced hostile policy toward China without good reason. A non-cooperative and hostile China provoked by the U.S. will also cause more problems than Washington wants to consider. A better relationship between China and Washington will also serve Taiwan's interests, but Taiwan should be aware of the danger. Fourth, Taiwan's and China's memberships in the World Trade Organization will affect their bilateral relations. Taiwan's policies, both formal and informal that have inhibited relations with China, will have to be reconsidered and generally scrapped. All contacts across the Strait will drastically increase. Beijing and Taipei will have to start direct economic negotiations, which in turn might help thaw the present cool-off. China is likely to seize the opportunity to push the door of exchanges even wider and sooner. Although no direct impact on political negotiations is envisaged, the atmosphere in general will become more conducive for talks to resume. Some other minor but related matters need to be briefly mentioned in this connection. One, the chief negotiators of both sides—Koo Chen-fu, president of the Straits Exchange Foundation (SEF), and his counterpart, Wang Daohan—are in ill health. Should they step down, finding replacements of equal standing and who are familiar with the intricacies of cross-strait relations will not be a simple matter. This may take time and will further hold back the resumption of talks. And, China's success, helped by Taiwan's support, in winning the bid for the 2008 Olympic Games will have some

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positive impact for cross-strait relations. Taiwan strongly believes that becoming host to the sporting event will mean China behaves itself as Taiwan seizes the opportunity to improve its international image and thus diminish the chance of military confrontation between Taiwan and the mainland. Cross-strait relations are, in conclusion, extremely sensitive and must be examined from a broader perspective. Taiwan's problems are its shortsightedness and inability to view things from a broader strategic perspective. It has refused to face up to the present realities; even if its tactics work well, it can achieve only marginal strategic gains. As for China, whether it adopts a "soft" or "hard" line, the effect on Taiwan will not matter too much. China needs to reach a certain level of rationality, democracy and prosperity before it can appeal to the Taiwanese and tempt them to come to the negotiating table. There is indeed no light at the end of the tunnel. While it is widely acknowledged that starting cross-strait talks is better sooner than later, in reality such a scenario is hard to achieve. It appears likely that talks will occur eventually and will be fruitful. How the two sides will work out their differences is difficult to say at this juncture. However, in the meantime there is a dynamic stability that will probably ensure peace in the area until a reconciliation can be reached.

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Table 5.1 Past and Present Principles and Approaches Employed by China PAST Principles To liberate Taiwan and unify China

Approaches By mainly using military means in the 1950s and later emphasizing peaceful liberation in the 1960s and peaceful unification since the 1980s By relying on party to party negotiation and adopting a central to local relationship By encouraging three direct links since late 1970s PRESENT

Principle "To unify Taiwan with China peacefully while refusing to renounce the use of force To stress Taiwan issue as an internal affair and allow no foreign interference To stick to the one-China principle and the 1992 consensus by being proactive in order to gain strategic initiative To insist on Deng's "one country, two systems" formula and Jiang's "eight points" proposal

Approaches "By applying constant pressures and employing a "revolutionary dual approach" and "united front" tactics from within and without Taiwan By preventing Taiwan from going independent and making it its top priority while at the same time encouraging unification, i.e., making Taiwan's de jure independence unrealistic, and its de facto independence meaningless By emphasizing political negotion, and taking a wait-and-see policy and yet showing Beijing's impatience By distinguishing Chen Shui-bian from his party, his words from his deeds, and playing the opposition parties against the ruling DPP By bypassing and playing down the role of Taiwan's central authority and designated SEF and dealing directly with Taiwan's local governments and other civilian organizations, using a bottom-up approach By using civilians to pressure the government, businessmen to lobby the officials, the local to balance the central, and the U.S. to restrain Taiwan By insisting on the realization of the three direct links and the abolishment of the "go slow, be patient" policy By forming a broad united front net and increasing all kinds of contacts and exchanges between people of both sides

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Table 5.2 Past and Present Principles and Approaches Employed by Taiwan PAST Principles

Approaches By using one-third military, and two-thirds political means

To recover the mainland and save the compatriots from Communist rule

By adopting an anti-communists, but not anti-Chinese stand By emphasizing a central to central, government to government relationship By getting U.S. support to liberate China By insisting on the "three nos" policy PRESENT Principles To emphasize, implicitly, a state to state relationship To stress the importance of Taiwan's "security, dignity, sovereignty" and equality between the two sides To keep international visibility, participate in international organizations and acquire weapons for self-defense To bide time and create space for maneuverability and secure third-party guarantee To avoid direct response to the one-China principle and 1992 consensus, but to emphasize different interpretations and the 1992 spirit To keep to the DPP party line and the possibility of independence alive, refusing to admit being Chinese or accepting that unification is inevitable

Approaches By raising trial balloons, such as integration, new middle road and confederalism, and promising no unilateral move that might provoke or irritate China By using friendly rhetoric to placate but offering very little substance By employing low politics, and incremental approaches to deal with China, aiming to reach interim agreements By first emphasizing technical, economic, local and indirect exchanges, but requiring all moves and contacts to be approved by the central government By using three mini links and lifting the restrictions as baits By emphasizing the importance of confidence-building mechanism By supporting China's bid for the 2008

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Table 5.3 Principles and Approaches Employed by Foreign Powers (especially U.S.A.) Principles To abide by the one-China principle To insist on peaceful resolution To encourage direct dialogues To stick to the Three Communiques and the Taiwan Relations Act To play the role as a power balancer, or moderator

Approaches By employing preventive diplomacy and switching back and fonh between strategic ambiguity, tactical clarity, and strategic clarity, tactical ambiguity Be selling arms to Taiwan and making sure neither Taiwan nor China can change the dynamic status quo unilaterally

Addendum Taiwan's December 2001 Election John F. Copper

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n December 1, 2001, voters in Taiwan went to the polls to elect delegates to a new legislature and pick mayors (except for Taipei and Kaohsiung, which are categorized as "metropolitan cities" and thus have separate elections) and county magistrates. The outcome of the election, pundits said before the voting, would determine Taiwan's near-term political future and either resolve the problem of political gridlock or perpetuate it. It would also help improve or worsen cross-strait relations. The campaign was an especially bitter one. A few months before the voting, former president Lee Teng-hui organized, through a surrogate, Huang Chu-wen, the formation of a new political party, the Taiwan Solidarity Union (TSU). His stated purpose was to help President Chen and the Democratic Progressive Party (DPP) deal with the political paralysis caused by the opposition: the Nationalist Party or Kuomintang (KMT), James Soong's People First Party (PFP) and the New Party. He subsequently campaigned for TSU candidates. For this he was expelled from the KMT. Thus two camps or blocs formed: the "green team" composed of the "ruling" DPP and Lee's TSU (green being the color of the DPP) and the "blue team" made up of the three opposition parties. (Blue was the KMT's color.) The formation of these two blocs polarized the country politically

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more than it already was and beyond what it would have ordinarily been during the campaign. While campaigning, the green team accused their opponents of treason: wanting to sell out Taiwan to China. An American scholar and a noted U.S. reporter gave alleged evidence of this during the campaign. The former said that the KMT had asked Beijing not to deal with President Chen or the DPP during the campaign. The latter said that the two had formed an alliance against the DPP and that China was abetting the KMT.' The green team repeated these charges and used the issues during the campaign. Each side accused the other of illegal actions, various improprieties, mistakes and more, and blamed the other for Taiwan's problems. The green team indicted the blue team for causing gridlock, of deliberately hurting the economy, and more. The blue team asserted that President Chen was incompetent. They said the same of his prime minister and demanded that he resign. They contended that Chen and his party had caused Taiwan's political mess and the recession. They accused President Chen of poor governance and lack of leadership and principles. Both sides imputed to the other corruption, lack of morals, and worse. Following months of political fighting and political malaise, this caused the populace to become even more cynical. Taiwan's political "big guns" played an important role in the campaign: former president Lee Teng-hui, President Chen Shui-bian, KMT chairman Lien Chan, PFP head James Soong. None, however, were running for office themselves. They attracted the lion's share of media attention during the campaign and they made the campaign even more bitter and mean. Lee Teng-hui pushed his "Taiwan first" or localization theme, saying the opposition wanted to make Taiwan part of China. The opposition accused him of trying to provoke a war with China and of senility. Chen, Lien and Soong leveled various charges against the leaders of the other side during the campaign, personal and otherwise. The DPP won the election big; the KMT lost big. The DPP had 66 seats before the voting. It won 87. The KMT had 110; it dropped to 68. The TSU got 13 seats, which could be added to the DPP's to give the green bloc 100 seats. But the PFP did even better than the DPP. It increased its seats in

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the legislature from 19 to 46. The NP lost badly, ending up with only one seat.2 This meant a major restructuring of the Legislative Yuan in terms of party strength. Still President Chen did not have a majority. The green team got 100 seats; 113 constitutes a majority. The blue team got 115. (The rest, ten seats, went to "others" or independents.) Notwithstanding the fact of the DPP's big victory and the TSU becoming a force to be reckoned with, there was no voter preference shift. Conservatives and liberals (defined primarily by their views on ties, or lack of them, with China) did about the same proportionally as in the previous five legislative elections.3 The difference in this election, moreover, seems explainable in terms of the election strategies used by the green bloc and the effectiveness of the parties' campaign strategies. How the DPP "won" (made a big gain in seats, though it failed to attain a majority as President Chen had wanted), is telling. It indicates foul play from the point of view of the opposition. Certainly it reflects dirty politics and undemocratic (though not illegal) tactics. The DPP and the TSU played the "ethnic card." Both appealed to voters based on their ethnicity and antipathy toward other ethnic groups. They aimed their campaign toward Fukien Taiwanese (those Chinese who migrated from Fukien Province years ago), as opposed to the Hakka Taiwanese (who migrated mostly from another province), Mainland Chinese (who came to Taiwan after World War II and hail from various parts of China), and Aborigines (the original inhabitants of Taiwan). Fukienese Taiwanese are well over half of the population and winning most of their votes translated into an election victory.4 During the campaign, Lee Teng-hui spoke of the KMT as being an "alien party." Green bloc candidates made frequent reference to ethnicity (sometimes in subtle ways, sometimes not) during the campaign. They promoted "Taiwanese" interests (meaning Fukien Taiwanese language and culture during political rallies and elsewhere). The DPP even made campaign advertisements to appeal to the youth using Adolf Hitler as a model. Aborigines reported DPP legislators using derogatory ethnic slurs toward them. Mainland Chinese spoke of being discriminated against in a variety

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of ways by the government and "racial incidents" in the street and elsewhere during the campaign.5 Both in the days leading up to the election and shortly after, some DPP officials and supporters and a number of neutral observers spoke of the nasty, racist nature of the green's campaign.6 In the wake of the election, many, including the president, spoke of a need for healing. President Chen also deliberately (in the eyes of the opposition at least and to a number of independent observers) provoked tension with China during the campaign. He renounced the " 1992 consensus" regarding crossstrait relations, which clearly riled leaders in Beijing. He made much more of China's refusing to allow him to represent Taiwan during a meeting of the Asia Pacific Economic Cooperation forum in Shanghai just weeks before the voting. He then named a representative that China, if following earlier guidelines, would reject (and did) and reacted strongly and emotionally to an exchange of words between one of Taiwan's delegates and a Chinese leader during the meeting. According to the opposition this was contrived. It looked like it.7 Evoking hostile feelings toward China fit with the greens playing the ethnic card. Recent history showed that it helped the green side win votes. It gave Lee Teng-hui additional votes in the 1996 election. China's missile tests aimed at intimidating Taiwan and the cross-strait tension this engendered helped Lee win much bigger than he would have otherwise. China issuing a "White Paper" during the run-up to the 2000 election aidedChen Shui-bian. Warnings (not to vote for Chen) by China's Premier Zhu Rongji just before the voting had a similar effect. China's actions, in fact, may have given Chen the win. All of this was not lost on DPP strategists in the fall of 2001. DPP leaders rationalized their actions. They said they assumed that a big DPP win would force Beijing to deal with President Chen and the DPP, which it had been refusing to do. And/or they thought they could patch up relations after the election. Both calculations may have been wrong. Chinese leaders were not happy with the DPP's promoting local nationalism and using tension with China to win the election. They were angry over Taiwan independence and anti-China rhetoric heard during the campaign

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and the fact that many activists of this ilk (China's view) won. For two very good reasons Beijing may see no reason to seek better cross-strait relations. One, leadership succession is an issue in China currently and probably will be for a year or so. In that context it is difficult to change policies on anything. It will be especially difficult to plan diplomatic initiatives that go against the grain of Chinese nationalism or views held by the military.8 Two, Chinese leaders perceive that time is on their side in view of China booming economically. In the months leading up to the election many business leaders in Taiwan expressed the view that Taiwan's only hope to end its recession soon, and its hope for future economic expansion, lay in expanding commercial relations with China. To Chinese leaders in Beijing this was not only true; it also gave China leverage. Taiwan independence, advocated by President Chen (his moderate views were not genuine in their view) and more extensive cross-strait economic relations were a contradiction. Another stratagem used by the DPP, which goes far in explaining its victory, was vote allocation. Taiwan uses an odd voting system (a multimember, single-vote that is not transferable system), which means that members of major parties compete with each other in large districts. That being so, the parties' election planners endeavor to get their voters to vote for candidates who are less likely to win, rather than to the most popular front runners. This is, of course, undemocratic, but it violates no election law. In this election the DPP pursued vote allocating very aggressively and very effectively. The party advertised in major newspapers and instructed voters exactly whom to cast votes for according to their national ID card number or their household registration number. The DPP was more efficient at it than the KMT or the other parties because of simultaneously playing to voters' emotions using the ethnic card and "prompting tension with the enemy" (China). The KMT did it less effectively because the party was in disarray and its election planning was not so good, but also (according to some KMT officials) because their voters would not be bossed around in this "authoritarian" way and owing to the fact they were more educated and believed in democracy more strongly.9

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In any event, after the election there were proposals (oddly coming from President Chen himself) to change the voting system. Others agreed, saying it encouraged vote buying and was not a good system. However, it had facilitated the DPP win since it for the first time got a bigger percentage of seats in the legislature than its popular vote and the KMT witnessed the opposite. The KMT also charged during the campaign and after that President Chen and the DPP had, in violation of a former agreement, made an issue of the source of KMT assets. Lien and other party leaders accused the Chen administration of selectivity in enforcing anti-vote buying efforts. And opposition candidates accused the DPP of using government funds and exploiting its advantage of being the party in power (which gave it access to making press releases, disseminating government literature on the campaign which favored the green team, etc.). The election looked bad from some other perspectives. The voter turnout was very low. Voters were cynical. They were unhappy with the dirty campaign. The turnout was just over 66 percent. The turnout was usually 70 or 80 percent of the eligible voters casting votes. The quality of the winning candidates was not as good as usual in terms of education, experience, etc. Fewer had lived or studied abroad or had foreign language capabilities. A number of incumbent candidates that had good ratings for being outstanding legislators lost. Many who were expected to win, as reflected in their high polling numbers, lost.10 After the election was over President Chen had to try to form a coalition. He promised to do so before and during the campaign. The TSU joining him was no problem. But that gave him only 100 votes. He could try to get some KMT members to defect. That, along with attracting some independents might give him a majority. But it would no doubt create more and deeper hard feelings in the KMT. It would also likely be a small majority and an unstable one. He could try to form a "broad coalition" with the KMT. But that would no doubt create dissention within the DPP ranks given its faction ridden past and the current state of DPP factions. It would also present difficulties for the TSU. Chen might try to make a deal with James Soong. But Soong

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would want something in return. Also, an alliance with Soong would likely rile the TSU. Both the PFP and the TSU are parties that depend on their respective leaders, James Soong and Lee Teng-hui, for their viability. Since Soong and Lee are bitter enemies this would create a likely unworkable situation. President Chen also has to calculate that by dealing with the PFP he will enhance Soong's visibility and his reputation and Chen does not want to do that considering Soong is likely to be his strongest rival in the 2004 presidential campaign. Before the election President Chen announced the formation of an organization which he called a national stabilization alliance to bring various political parties and other groups together to deal with Taiwan's political turmoil and strained cross-strait relations. The opposition snubbed Chen's invitation, saying they would not participate." Lien Chan called the organization unconstitutional and a few days later announced the creation of a body to "protect the Constitution" in response to Chen's initiative. After the election, Lee Teng-hui announced forming a "do tank" (a think tank that also acts). These actions seemed to reflect the reality that Taiwan's top leaders did not expect Taiwan's political problems to be worked out in the context of party negotiations or by agreements among the parties. Political leaders talked about reforming Taiwan's electoral system and resolving other problems. But little was said about changing the constitution to fix the political system. They understood that in the post-election political climate this would not be possible. Hence, it seemed likely that Taiwan's politics would remain polarized, hostile, unfriendly, uncompromising, and acrimonious. This did not augur well for ending gridlock. And it seemed likely that the mess in Taiwan's domestic politics would make it more difficult to rescue cross-strait relations, if there indeed was hope for that. Hence, troubled times for Taiwan appear likely to continue into the foreseeable future.

Appendix I China's White Paper on Taiwan: The One-China Principle and the Taiwan Issue February 21, 2000

Foreword

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n October 1, 1949, the Chinese people won a great victory in the new democratic revolution and founded the People's Republic of China (PRC). The Kuomintang (KMT) ruling clique retreated from the mainland to entrench in China's Taiwan Province in confrontation with the Central Government with the support of foreign forces. This is the origin of the Taiwan issue. Settlement of the Taiwan issue and realization of the complete reunification of China embodies the fundamental interests of the Chinese nation. The Chinese government has worked persistently toward this goal in the past 50 years. From 1979, the Chinese government has striven for the peaceful reunification of China in the form of "one country, two systems" with the greatest sincerity and the utmost effort. Economic and cultural exchanges and people-to-people contacts between the two sides of the Taiwan Straits have made rapid progress since the end of 1987. Unfortunately, from the

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1990s, Lee Teng-hui, the leader of the Taiwan authorities, has progressively betrayed the One-China Principle, striving to promote a separatist policy with "two Chinas" at the core, going so far as to openly describe the cross-Straits relations as "state to state relations, or at least special state to state relations." This action has seriously damaged the basis for peaceful reunification of the two sides, harmed the fundamental interests of the entire Chinese nation including the Taiwan compatriots, and jeopardized peace and stability in the Asia-Pacific region. The Chinese government has consistently adhered to the One-China Principle and resolutely opposed any attempt to separate Taiwan from China. The struggle between the Chinese government and the separatist forces headed by Lee Teng-hui finds its concentrated expression in the question of whether to persevere in the One-China Principle or to create "two Chinas" or "One-China, one Taiwan." In August 1993, we issued a white paper entitled "The Taiwan Question and Reunification of China," which systematically expounds the fact concerning Taiwan as an inalienable part of China, the origin of the Taiwan issue and the Chinese governments basic principles and related policies regarding resolution of the Taiwan question. We deem it necessary here to further explain to the international community the Chinese government's position and policy on the One-China Principle.

7. The Basis for One China, de Facto and de Jure The One-China Principle has evolved in the course of the Chinese people's just struggle to safeguard China's sovereignty and territorial integrity, and its basis, both de facto and de jure, is unshakable. Taiwan is an inalienable part of China. All the facts and laws about Taiwan prove that Taiwan is an inalienable part of Chinese territory. In April 1895, through a war of aggression against China, Japan forced the Qing government to sign the unequal Treaty of Shimonoseki, and forcibly occupied Taiwan. In July 1937, Japan launched an all-out war of aggression against China. In December 1941, the Chinese government issued the Proclamation of China's Declaration of War Against Japan, announcing to the world that all treaties, agreements and contracts concerning Sino-Japa-

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nese relations, including the Treaty of Shimonoseki, had been abrogated, and that China would recover Taiwan. In December 1943, the Cairo Declaration was issued by the Chinese, U.S. and British governments, stipulating that Japan should return to China all the territories it had stolen from the Chinese, including Northeast China, Taiwan and the Penghu Archipelago. The Potsdam Proclamation signed by China, the United States and Britain in 1945 (later adhered to by the Soviet Union) stipulated that "The terms of the Cairo Declaration shall be carried out." In August of that year, Japan declared surrender and promised in its instrument of surrender that it would faithfully fulfill the obligations laid down in the Potsdam Proclamation. On October 25, 1945, the Chinese government recovered Taiwan and the Penghu Archipelago, resuming the exercise of sovereignty over Taiwan. On October 1, 1949, the Central People's Government of the PRC was proclaimed, replacing the government of the Republic of China to become the only legal government of the whole of China and its sole legal representative in the international arena, thereby bringing the historical status of the Republic of China to an end. This is a replacement of the old regime by a new one in a situation where the main bodies of the same international laws have not changed and China's sovereignty and inherent territory have not changed therefrom, and so the government of the PRC naturally should fully enjoy and exercise China's sovereignty, including its sovereignty over Taiwan. Since the KMT ruling clique retreated to Taiwan, although its regime has continued to use the designations "Republic of China" and "government of the Republic of China," it has long since completely forfeited its right to exercise state sovereignty on behalf of China and, in reality, has always remained only a local authority in Chinese territory. The formulation of the One-China Principle and its basic meaning. On the day of its founding, the Central People's Government of the PRC declared to governments of all countries in the world, "This government is the sole legitimate government representing the entire people of the People's Republic of China."

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It is ready to establish diplomatic relations with all foreign governments that are willing to abide by the principles of equality, mutual benefit and mutual respect for each other's territorial integrity and sovereignty." Shortly afterwards, the Central People's Government telegraphed the United Nations, announcing that the KMT authorities had "lost all basis, both de jure and de facto, to represent the Chinese people," and therefore had no right to represent China at all. One principle governing New China's establishment of diplomatic relations with a foreign country is that it recognizes the government of the PRC as the sole legitimate government representing the whole of China, and severs or refrains from establishing diplomatic relations with the Taiwan authorities. These propositions of the Chinese government met with obstruction by the U.S. government. On January 5, 1950, U.S. President Truman issued a statement, saying that the U.S. and other Allied countries recognized China's exercise of sovereignty over Taiwan Island in the four years since 1945. However, after the start of the Korean War in June 1950, to isolate and contain China the U.S. government not only sent troops to occupy Taiwan, but it also dished out such fallacies as "the status of Taiwan has yet to be determined" and later, step by step, lobbied for "dual recognition" among the international community in order to create "two Chinas." Naturally, the Chinese government resolutely opposed this, insisting that there is only one China in the world, Taiwan is a part of China and the government of the PRC is the sole legal government representing the whole of China. China has evolved the One-China Principle precisely in the course of the endeavor to develop normal diplomatic relations with other countries and the struggle to safeguard state sovereignty and territorial integrity. The above propositions constitute the basic meaning of the One-China Principle, the crucial point being to safeguard China's sovereignty and territorial integrity. During the 30 or 40 years after 1949, although the Taiwan authorities did not recognize the legitimate status of the government of the PRC as the representative of the whole of China, they did insist that Taiwan is a part of China and that there is only one China, and opposed "two Chinas" and "Taiwan independence."

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This shows that for a long time there has been a common understanding among the Chinese on both sides of the Taiwan Straits on the fundamental question that there is only one China and Taiwan is a part of Chinese territory. As far back as October 1958, when the People's Liberation Army (PLA) was engaged in the battle to bombard Jinmen, Chairman Mao Zedong declared to the Taiwan authorities, "There is only one China, not two, in the world. You agree with us on this point, as indicated in your leaders' proclamations." In January 1979, the Standing Committee of the National People's Congress (NPC) issued a Message to Taiwan Compatriots, pointing out that "the Taiwan authorities have always stood firm on the one-China position and opposed the independence of Taiwan. This is our common stand and our basis for cooperation." The Chinese government's solemn and reasonable stand for the OneChina Principle has gained the understanding and support of more and more countries and international organizations, and the One-China Principle has been gradually accepted by the international community at large. In October 1971, the United Nations General Assembly adopted at its 26th session Resolution 2758, which expelled the representatives of the Taiwan authorities and restored the seat and all the lawful rights of the government of the PRC in the United Nations. In September 1972, China and Japan signed a Joint Statement, announcing establishment of diplomatic relations between the two countries, and that Japan recognizes the government of the PRC as the only legitimate government of China, fully understands and respects the Chinese government's position that Taiwan is an inalienable part of the territory of the PRC, and promises to adhere to the position as prescribed in Article 8 of the Potsdam Proclamation. In December 1978, China and the U.S. issued the Joint Communique on the establishment of diplomatic relations, in which the U.S. "recognizes the government of the People's Republic of China as the sole legal government of China" and "acknowledges the Chinese position that there is but one China and Taiwan is a part of China." Up to now, 161 countries have established diplomatic relations with the PRC; they all acknowledge the One-China Principle and promise to handle their relations with Taiwan within the one-China framework.

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II. The One-China Principle—the Basis and Prerequisite for Achieving Peaceful Reunification The One-China Principle is the foundation stone for the Chinese government's policy on Taiwan. On Comrade Deng Xiaoping's initiative, the Chinese government has, since 1979, adopted the policy of peaceful reunification and gradually evolved the scientific concept of "one country, two systems." On this basis, China established the basic principle of "peaceful reunification, and one country, two systems." The key points of this basic principle and the relevant policies are: China will do its best to achieve peaceful reunification, but will not commit itself to rule out the use of force; will actively promote people-to-people contacts and economic and cultural exchanges between the two sides of the Taiwan Straits, and start direct trade, postal, air and shipping services as soon as possible; achieve reunification through peaceful negotiations and, on the premise of the OneChina Principle, any matter can be negotiated. After reunification, the policy of "one country, two systems" will be practiced, with the main body of China (Chinese mainland) continuing with its socialist system, and Taiwan maintaining its capitalist system for a long period of time to come. After reunification, Taiwan will enjoy a high degree of autonomy, and the Central Government will not send troops or administrative personnel to be stationed in Taiwan. Resolution of the Taiwan issue is an internal affair of China, which should be achieved by the Chinese themselves, and there is no call for aid by foreign forces. The aforementioned principles and policies embody the basic stand and spirit of adhering to the One-China Principle, and fully respect Taiwan compatriots' wish to govern and administer Taiwan by themselves. On May 1, 1995, President Jiang Zemin put forward eight propositions on the development of relations between the two sides of the Taiwan Straits and the promotion of peaceful reunification of China, explicitly pointing out: "Adhering to the One-China Principle is the basis and prerequisite for peaceful reunification." Only by adhering to the One-China Principle can peaceful reunification be achieved. The Taiwan issue is one left over by the Chinese civil war. As yet, the state of hostility between the two sides of the Straits has

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not formally ended. To safeguard China's sovereignty and territorial integrity and realize the reunification of the two sides of the Straits, the Chinese government has the right to resort to any necessary means. Peaceful means would be favorable to the common development of the societies on both sides of the Straits, and to the harmony and unity of the compatriots across the Straits. Peaceful means is therefore the best means. The Chinese government's declaration in 1979 on implementing the principle of peaceful reunification was based on the premise that the Taiwan authorities at that time upheld the principle that there is only one China in the world and Taiwan is a part of China. Meanwhile, the Chinese government took into account the fact that the U.S. government, which for many years had supported the Taiwan authorities, had accepted that there is only one China in the world, that Taiwan is a part of China and the government of the PRC is the only legitimate government of China, and saw this acknowledgment as being beneficial to the peaceful resolution of the Taiwan issue. While carrying out the policy of peaceful reunification, the Chinese government always makes it clear that the means used to solve the Taiwan issue is a matter of China's internal affairs, and China is under no obligation to commit itself to rule out the use of force. This is by no means directed against Taiwan compatriots, but against the scheme to create an "independent Taiwan" and against the foreign forces interfering with the reunification of China, and is intended as a necessary safeguard for the striving for peaceful reunification. Resort to force would only be the last choice made under compelled circumstances. As for Taiwan, upholding the principle of one China indicates that it acknowledges that China's sovereignty and territory are inalienable. In this way, both sides of the Taiwan Straits will have a common basis and premise and may find ways to solve their political differences and realize peaceful reunification through consultation on an equal footing. If Taiwan denies the One-China Principle and tries to separate Taiwan from the territory of China, the premise and basis for peaceful reunification will cease to exist. As for the United States, if it promises to follow a one-China policy, it should earnestly implement the three communiques between the Chinese and U.S. governments and fulfill the series of promises it has made. It should maintain only cultural, commercial and other non-governmental

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relations with Taiwan, oppose "Taiwan independence," "two Chinas" or "one China, one Taiwan" and not to stand in the way of the reunification of China. Acting otherwise will destroy the external conditions necessary for the Chinese government to strive for peaceful reunification. As for countries in the Asia-Pacific region and other regions in the world, the situation across the Taiwan Straits has always been closely linked with the stability of the Asia-Pacific region. Adherence to the policy of one China by countries concerned will be beneficial to peace and stability in the Asia-Pacific region and favorable for China to develop friendly relations with other countries, and therefore conforms to the interests of the Asia-Pacific region and other countries in the world. The Chinese government is actively and sincerely striving for peaceful reunification. To achieve peaceful reunification, the Chinese government has appealed time and again for cross-Straits negotiations on the basis of equality and the One-China Principle. Taking Taiwan's political reality into full account and out of consideration for the Taiwan authorities' request for the negotiations to be held on an equal footing, we have put forward one proposal after another, such as that the negotiations should be held between the Communist Party of China (CPC) and the Chinese KMT on a reciprocal basis and that the talks between the two parties may include representatives from all parties and mass organizations of Taiwan, and we have never spoken of negotiations between the "central and local authorities." The Chinese government has also proposed that dialogues may start first, including political dialogues, which may gradually move on to procedural consultations for political talks to solve the name, the topics for discussion and the forms of official talks before political talks are held. Political talks may be carried out step by step. First, negotiations should be held and an agreement reached on an official end to the state of hostility between the two sides under the principle of one China so as to jointly safeguard China's sovereignty and territorial integrity and work out plans for the development of the future inter-Straits relations. In January 1998, to seek and expand the political basis for relations between the two sides, the Chinese government explicitly proposed to the Taiwan side that before the realization of reunification and in handling affairs concerning inter-Straits relations, especially during

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the talks between the two sides, the One-China Principle should be upheld, namely that there is only one China in the world, Taiwan is a part of China and China's sovereignty and territorial integrity is not to be separated. The Chinese government hopes that on the basis of the One-China Principle, the two sides will hold consultations on an equal footing and discuss national reunification together. To strive for peaceful reunification, the Chinese government has adopted a series of positive policies and measures to promote the comprehensive development of cross-Straits relations. From the end of 1987, when the state of isolation between the two sides was terminated, to the end of 1999, the number of Taiwan compatriots coming to the mainland of China for visiting their relatives, sightseeing or exchanges reached 16 million by turnstile count. The total indirect trade volume between the two sides of the Straits has exceeded US$ 160 billion; the agreed capital to be invested by Taiwan business people in the mainland has exceeded US$44 billion, of which US$ 24 billion has been actually used. Great progress has been made in the exchange of mail and telecommunications across the Straits; and some progress has been made in the exchange of air and shipping services too. The NPC and its Standing Committee, the State Council, and local governments have worked out a sequence of laws and regulations to safeguard the legitimate rights and interests of Taiwan compatriots. To properly solve the concrete issues arising from the people-to-people contacts between the two sides through consultations, in November 1992 the mainland's Association for Relations Across the Taiwan Straits and Taiwan's Straits Exchange Foundation reached the common understanding during talks on routine affairs that each of the two organizations should express verbally that "both sides of the Taiwan Straits adhere to the One-China Principle." On this basis, the leaders of these two organizations successfully held the "Wang Daohan-Koo Chen-fu talks" and signed several agreements on protecting the legitimate rights and interests of the compatriots on both sides of the Taiwan Straits in April 1993. In October 1998, the leaders of the two organizations met in Shanghai, starting political dialogue across the Straits. The talks between the two organizations were carried out on an equal footing.

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Practice has proved that on the basis of the One-China Principle, it is entirely possible to find a proper way for holding talks, based on equality, between the two sides. Since Hong Kong and Macao's return to China, people-to-people contacts and exchanges between Hong Kong and Taiwan and between Macao and Taiwan have continued and developed on the basis of the One-China Principle.

HI. The Chinese Government— Staunch Champion for the One-China Principle Separatist forces in Taiwan are bent on violating the One-China Principle. In 1988, after Lee Teng-hui became the leader of the Taiwan authorities, he publicly stated time and again that the basic policy of the Taiwan authorities was that "there is only one China, not two," and "we have always maintained that China should be reunited, and we adhere to the principle of 'one China.'" However, since the early 1990s, Lee Teng-hui has gradually deviated from the One-China Principle, trumpeting "two governments," "two reciprocal political entities," "Taiwan is already a state with independent sovereignty," and "At the present stage the Republic of China is on Taiwan and the People's Republic of China is on the mainland." Moreover, he went back on his words, saying that "I have never said that there is only one China." In addition, he has connived at and provided support for the separatists who advocate "Taiwan independence" and their activities, thus helping the rapid development of the "Taiwan independence" forces and the spread of the "Taiwan independence" ideology. Under the direction of Lee Teng-hui, the Taiwan authorities have adopted a series of measures towards actual separation. In matters of Taiwan's form of government, the Taiwan authorities are seeking to transform Taiwan into an "independent political entity" through a "constitutional reform," so as to suit the needs of creating "two Chinas." In foreign relations, the Taiwan authorities have spared no effort to carry out the activities for "expanding the international space of survival," with the aim of creating "two Chinas." Since 1993, for seven years running, the Taiwan authorities have manoeuvred for participation in the United Nations. In military affairs, the Taiwan authorities

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have bought large quantities of advanced weapons from foreign countries and sought to join the Theater Missile Defence System (TMDS), in an attempt to establish a military alliance of a disguised form with the United States and Japan. In ideology and culture, the Taiwan authorities have endeavoured to obliterate the Chinese awareness of Taiwan compatriots, especially young people, and their identification with the motherland, in order to create misunderstanding of the motherland among Taiwan compatriots and estrange them from her, thus cutting off the ideological and cultural ties between the compatriots on both sides of the Taiwan Straits. Since 1999, Lee Teng-hui has stepped up his separatist activities. In May, he published the book "The Road to Democracy," which advocates the division of China into seven regions, each enjoying "full autonomy." On July 9, he went so far as to publicly distort inter-Straits relations as "state to state relations, or at least special state to state relations," in an attempt to fundamentally change the status of Taiwan as a part of China, sabotage the relations between both sides of the Taiwan Straits, especially the basis for cross-Straits political dialogues and negotiations, and wreck the foundation for peaceful reunification. Lee Teng-hui has become the general representative of Taiwan's separatist forces, a saboteur of the stability of the Taiwan Straits, a stumbling block preventing the development of relations between China and the United States, and a troublemaker for the peace and stability in the Asia-Pacific region. The Chinese Government firmly defends the One-China Principle. The Chinese Government and people have always maintained sharp vigilance and fought resolutely against the secessionist activities of the Taiwan separatists, represented by Lee Teng-hui. After Lee Teng-hui's "private" visit to the United States in June 1995, the Chinese Government has waged a resolute struggle against separation and against "Taiwan independence," and made strong protests and representations to the U.S. Government for openly allowing Lee Teng-hui to visit the United States, violating its promises made in the three Sino-U.S. joint communiques, and seriously prejudicing China's sovereignty. This struggle has shown the Chinese Government and people's firm resolve and ability to safeguard state sovereignty and territorial integrity, and exerted

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an important and far-reaching influence. Compatriots in Taiwan have further realized the serious harm "Taiwan independence" can cause. Lee Teng-hui has received a heavy blow for his separatist activities in the international community, so that some of the "Taiwan independence" protagonists have had to abandon certain extremist propositions aimed at division. The international community has further realized the necessity of upholding the one-China policy. The U.S. Government has explicitly undertaken not to support "Taiwan independence," not to support "two Chinas" or "one China, one Taiwan," and not to support Taiwan joining any international organization whose membership is restricted to sovereign states. The Chinese Government and people have fought more unremittingly after Lee Teng-hui cooked up his "two states" theory. The relevant department of the Chinese Government has clearly stated that the attempt of the Taiwan separatists to implement the "two states" theory in "legal" form was an even more serious and dangerous step towards division and a grave provocation against peaceful reunification. Were the attempt to succeed, it would be impossible for China to achieve peaceful reunification. The struggle against this attempt has grown in momentum with Chinese both at home and abroad condemning the "two states" theory with one voice. Most countries in the world have reaffirmed their position of upholding the OneChina Policy. The U.S. Government has also reasserted its adherence to the One-China Policy and its commitment to the "Three Non-supports" for Taiwan. Finally, the Taiwan authorities have been compelled to announce that they will not amend their "constitution" and "laws" according to the "two states" theory. Nevertheless, separatists in Taiwan are still attempting to detach Taiwan "de jure" from China in the name of the "Republic of China" by various forms, including "formulating a new constitution," "amending the constitution," and "explaining the constitution" or through "legislation." Special vigilance should be maintained to the fact that the Taiwan separatists are continually scheming to disrupt Sino-U.S. relations and provoke conflicts and confrontation between the two nations to achieve their aim of dividing China. Facts prove that a serious crisis still exists in the situation of the Taiwan Straits. To safeguard the interests of the entire Chinese people including

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compatriots in Taiwan and maintain the peace and development of the AsiaPacific region, the Chinese Government remains firm in adhering to "peaceful reunification" and "one country, two systems;" upholding the eight propositions put forward by President Jiang Zemin for the development of cross-Straits relations and the acceleration of the peaceful reunification of China; and doing its utmost to achieve the objective of peaceful reunification. However, if a grave turn of events occurs leading to the separation of Taiwan from China in any name, or if Taiwan is invaded and occupied by foreign countries, or if the Taiwan authorities refuse, sine die, the peaceful settlement of cross-Straits reunification through negotiations, then the Chinese Government will only be forced to adopt all drastic measures possible, including the use of force, to safeguard China's sovereignty and territorial integrity and fulfill the great cause of reunification. The Chinese Government and people absolutely have the determination and ability to safeguard China's sovereignty and territorial integrity, and will never tolerate, condone or remain indifferent to the realization of any scheme to divide China. Any such scheme is doomed to failure.

IV. Several Questions Involving the One-China Principle in the Cross-Strait Relations Chinese territory and sovereignty has not been split, and the two sides of the Straits are not two states. The Taiwan authorities support their position on "two Chinas," including the "two states" theory proposed by Lee Tenghui, with the following arguments: Since 1949, the territories on either side of the Straits have been divided and governed separately, with neither side having jurisdiction over the other; the government of the PRC has never ruled Taiwan; and since 1991 Taiwan has witnessed a form of government that has nothing to do with that of the Chinese mainland. These arguments are absolutely untenable, and can never lead to the conclusion that Taiwan may declare itself a state under the name of the "Republic of China," or that the two sides of the Straits have been divided into two states. Firstly, state sovereignty is inseparable. The territory is the space in which a state exercises its sovereignty. In the territory of a country there can only be a central government exercising sovereignty on behalf of the state. As we

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have already said, Taiwan is an inalienable part of Chinese territory and, after replacing the government of the Republic of China in 1949, the government of the PRC has become the sole legal government of China, enjoying and exercising sovereignty over the whole of China, including Taiwan. Although the two sides of the Straits have not been reunified, Taiwan's status as a part of Chinese territory has never changed, neither, therefore, has China's sovereignty over Taiwan ever changed. Secondly, the international community recognizes that there is only one China, that Taiwan is a part of China, and that the government of the PRC is the sole legitimate government of China. Thirdly, the reason that the Taiwan question has not been settled for such a long period of time is mainly due to the intervention of foreign forces and the obstruction of the separatist forces in Taiwan. Although the two sides of the Straits remain to be reunified, the longterm existence of this abnormal situation has not imbued Taiwan with a status and rights in international law, nor can it change the legal status of Taiwan as a part of China. The problem now is that the separatists in Taiwan and some foreign anti-China forces seek to change this state of affairs, and it is this that the Chinese Government and people are firmly against. We firmly oppose changing Taiwan's status as a part of China by referendum. The Taiwan separatists' attempt to change Taiwan's status as a part of China by referendum on the pretext that "sovereignty belongs to the people" is futile. Firstly, under both domestic and international laws Taiwan's legal status as a part of Chinese territory is unequivocal, and there can be no premise for using referendum to decide any matter of selfdetermination. Secondly, the phrase "sovereignty belongs to the people" refers to all the people of a state, and not certain people or the people of a certain area. The sovereignty over Taiwan belongs to all the Chinese people including Taiwan compatriots, and not to some of the people in Taiwan. Thirdly, at no time in history has Taiwan been a state in its own right, and since 1945 Taiwan has not been a foreign colony, nor has it been under foreign occupation. The issue of national self-determination, therefore, does not exist. In short, from the time that China recovered Taiwan in 1945, there has been no question at all of changing Taiwan's status as a part of China by holding a referendum. The only future for Taiwan is reunification

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with the China mainland, and certainly not separation. Any attempt to separate Taiwan from China through so-called referendum would only lead the Taiwan people to disaster. The "two German states formula" cannot be applied to the settlement of the Taiwan issue. Some people in Taiwan have suggested that crossStraits relations should be dealt with according to the "two German states formula," since Germany was divided into two states after World War II, and was later reunified. This proposal shows a misunderstanding of history and reality. The division of Germany after the war and the temporary division between the two sides of the Straits are questions of a different nature, the difference lying mainly in three aspects. The first is the reasons for, and the nature of, the division. After its defeat in World War II in 1945, Germany was divided into zones occupied separately by the four victorious nations of the United States, Britain, France and the Soviet Union according to a declaration on the defeat of Germany and the assumption of supreme authority and the subsequent Potsdam Agreement. The reunification of Germany became a focus of the confrontation in Europe between the United States and the Soviet Union during the Cold War. The Federal Republic of Germany and the German Democratic Republic were established in the zones occupied by the United States, Britain and France, and that occupied by the Soviet Union. Thus Germany was divided into two states. Obviously, the German question arose entirely from external factors, while the Taiwan issue, left over by China's civil war, is a matter of China's internal affairs. The second aspect is the difference in status between the two under international law. Germany was divided according to a series of international treaties during and after World War II, while the Taiwan question involves provisions of the Cairo Declaration, the Potsdam Proclamation and other international treaties, stating that Japan must return Taiwan, which it had stolen from China, to the Chinese. The third is the difference between the two in their actual conditions of existence. Against the backdrop of the confrontation between the United States and the Soviet Union, the two German states had foreign troops stationed in their territories and so were compelled to recognize each other and coexist in the international community. The Chinese Government has always

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persisted in the principle of one China. Before Lee Teng-hui assumed power, and during his early days in office, the Taiwan authorities recognized only one China and opposed "two Chinas," and the One-China Principle has also been widely accepted by the international community. For these reasons, the Taiwan issue and the German issue cannot be placed in the same category, nor can the "two German states formula" be copied to settle the Taiwan question. Any question can be discussed under the One-China Principle. The Chinese Government advocates that the final purpose of cross-Straits negotiations is to achieve peaceful reunification; and that to achieve this purpose, talks should be held based on the principle of one China. However, the proposals for "Taiwan independence," "two Chinas" and "two states," aiming for separation instead of reunification, violate the One-China Principle, and are naturally unacceptable to the Chinese Government. Provided that it is within the framework of one China, any question can be discussed, including the various issues that are of concern to the Taiwan side. The Chinese Government believes that Taiwan's international space for economic, cultural and social activities compatible with its status, the political status of the Taiwan authorities and other questions, can be finally settled in the process of peaceful reunification through political negotiations within this framework. The so-called controversy about democracy and system is an excuse for obstructing the reunification of China. In recent years the Taiwan authorities have repeatedly declared that "democratization on the China mainland is the key to the reunification of China" and that "the real essence of the cross-Straits issue is a contest between systems." This is an excuse for postponing and resisting reunification, as well as a scheme to deceive compatriots in Taiwan and world opinion. The CPC and the Chinese Government have consistently striven to achieve socialist democracy. To achieve peaceful reunification in the form of "one country, two systems," and to allow the two different social systems on both sides of the Straits to coexist without imposing them on one or the other: this is best able to embody the wishes of compatriots on both sides of the Straits and is

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itself democratic. The different social systems across the Straits, therefore, should not constitute a barrier to peaceful reunification. Moreover, the Chinese Government acknowledges the differences between Taiwan on the one hand and Hong Kong and Macao on the other and, after peaceful reunification, is prepared to apply a looser form of the "one country, two systems" policy in Taiwan than in Hong Kong and Macao. It is totally unreasonable and undemocratic for the Taiwan authorities to seek to obstruct reunification on the pretext of the "controversy about democracy and system" and to force the more than 1.2 billion people living on the Chinese mainland to practise the political and economic systems in Taiwan. The demand for democracy should not be used as a reason for refusing reunification. The essence of the difference between the two sides of the Straits on this question lies by no means in the controversy over whether to practise democracy or in the controversy over what system to practise, but rather a controversy over the choice between reunification and separation.

V. Several Questions Involving Adherence to the OneChina Principle in the International Community The Chinese Government has expressed its appreciation to the international community for widely pursuing a one-China policy. In August 1993, we published the white paper, "The Taiwan Question and Reunification of China." In Chapter V of this document, "Several Questions Involving Taiwan in International Relations," we explained our position and policy on a number of issues, including relations between Taiwan and countries maintaining diplomatic ties with China, relations between international organizations and Taiwan, aviation services between Taiwan and countries having diplomatic relations with China, and arms sales to Taiwan by countries having diplomatic relations with China. Here, we would like to reaffirm our related position and policy. Taiwan is ineligible for membership in the United Nations and other international organizations whose membership is confined to sovereign states. The United Nations is an inter-governmental international organization composed of sovereign states. After the restoration of the lawful rights

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of the PRC in the United Nations, the issue of China's representation in the UN was resolved once and for all and Taiwan's re-entry became totally out of the question. The Taiwan authorities have asserted that Resolution 2758 of the UN resolved only "the problem of China's representation," but not "the problem of Taiwan's representation," and demanded participation in the UN. We will never permit such a separatist act of creating "two Chinas' or "one China, one Taiwan." All members of the UN should adhere to the purpose and principles of the Charter of the United Nations and related UN resolutions, abide by norms governing international relations, including mutual respect for sovereignty and territorial integrity and non-interference in each other's internal affairs, and never, in any form, support Taiwan's joining the UN or other international organizations whose membership is confined to sovereign states. On the basis of the principle of one China, the Chinese Government has made arrangements for Taiwan's participation in some inter-governmental international organizations which accept regional membership in an agreeable and acceptable way according to the nature, regulations and actual conditions of these international organizations. As a region of China, Taiwan has participated in the Asian Development Bank (ADB) and the Asia-Pacific Economic Co-operation (APEC), respectively, under the names "Taipei, China" and "Chinese Taipei." In September 1992, the chairman of the council of the predecessor of the World Trade Organization (WTO), the General Agreement on Tariffs and Trade (GATT), stated that Taiwan may participate in this organization as "a separate Taiwan-Penghu-JinmenMazu tariff zone" (abbreviated as Chinese Taipei) after the PRC's entry into GATT. The WTO should persist in the principle defined in the aforesaid statement when examining the acceptance of Taiwan's entry into the organization. This is only an ad hoc arrangement and cannot constitute a model applicable to other inter-governmental international organizations or international gatherings. No country maintaining diplomatic relations with China should provide arms to Taiwan or enter into military alliance of any form with Taiwan. All countries maintaining diplomatic relations with China should abide by the principles of mutual respect for sovereignty and territorial integrity and

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non-interference in each other's internal affairs, and refrain from providing arms to Taiwan or helping Taiwan produce arms in any form or under any pretext. The Taiwan question is the most crucial and most sensitive issue in the relations between China and the United States. The three Sino-U.S. joint communiques are the basis for the healthy and steady development of relations between the two countries. For over 20 years, the United States has promised to adhere to a One-China Policy, which has brought to itself benefits such as the establishment of diplomatic relations with China, the development of Sino-U.S. relations and the relative stability of the Taiwan situation. Regrettably, the United States has repeatedly contravened its solemn understandings with China made in the August 17 Communique and continued its sale of advanced arms and military equipment to Taiwan. Recently, some people in the U.S. Congress have cooked up the so-called Taiwan Security Enhancement Act and are attempting to include Taiwan in the TMDS. This is gross interference in China's internal affairs and a grave threat to China's security, obstructing the peaceful reunification of China and jeopardizing the peace and stability of the Asia-Pacific region and the world at large. The Chinese Government is firmly against such actions. The Chinese Government adheres to the One-China Principle in dealing with Taiwan's contacts with the outside world. The Taiwan authorities have spared no effort to promote "pragmatic diplomacy" in the international arena and enlarge their "international space of survival," the essence of these being to create "two Chinas" or "one China, one Taiwan." It is only natural that the Chinese Government should firmly oppose these moves. Meanwhile, considering the needs of Taiwan's socio-economic development and the actual benefits of compatriots in Taiwan, the Chinese Government has no objection to Taiwan's non-governmental economic and cultural contacts with foreign countries; in fact, on the premise of one China, it has adopted many flexible measures to make Taiwan's economic, trade and cultural contacts with foreign countries more convenient. For example, Taiwan may stay on the International Olympic Committee in the name of "Chinese Taipei." As a matter of fact, Taiwan has maintained extensive economic, trade and cultural relations with many countries and regions in the world. Every year, a million Taiwan compatriots go abroad for travel,

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business or study, as well as for academic, cultural or sports exchanges, and Taiwan's annual import and export trade volume has exceeded the US$200-billion mark. This has demonstrated that adhering to the One-China Principle has not prevented Taiwan compatriots from engaging in non-governmental international exchanges or affected the needs of Taiwan's normal economic, trade and cultural activities. The Chinese Government safeguards all the justified and lawful rights and interests of Taiwan compatriots abroad. The people of Taiwan are of the same flesh and blood with us. The Chinese Government has always worked for safeguarding their justified and lawful rights and interests abroad. Chinese embassies and consulates stationed abroad have always considered it their duties to strengthen their ties with Taiwan compatriots, listen to their suggestions and requests and safeguard their interests, and do everything they can to help them overcome their difficulties. During the Gulf War, the Chinese Embassy helped Taiwanese labour service personnel stranded in Kuwait pull out of dangerous places safely. After the big earthquakes in Osaka and Kobe, Japan, the Chinese Embassy and consulate there promptly extended their sympathies to stricken Taiwan compatriots. When the civil war in Cambodia broke out, the Chinese Embassy lost no time in helping Taiwanese business people and tourists whose lives and property were seriously imperiled by the war move to safe places. All the above-mentioned facts reflect the Chinese Government's care for Taiwan compatriots. When both sides of the Taiwan Straits are reunified, Taiwan compatriots will, together with people of all ethnic groups in the country, have more possibilities to fully enjoy the dignity and honour of the PRC in the world.

Conclusion China has a long history of 5,000 years. The Chinese people have lived and multiplied on this land where all ethnic groups have mixed together, in the course of which they have developed a powerful cohesiveness, and the values of cherishing and safeguarding unity. Over the long course of history, the Chinese nation has witnessed changes of dynasties, transfers of governments, local separatist regimes, and foreign invasions, especially

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the untold invasions and dismemberment by foreign powers in modern history. However, unity has always been the main trend in the development of Chinese history. After every separation, the country was invariably reunified, only to be followed in its wake by rapid political, economic, cultural, scientific and technological development. Our compatriots in Taiwan have a glorious tradition of patriotism, and have performed brilliant exploits in the struggles against foreign invasions of Taiwan. Since the founding of the PRC, the Chinese people have particularly valued their hard-earned national independence, firmly upheld state sovereignty and territorial integrity and struggled unswervingly for reunification of the motherland. The 5,000-year history and culture have been implanted deeply in the minds of the Chinese people, sprouting the strong national consciousness of the need for national unification. The Chinese Government hopes that the international community will follow the principle of one China now and always and that the U.S. government will earnestly fulfil all the principles concerning the Taiwan issue in the three Sino-U.S. joint communiques, and its solemn promise to uphold the One-China Principle. As the Chinese Government has successively resumed the exercise of sovereignty over Hong Kong and Macao, the people of the whole of China are eager to resolve the Taiwan issue as early as possible and realize the total reunification of the country. They cannot allow the resolution of the Taiwan issue to be postponed indefinitely. We firmly believe that the total reunification of China will be achieved through the joint efforts of the entire Chinese people including compatriots on both sides of the Taiwan Straits and those living overseas. Source: PRC Taiwan Affairs Office and the Information Office of the State Council

Appendix II Excerpted Remarks of PRC Premier Zhu Rongji from a March 15,2000, Press Conference

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would like to remind you that the two-states theory came before the White Paper. If the two-states theory had not been dished out, the White Paper possibly would not have been published. The White Paper serves only to generalize China's principle, position, and policy regarding the Taiwan issue in a more comprehensive manner. It includes Deng Xiaoping's ideas concerning peaceful reunification, one country and two systems, and Chairman Jiang Zemin's eight-point propositions. As for the statement that the Taiwan issue should not be allowed to drag on indefinitely, as early as in the 1980s, Comrade Deng Xiaoping used almost the same expression to expound this issue. The Taiwan issue should not be dragged on indefinitely. If it drags on, how can it be possible that we will not use force? The statement was made a long time ago.

Taiwan's election is a local election and the Taiwan people's own affair. I do not wish to interfere in it. However, we must state very clearly: Whoever gets the post absolutely shall not be allowed to engage in Taiwan

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independence. We shall not allow any form of Taiwan independence. This is our bottom line, which also represents the will of the 1.25 billion Chinese people. Our consistent principle of resolving the Taiwan issue is peaceful reunification and one country, two systems. However, we absolutely will not promise to give up the use of force. Whoever endorses the one-China principle will get our support. We will hold talks with him on any issue. We can make concessions. We are making concessions to Chinese. Whoever engages in Taiwan independence activities shall not end up well. It is because you are unpopular: You are against the will of the Chinese people on both sides of the strait and the Chinese people and overseas Chinese all over the world. All of us Chinese people remember that all of China's history since the Opium War in 1840 is a history of China being bullied and humiliated by foreign powers. Taiwan was also ruled and occupied by Japanese militarists for many years. We think of those early years; China was very poor and weak. However, we still shouted: Arise, those who are unwilling to be slaves. To this end, the Chinese people conducted heroic struggles where one stepped into the breach as another fell. At that time I was only nine years old. But, at present I still distinctly remember the words of national salvation songs at that time. Whenever these national salvation songs were sung, my tears would fall, and I would be full of lofty sentiments for the motherland. Now that the Chinese people have arisen, how can we allow Taiwan, which has been part of China's territory since ancient times, to secede from the motherland? We absolutely cannot allow it. Now some people are calculating how many aircraft, naval vessels, guided missiles China has. Their conclusion is that the Chinese people dare not and will not fight. According to such calculations of yours, Hitler would have ruled the world a long time ago. You do not understand China's history. You do not know: The Chinese people will definitely safeguard the motherland's reunification and national dignity with their own blood and lives. Over the past few days, Taiwan's election campaigns underwent sudden and perplexing changes and worsened abruptly. Some people used all sorts of political trickery and schemes. The villains' plots are obvious to everyone: They intend to let Taiwan independence forces win.

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Two days ago, Taiwan stock prices dropped drastically by 617 points. It showed in a nutshell Taiwan people's worries over the arrogance of Taiwan independence forces. They are worried Taiwan independence forces' victory will spark a cross-strait war and hamper cross-strait peace. We believe that these worries are a logical inevitability and concern all the Taiwan people's personal destinies. At present, Taiwan people are facing an urgent historic moment. They have to decide what path to follow. They absolutely should not act impulsively. Otherwise, it will be too late for regrets. We believe in Taiwan compatriots' political wisdom. We believe Taiwan compatriots will make a wise historic decision. However, there are only three days left. It is very hard to predict worldly affairs. Taiwan compatriots, you must be on your guard! Source: NTIS, translatedfromXinhua News Agency Document ID: 0friogw00wgip3

Appendix III Chen Shui-bian's Victory Speech after the 10th Republic of China Presidential and Vice Presidential Election

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he election results for the 10th ROC presidential and vice presidential election have been declared. The Democratic Progressive Party candidates, Chen Shui-bian and Annette Lu, have been elected president and vice president in Taiwan's second democratic presidential election. First, we want to thank the people of Taiwan with our most solemn and modest hearts. We would like to thank the DPP comrades. We want to thank the Academia Sinica president Lee Yuan-tseh and the national policy advisers for boldly pledging their support. We furthermore would like to thank all those who have contributed to the campaign process. This moment is a dignified and sacred one in the history of Taiwan— because the courageous people of Taiwan, with love and hope, have conquered fear and darkness. They have used their sacred ballots to express their determination to uphold the democracy of Taiwan. That Annette Lu and I are elected does not mean a personal victory or a victory for the DPP. This is a victory for democracy and a victory for the people. This glorious moment also marks the beginning of our responsibility. We want to thank all the countries of the world who have over the years shown concern and support for Taiwan. This has facilitated the smooth

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completion of Taiwan's presidential election. Today, Taiwan has written a new chapter in our road to democracy, and has given birth to a renewed opportunity for democracy and peace in the Asia-Pacific region. It has also concretely acted as a demonstration of the third wave of global democratization. From now on, Taiwan will continue to enhance the exchange and interaction between the government and people of the Western Pacific regions. We will dedicate ourselves toward preserving the peace and stability of the Taiwan Strait and Asia-Pacific. The government lead by Annette Lu and I will take advantage of Taiwan's developmental experience to assist the promotion of democracy and preservation of human rights in international societies. With our economic strength, we will assist Third World countries in reforms and developments, and fulfill our responsibility as a member of the international society. This election is not only the pride of the people of Taiwan, but it is also the pride of Chinese all over the world. We share the same bloodlines and culture. We hope that through more intimate exchange and interaction, with patience and respect, we can collectively create a harmonized and joyous new era. Peace and stability in the Taiwan Strait is the common hope of people on both sides. In the future, we are willing to conduct extensive, constructive communication and dialogue with the utmost sincerity and determination. Under the priority of ensuring national security and social benefits, we are willing to negotiate in various issues, including direct transportation links, business links, investments, peace agreement and a confidence building mechanism for military affairs. We will also, with sincerity, invite Mr. Jiang Zemin, Mr. Zhu Rongji and Mr. Wang Daohan to visit Taiwan. A-bian and Annette Lu are also willing to embark on a trip of negotiation and communication to Mainland China before our inauguration. We believe that the leaders of both parties are willing to exercise our wisdom and courage to initiate positive development for future relations, so as to launch an ever-lasting objective of "goodwill reconciliation, active cooperation and permanent peace."

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The results of the election may mean a momentary triumph or failure, but we believe the end of the election is the beginning of reconciliation. The people in Taiwan will need to collaborate on building a grand vision for the future and not dissipate our power by one moment's emotions. When tomorrow's sunlight shines on the top of the Yushan Mountains, it will be another dawn for Taiwan's progress to peace, democracy and reform. The people in Taiwan need to convene and face the engineering of future reform. "The dream has come true and the sunlight is seen." We believe Taiwan can transcend its historical burdens and prejudices if we only truly respect and understand each other. By doing so, we can conquer the anxiety and aversion in our hearts. The people in Taiwan should use their noblest souls and their most benevolent hearts to ratify the advancement of our country and society successfully. Therefore, let us use our humblest hearts to embrace anyone who disagrees with us. We must use the most passionate love to mend divisions. We will invite representatives from every political party, from the Kuomintang, the New Party, the Taiwan Independence Party and independents, to assemble a "non-partisan team." The group will employ the utmost tolerance and respect to heal the wounds that arose during the election. Furthermore, we will present our respect and appreciation to the other four groups of presidential and vice presidential candidates. The candidates have taught Annette Lu and myself a great deal and given us a fair chance to compete in the election. The future "non-partisan team" will be open-minded and inclusive in leading the new government. "Party alternation, termination of corrupt 'black gold' politics, clean governance, cross-strait peace, persistent development, and government for all people" are the promises I have made to the people of Taiwan. Annette Lu and I will be pragmatic and responsible in our efforts to maintain peace and stability in the Taiwan Strait. Annette Lu and I will strive to improve the lives of the people and create better prospects for Taiwan. From now on, Annette and I, joined by our comrades of the Democratic Progressive Party, will take on the mission mandated by the people and by history to serve Taiwan's 23 million citizens. May the heavens bless the people and may the heavens bless Taiwan—our motherland forever. Source: Taiwan Government Information Office, March 18, 2000

Appendix IV Republic of China Tenth-Term President Chen Shui-bian's Inauguration Address May 20, 2000

Taiwan Stands Up: Toward the Dawn of a Rising Era

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eaders of our friendly nations, honored guests and compatriots from Taiwan and abroad: This is a glorious moment; it is also a moment of dignity and hope. I thank our honored guests, who have come here from afar, as well as those friends from around the world who love democracy and care about Taiwan, for sharing this glorious moment with us. We are here today, not just to celebrate an inauguration, but to witness the hard-won democratic values, and to witness the beginning of a new era. On the eve of the 21st century, the people of Taiwan have completed a historic alternation of political parties in power. This is not only the first of its kind in the history of the Republic of China, but also an epochal landmark for Chinese communities around the world. Taiwan has not only set a new model for the Asian experience of democracy, but has also added a moving example to the third wave of democracy the world over. The election for the lOth-term president of the Republic of China has clearly shown the world that the fruits of freedom and democracy are not

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easily come by. Twenty-three million people with an unwavering will have allayed enmity with love, overcome intimidation with hope, and conquered fear with faith. With our sacred votes, we have proven to the world that freedom and democracy are indisputable universal values, and that peace is humanity's highest goal. The outcome of Taiwan's Year 2000 presidential election is not the victory of an individual or a political party. It is a victory of the people, a victory for democracy, because we have, while at the focus of global attention, transcended fear, threats and oppression and bravely risen to our feet together. Taiwan stands up, demonstrating a firmness of purpose and faith in democracy. Taiwan stands up, representing the self-confidence of the people and the dignity of the country. Taiwan stands up, symbolizing the quest for hope and the realization of dreams. Dear compatriots, let's always remember this moment; let's always remember to value and feel gratitude for it, because the fruits of democracy did not come out of the blue. It was realized by going through many perils and dangers, and by experiencing countless hardships. If not for the fearless sacrifice of our democratic forebears, if not for the unswerving faith of the tens of millions of Taiwanese people in freedom and democracy, we could not possibly be standing on our beloved land today and celebrate a glorious occasion that belongs to all the people. Today, it is as if we are standing before a fresh new gate in history. In the process of democratization, the Taiwanese people have created a brand new key to our shared destiny. The new century's gates of hope are soon to open. We are humble but not submissive. We are full of self-confidence but not the slightest bit of self-satisfaction. Since that moment on March 18 when the election results came to light, I have accepted the mandate of all Taiwanese people in a most earnest and humble frame of mind, and have vowed to devote all my efforts, understanding and courage to assuming the heavy responsibility of this country's future.

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I personally understand that the significance of the alternation of political parties and the peaceful transition of power lies not in that it is a change of personnel or political parties. Nor that it is a dynastic change. Rather, it is the return of state and government power to the people through a democratic procedure. The people are the true masters of the country, which no individual or political party can possess. From the head of state to the rank-and-file civil servant—the government exists for all the people and serves all the people. The alternation of political parties does not mean an all-out negation of the past. We should be fair in evaluating the contributions made by those in power throughout the ages. Mr. Lee Teng-hui deserves our highest praise and heartfelt honor for his promotion of democratic reforms and for his excellent performance during his twelve years of leadership. Taiwan society has rallied and participated energetically in the election. Despite the diverse views and stances, all individuals share the same intent—to come forward for the sake of their political ideas and the country's future. We believe that the end of an election is the beginning of reconciliation. After the curtain falls on emotional campaigns, rationality should prevail. Under the supreme principles of national interests and the welfare of the people, those in power and in opposition should both fulfill their duties by the people and realize the ideals of fair competition in party politics, as well as the checks and balances of democratic politics. A democratic society with fair competition, tolerance and trust is the strongest impetus for a nation's development. Placing national interests above those of political parties, we should solidify the will of the people and seek consensus among the ruling and opposition parties, to promote the country's development and reforms. "A government for all people" and "rule by the clean and upright" were my promises to the people during the election period. It is also an important key for Taiwan society in stepping over its fault lines and exalting to a higher level in the future. The spirit of a "government for all people" lies in the fact that "the government exists for the people." The people are the masters and shareholders of the state. The government should rule on the basis of majority

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public opinion. The interests of the people are absolutely above those of any political party or individual. I have always taken pride in being a member of the Democratic Progressive Party, but from the moment I take my oath and assume the president's post, I will put all my efforts into fulfilling my role as a "president for all people." As in the formation of the new government, we employ people according to their talents and do not discriminate on the basis of ethnicity, gender or party affiliation. We will also place the welfare of the populace as our primary goal in future. The topmost initiatives of my promise to "rule by the clean and upright" are to eliminate "black gold"—the involvement of organized crime in politics—and to eradicate vote-buying. For a long time, the Taiwanese people have been deeply repelled by money politics and the interference of organized crime. A grassroots vote-buying culture has also robbed the people of their right to elect the wise and the able. These have tainted the development of Taiwan's democracy. Today, I am willing to promise hereby that the new government will eliminate vote buying and crack down on "black gold" politics, so that Taiwan can rise above such downward sinking forces. We must give the people a clean political environment. In the area of government reforms, we need to establish a government that is clean, efficient, far-sighted, dynamic, highly flexible and responsive, in order to ensure Taiwan's competitiveness in the face of increasingly fierce global competition. The age of "large and capable" governments has now passed, replaced by "small and effective" governments, which have established partnership relations with the people. We should accelerate the streamlining of government functions and organization and actively expand the role of public participation. This will not only allow the public to fully utilize their energy but also significantly reduce the government's burdens. Similar partnership relations should also be set up between the central and local governments. We want to break the authoritarian attitudes from the days of centralized, money-controlled power. We want to realize the spirit of local autonomy, where the local and central governments share

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resources and responsibilities, where "the central government will not do what the local governments can do." Whether in the east, west, north or south, or whether on Taiwan Proper or on offshore islands, all will get balanced, pluralistic development, and the gap between urban and rural areas will decrease. Of course, we should understand that the government is no panacea for all problems. The driving force for economic development and societal progress comes from the people. Over the past half-century, the Taiwanese people have toiled hard to create an economic miracle that has won global applause, and to lay the foundation for the survival and development of the Republic of China. Today, facing the impact of the fast-changing information technologies and trade liberalization, Taiwan's industrial development must move toward a knowledge-based economy. High-tech industries need to be constantly innovative, while traditional industries need to undergo transformation and upgrading. The future government should not necessarily play the role of a "leader" or "manager." On the contrary, it should be the "supporter" and "service provider," as expected by private enterprises. The responsibility of a modern government is to raise administrative efficiency, improve the domestic investment environment, and maintain financial order and stock market stability, so as to allow economic development to move toward full liberalization and internationalization with fair competition. By observing these principles, the vitality of the public will naturally bloom and create a new phase in Taiwan's economic miracle. Apart from consolidating our democratic achievements, promoting government reforms, and raising economic competitiveness, the new government's foremost objective should be to adhere to public opinion and implement reforms, so that the people on this land can live in more dignity, more self-confidence and better quality. Let our society be not only safe, harmonious and prosperous, but also meet the principles of fairness and justice. As we cultivate the ever growing abilities of our citizens, we will let our next generation learn in an environment filled with happiness and hope. The 21 st century will be a time when "the right to a quality life" and "refined lifestyles" are much emphasized. The government will have to

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bring up solutions for all issues relating to the people's lives, such as social order, social welfare, environmental protection, land planning, waste treatment, cleaning up rivers and community building. It will also have to implement these solutions thoroughly. At present, we need to immediately improve social order and environmental protection, which are important indicators of the quality of life. Building a new social order, we will let the people live and work in peace and without fear. Finding a balance between ecological preservation and economic development, we will develop Taiwan into a sustainable green silicon island. The integrity of the judiciary is a staunch line of defense for democratic politics and social justice. An impartial, independent judicial system is a safeguard for social order and a defender of the people's rights. At present, we still have a long way to go in our judicial reforms. Our compatriots should continue to give the judiciary their calls to action and their ardent expectations. At the same time, we should also restrain our administrative authority and give the judiciary room to operate independently and without interference. Human resources are Taiwan's most important resources. Talent is the foundation of the country's competitiveness, while education is a longterm plan for empowering the people. We will seek a consensus among the ruling and opposition parties, academia and the public to carry on with educational reforms and build a healthy, proactive, lively and innovative education system, which will allow Taiwan to cultivate first-class, outstanding talents amid the fierce international competition. We will let Taiwan move gradually toward a "learning organization" and a "knowledge-based society." We will also encourage people to take up lifetime learning to fully develop their potential and creativity. Grassroots community organizations have now been developing around the country, working to explore and preserve the history, culture, geography and ecology of their localities. These are all part of Taiwan culture, whether they are local cultures, mass cultures or high cultures. Due to special historical and geographical factors, Taiwan possesses a wealth of diversified cultural elements. But cultural development is not something that can bring immediate success. Rather, it has to be accumulated bit by

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bit. We must open our hearts with tolerance and respect, so that our diverse ethnic groups and different regional cultures communicate with each other, and so that Taiwan's local cultures connect with the cultures of Chinesespeaking communities and other world cultures, and create a new milieu of "a cultural Taiwan in a modern century." The September 21 earthquake that occurred last year brought to our land and our compatriots an unprecedented catastrophe, the pain of which is yet to heal. The new government will brook no delay in the reconstruction of disaster areas, including industrial and spiritual recovery. We will work to ensure that care is extended to every victim and rebuild every destroyed place. Here, we would also like to express our highest respect again for all individuals and non-governmental organizations that have selflessly contributed to the rescue and reconstruction work after the disaster. Amid the fierce power of Nature, we have seen Taiwan's most beautiful compassion, strongest faith and greatest trust. Our compatriots have been injured and wounded during the September 21 earthquake, but with the spirit of a "volunteer Taiwan," Taiwan's new family will stand up resolutely on its feet once again. Dear compatriots, 400 years ago, Taiwan was called "Formosa"—the beautiful island—for its lustrous landscape. Today, Taiwan is manifesting the elegance of a democratic island, once again attracting global attention, as the people on this land create a new page in our history. We believe that the Republic of China, with its democratic achievements and technological and economic prowess, can certainly continue to play an indispensable role in the international community. In addition to strengthening the existing relations with friendly nations, we want to actively participate in all types of international non-governmental organizations. Through humanitarian care, economic cooperation, cultural exchanges and various other methods, we will actively participate in international affairs, expand Taiwan's room for survival in the international arena, and contribute to the welfare of the international community. Besides, we are also willing to promise a more active contribution in safeguarding international human rights. The Republic of China cannot and will not remain outside global human rights trends. We will abide by the Universal Declaration of Human Rights, the International Convention

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for Civil and Political Rights, and the Vienna Declaration and Program of Action. We will bring the Republic of China back into the international human rights system. The new government will request the Legislative Yuan to pass and ratify the International Bill of Rights as a domestic law of Taiwan, so that it will formally become the "Taiwan Bill of Rights." We hope to set up an independent national human rights commission in Taiwan, thereby realizing an action long advocated by the United Nations. We will also invite two outstanding non-governmental organizations, the International Commission of Jurists and Amnesty International, to assist us in our measures to protect human rights and make the Republic of China into a new indicator for human rights in the 21 st century. We firmly believe that in any time or any corner of the world, the meaning and values of freedom, democracy and human rights cannot be ignored or changed. The history of the 20th century left us with a major lesson—that war is a failure of humanity. Waged for whatever purpose or whatever imperious reasons, war is the greatest harm to freedom, democracy and human rights. Over the past one hundred-plus years, China has suffered imperialist aggression, which left indelible wounds in her history. Taiwan's destiny has been even more arduous, tormented by brute force and the rule of colonialist regimes. These similar historical experiences should bring mutual understanding between the people on both sides of the Taiwan Strait, setting a solid foundation for pursuing freedom, democracy and human rights together. However, due to long periods of separation, the two sides have developed vastly different political systems and lifestyles, obstructing empathy and friendship between the people on the two sides, and even creating a wall of divisiveness and confrontation. Today, as the Cold War has ended, it is time for the two sides to cast aside the hostilities left from the old era. We do not need to wait further because now is a new opportunity for the two sides to create an era of reconciliation together. The people across the Taiwan Strait share the same ancestral, cultural, and historical background. While upholding the principles of democracy and parity, building upon the existing foundations, and constructing condi-

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tions for cooperation through goodwill, we believe that the leaders on both sides possess enough wisdom and creativity to jointly deal with the question of a future "one China." I fully understand that as the popularly elected lOth-term president of the Republic of China, I must abide by the Constitution, maintain the sovereignty, dignity and security of our country, and ensure the well-being of all citizens. Therefore, as long as the CCP regime has no intention to use military force against Taiwan, I pledge that during my term in office, I will not declare independence, I will not change the national title, I will not push forth the inclusion of the so-called "state-to-state" description in the Constitution, and I will not promote a referendum to change the status quo in regards to the question of independence or unification. Furthermore, the abolition of the National Reunification Council or the National Reunification Guidelines will not be an issue. History has illustrated that war will only create hatred and enmity, with absolutely no benefit to the development of mutual relations. Chinese people emphasize the difference between statesmanship and hegemony, believing in the philosophy that a government which employs benevolence "will please those near and appeal to those from afar," and "when those afar will not submit, then one must practice kindness and virtue to attract them." Such Chinese wisdom will remain universal words of value. Under the leadership of Mr. Deng Xiaoping and Mr. Jiang Zemin, the mainland has created a miracle of economic openness. In Taiwan, over a half century, not only have we created a miracle economy, we have also created the political marvel of democracy. On such a basis, as long as the governments and people on both sides of the Taiwan Strait can interact more, following the principles of "goodwill reconciliation, active cooperation, and permanent peace," while at the same time respecting the free choice of the people and excluding unnecessary obstacles, both sides of the Strait can make great contributions to the prosperity and stability of the Asia Pacific Region. Both sides will also create a glorious civilization for the world's humanity. Dear compatriots, we hope so much to share the moving scene of this moment with all Chinese-speaking people around the world. The wide Ketagelan Boulevard before us was bristling with security guards only a

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few years ago. The building behind me used to be the Governor General's Mansion during the colonial era. Today, we gather here to extol the glory and joy of democracy with songs of the earth and the voice of the people. With a little reflection, our compatriots should be able to appreciate the deep and far-reaching meaning of this moment: Authoritarianism and force can only bring surrender for one time, while democracy and freedom are values that will endure forever. Only by adhering to the will of the people can we pioneer the paths of history and build enduring architecture. Today, as a son of a tenant farmer and with a poor family background, I have struggled and grown on this land and, after experiencing defeat and tribulation, I have finally won the trust of the people to take up the great responsibility leading the country. My individual achievements are minor, but the message is valuable because each citizen of Formosa is a "child of Taiwan" just like me. In whatever difficult environment, Taiwan will be like a selfless, loving mother, who never stops giving us opportunities and who helps us achieve our beautiful dreams. The spirit of the "child of Taiwan" reveals to us that even though Taiwan, Penghu, Kinmen and Matsu are tiny islands on the rim of the Pacific, the map of our dreams knows no limits. It extends all the way to the end of the horizon, as long as our 23 million compatriots fear no hardship and move forward hand in hand. Dear compatriots, this magnificent moment belongs to all the people. All grace and glory belongs to Taiwan—our eternal Mother. Together, let's extend our gratitude to the earth and respect to the people. Long live freedom and democracy! Long live the people of Taiwan! We pray for the prosperity of the Republic of China, and for the health and happiness of all compatriots and all honored guests! Source: Taipei Economic and Cultural Office in New York, Information Division

Appendix V President's National Day Address, 2000

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istinguished Guests, Ladies and Gentlemen: Today is the 89th National Day of the Republic of China. We are solemnly celebrating our country's birthday with thanks, as this year's national day has particular historical significance. Atthe end of the 20th century, the 23 million people on Taiwan achieved, with love and courage, the first peaceful transfer of power through a change of ruling parties in the history of the Republic of China or any other Chinese society for that matter. After many years of living under emergency-decree and authoritarian rule in Taiwan, we finally used ballots to proudly announce to the world: "The people in Taiwan now stand up. Taiwan is now part of the worldwide trend of democracy and freedom." From the very moment of my inauguration as President on May 20,1 have felt not a sense of gratification or elation, but a deep sense of responsibility. Now that the emotional heat generated by the election campaign has subsided, we face not only the serious ills and corrupt practices left by the past authoritarian regime, but also the verbal attacks and military threats from the Chinese mainland, which serve to put the wisdom of the new government to a serious test. Thus, maintaining a stable, peaceful, and secure environment has become the top priority of the new government. If we cannot immediately ease cross-strait tensions, strengthen our diplomatic front, and boost the

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morale of the armed forces, it will be impossible for us to implement various domestic reforms, because nothing can be achieved without the guarantees of national security and a secure international status. We fully understand that all our fellow countrymen have high expectations of the new government. The international community is also waiting to see how the new government will ensure peace in the Taiwan Strait. However, no reform can be achieved in no time. Nor can the backlog of encumbrances that has been accumulated for decades be completely cleared in just a few months. Normalizing cross-strait relations also takes greater wisdom and patience. Over the past five months or so, the new government has been subjected to severe oversight and criticism from citizens and the opposition. We modestly accept advice and make improvements. After the recent adjustments, the new government, with more experience, is leaving the meandering and rugged mountain path behind and moving onto a smooth highway. The government is now ready to launch at full throttle into its very full agenda. We are confident that the new administration will implement various reforms on a planned basis and efficiently. In light of the international trends and the domestic demand, we must expedite national development projects and meet the expectations of the people. The following reforms and initiatives will be carried out: Firstly, we must crack down on money politics and corruption, raise government efficiency, improve law and order, speed up judicial reform, implement educational reforms, and establish a partnership between the government and private enterprises. These actions will strengthen our basis for national development as we face an increasingly competitive world. With regard to economic development, we will keep abreast of the international trend of developing the knowledge-based economy, and use Taiwan's high-tech comparative advantage to realize our goal of turning Taiwan into a "Green Silicon Island." As we are entering the World Trade Organization, we have to help traditional industries initiate necessary changes and upgrading, and remove obstacles to foreign investment. They will then be better able to cope with a more liberalized world. As to social security, we will strengthen our preparations and defenses against natural disasters. We will also eliminate the narrow-minded and

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self-centered mentality and the habit of passing the buck. We must instead forge a community sense of lending a hand to those who suffer. Lastly, we will guarantee social justice, ensure the rule of law, and safeguard the welfare of the disadvantaged groups so as to establish a safe, stable, and secure society. In the field of national security, we will upgrade essential military equipment, strengthen civil defense and psywar preparedness, and continue to carry out the military downsizing and enhancement program. Furthermore, as a contributor to regional peace, we support security in the Asia-Pacific region and world peace. In cross-strait relations, we are sincere and patient in seeking "goodwill reconciliation, active cooperation, and long-lasting peace." We call on the leaders of the other side to join us in returning to the "spirit of 1992," put aside disputes, and resume dialogue and exchange as soon as possible. Thus, we can break the deadlock and achieve a "win-win" situation. Meanwhile, we reiterate our position that the resolution of cross-strait issues and the future of Taiwan must respect the will of the 23 million people in the Taiwan area. Ladies and gentlemen, during its 89-year history the ROC has experienced an initial period of trials and tribulations, received assistance from foreign nations and become self-reliant, undergone colonial and authoritarian rule, and won worldwide acclamation with an economic miracle. Finally, before the end of the century, Taiwan has accomplished a democratic change of political parties in power, a "political miracle" that gives impetus to our entry into the new century. Despite a difficult survival amid internal worries and foreign threats, the ROC still stands on its feet and strides forward. This demonstrates the unyielding and unswerving spirit of the people on Taiwan. We can proudly stride forward on the world stage because of our economic and democratic record. On the threshold of a new era, our new government, based on the solid foundation that has been laid, commits itself to a series of reforms, which will instill uplifting energy into the ROC. At the turn of the century, I sincerely urge all our citizens to place the interests of the nation and our people

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above those of any political party or individual. Together, we take upon ourselves the lofty duty of enhancing the welfare of our descendants. On this glorious day, I invite my 23 million compatriots to join me in wishing the Republic of China the best of everything. May the Republic of China enjoy a long and prosperous future and all my compatriots peace and happiness. Source: Government Information Office, Taipei, October 10, 2000

Appendix VI President Chen Shui-bian's New Year's Eve Address: Bridging the New Century December 31, 2000

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everal hours from now, the year 2000 will draw to an end, and a new century will begin. As we join the world in joyously welcoming the new century, we remember that tomorrow is also the 90th anniversary of the founding of the Republic of China. I would like to share the happiness of transcending the centuries with my compatriots at home and abroad. Let us join together in wishing our country progress toward a successful new era. A review of the history of the 20th century will show civilization's great strides forward. Scientific and technological innovation made impossible dreams come true. Developments in medicine have nearly doubled average life expectancy. Consequently, a longer, more comfortable, and more convenient life has enabled people to make myriad remarkable achievements in such fields as science, technology, and culture. From the perspective of technology and civilization, the 20th century was the best that mankind has ever experienced. However, as a result of cultural conflicts and suffering caused by totalitarianism and wars, the 20th century is also the era that affords us the most lessons and deserves our sober reflection.

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After it was ceded to Japan in the 1895 Treaty of Shimonoseki, Taiwan entered the 20th century frustrated by its inability to control its own destiny. Nevertheless, for over a century, the determination of the people of Taiwan to be their own masters and not capitulate has never changed. During the past century, Taiwan has experienced a variety of struggles: from resisting colonial rule, to maintaining a bastion of anti-communism, to developing a democratic movement under an authoritarian system. The 20th century has especially favored Taiwan, as it has given the people of this land a chance to challenge and better themselves. Taiwan is like a "rose that will never be crushed," in the words of the senior Taiwan writer Yang Kuei. Even in the darkest age of suppression, the people on Taiwan still maintained their pragmatism, diligence, and undaunted character. Over the course of an entire century, the people of Taiwan established the best definition of the "Taiwan spirit." Today, the world has clearly seen the "Taiwan experience," which has been created by the people on this island. The Republic of China has successively made hard-earned economic achievements, courageously "fought big with small," and created a world-acclaimed miracle on Taiwan. Furthermore, in this last year of the 20th century, the people of Taiwan have peacefully transferred political power through a mature, democratic process, setting a new milestone for the ideals of freedom and democracy. My dear fellow countrymen, in a few hours the first sunlight of the 21st century will be shining on the eastern edge of the Pacific Ocean. At the turn of the century, we should attentively reflect on the dignity of being Taiwanese. Today, as everyone happily greets the new century, we should also join in identifying new opportunities for Taiwan. Throughout the next century, Taiwan's economic competitiveness will still sustain our survival. As a result of the world economic recession, the United States and Japan have further reduced their estimated national economic growth rates. Once again, there will be severe tests for Taiwan's prosperity. Although we have previously passed through energy and financial crises unscathed, the government and the private sector must prepare for a worsening situation. Before our World Trade Organization accession, the ROC government must prepare the nation for new situations, including cross-strait economic

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and trade issues and full-scale engagement in the world market. In the past, the government adopted the policy of "patience over haste," considering the different circumstances and eventualities of that time. In the future, we will adopt the new perspective of "positive openness with effective management." As the knowledge-based economy has become the established direction for national development, we will progressively implement the macro-economic plan we have prepared to manage Taiwan's position in world trade and economics during the new century. Experience has shown that Taiwan did not fear economic depression, fierce competition, or a series of severe difficulties. However, we are concerned that the industrial sector is not prepared to upgrade and transform itself before the next series of economic problems. Today, our competition is not internal, it is not a competition between the ruling party and other political parties, and it is not a conflict between labor and management. Fostering Taiwan's international industrial competitiveness and the capability of our next generation to compete in the world is essential for our economic sustainability. On May 20, 2000, Taiwan experienced its first change of political parties in power. The majority party in the Legislative Yuan became the opposition. Since that day, although we spared no effort, the new government is still unable to function as effectively as it should. Therefore, I must examine myself, and I am willing to humbly learn. In facing the political and economic conditions over the past six months, all of us clearly understand that only a stable political situation can ensure economic prosperity, reform, and progress. I believe that, if we continue to clench our fists against each other, we will not be able to hold anything in our hands. Only with open hands can we accomplish anything, with opportunities to hold out our hands and embrace. Only reconciliation and cooperation among political parties can ensure the greatest benefits for the entire citizenry, generate a new consensus on future cross-strait relations, and create a turning point for the two sides of the Taiwan Strait. As we look back on the early years of the 20th century, people on both sides have experienced much turmoil and suffering. I stressed in my inaugural speech that the people on the two sides of the Taiwan Strait share the

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same ancestral, cultural, and historical backgrounds. We believe that the leaders of both sides possess enough wisdom and creativity to jointly deal with the question of a future "one China," while upholding the principles of democracy and reciprocity, building on the existing foundations, and developing conditions for cooperation through goodwill. Actually, according to the Constitution of the Republic of China, "one China" should not be an issue. We hope the mainland can have better understanding of the doubts in the minds of the people of Taiwan. If the mainland can neither respect nor understand the will of the 23 million people of Taiwan to make their own decisions, unnecessary differences between the two sides will result. At the beginning of this new century, the people of Taiwan have the highest expectations for improving cross-strait relations and preserving lasting peace in the Taiwan Strait. I wish to express my sincerest gratitude to all people in both the ruling and opposition parties, including the members of the Supra-party Task Force on Cross-strait Relations, for dedicating themselves to improving cross-strait relations. On the basis of the "three acknowledgements and four recommendations," proposed by the Supra-party Task Force on Cross-strait Relations, I hope to give a positive response as soon as possible to the recommendation to "establish new mechanisms or adjust the existing mechanisms, in order to continuously build an internal consensus on issues related to national development and cross-strait relations among all domestic political parties and sectors of our society." I have always felt that the people on both sides of the Taiwan Strait came from the same family, and that they all pursue the same goals of peaceful coexistence and mutual prosperity. Since both sides wish to live under the same roof, we should be more understanding and helpful rather than harming or destroying each other. Thus, we would like to appeal to the government and leaders on the Chinese mainland to respect the existence and international dignity of the Republic of China; publicly renounce the use of force; and rise above the current dispute and deadlock through tolerance, foresight, and wisdom. The integration of our economies, trade, and culture can be a starting point for gradually building faith and confidence in each other. This, in turn, can be the basis for a new framework of permanent peace and politi-

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cal integration. Eventually, there will be unlimited possibilities for benefiting the people on both sides of the Taiwan Strait in the 21 st century. I recently had the opportunity to read some of Taiwan's historical records and was deeply inspired by one picture in particular: a portrait of the Red Leaf Little League Baseball Team. In this black-and-white photograph, there was a barefoot aboriginal boy at bat. His face showed full concentration, as he focused all of his energy on his responsibility. Meanwhile, his teammates stood by on the sidelines anxiously watching and giving encouragement. Such a beautiful moment perfectly captures 20th century Taiwan and is a memory that I will never forget. My dear fellow countrymen, history has passed the bat to us, and it is now our turn to stand at the plate. The 21 st century will undoubtedly throw us several good pitches, as well as one or two dusters. Regardless of what is thrown to us, however, we must stand firm and concentrate all of our strength and willpower for our best swing. Let us welcome the full promise of the 21st century with confidence and courage. I wish everyone a happy New Year! Thank you. Source: Government Information Office, Republic of China

Appendix VII President's New Year's Address

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y dear fellow countrymen at home and abroad: This first day of the 90th year of the Republic of China is also the first day of the 21 st century. As the world is joyously greeting and celebrating the beginning of this new century, I solemnly and resolutely pray for the 23 million people of Taiwan. Let us remember the past 90 years of our history. The Republic of China endured extreme hardships in the early years after its founding and was subject to colonial rule and authoritarian leadership, before it created the world-acclaimed "economic miracle." The ROC then created a "political miracle" with the peaceful transfer of power, which brought the 20th century to a perfect close and opened a bright future for this new century. Over a protracted period of time, the realities of the world situation and unceasing suppression by the Chinese mainland have continued to frustrate the development of our international relations. Nevertheless, our energetic performance in resolutely implementing democracy, developing economic and trade relations, fulfilling international obligations, and contributing to the global community have prompted nations around the world to again recognize the existence of the Republic of China, its genuine progress, and its accomplishments. Furthermore, the unprecedented change of ruling party in the year 2000 is a source of pride for the world's Chinese communities, as they write a glorious chapter in history.

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Even during periods of global economic fluctuation, the government and people of the ROC have consistently united to overcome adversities, so we can now enjoy economic prosperity and establish a superb model for international economic development. In terms of improving cross-strait relations, people across the Taiwan Strait share the same ethnicity, culture, and historical background, factors which generate continuing private cross-strait exchanges. While we in Taiwan may lack a consensus on the strategy for building future cross-strait relations, we all insist that the Chinese communists renounce the use of force against Taiwan and engage in constructive, peaceful negotiations. My dear fellow countrymen, the new century is approaching. It will be a time of crises and challenges with countless opportunities for progress. Therefore, seizing world trends, creating opportunities, and constructing a national perspective for lasting peace are the important goals we must achieve in the new century. The peaceful transfer of political power has provided a fresh democratic experience for the entire population of Taiwan. In accordance with the extraordinary expectations of our people and under the supervision of various political parties, the new administration will face serious challenges cautiously and courageously. I wish to propose six administrative goals for government in the new century. I. Reform the financial system and develop a knowledge-based economy With the arrival of the age of globalization, the reduction of trade obstacles, the blurring of international boundaries, the rise of regionalism, and the rapid spread of information technology are world trends. The increasingly interdependent world economy requires the ROC to face momentary changes in the international environment. With the gradual decline of financial prosperity around the world at the close of the 20th century, the new era may witness a global economic slowdown. Therefore, we must take preventive measures and actively reform the financial system, build an effective work force, and accelerate international cooperation by constructing a knowl-

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edge-based economy based on the two pillars of knowledge and rule of law. II. Reconcile ruling and opposition parties and integrate ethnic groups To meet the challenges of a fast-paced and dangerous future, we must all consolidate our sentiments of unity and common destiny. Differences in opinion and disagreements can sink us. We cannot afford division, as all 23 million citizens will have to pay the price. Therefore, if we are to form a foundation for enduring national welfare and stability, we must abandon dogmatic ideology, eliminate selfishness and partisan politics, form a majority consensus, and reconcile ethnic differences. III. Eliminate "black gold" politics and thoroughly implement the rule of law "Black gold" politics has been the persistent problem that has corrupted the political system, economic order, and social justice in Taiwan. I believe that the ROC citizens' highest expectations of their government are the elimination of "black gold" politics and restoration of a fair and just society. In order to fulfill these demands and guarantee the rights and freedom of the people, the government must assiduously ensure judicial independence, establish a modern and progressive judicial system, and severely punish corrupt and illegal activities. IV. Enhance government efficiency and accelerate reform In this new era of information, globalization, and democratization, all government agencies must consider public opinion and quickly meet the needs of people. We must abandon obsolete and dilatory attitudes and identify deficiencies and responsibilities of government organizations, so we can improve administrative efficiency and strengthen Taiwan's international competitiveness. The government must accelerate efforts to reconstruct the area damaged by the September 21 earthquake and complete all work within the

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next three and a half years. I propose to designate the September 21 earthquake area as a "reconstruction area" rather than a "disaster area," for the disaster will not last forever. As long as we have confidence, we can assist our fellow citizens in the "reconstruction area" to recover. V. Promote human rights legislation and establish human rights standards I want to reiterate that the ROC cannot and will not exclude itself from world human rights trends. To incorporate Taiwan into the international human rights regime, we will conform to the Universal Declaration on Human Rights, the International Covenant on Civil and Political Rights, and the Vienna Declaration and Action Program of the World Conference on Human Rights. The government has also set up a human rights advisory group, which will encourage the Legislative Yuan to integrate the International Bill of Rights into domestic law, making it "the ROC's Bill of Rights." We also plan to implement the United Nations' long-term human rights policy and establish an independent national human rights commission in Taiwan, setting the ROC as the new standard for human rights in the 21 st century. VI. Reconcile cross-strait relations and establish permanent peace Cross-strait relations affect the welfare of our future generations; however, a solution cannot be attained instantly. We need to proceed cautiously and gradually, especially since a national consensus has not yet been achieved. After the Presidential Advisory Group on Cross-strait Relations proposed the "three acknowledgments and four suggestions," we finally saw the preliminary results of our effort. This is a starting point for our government, which will actively promote the resumption of cross-strait dialogue. This year, when both sides of the Taiwan Strait enter the World Trade Organization, the ROC government will progressively review and promote the "three links" and normalize trade relations to bring permanent peace and stability to cross-strait relations.

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My fellow countrymen, the 20th century has taught us the destructiveness of war, political confrontation, economic recession, and environmental crisis. We study the past in order to plan for the future. The new values of the 21st century are world peace, political reconciliation, economic prosperity, and environmental protection. The geographic situation and the political and economic accomplishments of the Republic of China prove that we can never exclude ourselves from the rapidly changing international community. This is a reality we must take seriously. Maintaining a stable and safe global environment is therefore essential for the future peace and prosperity of Taiwan. Taiwan is our motherland. Only if we are willing to eliminate ethnic and regional discrimination, show tolerance, and unite closely can we develop the spirit of Taiwan. Let us work together for a brighter future for our nation's 23 million people in the 21st century. Let us all give our best wishes for a prosperous Republic of China and a happy New Year for our fellow countrymen at home and abroad. Source: Government Information Office, Taipei, January 1, 2001

Appendix VIII President's Televised Speech Marking the First Anniversary of the New Administration

The following is the full text of President Chen Shui-bian s televised speech, which was broadcast on May 18, 2001.

M

y Dear Fellow Countrymen, Good Morning! Last week, I had an opportunity to visit the countryside with many media managers, view major development projects, and listen to valuable opinions. I presided over the commissioning of the world's first wing of Mirage 2000-5 fighter jets and inspected medical facilities and observed the achievements of the tourist industry and aquacuitural development on offshore islands. In southern Taiwan, I noticed the great improvement of water quality, industrial upgrading, and the integrated development of the Kaohsiung International Harbor. The eastern region is developing green tourism, and our bio-tech industry is expanding. During these two days, all friends from the media personally felt the vitality and competitiveness of the people whether on Taiwan or the offshore islands, in the north, the south, the east, or the west. We were deeply impressed by their diligence, steadfastness, and wholehearted dedication to work.

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During my two-day trip, I was especially amazed by the breeding of freshwater lobsters at the National Penghu Institute of Technology. We saw many cylindrical tubes in the breeding pond. The guide told us that during its development, the lobster must repeatedly shed its shell. Before its new shell has hardened, the lobster is extremely vulnerable to attack by fish and shrimps. It needs a shelter, where it can safely grow a new shell and become a bigger lobster. Looking back over the past year, we find the process of changing the governing party is like shedding a shell. In the five thousand years of ethnic Chinese history and half a century of Taiwan's development, this was the first peaceful transfer of power. Both members of the government and the opposition must experience a transitional period of adjustment before they learn their roles well. We must acknowledge that neither the administration nor the opposition has been fully successful in its transition this past year. New problems have thus arisen in the course of democratic transformation. Although both the governing and opposition parties must devote an even greater effort, I am ready to examine and reflect. I hope that those in the government will accept a greater responsibility and not only be audacious in changing but also successful in transforming. In the past fifty years, Taiwan's political, economic, and social developments have gone through many phases—from dependence on foreign aid to economic independence, from authoritarian rule under the Emergency Decree to freedom under democracy, and from identity crisis to emphasis on Taiwan. All these transformations were painful and have tested us. There were some unavoidable frustrations and confusions during the process; however, our country successfully surmounted them and stepped into a promising new era. In the past one year, the international community and the international media have carefully watched Taiwan, because the 23 million people on Taiwan opened a new page in their history with unparalleled courage. The latest issue of the Time magazine has again made a detailed report on the past year's change of political party on Taiwan. From the global perspective, Taiwan faced severe trials. Nonetheless, the political, economic, and cultural

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achievements accomplished by its 23 million people are unsurpassed in global Chinese society. Dear fellow countrymen, there is no reason for us to be pessimistic. Despite the dual challenges of political and economic transformation, the new administration has this past year achieved outstanding and valuable results, including consolidating our democracy, stabilizing cross-strait relations, eliminating deep-seated irregularities, and expanding diplomatic relations. The global recession and transforming domestic industry remain our greatest challenges. I firmly believe that people from all sectors of society do not care whether the new or former administration is to blame for the rising unemployment or the slowdown of the economy. Nor are they willing to see disputes continue between the Executive and Legislative Yuans. Therefore, we will urge the various ministries and agencies under the Executive Yuan to propose and quickly implement counter-strategies, as well as formulate important medium- and long-term national development plans over the next six months. From a long-term point of view, Taiwan will face a lower economic growth rate and a higher unemployment rate. It will be an inevitable war Taiwan must fight, and the administrative agencies cannot fight it alone. Only with the wisdom of the private sector and the governing and opposition parties will it be possible for Taiwan to win the war. Therefore, I plan to establish an economic development advisory committee under the Office of the President that is above partisan politics. I will personally chair the committee and invite members from the governing and opposition parties, academia, business, and labor to jointly contribute their wisdom for the nation's long-term economic development. By establishing this committee, I hope we can find the most suitable remedy for each problem and further implement the three priority policies of "Taiwan first," "economy first," and "investment first." I fully understand that only when the long and exhausting political strife has ended can we win the war for our nation's economic development. In an effort to stabilize the political situation at home and break the deadlock, we hope the governing party will continue to strongly adhere to its reformist

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ideals in order to win the support of the people. Thus, the work begun by the change of political parties will further progress in a new legislature. In addition, we hope to form a stable majority in the legislature by joining with opposition members who share our ideals and support our reform efforts. Only by so doing can the interaction between the executive and legislative branches reasonably function and major national policies be smoothly promoted. Over the past year, people have become tired of the confrontation and deadlock among the governing and opposition parties. When the new administration first took office, the working hours regulation, which would have been a victory for labor, capital, and government, was boycotted by the opposition parties and eventually led to a defeat for all. This left us deeply exasperated. Whatever the outcome of the election at the end of 2001, people do not want this to continue. Therefore, for the national interest and political stability over the coming two and half years, we would like to open our hearts and extend both hands to propose "joining ideals, sharing resources, making Taiwan first, and rising above political factions" to seek the greatest amount of cooperation among the ruling and opposition parties. Regardless of the outcome of the election this year, we will form a coalition government and a majority alliance in the Legislative Yuan after the election, in order to rebuild the legislature and establish political stability. The ROC is currently transforming, and consequently, cross-strait relations are likewise in transition. Haifa century of enmity between the KMT and the Chinese Communists finally ended with the ROC's change of governing parties, and since our nation now has a new governing party and leader, it is only natural for the Chinese mainland to require some time to adjust. During both the presidential election and my inauguration last year, cross-strait relations were very tense and unstable. Many people doubted the new administration's ability to handle cross-strait relations. Although the Chinese mainland has not given the new administration a single opportunity to gain credibility in the past year, at the same time no ground has been lost. In an attempt to disrupt our national unity, the Chinese mainland has continuously disregarded our goodwill and sincerity, while

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trying to associate itself with both opposition parties and the private sector. The evidence shows, however, that we not only have the ability to manage but also the wisdom and creativity to enhance and further stabilize crossstrait relations. Recent international developments have also boosted our confidence. Indeed, peace and stability in the Taiwan Strait are not just expectations of the people of Taiwan, but are also in the best interests of Asia and the rest of the world. I would like to call on my fellow countrymen to stand firm and unwavering. Do not be distracted by the murmuring of others. We are willing to resume cross-strait negotiations and dialogue at any time and on any subject, so long as they are under the principles of democracy, parity, and peace. Last year's "historic handshake" between the leaders of North and South Korea added a glorious new page to world peace, and I feel that I have a similar mission to accomplish in the development of cross-strait relations. This year's Asia Pacific Economic Cooperation (APEC) forum will be held in Shanghai on the Chinese mainland. Based on the rights and obligations of the ROC as a full APEC member and after careful consideration, I would like to take this opportunity to express my desire to attend the forum in person. Aside from trade and economic issues, I also wish to hold direct talks with President Jiang Zemin on other important issues of concern to the people on both sides, such as the establishment of the "Three Direct Links." I sincerely hope that the Chinese mainland authorities can open their hearts and bravely write a new chapter in history by allowing the leaders on the two sides of the Taiwan Strait to create their own "historic handshake." Over the past year, I have constantly deliberated on Taiwan's value, Taiwan's spirit, and Taiwan's future. Viewed from its geographical position and the size of its population, Taiwan is only a small island at the edge of the Pacific Ocean. But there are many countries that are as large as Taiwan in terms of land area and population, and many more that have better conditions than this island. However, because Taiwan's people are hardworking, optimistic, and tolerant, and because of their high level of education, our country has repeatedly transformed itself, and constantly attracts the attention of the

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world. Whenever I receive a foreign guest or grant an interview to the international news media, I always say that because Taiwan has great people, it does not need a great leader; however, I believe the Republic of China definitely has an opportunity to become a great country. My fellow countrymen, temporary difficulties should not diminish our self-confidence. Temporary setbacks will not wear down our will for advancement. The more others think we cannot do well, the more we should do better. After the transformation, Taiwan surely can create even more outstanding achievements. I have confidence and hope that we can all work together with added vitality. Source: Government Information Office, Taipei, May 18, 2001

Appendix IX President's Economic Development Advisory Conference Closing Address

T

his is not an ending, but a new beginning. After more than a month and under the scrutiny of the nation, the Economic Development Advisory Conference meetings are drawing to a close. From the preparatory process to preliminary meetings, and from panel discussions to the final group report, intense policy debates have taken place. Through tolerance and reconciliation and despite each member's firm position, a consensus has been finally reached on many issues. I believe that most people in Taiwan will welcome these results. We would like to express our sincere gratitude to the governing and opposition parties for their great efforts. We also thank the executive and legislative branches for their cooperation and coordination. Moreover, the success of these meetings not only relies on the perceptive opinions from scholars and experts, but also on the mutual understanding between labor and management. We can say that the conclusion of the EDAC sessions today marks the formal beginning for a most valuable consensus in the future.

New Century, New Nation, and the New Middle Way During the past three days of the Economic Development Advisory Conference, I have listened carefully to the comments of every conference

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member, which I have not only made notes on paper but also in my mind. I have also noticed there are different opinions being expressed outside this convention center, and I have heard what those people had to say. In fact, my initial intention in holding the Economic Development Advisory Conference was to incorporate a plurality of opinions and ensure the welfare of all citizens, which the final consensus of the conference includes. Economic development is Taiwan's lifeline. Only by enhancing the ROC's national strength will we be able to ensure the maximum interests of the people. And only by setting a correct direction for our economic development will we be able to safeguard a sustainable environment, labor's rights and interests, welfare of the disadvantaged, and social justice. This is the "new century, new nation, and the new middle way" that I have always stressed. Twenty-first century Taiwan must find a stable and balanced "third way" between economic development and environmental protection, between industrial investment and welfare of the disadvantaged, and between corporate and labor interests, and it has to be carried out with the cooperation of the government and the private sector. After Taiwan's successful political transformation to democracy, we entered a new stage of transformation in economics and social relations. Although we are still in the process of experimenting and adjusting, so long as we stand firm on the new middle way, the goal of stable and balanced development will eventually be reached.

Policy Direction for National Economic Development In the opening address to this conference, I mentioned "deeply cultivating Taiwan with global perspectives" in accordance with the primary consensus of the panel discussion, as a vision for national economic development in the new millennium. After three days of discussion, the conclusions of each panel have further confirmed the final consensus and conclusions. The outcome should please all members of the conference, as we have fulfilled the expectations of the people and have shown a clear direction for the future economic development for our country. First, in terms of employment, the government will promptly amend labor laws and regulations to strengthen labor-management relations and

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expand labor participation; re-examine foreign-labor policy to accommodate both the needs of the businesses and the employment opportunities for the laborers; promote a new labor retirement system to implement and ensure labor welfare; and establish a comprehensive employment security system. To counter the current rising unemployment rate and the threat of unemployment issues that may arise once we join the WTO, the government must develop an employment promotion program and an effective counter-strategy. Second, with regard to investments, the ROC government must make proper use of its industrial zones and stabilize its water and electricity supplies. We must enhance governmental efficiency; eliminate barriers preventing central and local governments from attracting investments; provide incentives to encourage enterprises to increase their international competitiveness; and find new ways to attract domestic, foreign, and Chinese mainland investments. The budgets for public construction projects need to be increased, and Taiwan's overall infrastructure should be renovated to reflect international standards. Lastly, the government should eliminate non-economic factors affecting economic development, define standards and simplify related procedures for conducting environmental impact assessments, and coordinate environmental protection regulations, labor laws, and industrial development. Third, with regard to industry, the ROC government needs to actively recruit foreign high-tech professionals, facilitate greater access for businesses to bank loans, and enhance the competitiveness of traditional industries. A favorable tax environment should be established to stimulate the development of Taiwan's high-tech industries. R&D resources should be better integrated; and an innovation and R&D mechanism should be established for the industrial, academic, and R&D sections. Finally, the government must promote a knowledge-based economy, revise relevant regulations on business management, and assist Taiwan's agricultural and fishing industries in transforming and modernizing themselves to comply with WTO norms. Fourth, with regard to reforming Taiwan's financial system, the ROC government will thoroughly implement flexible financial policies and fa-

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cilitate governmental reforms. Such policies and reforms will include eliminating financial deficits to balance the budget, establishing a fair accounting system to internationalize Taiwan's financial institutions and make them more transparent, and expediting the privatization of government-owned enterprises. Fifth, with regard to the further development of cross-strait relations, the ROC government will use the four principles of "Taiwan first," "global perspectives" "mutually beneficial win-win situation," and "sound risk management" to replace the current "patience over haste" policy with one of "vigorous liberalization and effective management." Consequently, we will establish a stable cross-strait policy. A flexible mechanism for the flow of capital between Taiwan and the mainland will be established, and the initiative will be taken in preparing for the opening of the "three links" and accession to the WTO by both sides. Tourist visits to Taiwan by people from the Chinese mainland will be promoted. Lastly, we will continue to push for dialogue between the two sides. Altogether, a total of five divisions have reached a consensus on 322 opinions. Thus, it can be clearly seen that every division has put forth its greatest effort to attain the best results. This achievement is especially remarkable considering the initial differences between management and labor, as well as among the political parties and the various industries. Indeed, when the meetings began, divergent views on cross-strait trade and economic development separated various parties, and no one had high expectations for the meeting's success. However, most of these obstacles were overcome and everyone was able to work together to seek and reach a consensus on many of the more important issues. This is highly commendable.

Seven Responses and Pledges In addition to expressing my heartfelt congratulations and thanks to the EDAC for preparing the final summary report, as well as to all committee members for reaching these agreements and conclusions, I would also like to propose seven concrete responses and pledges:

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I. The conclusions reached by the conference are a consensus of all participating members and thus are also a consensus of the people of Taiwan and myself. Therefore, the appropriate administrative departments should implement all these proposals as soon as possible. I hope to see action plans and timetables from relevant departments within the next two weeks. Subsequently, such plans and timetables should be strictly monitored and evaluated. II. The amendment of the 43 relevant laws, like the six financial laws, should be accomplished in the shortest time possible. I hope the legislative process for many of the proposals that have already generated a consensus can be completed at the beginning of the next parliamentary session. Comprehensive communication of both the executive and legislative branches will be necessary. III. Under the category of majority opinions, many policies have been discussed in detail and won the support of a majority of the members. Although they do not form a consensus, they still are important for policy consideration and feasibility study. For example, the annual debt service amount paid off with new loans should be deducted from the annual total of the government public debt. It should be adjusted according to the necessary financial expenditures agreed upon by members of the ED AC. Furthermore, a consensus was formed on the overall study of the tax system, including many suggestions commonly shared by members, such as reducing the land increment tax. The Executive Yuan will have the responsibility to review the tax system in detail and to communicate and coordinate with the Legislative Yuan. I hope that this will have the effect of rejuvenating the domestic economy. IV. A knowledge-based economy not only concerns innovation in the hightech industry. It also incorporates the transformation and modernization of traditional industries. The government must take specific actions to vigorously invest in newly emerging domestic industries and assist innovative research and development of key technologies and prod-

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ucts. It must also assist the best traditional industries, stimulate new investment opportunities, and provide guidance for industrial modernization. We will target an annual growth of more than 12 percent for our future science and technology R&D budget. The vice chairmen's idea of establishing an "industrial re-invention and R&D innovation fund" is an innovation in itself. I ask that the Executive Yuan quickly complete a careful assessment and reach a decision on its feasibility and budgetary sources. V. Streamlining and reorganizing the government is a consensus of the EDAC, which also suggests that "the president invite people from all sectors of society to form a government re-invention committee." I not only agree with this conclusion, but I am also determined to fulfill my election pledge of establishing a "young Taiwan and lively government" during my term of office. I hope that the Executive Yuan can propose a sound and complete government organization and reinvention plan in the first session of the new legislature to create a small, but beautiful, capable, highly efficient government. VI. Without the supportive efforts and full cooperation of various political parties, achievements could hardly have been made during the EDAC. Forming a consensus at the EDAC required consultations and communication among different parties at the Legislative Yuan. Therefore, I am happy to see that the idea of convening a multiparty consultative meeting or a multiparty leaders' summit after the EDAC has been confirmed. I hope that I will have the opportunity to visit party leaders, form a consensus between the governing and opposition parties, and consolidate the efforts of the entire population. VII. During the past year, political stability has directly affected economic development and the confidence of the people. Only with reconciliation and cooperation between the governing and opposition parties can our citizens maximize the benefits from stable national develop-

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ment. Regardless of the year-end election outcome, I have decided to organize a coalition government. The consensus and conclusions we have attained at the EDAC will not change with the outcome of the election.

A Starting Point for

Cooperation

Ladies and gentlemen, the Economic Development Advisory Conference, the first nationwide and multiparty conference after the change of governing parties, is a rare experience. The satisfactory conclusion of the conference is proof that governing and opposition parties, labor and management, academics, and researchers representing a broad spectrum of opinions, regardless of different positions and stances, are able to reach a strong consensus, as long as they open their hearts and find common interests. I have become even more confident in the prospect of moving from the conference toward a coalition government. Again, I would like to thank the five vice chairmen, the members, and all the staff of the conference for their hard work. Together, we have written a beautiful page in history. I also expect that this is not an end, but a new beginning. Let the consensus of the conference be the emphasis for the future administration. Let the mode of the conference be the starting point for cooperation between the governing and opposition parties. Since our goal is not simply predicting the future but realizing the beautiful future by working together, much remains to be done after the conclusion of this conference. Let us unite and bravely work together for this land. Source: Government Information Office, Taipei, August 26, 2001

Appendix X Some of the Resolutions Passed at Taiwan's Economic Development Advisory Conference in August 2001

1. Principles for promoting development of cross-strait economic interaction are: Taiwan first, followed by globalisation, mutual benefit and risk management. 2. Changing of "no haste, be patient" policy to "active opening, effective management." Main measures are: setting up of a panel comprising government officials, businessmen and scholars to study the liberalising of industries allowed to invest in China. The principles for liberalisation are: Allow industries that will increase competitiveness of Taiwan's own industries and which will help raise global logistics management capabilities; allow industries for which moving to China is a matter of survival; careful study of the possibility of the loss of key technologies. Lift restrictions on the size of investment and build risk-management systems, for example lifting the limit of US$50 million (S$87.5 million) on any single investment. Allow direct investment in China. Help Taiwanese businessmen to reduce investment risks.

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3. Build a system to allow easier flow of funds across the Taiwan Strait. Allow Chinese investment in Taiwan. Allow direct foreign-exchange transactions between financial institutions on either side of the strait. In accordance with international practice, allow Taiwanese financial institutions to set up branches in China. 4. Lifting the ban on direct links and preparation for entry into the World Trade Organisation (WTO). In preparation for WTO entry of both China and Taiwan, to get ready for direct trade, postal and transport links and increase the types of Chinese goods allowed into Taiwan. Plan for direct transport links; before signing of agreement with China on such links, to widen the capabilities and scope of offshore transshipment centres. 5. Keeping the precondition of security in mind, to allow more tourists from China to visit Taiwan. 6. The cross-strait negotiation issue, which has been stalled for some time, between the Chinese and Taiwanese sides. Propose that the government quickly build consensus with the opposition to resolve differences over the "1992 consensus," based on the Republic of China Constitution's definition of relations of the two sides; to negotiate with China on direct links as soon as possible. Source: Soh Sui Noi, "Set up timetable for Taiwan-China economic links," The Straits Times, August 28, 2001.

Appendix XI President's National Day Address, 2001

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istinguished Guests, Ladies and Gentlemen: Today is the 90th National Day of the Republic of China. It is also the first of the new century. A year ago, we entered the new century with the first peaceful transfer of political power in our history. Twenty-three million people earned Taiwan a place in the world trend of democracy and freedom with their love and ballots. This democratic achievement created by all people in Taiwan is the solid foundation on which we stand firm and look at the world. However, this is an era of hope filled with challenges. We confront not only the unprecedented challenge of economic transformation, but also the havoc brought by Typhoons Toraji and Nari, as well as the international adversity from the September 11 terrorist attacks in the United States. These domestic and international developments show that the new century has not brought eternal light and peace to mankind as expected. The ever-changing international political and economic situations and unpredictable natural disasters have caused immense suffering and uncertainties at the beginning of this century. Consequently, we must solemnly and humbly face the clash of civilizations and the backlash of nature. I believe the disasters caused by the typhoons will pass. The government has complete confidence and the courage to assist people through these difficulties and accelerate the reconstruction. On the other hand, the government and people must learn a lesson and seriously re-examine criti-

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cal ecological conservation and land management issues. We need to stress that "an ounce of prevention is worth a pound of cure" to prevent disasters in the future. Regarding the international community's anti-terrorism campaign, our government has not only strongly condemned the September 11 terrorist attacks, but has also supported all necessary United States actions to fight international terrorism. The impact of the September 11 terrorist attacks has extended beyond borders. Whether economically or politically, Taiwan cannot stand on the sidelines. Our government has prepared various contingency measures in anticipation of possible changes in the international situation. I personally ask all compatriots to remain calm and united, and understand the importance of "being vigilant in peace time." Moreover, we should demonstrate a community spirit that holds us together. During the past year, the government's top priority has been maintaining a stable, peaceful, and safe society, in order to consolidate democracy in Taiwan and promote various reforms. In the area of national security, the military has strengthened its self-defense capabilities while both the military and intelligence establishment have adhered to the principle of political neutralization. The cross-strait relationship has remained peaceful and stable. In international affairs, we have strengthened our relations with friendly nations and will soon become a member of the World Trade Organization. Thus, we will be able to establish economic relations with 140 countries as part of the global economic and trade system. Moreover, the governing and opposition parties and the private sector collaborated to hold the Economic Development Advisory Conference during late August 2001, reaching a consensus that "cultivating Taiwan with a global perspective" will be the expectation and strategic goal for economic development in the new century. The fact that all political parties were willing to advance the enduring interests of the country with an open mind marks a positive step toward the reconciliation between the governing and opposition parties. In order to strengthen social stability, the government has made earnest efforts to crack down on organized crime, eliminate corruption, and restructure the financial system. Its resolve to improve social order has

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never wavered. As a result of these efforts, we have progressively achieved great success. The government's promises to the people are being realized step by step. Looking into the future, I would like to propose the following four main goals of my administration and invite the entire populace to work together with me: I. Rebuilding Economic Order The government's recent actions to promote reform in the grass-roots financial institutions demonstrate its strong resolve to re-establish Taiwan's economic order. The enactment of the six financial laws indicates that the policy of restructuring the financial system has won support from both the governing and opposition parties. Our impending accession to the World Trade Organization will have an impact on several local industries. However, the government is well prepared and determined to rebuild the economic order and maintain a fair and independent market. Improving government efficiency is important for economic activities. Therefore, the government will implement all recommendations of the Economic Development Advisory Conference on streamlining and reorganizing government agencies. The government has decided to invite representatives from all sectors of society to form a government reorganization committee in the near future to achieve the government's promise of a "young Taiwan and energetic government" and build a small but beautiful, capable, and efficient government. II. Promoting Clean Government The year-end elections for county magistrates, city mayors, and legislators will be the first elections held since the change of governing parties. It will also be a crucial time to test the government's determination to crack down on "black gold," eliminate vote buying and corruption, and improve electoral practices. The government pledges to "declare war on vote buying and severely crack down on black gold," and will harshly punish corruption and illicit activities to clean up elections and politics with the ultimate goal of "eradication of vote buying and elevation of democracy."

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III. Nourishing Civil Society Citizen participation is common in a democracy. However, democratic maturity is achieved on the foundation of rational debate and mutual respect. After the September 11 disaster in the United States, American citizens at all levels have united in their fight against a common foe. They have encouraged each other and extended unanimous support to the government in its handling of the crisis. This is a civil society that has been shaped by 200 years of democracy in the United States. A reflection of our experiences over the past year or so shows that Taiwan's political stability has a direct bearing on its economic development and public confidence. Only a civil society that pursues political reconciliation and cooperation between the governing and opposition parties can constantly develop and produce the optimum benefits for its people. Therefore, regardless of the year-end election results, I have pledged to form a coalition government. The operative model of the Economic Development Advisory Conference will serve as the best example for cooperation between the governing and opposition parties and for social harmony. IV. Pursuing Cross-Strait Reconciliation Although the Chinese mainland has not responded positively to our government's initiatives to normalize cross-strait relations since my inauguration on May 20 last year, we will continue to promote cross-strait reconciliation. The Economic Development Advisory Conference has reached a consensus on mainland relations that the "patience over haste" policy should be replaced by a policy of "proactive opening and effective management" under the principles of "Taiwan first, global perspectives, mutual benefit, and risk management." In this regard, the ROC government will spare no effort to establish flexible mechanisms for cross-strait capital flow, cope with the challenges of our WTO accession and the "Three Links" across the Taiwan Strait, allow tourists from the Chinese mainland, and continue to promote crossstrait consultations. I call on the leaders of the Chinese mainland to abandon obsolete and rigid thinking, raise their intellectual horizon in facing cross-strait rela-

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tions in the 21st century, considering themes such as humanitarianism to overcome the present impasse between the two sides. With the same cultural heritage, dedication to peace, and eagerness for mutually beneficial results, business, trade, and cultural exchanges will help remove political obstacles between the two sides. Only mutually supportive compassion will resolve unnecessary conflicts of opinion. Pursuing a win-win result for the two sides and maintaining peace in the Asia-Pacific region are the unavoidable obligations of leaders on both sides of the Taiwan Strait; otherwise, we cannot face history or our people. We should be open and positive about developing a new era during our time. Distinguished Guests, Ladies and Gentlemen: During the past century, the ROC has stood firm in times of adversity. We have upheld our faith in democracy and free enterprise, with full confidence in the land, people, and future development. Facing numerous challenges and difficulties, we have always progressed with great courage and perseverance. Let us jointly fulfill our responsibilities and rebuild our confidence, so future generations in Taiwan can anticipate and attain new heights and brilliant prospects. In closing, I wish everlasting prosperity to the Republic of China and good health and happiness to each of you. Source: Government Information Office, Taipei, October 10, 2001

Appendix XII President Chen's Comments on Taiwan's Exclusion from APEC

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irst, I would like to express my gratitude to Dr. Li Yuan-zu, Senior Advisor to the President, for agreeing to represent me at this year's Asia-Pacific Economic Cooperation (APEC) Informal Economic Leaders' Meeting. I admire his tireless efforts during this period to prepare for participating in the meeting. I believe that had Senior Advisor Li been able to attend, his profound legal background and administrative experience would have enabled him to contribute to the success of the discussions on cooperation to combat terrorism. His inability to take part in this meeting is not only a source of regret for the people of Taiwan, but also a great loss to this year's APEC Leaders' Meeting. Senior Advisor Li's willingness to offer his services at a time of national need presents an ideal model for all the people of Taiwan, who deeply respect and appreciate his efforts. In addition, the People's Republic of China's departure from established APEC practices of sending a special envoy to deliver the invitation to the Informal Economic Leaders' Meeting, causing our inability to attend, fills me with regret and dismay. By intentionally discriminating against Taiwan and suppressing our active participation in the international arena, the PRC has neglected its responsibilities and obligations as an APEC host economy, undermined its stature as a major player on the world stage, and harmed the normalization of cross-strait relations.

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I want to stress that Taiwan participates in APEC as an equal member, but in its hosting of various APEC meetings, the PRC has consistently used every tactic to obstruct Taiwan's participation and demean its status in APEC. In violation of established APEC practices and protocol, the PRC contacted us to send representatives to the various ministerial meetings held in mainland China simply by faxing unsigned notices without specifying the names of the recipients. In response, to preserve our national dignity and to protect our right to active participation in APEC, our government demanded that the PRC discontinue its discrimination, for the sake of maintaining harmony in cross-strait relations and at the APEC meeting. Unfortunately, with regard to the APEC Informal Economic Leaders' Meeting, the PRC government has continued its old practices, completely disregarding its role as the host economy for the conference. It has also ignored the interests of cross-strait harmony and the feelings of the people of Taiwan, which is truly a cause for great disappointment. Considering the difficulties, interference, and suppression we have experienced this year, I call on the member economies of APEC to jointly condemn the PRC's behavior and prevent such an occurrence from happening again. In the past year, our government has held to the principle of "goodwill reconciliation, active cooperation, and permanent peace" to promote crossstrait exchanges, in order to harmonize and stabilize cross-strait relations. From the PRC's refusal to issue an invitation this time and its inflexible handling of our representation, we can see that the PRC government still employs a two-faced strategy and power struggle mentality toward us, incessantly suppressing Taiwan's international participation and activities. I believe that the PRC has hurt the feelings of the Taiwanese people and we have gained a deeper understanding and awareness of the real nature of the PRC's policy toward Taiwan. With regard to the main topic—"Cooperation Against Terrorism"—to be discussed at this year's APEC Informal Economic Leaders' Meeting, although I will be unable to attend personally for discussions with other economic leaders, the Republic of China will fully support the spirit and determination of the anti-terrorism campaign as well as any effective, substantive measures that may be adopted at the meeting. In addition, we will collaborate with other APEC members, including the United States, for

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close cooperation in the areas of intelligence exchanges, information, security checks, anti-money laundering measures, elimination of tax havens, and enhancement of energy security mechanisms, completely eliminating terrorist organizations and their affiliates. In order to block channels for financing terrorism and to assist in the capture of terrorists, I call on APEC members to support the US proposal to join the "International Convention for the Suppression of the Financing of Terrorism" in accordance with UN Resolution 1373, actively implementing related international rules under the APEC framework. In terms of substantive economic cooperation, many Asia-Pacific countries have been greatly affected by the global economic downturn of the past year. The impact of the September 11 terrorist attacks has further slowed the prospects for economic recovery. Therefore, we will help promote, through various APEC mechanisms, the Shanghai Accord to complete APEC's goal of liberalizing and facilitating trade and investment. We will continue to pursue the objectives of our proposal for "decreasing the digital divide and creating digital opportunities," in order to make an effective contribution to APEC. Finally, I want to call on the people of Taiwan, including all political parties, to be united behind the government in our active participation in the international arena. While recognizing the importance of taking part in such activities, we should not allow our national dignity to be disparaged, to avoid narrowing our space for international survival. I would like to again call on the PRC government to be more open-minded and to take the opportunity for a positive development in cross-strait relations. The sabotage of Taiwan's participation in this APEC meeting will only increase feelings of resentment, resulting in a negative impact on cross-strait relations. At the onset of the entry into the World Trade Organization by both sides of the strait, the PRC should adjust its attitude and adopt constructive measures to facilitate future interaction between the two sides in international settings. Source: Information Division, TECO-NY, October 19, 2001

Notes

Chapter 1 1. In actuality it was a five-team race, but the other two teams of candidates received only a very small portion of the vote and had not figured into the campaign except as a matter of some press interest and as spoilers, which they ultimately were not. For details, see John F. Copper, Taiwan's 2000 Presidential and Vice Presidential Election: Consolidating Democracy and Creating a New Era ofPolitics (Baltimore: University of Maryland Law School, 2000). 2. See ibid. Even China thought Lien would win. 3. For details on Taiwan's political modernization, sometimes called a "political miracle," see John F. Copper, The Taiwan Political Miracle: Essays on Political Development, Elections and Foreign Relations (Lanham, MD: University Press of America, 1997). 4. See for example, Teh-fu Huang and Ching-hsin Yu, "Developing a Party System and Democratic Consolidation," in Steve Tsang and Hung-mao Tien (eds.), Democratization in Taiwan: Implications for China (London: MacMillan Press, 1999), pp. 85-100. 5. The DPP had frequently used this term. Their spokespersons used it during the campaign. 6. For a detailed discussion on this topic, especially the "third generation," see You Ji, "Changing Leadership Consensus" and Qimao Chen, "The Taiwan Strait Crisis," in Shuisheng Zhao (ed.), Across the Taiwan Strait: Mainland China, Taiwan, and the 1995-1996 Crisis (London: Routledge, 1999). 7. For details on Chen's life see the Democratic Progressive Party's webpage: www.dpp.org. 8. See Alexander Ya-li Lu, "Political Opposition in Taiwan: The Development of the Democratic Progressive Party," in Tun-jen Cheng and Stephan Haggard

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10. 11.

12.

13. 14. 15. 16.

17. 18. 19. 20. 21. 22.

23.

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(eds.), Political Change in Taiwan (Boulder, CO: Lynne Rienner Publisher, 1992). See Linda Chao and Ramon H. Myers, The First Chinese Democracy: Political Life in the Republic ofChina on Taiwan (Baltimore: Johns Hopkins University Press, 1998), pp. 46-48 for further details. The observation that public opinion turned to favor the government is my own, but it is shared by many scholars in Taiwan. Interestingly it was Elmer Feng, the New Party's vice presidential candidate in the 2000 election, who caused Chen to go to prison. See John F. Copper, Taiwan's Mid-1990s Elections: Taking the Final Steps to Democracy, chapter 2. For details on the DPP's rise with Chen, see Shelley Rigger, From Opposition to Power: Taiwan s Democratic Progressive Party (Boulder, CO: Lynne Rienner Publisher, 2001). Chen had had approval ratings of over 70 percent much of the time when he was mayor. He won more votes in the 1998 election than in 1994 (both being three-way races). He used his concession speech to launch his presidential campaign. See Shelly Rigger, From Opposition to Power: Taiwan s Democratic Progressive Party (Boulder, CO: Lynne Rienner Publisher, 2001), p. 101. For further details, see the DPP's website: www.dpp.org. Ibid. Ibid. The definition of a mandate was widely discussed during the 1996 election campaign. See John F. Copper, Taiwan's Mid-1990s Elections: Taking the Final Steps to Democracy (Westport, CT: Praeger Publisher, 1999), chapter 4. See Copper, Taiwan's 2000 Presidential and Vice Presidential Elections. Ibid. Ibid. Ibid. Information on the People First Party can be found at www.pfp.org.tw. This view of Lien and Soong contradicts what Lee Teng-hui said about the KMT's attacks on Soong prior to the March 2000 election, especially that the revelations about Soong's using KMT money for wrong purposes were Lien's ideas. Most people believe that Lee very strongly opposed Soong becoming president. Tang Fei and others who joined Chen's cabinet did not get permission from the KMT to do so. In fact, many KMT members opposed this. Clearly Chen had not made a deal with the KMT. This was reported in the press almost daily at this time. See also the web sites of the two parties: www.kmt.org.tw and www.pfp.org.tw. President Chen discusses it in his book cited in the bibliography.

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25. Both Chen and Lu talk openly about this in their books. See the bibliography of this book. 26. See Yu-shan Wu, "Taiwan in 2000: Managing the Aftershock of Power Transfer," Asian Survey, January-February 2001. 27. This point is discussed in greater detail in the next chapter. 28. The election victory gave Chen few advantages in influencing the media, except for some government-controlled publications. The major newspapers were either pro-KMT or middle-of-the-road. The largest pro-DPP newspaper, the Independence Daily News experienced serious financial difficulties shortly after Chen's victory and collapsed. 29. Details on this event can be found in the next chapter. 30. Various public opinion polls are cited in the following two chapters. 31. The Department of State had not been so positive about Lee Teng-hui's victory in 1996, obviously due to its dislike of Lee. 32. "Albright: Taiwan Head's Words 'Careful and Appropriate,'" AFP, March 19, 2000 cited in Foreign Broadcast Information Service, March 21,2000. 33. "House votes to applaud Taiwan on elections," China Post (international edition), March 30,2000, p. 1. 34. "Chen's Victory," Wall Street Journal, March 20,2000, p. A34. 35. "Taiwan: Handle with Care," USA Today, March 21, 2000 (from the internet at usatoday.com). 36. "Political Earthquake in Taiwan," New York Times, March 20,2000, p. 22. 37. "Taiwan Steps Forward," Washington Post, March 19,2000, p. B6. 38. "Uncertain Era for Taiwan," Los Angeles Times, March 20,2000, p. B4. 39. "Support Taiwan," Daily Telegraph, March 20,2000, p. 21. 40. Michael Sheridan, "Humiliation for China as Taiwan Votes in Reformer," Sunday Times, March 19,2000 (from the internet). 41. See chapter 2 for further details on this point. 42. See chapter 3 for further details on this point. 43. See Joseph Fewsmith and Stanley Rosen, "The Domestic Context of Chinese Foreign Policy: Does 'Public Opinion" Matter?" in David M. Lampton (ed.), The Making of Chinese Foreign and Security Policy in an Era of Reform (Stanford: Stanford University Press, 2001), p. 173. 44. See chapter 3 for further details. 45. "China Issues Statement on Taiwan Election," Xinhua, March 18, 2000, cited in Foreign Broadcasting Information Service, March 21,2000. 46. "Hundreds of Chinese boats intruding Taiwan's waters: report," AFP, March 24,2000 (from the internet). 47. See chapter 3 for further details. 48. See Sheng Lijun, "Taiwan at a Crossroads," Asian Perspective, Vol. 25, No. 1, 2001.

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49. See chapter 2 for further details on this point. 50. See chapter 3 for further details. 51. Members of the KMT and PFP went to China. Neither Lien nor Soong, however, went. Top DPP leaders were highly critical of their visits. 52. See chapter 2 for further details. 53. See chapter 2 for further details. 54. "Think tank sees severe downturn," Taipei Times, November 5, 2001 (on line at www.tapietimes.com).

Chapter 2 1. For details on the election, see John F. Copper, Taiwan's 2000 Presidential and Vice Presidential Election: Consolidating Democracy and Creating a New Era ofPolitics (Baltimore: University of Maryland Law School, Maryland Series in Contemporary Asian Studies, 2000). For assessments of the election as it relates to cross-strait relations, see Deborah A. Brown, "Taiwan's 2000 Presidential Election and Cross-Strait Relations," and Lowell Dittmer, "Taiwan Strait Policy and the Millennial Elections," both in American Asian Review, Spring 2001. 2. The numbers, of course, varied considerably; yet those favoring the status quo, as opposed to adopting a formal policy of separation from China or unification, ran around 70 to 80 percent. One month before the voting it was 86 percent. See "86% show support for maintaining the status quo; 80% opt for political talks as equals," Taipei Times, March 4,2000, p. 3. 3. For further details, see Copper, Taiwan's 2000 Presidential and Vice Presidential Election, pp. 30-31. 4. For more information, see Deborah A. Brown, "Taiwan's 2000 Presidential Election and Cross-Strait Relations," American Asian Review, Spring 2001, pp. 64-66. 5. Copper, Taiwan's 2000 Presidential and Vice Presidential Election, pp. 2930. 6. For details, see Ching Chong, Will Taiwan Break Away? The Rise of Taiwanese Nationalism (Singapore: World Scientific, 2000), pp. 83-84. 7. Of the three, Beijing favored Lien. Soong was acceptable. Their strongest view, however, was against Chen. 8. Copper, Taiwan's 2000 Presidential and Vice Presidential Election, p. 78. 9. See Ching, Will Taiwan Break Away? p. 79. 10. See Julian Baum, Dan Biers and Susan V. Lawrence, "Chen's Chance," Far Eastern Economic Review, March 30,2000, pp. 18-19. 11. Ching, Will Taiwan Break Away? p. 26. Formosa is the Western word for

Notes to Chapter 2

12. 13. 14.

15.

16. 17. 18. 19. 20.

21.

22. 23. 24.

25. 26.

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Taiwan and using it implies Taiwan (a Chinese word) was not historically part ofChina. Ibid., p. 53. Also, see Sheng Lijun, "Taiwan at a Crossroads, Asian Perspective, Vol. 25, No. 12001, p. 198. Ching, Will Taiwan Break Away? p. 20. This was generally true. As noted above, Chen made a number of subtle statements that Beijing did not like, but the U.S. apparently did not notice or chose to ignore them. For example, Chen said in his inauguration speech that Taiwan has "stood up." This reminded many of the same words Mao used after defeating the Nationalists and that were taken to be a measure of China's independence of foreign influence and of Chinese nationalism. Chen's statement was seen as a manifestation of Taiwanese independence and nationalism. See Brown, Taiwan's 2000 Presidential Election and Cross-Strait Relations, p. 56. The author quotes scholar James Robinson who calls this policy "mutual implied deferral." Julian Baum, "Reality Check," Far Eastern Economic Review, July 6,2000, p. 24. Sheng Lijun, "Taiwan at a Crossroads, Asian Perspective, Vol. 25, No. 1 2001. Julian Baum and Maureen Pao, "Rude Awakening," Far Eastern Economic Review, October 19,2000, p. 16. Maureen Pao and Susan Lawrence, "Hands Across the Waters," Far Eastern Economic Review, December 14,2000, pp. 22-23. See Joseph Wu, "Hope kindled by Chen's journey," and Liu Kuan-teh, "Chen's Stopover in major U.S. cities a boost for Taiwan's dignity," both in Taipei Times, June 15,2001 (on the internet at www.taipeitimes.com). See Maureen Pao, "Wanted: Overseas Chinese," Far Eastern Economic Review, June 21,2001, pp. 24-25. Also see Crystal Hsu, "Macedonia: Loss of diplomacy links deals big blow to DPP prestige," Taipei Times, June 19,2001 (on the internet at www.taipeitimes.com). See Dan Biers, "Can't Buy Me Love," Far Eastern Economic Review, June 28,2001, pp. 14-18. "Taiwan: Looking for an Economic Ally in Japan," Stratfor Strategic Forecasting, July 1,2001 (on the internet at www.stratfor.com). See Allen T. Cheng, "The United States of China: How business is moving Taipei and Beijing together," Asiaweek, July 6, 2001 (on line at www.asiaweek.com). See "FPG tycoon slams gov't for upholding 'go slow' policy," China Post (international edition), June 20,2001, p. 1. David Lague," Money Speaks," Far Eastern Economic Review, August 23, 2001, p. 24.

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27. See Maureen Pao, "Independence Dream Team," Far Eastern Economic Review, July 5,2001, pp. 21-22. 28. See "Beijing Retaliates against CSFB for Insensitivity on Taiwan Issue," Asian Wall Street Journal, August 31 -September 2, 2001, p. 1. 29. See "Taiwan boycotts APEC leaders' summit," China Post, October 20, 2001, p. 1., and "Chen comes under fire for Apec boycott," China Post, October 26, 2001, p. 1.. 30. See Bruce Gilley and Maureen Pao, "Defenses Weaken," Far Eastern Economic Review, October 4,2001, pp. 41 -45. 31. See "Rude versus Crude" (editorial), China Post, October 22, 2001, p. 2 32. "Vice President blames gov't's miscalculation for Apec summit fiasco," China Post, October 26,2001, p. 1. 33. See "MAC announces end to 'go slow, be patient' policy," China Post, November 8,2001, p. 1 and Hsieh Kuo-lien, "President calls for closer ROCPRC ties under WTO framework," China Post, November 13,2001, p. 1. 34. See '"I never said I accepted '92 consensus,' says Chen," China Post, November 6,2001, p. 1. 35. See Copper, Taiwan s 2000 Presidential and Vice Presidential Election, pp. 18-19. 36. The KMT's funds have been estimated at between US$3 and 20 billion. Lien is far from being the richest individual in Taiwan, but is the richest politician. 37. Taipei Journal, July 13,2001, p. 1. 38. See Oscar Chung, "One Year On," Taipei Review, August 2001, p. 5. 39. Liu's replacement has hardly been mentioned in press. This may seem an odd situation, but it is true. Liu reappeared in mid-2001 when he was seen to be aligning with the DPP. 40. The New Party, after breaking from the KMT in 1993, took a tough stance against KMT corruption and indicted Lee. Two former KMT leaders, Lin Yang-kang and Chen Lih-an, made this case during the 1996 presidential election. This drew attention to the fact that KMT corruption got worse under Lee. 41. Ching, Will Taiwan Break Away? pp. 24-25. 42. "Liu maintains his grip on bank," Taipei Times, June 21,2001 (on the internet at www.taipeitimes.com). 43. Yun-han Chu, "The Challenges of Democratic Consolidation," in Steve Tsang and Hung-mao Tien (eds.), Democratization in Taiwan: Implications for China (Hong Kong: Hong Kong University Press, 1999), p. 152. 44. The DPP gained executive control over local government that ruled more than two-thirds of the population of Taiwan. 45. See Lin Yu-hsiang, "Prosecutors losing to'black gold,"' Taipei Times, May 3, 2001 (on the internet at www.taipeitimes. com)

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46. See Brian Kennedy, "Through the Looking Glass: Justice in Taiwan," Taipei Times, October 1,2000 (on the internet at www.taipeitimes.com). 47. One of these, an especially well-known one, Lo Fu-chu, was in the legislature (incidentally an independent, not a member of the KMT) heading the Judiciary Committee, which should have been the avenue for taking action against black gold. 48. See Kennedy, "Through the Looking Glass." 49. The Bureau of Investigation was responsible to the Minister of Justice, though it had generally reported to the National Security Bureau, which in turn was responsible to the National Security Council. An effort to make the Bureau more directly responsible to the Minister created serious problems. 50. See Brian Hsu, "Ex-Officers sell secrets for cash," Taipei Times, July 21,2001 (on line at www.taipeitimes. com). 51. See A. James Gregor and Maria Hsia Chang, "The Taiwan Independence Movement: The Failure of Political Persuasion," Political Communication and Persuasion, Vol. 2, No. 4 (1985), p. 371. 52. Peter Huang, however, was the best known of the three because he fled the United States when on parole and became a fugitive for a number of years. 53. See Allen T. Cheng, "Sexual Politics," Asiaweek, June 18,2000 (on the internet at www.Asiaweek.com). Also see Jason Blatt, "Gossipy politicians spread Chen affair rumors," South China Morning Post, November 16,2000 (on the internet at www.scmp.com). Televised meetings between Lu and Chen's handicapped (paralyzed) wife did not help. Neither did talk of the DPP's widely known male chauvinism, which Taiwanese had absorbed from Japanese culture during the period when Taiwan was part of the Japanese Empire (1895 to 1945). While this so-called "Lewinsky affair" was not directly related to Chen's anti-corruption efforts, it was a major distraction. 54. See "Chen accused of nepotism as son lands plum post," Taipei News, June 3,2001,p.3. 55. See Copper, Taiwan's 2000 Presidential and Vice Presidential Election, p. 38. 56. See Laurence Eyton, "Welcome to the 1990s: Military corruption is (finally) under attack," Asiaweek, June 18,2001 (on the internet at www.as/Grwee^.com). 57. Thus judgement is based on interviews with officials in Taiwan. 58. "Taiwan Meddles with Capitalism," Far Eastern Economic Review, October 19,2000 (on the internet at www.feer.com). 59. In Taiwan the stockmarket is heavy with individual investors. There are few institutional investors as in the United States and few bank investors as in Japan. Also investors believe that it is the government's responsibility to keep the market stable and growing. Thus a down market has more political impact that it does in most other countries.

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60. For details, see Asia 2001 Yearbook (Hong Kong: Far Eastern Economic Review, Ltd., 2001), p. 205. 61. Allen T. Cheng, "A test like never before," Asiaweek, October 5,2001, p. 24. 62. "Corruption still rampant," Taipei Times, April 5, 2001 (on the internet at www.taipeitimes.com). 63. "Corruption Still a Serious Problem," China Post, May 22,2001, p. 1. 64. See "Taiwan's Coming Economic Winter," Taipei Times, December 19,2000 (on line at taipeitimes. com). 65. "Dissatisfaction widespread poll shows," South China Morning Post, March 19,2001 (on the internet at www.scmp.com). 66. See John F. Copper, Taiwan's Mid-1990s Elections: Taking the Final Steps to Democracy (Westport, CT: Praeger Publisher, 1998) for further details. 67. Copper, Taiwan's 2000 Presidential and Vice Presidential Election, pp. 3031. 68. This observation is based on a number of interviews the author did in Taiwan at this time. 69. Julian Baum, "Rattling the System," Far Eastern Economic Review, September 21,2000, p. 78. 70. Julian Baum, "Rude Awakening," Far Eastern Economic Review, October 19, 2001, p. 16. 71. According to the Far Eastern Economic Review, the KMT has a massive stock portfolio that includes part ownership in around 300 companies in Taiwan. According to Singapore's Business Times, the KMT sold stocks causing a 600-point drop in the market to influence the election. Finally, KMT members have suggested Chen step down because of his inability to manage the economy and have specifically mentioned the stockmarket. Others, however, say that the KMT's ability to control the stockmarket is limited and doing so costs money so it cannot do it often. For details on this issue, see "Taiwan: Struggling Economy Helping KMT Erode President's Support," Stratfor Strategic Forecasting, October 21, 2000 at www.stratfor.com/asia/ commentary/001021200.htm. 72. See Mat Match, "Power Hungry," Topics, February 2001, pp. 18-28. The author states that if the plant were built on time, Taiwan would be "just skirting an energy shortage." He also says that Taiwan had been producing only 0.8 percent more electricity than needed during peak hours when the ideal was 15 to 20 percent more. 73. See Yu-shan Wu, "Taiwan in 2000: Managing the Aftershock of Power Transfer," Asian Survey, January-February 2001, p. 47. Shortly after this the Council for Economic Planning and Development reported that Taiwan's "economic fitness index" had dropped 10 points to the lowest since it had

Notes to Chapter 2

74. 75. 76. 77. 78.

79.

80. 81. 82. 83. 84. 85. 86. 87.

88.

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kept records. See "Taiwan economic outlook dim," Economic News Daily, March 20,2001 (online attaiwanheadlines.com). Jason Blatt, "Grim job prospects tipped to worsen," South China Morning Post, May 24,2001 (on the internetatwww.scmp.com). See "Taiwan's industries going to China," Taipei Times, May 29,2001 (on the internet at www.taipitimes.com). "Foreign Investment Slides in Korea, Taiwan," Asian Wall Street Journal, June 6,2001, p. 3. "Chen's domestic record lackluster," South China Morning Post, May 18, 2001 (ontheinternetatwww.scmp.com). See "One Year On: Economy—straight talking minister," Taipei Times, May 20,2001 (on the internet at www.taipeitimes.com). Also see Laurie Underwood, "Politics and Business," Topics, April 2001, pp. 17-25. The author interviewed a number of politicians, several of whom blamed the economic downturn on political gridlock. China's economy grew 8 percent in 2000 and by 8.1 percent in the first quarter of 2001. Experts were predicting continued growth, in part fueled by China joining the World Trade Organization. Joining WTO had already stimulated more foreign investment in China. See Bruce Gilley, "Demand-Led Growth," Far Eastern Economic Review, July 19,2001, p. 49. See "Asian Growth Will Be Hit By September's Attacks," Asian Wall Street Journal, October 12-14,2001, p. 1. Cheng, "The United States of China." David Murphy and Maureen Pao, "A Place to Call Home," Far Eastern Economic Review, July 5,2001, p. 57. For details on the reasons for this change in policy, see Pat Gao, "The State of Welfare," Taipei Review, March 2001, pp. 5-11. "Taiwan hit by worst GDP statistics in 26 years," China Post, August 18, 2001, p. 4. "Slumping trade figures continue to plague Taiwan," China Post, September 8,2001,p. 1. Laurie Underwood, "Wrong Side of the Digital Divide," Topics, September 2001, pp. 16-20. Jim Boyce, "Idle Isle," Topics, September 2001, pp. 21-25. He cites one union leader who states the rate is 2.5 times higher than the government reported, making it 12.3 percent in July. He also notes that there is concern that twothirds of the unemployed are men and that 44.8 percent of the unemployment is the result of businesses closing compared to 6.8 percent in 1981. "Mainland China outperforms Taiwan in economic rivalry," (editorial) China Post, September 24, 2001, p. 2. The author also notes in talking of China's

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93.

94.

95.

96. 97.

98.

99. 100.

101. 102. 103.

Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

economic prowess, that the city of Shanghai had surpassed Ireland in economic output, that China's foreign exchange reserves were one of the largest in the world, and that China had become a magnet for foreign investment from all over the world, including Taiwan. "Taiwan's economy faces a bleak winter," China Post, September 29,2001, p. 2. Catherine Hsieh, "Typhoon lashes Taiwan on quake anniversary," Taipei Journal, September 28,2001, p. 1. Michelle Hsu, "Stock market value tumbles by 19.1 percent," China Post, October2,2001,p.3. This stimulus package was started in the spring. See "Taiwan's economic outlook dim," Economic Daily News, March 29, 2001 (on line at taiwanheadlines.com). By the fall not much of it had been implemented. For details, see Yu-shan Wu, "The ROC's Semi-Presidentialism at Work: Unstable Compromise, Not Cohabitation," Issues and Studies, SeptemberOctober 2000, pp. 1-40. China's 1947 Constitution was patterned on an earlier version which sought to limit executive authority in the context of Yuan Shih-kai trying to usurp power and destroy democracy and republicanism. Yen Chia-kan, who was president between the two Chiangs, was not a strong president because he did not control the party. Chiang Ching-kuo, who was premier, controlled the party and also the government. A 1997 amendment to the Constitution ended the Legislative Yuan's approval of the premier. See Hung-mao Tien and Yun-han Chu, "Building Democracy in Taiwan," in David Shambaugh (ed.), Contemporary Taiwan (Oxford: Clarendon Press, 1998), pp. 108-09. Both the easy-to-comply-with regulations on founding a political party in Taiwan and the single non-transferable vote in multi-member voting districts favor a multi-party system. Also see John F. Copper, "The Role of Minor Parties in Taiwan," World Affairs, Fall 1992. There were, of course, other political parties; but none of them was large and few took them seriously. Smaller parties and independents had in earlier election campaigns formed an alliance, but this had not proven effective in winning. See Wu, "The ROC's Semi-Presidentialism at Work" for details. Chen's canceling the building of the 4th nuclear plant was a turning point in his administration in terms of his relationship with the opposition parties. Only 18 percent of the members of Chen's first cabinet were from the DPP. Thirty-three percent came from the KMT. Fifty percent were independents.

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111

104. It is not known if Chen presumed this or felt he had no other alternative. 105. Chen in part picked Annette Lu for her ability to speak English and her foreign contacts and experience. But soon they experienced discord in their relationship. 106. There was reported to have been a deal reached between Chen and the KMT whereby Chen would not investigate the KMT's funds in return for certain cooperation. If there were such an agreement it did not work well. 107. See "Time for Chen to get his act together," Taipei Times, December 13,2000 (on line at www.taipeitimes.com) 108. Julian Baum, "Nuclear Test," Far Eastern Economic Review, June 8, 2000, p. 20. 109. Maureen Pao, "A President Under Siege," Far Eastern Economic Review, May 29,2001, pp. 22-23. 110. See Liu Kuan-teh, "Policy should follow public opinion," Taipei Times, November 11,2000 (on line at taipeitimes.com). In between Chen rejecting the plant and then changing his position, there was a high court ruling on the matter saying that the procedure had been flawed. It was not a definitive ruling but Chen took it to be justification for changing his position. 111. According to a Gallup Poll, in party identification the DPP won 20.3 percent, the KMT 9.9 percent and the PFP 14.3 percent. The approval rating of the DPP was 40 percent. The disapproval rate of the Legislative Yuan was 76 percent. See Dennis Engbarth, "KMT faces hard fight for approval," South China Morning Post, May 21,2001 (on the internet at www.scmp.com). 112. There had been speculation about this during 2000. In the fall of 2001 Chen and Soong met, leading to talk of this happening. Then it was denied. See Stephanie Low, "PFP denies second Soong-Chen tryst," Taipei Times, September 9,2001 (on line atwww.taipeitimes.com)

Chapter 3 1. On 9 July 1999, Lee Teng-hui for the first time openly defined the relations between Mainland China and Taiwan as being "between two states." This new definition by Lee has been widely described as Lee's "two states" theory, which has subsequently been formally accepted by the then ruling KMT and Lee's government. 2. The Guidelines for National Unification, promulgated by the KMT in 1991, set a three-phase process to achieve final unification. The "medium phase" is characterized by the two sides establishing official communication channels on an equal footing. Direct postal, transport and commercial links will be allowed, and both sides will develop jointly the southeastern coastal area of

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5.

6.

7.

8.

9.

Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency the Chinese mainland and then gradually extend the development to other areas to narrow the gap in living standards between the two sides. Both sides will assist each other in international organizations and activities. Bilateral visits by high-ranking officials from both sides will also be promoted. Renmin Ribao (People's Daily) (Beijing), January 29,2000. See President Jiang Zemin's speech at the New Year party and Vice Premier Qian Qichen's speech on January 28,2000. Renmin Ribao, December 31,1999 and January 29,2000. From the late 1970s to the late 1990s, China said to base its Taiwan policy on "two trusts" or "two hopes." In the late 1970s, China only said it was "placing the hope [of reunification] on the government of Taiwan." In the beginning of the 1980s, that line was amended to read: "placing the hope on the government of Taiwan and placing the hope on the people in Taiwan too." Later, Beijing deleted the word "too." From 1991, Beijing changed the wording into "placing the hope on the government of Taiwan but placing more hope on the people in Taiwan." After Lee Teng-hui's trip to the United States in 1995 and during the subsequent Taiwan Strait crisis in 1995-96, Beijing deleted the first part of the statement, i.e., "placing the hope on the government of Taiwan," leaving it to read: "placing the hope on the people in Taiwan." After the March 1996 presidential election in Taiwan, Beijing even stopped using the words "placing the hope on the people in Taiwan." In 1997, it only chose to say "placing the hope on those people in Taiwan who have a glorious patriotic tradition." The white paper was drafted by Yu Keli, deputy president of the Institute of Taiwan Studies of the China Academy of Social Sciences (CASS). In his draft, he did not use the expression that "the Taiwan government was a local government." The central leaders later added it. See Ming Pao Journal (Hong Kong), March 2000. CASS issued the warning when the Taiwanese delegation visited the Institute. Vivien Pik-Kwan Chan, "Delegation Warned on 'Two States' Policy," The South China Morning Post (Hong Kong) November 30, 1999. Chinese Vice Premier Qian Qichen insisted that the threat to attack Taiwan if the island indefinitely delayed talks on reunification, was not new. Deng Xiaoping first delivered the warning in an October 1984 speech. See "Threat of Attack Is Not New, Says Qian," The South China Morning Post, March 1, 2000. However, the speech by Deng was not made public in China. See the interview of Zhang Mingqing, Information Bureau Director of the Taiwan Affairs Office, in "Timing of Threat Deliberate: Chinese Official," The Straits Times (Singapore), February 28,2000. In December 1999 the DPP passed a party resolution to "draft a law to reflect Taiwan's new constitutional reality."

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10. Mark Landler, "China's Sniping Heeded by Some Taiwan Voters," The New York Times, March 9,2000. 11. "Threats May Backfire, Says DPP Candidate," The South China Morning Post, March 3,2000. Also see Mary Kwang, "Chen's Win Will Rule Out Peace, Say Scholars," The Straits Times, March 15,2000. 12. For Zhu's remarks, see Renmin Ribao, March 16,2000. 13. For Xu's suspicion, see "Talk Must Be Backed Up by Firepower," The Straits Times, April 1,2000. For Zhang's accusation, see Lianhe Zaobao (The United Morning News) (Singapore), April 30,2000, p. 20. 14. "U.S. Commitment to People, Not Politician," Lien Ho Pao (United Daily News) (Taipei), January 11,2000. 15. For example, Richard Bush, managing director of the American Institute in Taiwan, delivered this message to Taipei on December 15, 1999. See "Washington Sends a Message to Taipei," stratfor.com, Global Intelligence Update, December 16, 1999; and Goh Sui Noi, "Warnings for Presidential Hopefuls," The Straits Times, December 17, 1999. 16. "Congressman Predicts Cross-Strait Dialogue to Resume after Election," Central News Agency (Taipei), January 17,2000; and "Congressmen to Tenghui: Mind Your Words," The Straits Times, January 15,2000. 17. John Leicester, "China, U.S. Swap Taiwan Warnings," Associated Press Newsline, February 29,2000. 18. See speech by Admiral Dennis Blair, commander-in-chief of the U.S. Pacific Command, at the Senate Armed Services Committee in early March 2000. Tom Raum, "Blair: China Not Fighting Taiwan," Associated Press Newsline, March 7,2000. 19. Tom Raum, "New Images Question Chinese Threat," Associated Press Newsline, May 12,2000. 20. Robert Kagan, "How China Will Take Taiwan," The Washington Post, March 12,2000. 21. "Clinton Wants Taiwan, China to Meet," Associated Press Newsline, March 18,2000. 22. For Japan, it was made in the form of Japanese Prime Minister Keizo Obuchi's comments to reporters. For Australia, it took the form of its Foreign Minister, Alexander Downer, remarking on a TV program. For these international responses, see a survey by The Straits Times ("Around the World," The Straits Times, March 20,2000). 23. Ibid. 24. Pan Xitang, "Xuanhe Lian 'an Guangxi de Weiji yu ZhuanjT (Crises and Opportunities in the Cross-Strait Relations after the Presidential Election), Lianhe Zaobao, April 17, 2000, p. 21. William Foreman, "Opposition Wins Taiwan Election," Associate Press Newsline, March 18,2000.

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25. Pan, op. cit. 26. Zhongguo GuofangBao (China Defense Daily) (Beijing), March 24,2000, p. 2. 27. Sing Tao Jih Pao (Hong Kong), April 20, 2000; and Chung Kuo Shih Pao (China Times) (Taipei), April 20,2000. 28. Jason Blatt, "Principle Stumbling Block," The South China Morning Post, April 7,2000. 29. MAC News Briefing (Mainland Affairs Council, Taipei), no. 0173, April 21, 2000, p. 1. 30. Lianhe Zaobao, September 30, 1997, p. 17. ARATS is a semi-official organisation established in Beijing in 1992 for the negotiations with Taipei with its counterpart the Strait Exchange Foundation (SEF), which was established in 1991. 31. "China: Chinese Party Official Speaks on Unofficial Links with Taiwan's Democratic Progressive Party," Reuters Newsline, August 9,1994. 32. See Jiang's Eight-point proposal in Renmin Ribao, January 31, 1995, p. 1. Emphasis added. 33. "Former Parliamentary Leader Urges Beijing to Move towards Peace Talks," Sing Tao Jih Pao, May 6,1996, p. A2, cited in Reuters Newsline, May 7,1996. Emphasis added. 34. Lianhe Zaobao, September 13,1997, p. 26. Emphasis added. 35. From the author's interviews with Chinese strategists in China in 1998 and 1999. 36. The DPP only recently had sent "representatives" to visit China (as tourists) to engage Chinese leaders in talks. The DPP also sought at times to discuss political issues under the pretence of discussing economic issues. 37. Lien Ho Pao (Taipei), quoted in Lianhe Zaobao, May 22,2001. p. 14. 38. Taiwan's CTN TV and CNN news, May 20,2000. 39. "Chen Reaffirms 'Three Noes' to Show Goodwill in Cross-Strait," Central News Agency, April 16, 2000; and Catherine Sung and William Ide, "Chen Says No Consensus on 'One China,'" Taipei Times (Taipei), April 14,2000. 40. See China's White Paper on Taiwan, Renmin Ribao, February 21,2000. 41. Todd Crowell, "Now, a Beijing Peace Offensive," Asiaweek, July 28, 2000. "Beijing Redefines Dogma in Overture to Taiwan," Reuters Newsline, August 27,2000. 42. Chung Kuo Shih Pao, April 26,2000. 43. Liang'an Guanxi (Cross Strait Relations) (a journal in Beijing), April 2000. Cited in Lianhe Zaobao, April 12,2000, p. 24. 44. Lu said: "If 'one China' means the PRC, then we are of course not Chinese." Lianhe Zaobao, April 23, 2000, p. 21; and Chung Kuo Shih Pao, April 23, 2000. Tsai gave a formal statement when asked whether she is Chinese. She

Notes to Chapter 3

45. 46. 47.

48. 49.

50. 51.

52. 53. 54. 55.

56.

241

said: "From a political aspect, I am citizen of the ROC and you may as well call me huaren. But I am Taiwanese in terms of culture and blood relationship, among which, I am not denying, the Chinese [zhongguoren] are one of the segments." See Chung Kuo Shih Pao, May 30, 2000. Taiwan's CTN TV and CNN news, May 20,2000. Jason Blatt, "Chen Outlines Principles for Dialogue with Beijing," The South China Morning Post, May 6,2000. For example, see "Taiwan Makes a Goodwill Gesture to China," The Straits Times, May 6,2000. For further reading, see The South China Morning Post and major newspapers in the United States of the same date. See Chung Kuo Shih Pao, May 6,2000; and Sing Tao Jih Pao, May 6,2000. Mark Landler, "Risking China's Ire, Taiwan Leader Questions Unification," The New York Times, September 2,2000. "Taiwan President: Reunification is Not Taiwan's Only Choice," Associated Press Newsline, August 18, 2000. Lianhe Zaobao, September 4,2000, p. 4. On 17 August, during a visit to the Dominican Republic, Chen said that there was room for discussion over whether he should chair the National Unification Council. The Council is charged with deliberating policy principles and guidelines for unification with the mainland. It was set up in October 1990 and meant to be chaired by the president of Taiwan. "Chen attacked for not chairing reunification body," 77ie South China Morning Post, August 28, 2000. Lawrence Chung, "Chen still hopes for cross-strait dialogue," The South China Morning Post, August 1, 2000. Renmin Ribao, February 21,2000. Ibid. Goh Sui Noi, "Lien Tells Chen About 'One China' Consensus," The Straits Times, October 28,2000. Lien said that as one of the participants of the 1992 proceedings that led to cross-strait talks in Singapore in 1993, he knew for a fact that there was a consensus on "one China," which was that the two sides would express verbally what each meant by "one China." For Su Chi's such an acknowledgement, see "Ex-MAC Chief Claims 'Spirit of 1992' Is Invented by Foreigner," Central News Agency, October 14,2000. The "three acknowledgements" are: • The current state of cross-strait affairs is the result of the developments of history; • The PRC and Taiwan neither mutually represent one another nor belong to each other; and • Any change to the current cross-strait situation should be approved by the people of Taiwan through democratic measures. People are the pillar of a nation and the purpose of a nation is to guarantee their security and benefits.

242

57.

58. 59. 60. 61. 62. 63. 64.

65. 66.

Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency Seeing that languages on both sides of the Strait are similar and the physical distance between the two is small, the people on both sides of the Strait should work to uphold and enhance this. The "four suggestions" are: • To improve cross-strait relations, to deal with cross-strait disputes and to deal with China's "one China" principle according to the ROC Constitution; • To create a new mechanism or adjust current measures to continually coordinate the different opinions on national development or cross-strait relations which would include all political parties as well as the public; • To appeal to the PRC to respect both the dignity and the "space" of Taiwan and to end military threats and work together with Taiwan to sign a peace agreement. In this way, confidence can be built and a win-win situation will be established. • To declare to the world that the government and people of Taiwan insist on peace, democracy and prosperity as cornerstones to cooperating with the international community. With this in mind, Taiwan will construct new crossstrait relations with sincerity and patience. See Lin Chieh-yu, "President's Advisors Make Suggestions," Taipei Times, November 27,2000. Zhang Mingqing, spokesman for the Taiwan Affairs Office of the PRC State Council flatly rejected this recommendation as "word games." "What they are doing is playing games with words." He said: "Those suggestions are neither here nor there, neither fish nor fowl." "We are resolutely opposed to any person or any so-called committee refusing to recognise 'one China.'" See "China Flatly Rejects Taiwan's Ice-Breaking Bid," Reuters Newsline, November 30,2000. "Presidential Task Force Recommendations Criticized by Opposition," Central News Agency, November 27,2000. Ibid. Ibid. Ibid. MAC News Briefing, November 27,2000, no. 0206, p. 2. Ibid. "Chen Extends Olive Branch to Beijing: 'One-China' principle 'no problem for Taiwan's constitution,'" The South China Morning Post, January 1, 2001. "China Deserves the Back Burner," Taipei Times, January 2,2001. Emphasis added. Chung Kuo Shih Pao, January 1,2001. Emphasis added. '"Political Integration' in Line with DPP Policy: Hsieh," China Post (Taipei), January 8,2001.

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67. Willy Wo-Lap Lam, "Top Cadre Hopes Chen Will Be More Flexible," The South China Morning Post, April 7, 2000. 68. See Qian's talk at Beijing University on May 26,2000, reported by CTN TV, May 26, 2000 and ChungKuo Shih Pao, May 27, 2000. 69. For the DPP organisation and its decision-making process, see Julian J. Kuo, Minjindang Zhuanxing Zhi Tong (The DPP's Ordeal of Transformation] (Taiwan: Commonwealth Publishing, 1998). 70. Lianhe Zaobao, March 17,2000, p. 1. 71. Ibid. The term "Mainlanders" refers to those Chinese that came from the Chinese mainland to Taiwan after the KMT lost the civil war in 1949. 72. Alexander Chieh-cheng Huang, "Militarization of the Cross-Strait Relations: Security Challenges to the Chen Shui-bian Administration," in http:// www.dsis.org.tw/peaceforum/papers/2000-05/CSM0005003e.htm. 73. "Guoren Diwo Bufeng Shi Lian 'an Wenti Guanjian" (The Crux of the CrossStrait Issue is that We Cannot Distinguish Enemies and Friends), Chung Kuo Shih Pao (China Times) (Taipei), July 26,2000. 74. Goh Sui Noi, "Taiwan's DPP marks anniversary quietly," The Straits Times, September 28,2000. 75. Ibid. 76. Ibid. 77. "Voters Turn against Year-Old Taiwan Government: Poll," Agence France Presse, March 18,2001. 78. Mure Dickie, "Taiwan's Growth Sinks to 1%," The Financial Times, May 26, 2001. 79. "Unemployment Rate Hits 4.92 Percent," Taiwan Economic News, August 23, 2001. 80. "July exports fell record 28 percent," Taipei Times, August 10,2001. 81. Assif Shame, "Taiwan — It's Time for Some Real Pain," Asiaweek, August 22, 2001. 82. Allen T. Chenng, "Stalemate," Asiaweek, August 10, 2001. 83. This is figure in 2000. David Brown, "Dialogue in Neutral: Private Sector in Gear," in http://www.csis.org/pacfor/cc/004Qchina_taiwan.html. 84. Ibid. 85. Times (Taipei), November 22,2000. 86. Chung Kuo Shih Pao, March 15,2001. 87. The 2000 figure of Taiwan's economic dependence on China was from Taiwan's Mainland Affairs Council, quoted in Chang Hsien-chao, "How Taiwan's Accession into the WTO Will Lead to Political, Economic and Legal Ramifications for the 'Three Links,'" http://www.dsis.org.tw/peaceforum/ papers/2000-05/CSE0005001 e.htm.

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88. Chang Che-shen, "Slogans by themselves won't fix the economy," Taipei Times, June 5,2001. 89. Ronnie C. Chan, "Watch China Move Up and Southeast Asia Down," The International Herald Tribune, May 23, 2001. 90. Wang Tso-yung, "Taiwan de Jingji Wenti yu Jingji zhuanxing" (Taiwan's Economic Problems and Economic Upgrading), Chung Kuo Shih Pao, May 29,2001. 91. Ibid. 92. "Cross-Strait Relations Official—New Guiding Principle towards Taiwan Proved Correct," Ming Pao Daily (Hong Kong), January 20, 1996, p. A2, quoted in Reuters, February 7,1996. 93. "Economic Facts Support Direct Links," Editorial, Commercial Times, August 10,2001. 94. "Forum proposes easing of China policy," Taipei Times, August 27,2001. 95. For the other relevant resolutions passed at the Conference, see Appendix 1. 96. Kao Koong-lian and Lee Shin-kuan, "Cross-straight policy not the only key," Taipei Times, August 25,2001. 97. Ibid. 98. Ibid. 99. Clay Chandler, "Firms Risk China's Wrath Over Taiwan Deals," The Washington Post, September 5,2001. 100. Mary Kwang, "Bank 'trying to raise Taipei's profile,'" The Straits Times, September 12,2001. 101. Clay Chandler, op. cit. 102. LienheZaobao,August23, 1999, p. 23. 103. See Beijing Review 24, no. 40 (5 October 1981): 10-11. Emphasis added. 104. "Taiwan Doubts China's 'Seven Guarantees,'" Taipei Times, July 16, 2001. "Chen Condemns Hong Kong-Style Unification Plan," Agence France Presse, July 14,2001. 105. Jeremy Page, "China Details Taiwan Unification Offer," Reuters, September 10,2001. 106. Ming Pao Daily, quoted in "China in bid to aid HK with exports," The Straits Times, September 11,2001. 107. Lienhe Zaobao, August 28,2001, p. 1. 108. Li Jian, "Lian 'an Tonghang Dui Lian 'an Guanxi Fazhan Zhi Yingxiang," (The Impact of Direct Shipping on the Cross-Strait Relations) a paper for the Symposium on Cross-Strait Relations (July Beijing) 1996, p. 5. 109. Robert Keatley, "Taipei Moguls Eye Mainland," The South China Morning Post, September 8,2001. 110. Jeremy Page, "China Details Taiwan Unification Offer," Reuters, September 10,2001.

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111. Jason Blatt, '"One China key to Taiwan trade,'" The South China Morning Post, August 30, 2001. 112. "Beijing 'trying to hollow out our economy,'" The Straits Times, September 8, 2001. 113. Ibid. 114. Todd Crowell, "Now, a Beijing Peace Offensive," Asiaweek, July 28,2000. 115. The development of Dongfeng-31 began in the 1970s and was completed with trials in May 1995. Jane's Defense Weekly estimated the missile to have an 8,000 kilometres range, with a 700 kilograms nuclear warhead capability. Thus it could target a sizeable portion of the U.S. mainland. It is equipped with an improved Global Positioning System that makes it more accurate. It also has a solid-propellant with a preparation time for launch often to fifteen minutes. It does not use a silo but is vehicle-mounted, vehicle-erected and vehiclelaunched, and therefore highly mobile. See "Beijing Gives Details of Missile Test," The Straits Times, August 13,1999; Hong Kong Business Daily, August 2,1999; and Lianhe Zaobao, September 4,1999, p. 2. 116. "Spacecraft Launch 'a Victory for PLA,'" The South China Morning Post, November 23,1999. Also see China Business Times, November 22,1999. 117. MIRV stands for multiple independently-targetable re-entry vehicles. MRV stand for multiple re-entry vehicles. Bates Gill of the U.S. Brookings Institution noted that the PLA "apparently has the ability to place multiple warheads on its missiles." See Bates Gill and James Mulvenon, "China's Nuclear Agenda," The New York Times, September 7,2001. 118. Ibid. Also see Bill Gertz, "China Ready to Deploy its First Mobile ICBMs," The Washington Times, September 6,2001. 119. "Chinese subs score 3 missile hits in war games," The Straits Times, August 29,2001. 120. Sing Tao Jih Pao quoting the PLA sources, quoted in Lianhe Zaobao, January 7, 2001, p. 25. It was also reported in The Washington Times, in which 094 SSBN was reported to carry the missiles with a range of 11,906 kilometres (then, it must be Dongfeng-41 instead of Dongfeng-31). See The Washington Times, quoted in Greg Torode, "New Nuclear Sub Can Target 'Any US City,'" The South China Morning Post, December 7, 1999. 121. Jane's Defense Weekly and Sing Tao Daily, quoted in "Chinese subs score 3 missile hits in war games," The Straits Times, August 29,2001. 122. This is an assessment by U.S. military intelligence. See Bill Gertz, "Chinese 'Civilian' Satellite a Spy Tool," The Washington Times, August 1,2001. 123. Ibid. Also see "Whom, If Not China, Is [sic] U.S. Aircraft Carriers' Moving onto South China Sea Directed Against?," Renmin Ribao, quoting Wen Wei Po (Hong Kong). "China's satellites watching," The Straits Times, August 21, 2001.

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124. Sichuan Youth Daily, quoted in "Spy Satellites Said to Track US Warships," AFP, October 6, 1999. Also see Robert Burns, "China Able to Attack Taiwan by 2005," The Washington Post, February 26, 1999. 125. Lianhe Zaobao, May 1,2001, p. 2. 126. China successfully launched two such ASAT mini-satellites on April 25,2001, see ibid. Also see Lianhe Zaobao, January 6,2001, p. 33. 127. See a report by Al Santoli to U.S. congress "China's New War Fighting Skills: Emerging threats to the U.S., India, Taiwan and the Asia/Pacific Region," an American Foreign Policy Council investigation in Southeast Asia, August 14-26,2000. http://taiwansecurity.org/IS/Santoli-082600.htm. 128. Current U.S. anti-aircraft defenses are cued by radar that detects and tracks incoming aircraft. But the radar is vulnerable because its signals can be jammed or missiles can be launched to ride back down the radar beam to destroy the transmitter. But China's new Passive Coherent Location (PCL) system tracks the signals of civilian radio and television broadcasts and picks up aircraft by analysing the minute turbulence their flights caused in the commercial wavelengths. Because the PCL does not transmit, its receivers cannot be detected and jammed or destroyed. Its strategic implication is significant because it can defeat current U.S. air force tactics against enemy defenses. This had alarmed the United States defense community concerning the cost of defending Taiwan as this would make U.S. air power suddenly vulnerable. See Newsweek, 6 December 1999, quoted in "Anti-Plane System Causes Concern in US," The South China Morning Post, November 30, 1999. 129. See Science Times, published by China Academy of Science, quoted in Christopher Bodeen, "Taiwan Blames China for Instability," Associated Press Newsline, August 20,1999. 130. Reported in Independence Post in 1998, quoted in The Straits Times, October 2,1998. 131. Jasper Becker, "PLANewspaper Details Strategies to 'Liberate' Island," The South China Morning Post, March 20,2000. 132. Ibid. 133. Stiilman retired in 1993 after 28 years at the Los Alamos National Laboratory in New Mexico where for nearly 14 years he was leader of the lab's intelligence division. He is one of the very few foreign nuclear scientists who visited nearly all of China's nuclear weapons facilities and bomb testing sites and had extensive discussions with Chinese nuclear scientists and officials, and met with Chinese weapon designers. Reuters, "U.S. nuclear weapons expert sues over book," The South China Morning Post, June 19, 2001. 134. Ibid. The diagnostics take measurements during the nuclear test to determine the effectiveness of the weapon.

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135. Ibid. 136. Zhao Yunshan, Xiaoshi zhong de Han 'an (Bi-Coast Disappearing) (Taiwan: Xinxinwen (New News) Publishing Company), 1996, Chapter 3. 137. Nadia Tsao, "Delegation Pressing for AEGIS Sale," Taipei Times, December 18,2000. 138. The Washington Times, quoted by Jason Blatt in "New missiles 'placed within striking range of Taiwan,'" The South China Morning Post, August 29, 2001. 139. Ibid. 140. Holmes S. Liao, "What Taiwan's Military Needs for Its Survival," Taipei Times, April 19,2000. The Hong Niao project, believed to have started in 1977, yielded its first version or Hong Niao-1 in 1992. Though capable of carrying a high nuclear payload, Hong Niao-1 could cover only a range of 600 kilometres. Hong Niao-2 came off the pipeline in 1996. Now China is fitting up a third version, or Hong Niao-3, which covers a range of 2,500 kilometers, and can serve as a platform to yet another version that can be launched from ships, submarines and aircraft. "China: Quantum leaps in missile know-how," The Straits Times, January 23,2000. Another report put the range of Chang Feng1 cruise missile at 2,000 kilometres with the same accuracy of five meters. See "China studies war options, including latest space arms," The Straits Times, August 15,1999. 141. "China Deploying over 400 Missiles Opposite Taiwan: Report," Central News Agency, August 8,2000. Chung Kuo Shih Pao, November 24, 2000. The SA10 an advanced air-defense system capable of shooting down aircraft, cruise missiles and some ballistic missiles as far as 62 miles away. The system is transportable and usually deployed in batteries of several launchers, each loaded with four missiles and tracking radar vehicles. 142. Liao, op. cit. Also "Chinese 'building missile base facing Taiwan,'" The Straits Times, January 16,2001. 143. Chung Kuo Shih Pao, February 6,2001. 144. Liao, op. cit. Also see "Chinese 'building missile base facing Taiwan,'" The Straits Times, January 16,2001. 145. A photo of one PLA AWACS was published in Lien Ho Pao, November 29, 1993, p. 1. 146. Chung Kuo Shih Pao, November 6,2000. Lianhe Zaobao, December 12,2000, p. 32. John Pomfret, "Russia Moves In on Israel's Lost Jet Deal with Chinese," The International Herald Tribune, November 20,2000. 147. Ibid. 148. Lianhe Zaobao, December 20,2000, p. 34. Also Sing Tao Jih Pao, December 19,2000. 149. Anne Gruettner, "Taipei 'ready to buy US missile defense,'" The South China Morning Post, April 22, 1999.

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150. Brian Hsu, "Report Shows China Military Expanding," Taipei Times, September 18,2000. The report is entitled "China's New Fighting Skills: Emerging Threats to the US, India, Taiwan, and the Asia-Pacific Region," seeAl Santoli, op. cit. 151. See Lianhe Zaobao December 25,2000, p. 25. 152. Ching Chong, "Taiwan's separatist bid gets nod from abroad, not at home," The Straits Times, June 11, 2001. 153. "More support HK model," The Straits Times, June 9,2001. 154. Lawrence Chung, "Influential academics take President to task," The South China Morning Post, August 21, 2000. Crystal Hsu, "Poll indicates that disaffection with DPP growing fast," Taipei Times, March 3,2001.

Chapter 4 1. 2. 3. 4. 5. 6. 7.

8.

9. 10.

11. 12.

Zhongguo shibao (China Times) (Taipei), March 16,2000, p. 1. Zhongguo shibao, December 6,2001, p. 2. Zhongguo shibao, May 21, 2000, p.4. Lienho bao (Taipei), May 21,2000, p. 2. Zhongguo shibao, January 2, 2001, p. 1. Ming Bao (Hong Kong), June 4,2001, p. A 12. In preparation for the historic summit between the two heads of the semiofficial SEF and ARATS, representatives of the two organizations met in November 1992 to discuss the agenda. It was agreed that the "one China" principle be expressed with their respective interpretations. After the agreement, the summit was able to take place in Apri 11993. See Chien-min Chao, "Opportunities amid Crisis: Mainland Policies under President Chen Shui-bian," paper presented at the Fourth ASEAN-ISIS/IIR Dialogue on ASEAN-Taiwan and Human Security Issues: Coping with Globalization, Taipei, January 11-14,2001. Meilidao (Formosa) (Taipei), Vol. 1 (1979), p. 2. The event erupted after the severance of diplomatic relations with the Untied States earlier that year. Consequently, 183 policemen were injured and a number of well-known opposition political figures were convicted and sentenced to prison. A compromise was reached between the government and the opposition and an election was held in December 1980, which became a watershed event in Taiwan's political development. See John F. Copper, Historical Dictionary of Taiwan (Republic of China), 2nd Edition (Lanham, Maryland: The Scarecrow Press, 2000), pp. 105-106. Jesper Zeuthen, "Nation and Identity in Taiwan: An Analysis Based on Examinations of the Public Discussion," unpublished paper. The term Formosa literally means a beautiful island. It was invented by the Portuguese in the 16th century when theyfirstsaw the island, and was borrowed

Notes to Chapter 4

13.

14.

15. 16.

17. 18.

19.

20. 21. 22. 23. 24.

249

by Taiwan independence advocates and became synonymous with their cause. But for the Formosa faction, their position on the independence is relatively miid within the party. The term xi, literally means "system," and is used by the party to substitute faction. See Liu Jinchai, Dadan xijin? Jiejiyongren? Minjindang dalu zhenchepoxi (Go Westward Boldly? Or No Haste, Be Patient? An Analysis of DPP's Mainland Policy) (Taipei: Shiying Publishing Co., 1998), p. 141. The policy was designed by late President Chiang Ching-kuo as countermeasures against Beijing's new initiatives, proposed in January 1979, of direct mail, trade, and shipping and exchanges on activities in the areas of culture, athletics and the like, collectively known as the "three links and four exchanges." About Beijing's new policy, see "A Letter to the People of Taiwan," in Council for Mainland Affairs, ed. Dalu gongzuo cankao ziliao (Reference Materials for the Work on Mainland China), vol. 2 (Taipei: Council for Mainland Affairs, 1998), pp. 1-4. Liu Jinchai, Dadan xijin? Jieji yongren? Minjindang dalu zhenche poxi, p. 178. Huang Defti, Minjujinbudang yu taiwan diqu zhenzhi minzhuhua (DPP and the Democratization in the Taiwan Area) (Taipei: Shiying Publishing Co., 1993), pp. 118-121. Minjin Bao (Taipei), no. 7, April 23-29,1988, pp. 16-22. Department of China Affairs of the DDP, Minzhu jinbudang lianan zhenche zhonyiao wenjian huibian (Compilation of Important Documents of the DPP), undated, p. 4. After the end of the Sino-Japanese War, a constitution was promulgated in 1946 by the Nationalist government and elections were held to choose representatives for the Legislative Yuan, the Control Yuan and the National Assembly in the next few years. But since retreating to Taiwan in 1949 there had been only a few "supplementary elections" held to fill a few vacancies left by representatives who had passed away and no elections had been held to replace the whole chamber due to the issue of legitimacy. The elections in 1991 and the following year were the first elections in which all positions in the Legislative Yuan and the National Assembly were up for grabs. See James Mann, About Face: A History of America's Curious Relationship with China, from Nixon to Clinton (NY: Alfred A. Knopf, 1999), chapter 17. Zhongguoshibao, October 8,1990, p. 3. Lin Zhuoshui, ed., Lu shi zheyang zhou chulai de (Roads Are Created This Way) (Taipei: Qianwei Publishing Co., 1992), pp. 89-91. Zhili zhaobao (Independence Morning Post), August 26, 1991, p. 3. Julian J. Kuo, Minjindang zhuanxing zhitong (The Pain of Transition with the DPP) (Taipei: Commonwealth Publishing Co., 1998), p. 115.

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25. Fei Xiping withdrewfromthe DPP in December 1988, citing strong independence sentiments and fascist ways of thinking that contradicted democratic goals set by the party; Zhu Kaozhen disavowed party membership in August 1990, declaring the New Tide an infectious AIDS disease and that localization should not be based on negation of the Chinese culture; Lin Zhenjie complained that the party disallowed the freedom of not supporting Taiwan independence. See Liu Jinchai, Dadan xijin? Jiejiyongren? Minjindang dalu zhenche poxi, p. 178. 26. President Lee made the argument in an interview with a Japanese journalist of the Sankei Shimbun, Ryotaro Shiba. . 27. President Lee coined the term in 1998 during the Taipei mayoral election. It was believed that the invention had helped KMT candidate Ma Yinjiu, a second generation mainlander, in winning the election over the DPP opponent, Chen Shui-bian, a native Taiwanese. 28. Xu Xinliang, Xin taiwanren (The Rising People) (Taipei: Yuanliu Publishing Co, 1995). 29. Julian J. Kuo, Minjindang zhuanxing zhitong, p 72. 30. Zhongkuo shibao, July 8, 1998, p. 15. 31. "Taiwan minzhu yundong de xinshidai gangling," (Program of Taiwan Independence for the New Generation), in Julian J. Kuo, Minjindang zhuanxing zhitong, pp. 297-303. 32. As an opposition party, the DPP had thrown its support behind the residents of Gongliao, a rural town on the fringe of the Taipei city, in their fight against the KMT government's decision to build the fourth nuclear power plant there. After becoming the ruling party, the party immediately took action to revoke the construction although it was understood that 30 percent of the project was already completed with roughly US$3 billion spent. After a strong resistance from the KMT with a threat to proceed with the recalling of the president with a popular vote, the DPP finally backed off. 33. They are: the Justice Alliance, Alliance for Laissez-faire Nation, the New Dynamics, and the New Alliance for Taiwan Independence. See Chen Huashen and Yang Junchi, "Minjindang paixizhenzhi yu jiazhuzhenzhi" ("DPP's Factional Politics and Family Politics") Kuojia zhenche luntan (Forum for National Policy) (Taipei), Vol. 1, no. 3 (May 2001), pp. 47-55. 34. Zhongguo shibao, September 3,2000, p. 2. 35. Zhongguo shibao, August 17,2000, p. 4. 36. Lienho bao, September 9,2000, p. 4. 37. Anthony Giddens, The Third Way: Renewal of Social Democracy (Maiden, MA.: Polity Press, 1999). 38. Zhongguo shibao, January 2, 2001, p. 1. 39. Zhongguo shibao, November 7,1997, p. 4.

Notes to Chapter 5

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40. Taiwan ribao (Taipei), February 14, 1998. 41. Liu Jincai, "Minjindang neibu de paixi shengtai yu dalu zhenche zhenyi," ("DPP's Factional Environment and Disputes over the Mainland Policies") Zhongguopinglun (China Review) (Hong Kong), May 2001, pp. 47-51. 42. Zhongguo shibao, March 22,2000, p. 1. 43. Gongshangshibao, September 5,2001, p. 6. 44. Ye Wanan, "Santong, songbangjieji yongren cainen genliu taiwan," ("Direct Transportation and Loosening up on the 'No Haste, Be Patient' Policy Are the Keys to Keep the Roots in Taiwan"), Lienho bao, August 23,2001, p. 14. 45. Zhongguo shibao, August 28,2001, p. 1. 46. Zhongguo shibao, August 14, 2001, p. 1. 47. The party held primaries in March 2000 to decide nominations for the upcoming Legislative Yuan elections at the end of 2000 and the New Tide faction emerged the sole winner. The faction has held overwhelming influence over the decisions made both by the party machinery and the administration. 48. The reason for Chen's statement that "there is no problem with 'one China' according to the ROC constitution" is simple: It is in line with the DPP's position that Taiwan is an actual sovereignty and thus, the phrase "one China" is shunned. 49. An unidentified official in Beijing responsible for Taiwan policies included Chen's speech as evidence for the island heading towards factual independence. See Ming Bao, June 4,2001, p. A12. 50. lienho bao, May 28,2001, p. 1. 51. Willy Wo-Lap Lam, "China-Taiwan Military Threat Unlikely," China Brief, Vol. 1, Issue 3 (August 2001). 52. See Chien-min Chao, '"One Country, Two Systems': A Theoretical Analysis," Asian Affairs (1987), pp. 107-124.

Chapter 5 1. See the most recent statistics published by the Investment Commission, Ministry of Economic Affairs, ROC, at http://www.mac.gov.tw/english/ CSEchange/economic/9003e.gif. 2. See the report prepared by the Mainland Affairs Council, Executive Yuan, in January 2001. The survey showed that more than 80 percent of the populace in Taiwan preferred to keep the status quo in a broad sense. See http:// www.mac.gov.tw/mlpolicy/pos/9001 /9001 .htm. 3. Chen pledged that during his term in office, he would not declare independence, change the national title, include the "state-to-state" description in ROC Constitution, and prompt a referendum to change the status quo. Furthermore, he would not abolish the Guidelines for National Unification and the National

252

4. 5. 6.

7.

8.

9.

10. 11. 12.

13. 14. 15.

Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency Unification Council. See http://www.president.gov.tw/2_special/520/ e_speak.html. China News Agency (Taipei), March 20,2001. For a recent appraisal of this, see China Times News (Taipei), March 21,2001, p.l. In the proposal, Jiang promised that China had no intention to "swallow up" Taiwan and would allow it a high degree of autonomy. Jiang blamed foreign forces that were trying to split Taiwan from China, declaring Beijing would use force to prevent Taiwan from being independent. In the end he also said that the Chinese should not fight Chinese. The proposal seemed generous and conciliatory on the surface but contained no new policies at all. See John Copper, Historical Dictionary of Taiwan (Republic ofChina), Second Edition, (Lanham, Maryland: Scarecrow Press, Inc., 2000) p. 80. See Xu Shiquan, "1992 Consensus: The Negotiations between SEF and ARATS in Retrospect and Analysis," Institute of Taiwan Studies, Chinese Academy of Social Sciences, monograph, October 2000, pp. 20-21. But, this argument cannot really sustain further analyses because China intended to start negotiations with Taiwan a long time ago without even raising the issue of the one China principle, at least before Lee broke away from that position in the mid-1990s. Here, China employs a so-called dual hand policy. Internationally, it says there is but one China; Taiwan is part of China and the People's Republic of China is the sole legal representative of China. But between Taiwan and China, Beijing alters its positions and statements slightly. Beijing says that, as far as the cross-strait relations are concerned, there is but one China; both Taiwan and the mainland form this one China; and China's sovereignty and territory are inseparable. It deliberately de-emphasizes the PRC's role as the sole representative of all China so as not to unnecessarily cause Taiwan's justifiable suspicion. See Xu Shiquan, ibid., p.25. See Richard. H. Solomon, Chinese Political Negotiating Behavior, 19671984, (Santa Monica, RAND, 1995), p.56. John K. Leung and Michael Y.M. Kau, eds., The Writings of Mao Zedong: 1949-1976, Vol. 2, (NY: M.E. Sharpe, 1992), p.789. Hungdah Chiu and Ren Xiao Qi, ed., Studies on Chinese Communist's Negotiation Tactics, (zhong gong tan pan ce lue yan jiu) (Taipei: United Daily Press, 1987), p. 128. Wu Hsin-hsin, "From one China to Special State to State Relations: Analysis of ROC's Mainland Policies," See http://www.kmtdpr.org.tw/4/51 -3.htm. China Times (Taipei), August 16,2001, p.3. To this author, at least, this insistence on no preconditions is itself a precondition.

Notes to Addendum 16. 17. 18. 19.

20. 21. 22. 23.

24.

25. 26. 27.

28. 29.

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United Daily News (Taipei), December 16,2000, p.2. Personal interviews conducted in Beijing and Shanghai in August 2000. Basically a belated response to Lee Teng-hui's "special state-to-state" policy. Chinese Premier Zhu Rongji's warning remarks to the Taiwan electorate to cast their ballots carefully on the eve of the election are another example. (See Appendix II.) United Daily News (Taipei), August 25,2000 and March 22,2001, p. 1. China Times News (Taipei), November 18,2000, p. 13. See http://news.pchome.com.tw/pnn/politics/20010225/index-20010224153524286444.html. However, Chen told members of the pro-independence World Taiwanese Congress in March that integration was something open to free interpretation. "Why would you—making (make) interpretation that is beneficial to yourselves." It seems that the integration theory, whether it is economic or political, will certainly be met with a deaf ear again. China Post (Taipei), March 20,2001. See http://th.gio.gov.tw/show.cfm?news-id=8038. The most recent development in the DPP is that the party wants to bypass the party line for independence by elevating the Resolution for Taiwan's Future up to the level of action guideline. See China Times, (Taipei), August 29,2001, p.l. See http://www.ttimes.com.tw/2000/04/29/l/politics/200004290277.htm. See http://iwebs.edirectl68.com/main/html/newtaiwan/548.html. In contrast to the so-called three direct links between Taiwan and the mainland, the Taiwan government decided to establish the three mini-links (direct trade, postal and transportation) between Kinmen, Matsu and the mainland "as a means of demonstrating goodwill." China Times (Taipei), December 11,2000. Seehttp://th.gio.gov.tw/show.cfm?news-id=6607. See http://www.ttimes.com.tw/2001/02/20/politics/200102200576.html. Taipei Journal, August 24,2001. p.6. Chen's government formally declared the "go slow, be patient" policy ended as of November 6,2001.

Addendum 1. The two were Bonnie Glazer, who wrote a piece for the Center for Strategic and International Studies in Washington, and Willy Lam, who wrote an article for CNN. Both got considerable notice during the campaign. 2. For details, see John F. Copper, "Taiwan's Legislative Election: The Winners and Losers," China Brief, December 10,2001 (on line atjamestown.org). 3. See Wang Yeh-lih, "Elections the beginning of the battle, not end," Taipei Times, December 2,2001, p. 24.

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4. Fukien Taiwanese comprise between 60 and 65 percent of Taiwan's population. 5. See "Chuang Chi-ting, "DPP's Hitler ad creates stir," Taipei Times, July 12, 2002 (on line at www.taipeitiems.com) Aboriginal legislators expressed resentment over DPP legislators calling them fan-a, a term equivalent to "nigger." See Bruce Jacobs, "Post-election situation clarifies," Taipei Times, November 30,2001, p. 3. 6. See Mark Landle, "In Taiwan a Discouraging Campaign Notable for Its Nastiness," New York Times, November 26,2001 (online at nyt.com) 7. Chinese leaders in Beijing said this also. 8. There is considerable uncertainty over the retirement of Jiang Zemin from positions he holds in the next year plus. 9. A KMT official told this writer this in Taipei just after the election. 10. This, of course, has happened in Taiwan's elections in the past. But it was more noticeable this time due to the greater emphasis on vote allocation. 11. "Opposition snubs Chen's cross-party alliance plan," China Post, November 23,2001, p. 1.

Selected Bibliography

Books and Monographs Chen Shui-bian. The Son of Taiwan: The Life of Chen Shui-bian and His Dreams for Taiwan (translated by David J. Toman). Taipei: Taiwan Publishing Company, 2000. Chen Shui-bian. The Premier Voyage of the Century. Ching Choeng. Will Taiwan Break Away? The Rise of Taiwanese Nationalism. Singapore: World Scientific, 2001. Clark, Cal. 2000 Presidential Election. New York: Asia Society, 2000. Copper, John F. As Taiwan Approaches the New Millennium. Lanham, MD: University Press of America, 1999. Copper, John F. Taiwan s 2000 Presidential and Vice Presidential Election: Consolidating Democracy and Creating a New Era of Politics. Baltimore: University of Maryland School of Law (Maryland Series in Contemporary Asian Studies), 2000. Klinkner, Kenneth, ed., The United States and Cross Strait Relations: China, Taiwan and the U.S. Entering a New Century. Urbana-Champain, IL: Center for East Asian and Pacific Studies, Univesity of Illinois, 2001. Lee, Wei-chin, ed., Taiwan in Perspective. Leiden, Netherlands: Kominklyke Brill, 2000. Rigger, Shelley. From Opposition to Power: Taiwan's Democratic Progressive Party. Boulder, CO: Lynn Rienner Press, 2001. Rigger, Shelley. Politics in Taiwan: Voting for Democracy. London: Routledge, 1999. Sheng Lijun. China's Dilemma: The Taiwan Issue. Singapore: Institute for Southeast Asian Studies, 2001. Tsang, Steve and Hung-mao Tien, eds. Democratization in Taiwan: Implications for China. London: MacMillan Press, 1999.

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Wang, Mei-ling T. The Dust That Never Settles: The Taiwan Independence Campaign and U.S.-China Relations. Lanham, MD: University Press of America, 1999.

Articles Copper, John F. "Taiwan's Military Modernization," National Security Studies Quarterly, Volume VII, Issue I, Winter 2001. Lai I-chung, "Taiwan's Politics in the New Millenium—Who are the New Kids on the Block?" Taiwan International Review, January-August 2000. Sheng Lijun. "Taiwan at a Crossroads," Asian Perspective, Vol. 25, No. 1, 2001. Wu Yu-shan, "Taiwan in 2000: Managing the Aftershock of Power Transfer," Asian Survey, February 2001 Wu Yu-shan, "The ROC's Semi-Presidentialism at Work: Unstable Compromise, Not Cohabitation," Issues and Studies, October 2000.

Index A Aegis system, 95 Aborigines, 148 Albright, Madeleine, 10 Alliance for Laizzez-faire Nation faction, 105-6 American Institute in Taiwan, 11,62 Asia Pacific Economic Cooperation (APEC), 16,29,121,149,170,208, 224-226 Association for Relations Across the Taiwan Strait (ARATS), 65,68,71, 83,102 Australia, 63 AWACS, 95 B Beijing. See People's Republic of China (PRC) Black Gold, 20-21,30-36,78 Blair, Dennis, 62 Bush, George W., 16,29,49,100,140141 C Cairo Declaration, 155,167 Carter, Jimmy, 3,5 CCP. See Chinese Communist Party. Chang Chun-hong, 65 Chang, Morris, 88, 119 Chao Chien-min, 18

Chen Andong, 65 Chen Ming-tung, 73 Chen Po-chih, 24 Chen Zhongxin, 65 Chen Shui-bian, 11,16,78,124-125; 2000 election, 1,4-6, personal history, 3-4, position on independence, v, 4,10,22,53,101102,110,136,231m. 14; Chen administration, 7-12,18,30 chapter 2 passim; attempt to be non-party president, 45,115,179,236m. 103; public approval rating, 21,29-30, 39,46,228fh. 12; and the PRC, 24, 54, 90; approach to cross-strait policy/PRC, 27,29-30,39,66-75, 83,120-142; black gold and, 30-36; nuclear plant controversy and, 33, 37,45,115,136,236m. 102; attempted impeachment of, 46; economy and, 36-42; defense policy and, 55; attempts to attract American corporations, 84; 2001 trip to U.S., 84,100; as member of Formosa faction, 104; as member of Justice Alliance, 104-105,108; effects of DPP factionalism on cross-strait policies and, 116-119; 2001 election and, 147,151-152; three acknowledgements and four suggestions, 72,241fn.56

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ChenYunlin, 57 Chen Zhaonan, 118 Chiang Ching-kuo, 2,6,8,31,34,42,89 Chiang Kai-shek, 2,8,19,31,42,89 Chi Haotian, 13 China, 1, 7,10,39. See also People's Republic of China (PRC) China Aluminum, 85 China Unicom, 85 Chinese civil war, 2 Chinese Communist Party (CCP), 14, 63,108,110,138,160 Chongqing, 13 Clinton, Bill, 10,60-62,109,114,140-141 Constitution (ROC), 8 Control Yuan, 6,83 Credit Suisse First Boston, 28, 85 Cross-strait Cross-party Advisory Group (CCAG), 117 Cross-strait relations, 21 -22,28,49,142 D Dangwai, 107 DeLay, Tom, 11 Dell Computers, 119 Democratic Progressive Party (DPP), 1, 4,7,12,31-32,35-36,43^5,48,50, 52,64-67,71 -80,89-90,99,125,130131,136,139,144,146-151,177, 250fn.25; history and development of, 101 -122. See also Alliance for Laissez-faire Nation faction; Formosa faction; Justice Alliance faction; Kang Ninxiang faction; Mainstream Alliance faction; New Century faction; New Tide faction. Deng Xiaoping, 2,127,143,158,174 Dongfeng-31 /41 ballistic missiles, 91 92,245m.ll5

E Economic Development Advisory Conference, 40,84,88,119,125 F F-16 fighter, 16,109 F-22 fighter, 92 F-l 17 fighter, 92,94 FeiXiping, 107,110 Feng, Elmer, 228m. 10 Formosa faction, 104-106,108-111,116 Formosa magazine, 103 Formosa Plastics, 16,27,83 France, 8,34,43 Fukien Province. See Fujian Province. Fukien Taiwanese, 148 Fujian Province, 13, 54,148 G Giddens, Anthony, 117 Goldman Sachs, 85 Gore, Al, 60 H Hainan Island, 16 Hakka, 148 Harvard University, 5 HauPei-tsun, 35 Helms, Jesse, 10 Hitler, Adolf, 148,175 Hong Kong, 36,57,83,85,87-89,119, 169 Hong Qicang, 105 Hsieh Chang-ting, 74,79-80 Hsieh Tung-min, 34 Huang Chu-wen, 146 Huang, Peter, 33 HuangXinjie, 104-105

Index

Japan, 1,36,39,63,82-83,129,154,157 Jiangshan, 94 Jiang Zemin, 3,11,14, 54,56,63,65, 121,125,127,143,158,165,174, 178,188,208 Justice Alliance faction, 104-106,118 K Kang Ninxiang, 104 Kang Ninxiang faction, 105 Kaohsiung, 4,35,88,103,146,204 Kaohsiung Incident, 4-5,104 Kerry, John, 11 Kinmen and Matsu, 54 KooChen-fu, 141,161 Korean War, 156 Kuomintang(KMT), 1-3,5-6,8-9,12, 30,32,36,38,43-45,48,50,65-67, 71-72,78-80,101,107-108,112,114115,121-122,124,130-131,138, 146-152,160,232m.36,234fh.71

Land Attack Cruise Missile (LACM), 94 Lee Cheng-yuan, 118 Lee Hong-xi, 118 Lee Teng-hui, 43,49-50,62,69,71,74, 79,85,89,109,120,125,140,149, 182: role in 2000 election, 3,5-6; U.S. attitude toward, 10,61; opposition to James Soong, 20, 152,228fh.22; three links policy and, 22; no haste, be patient policy, 24,29,39,54,83-84; twostates theory, 24,52-54, 58,61, 63, 67,70,163-165,237m.l;Beijing's feelings about, 24-25,28, 56, 58, 75,154, 162-164; black gold and,

259

31,232fh.40; New Taiwanese/ Taiwanization concept and, 112, 124,147,250m.27;TSUand, 139; role in 2001 December election, 146 Lee Yuan-tseh, 6,27,72,117,177 Lee Yuanze. See Lee Yuan-tseh. Legislative Yuan, 7,34,46,50,103-104, 108-109,115,148,187 Leping, 94 Lien Chan, 1,5-7,19,22-23,30,39.46, 53-56,60,71,147,152 Lin Chong-pin, 89 Lin Yixiong, 117 LinZhenjie, 107,110 LinZhuoshui, 105,110,113 Liu Tai-ying, 31 LiYuan-zu,29,224 Los Alamos National Laboratory, 94 Lu, Annette, 4-5,8,40,69,71, 104-105, 119,130,177 Lu Hsiu-lien. See Lu, Annette. M Macao, 57,169 Mainland Affairs Council (MAC), 25, 29,69,73,89 Mainland Chinese, 3,19,31,33,148 Mainstream Alliance faction, 116 Mao Zedong, 2,128,157 Matsu. See Kinmen and Matsu. Ma Ying-jeou, 71 Merrill Lynch, 85 Mirage 2000 fighter, 204 Movement magazine, 104 N Nanping, 94 National Assembly, 43,48, 109 National University of Singapore, vi

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Taiwan in Troubled Times: Essays on the Chen Shui-bian Presidency

Nationalist Party. See Kuomintang. National Missile Defense (NMD), 91, 97 National Taiwan University, 118 National Unification Council (NUC), 102,109,120-121,138,188 National Unification Guidelines, 102, 120,188,237fh.2 New Century faction, 116,118 New Tide faction, 104-106,108-112, 116-120,136 New York, 16,34,41,84 New Party (NP), 66,72,112-113,146, 148,232m.40 Nixon, Richard, 14 O One-China Policy, 10,16,27,60,62,129 One-China Principle, 57-58,64,67-68, 71,73,88,90,101,116,127,129130,132-133,145,154-157 One country, two-systems policy, 27, 57,99,109,122,127,143,153,169 P Patriot missile, 95 PengMing-min, 24,113-114,116,118 People First Party (PFP), 7-9,21,38,72, 146,152 People's Liberation Army (PLA), 13: modernization of, 91-98 People's Liberation Army Navy (PLAN), 96 People's Republic of China (PRC), 7, 22,110,118,125: policy/attitude toward Chen Shui-bian, v, 23-24, 28,49,56,59,63,75,102,135;first through fourth generations of leadership, 2-3,2000 White Paper on Taiwan, 12,22-23,58-59,134,

149; reaction to 2000 election, 1117,25; relations with U.S., 49,125126; Taiwan policy of, 65,67-70, 75-76,86-91,98-100,123-142, 238fh.4,252fh.9; pressure on foreign corporations, 28, 85; attempts to foil Taiwan's economic development, 87; military advances of, 91-98,246fh. 128; missiles targeted at Taiwan, 94-95; missile tests near Taiwan, v, 14, 113,129,149; attempts to undermine Taiwan's central government, 137,143 Permanent Normal Trade Relations (PNTR),61 Potsdam Proclamation, 155,157,167 Q Qian Qichen, 57,75,86-88,90,120,135 QiuYiren, 105 Quemoy. See Kinmen and Matsu. R Reagan, Ronald, 97 Republic of China. See Taiwan. Russia, 63 S Salmon, Matt, 61 Shanghai, 16,60,83,85,88,121,149, 161 Sheng Lijun, vi, 18 Shenzhen, 65 ShiMingde, 105,113,117 Siew, Vincent, 1,138 Singapore, 36 Submarine Launched Ballistic Missile (SLBM),92 Soong Chu-yu. See Soong, James.

Index Soong, James, 1,5-7,19-23,44,53-56, 60,146-147,151-152 Soviet Union, 78,97-98,109 Sovremenny-class destroyer, 92,96 SS-N-22 Sunburn missile, 92,96 State Council Taiwan Affairs Office (PRC),57,63 State Department (U.S.), 10,12,30,61, 229fh.31 Stillman, Danny, 94 Straits Exchange Foundation (SEF), 71, 102,137,141,143 Su-27 fighter, 95 Su-30 fighter, 95 SuChi,71 T Taipei, 3, 12,35,146. See also Taiwan Taiwan, 16: political paralysis(gridlock), v, 9,2,47,78, 146,152; democratization, 2-3; economic miracle, 1 -2,36; 2000 presidential election, 4-7; reaction to derecognition by U.S., 3, 107; political miracle, 2,20; foreign newspapers' reaction to 2000 election, 11-12; political system, 810,42-48,51,76-80; PRC reaction to 2000 election, 13-14; as flashpoint for conflict, 17,123; economy, 21,27,36-42,81 -84,119, 210-216,233fh.59,235fh.87; Chinese military policy against, 98; as possible U.S. non-NATO ally, 100; cultural independence movement, 132; December 2001 election, 146-152 Taiwan Independence Party (TAIP), 66, 117-118 Taiwan Presbyterian Church, 118

261

Taiwan Relations Act (TRA), 11,62, 126,145 Taiwan Security Enhancement Act (TSEA),55,57,171 Taiwan Semiconductor Manufacturing Corporation (TSMC), 88,119 Taiwan Solidarity Union (TSU), 28,139, 146,151-152 Tang Fei, 7,9,24,44,46,115,228fh.23 Tang Jiaxuan, 29 Tang Shubei, 68,83 Taoyuan County, 5 Temporary Provisions (of ROC Constitution), 8,42 Theater Missile Defense (TMD), 55, 57-58,91,97 Three Communiques, 126,145 Three links policy, 22,54,84,88-89, 143,208,253fn.27 Tiananmen Square, 109 Tien Hung-mao, 24 Tomahawk cruise missile, 94 TrongTsai, 105 Truman, Harry, 156 TsaiWei, 18 TsaiYing-wen, 24-25,69 U United Nations, 70,128,131,157,169170 United States, 10-12,14,16-17,34,39, 41,43,48-49,57-58,60,78,83,91, 93,97-100,104,107,109,113,125126,129,132-133,140,144,157, 159,164 U.S. Congress, 10-12,55,57,61,171 W Wang Daohan, 56,65,141,161,178 Wang Tso-yung, 83

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Wang Yung-chai, 83 Wang Yung-ching, 16,27, 83 Wang Zhaoguo, 56 Washington, D.C., 16. See also United States. White House, 10,12 Wong Hsin-nan, 34 Wong, John, vi World Trade Organization (WTO), 14, 25,29,57,88,141,170,191 World War II, 1,3,19,131,148 WuNairen, 105 X A7a-class SSBN, 92 Xiang Huaicheng, 85 Xianyou, 94 Xie, Frank, 104,108,117-118 Xu Shiquan, 60 XuXinliang, 105,110,113,116 Y YaoJiawen, 105,108 Ye Jianying, 86-87 Yen Ching-chang, 40 Yin Ching-feng, 34 Yong'an, 94 Z Zhang Junhong, 104-105,116,118 Zhang Nianci, 60 ZhouYizen, 114

About the Editor and Contributors

John F. Copper is the Stanley J. Buckman Professor of International Studies at Rhodes College in Memphis, Tennessee. He is the author of more than twenty books on China, Taiwan and Asian affairs. His book China's Global Role (1980) won the Clarence Day Foundation Award for outstanding research and creativity activity. Professor Copper's most recent books include Taiwan: Nation-State or Province? Third Edition (1999) and Taiwan Enters the New Millennium (1999). In 1987, Dr. Copper was a recipient of the International Communications Award. Chao Chien-min is Professor of Politics at the Sun Yat-sen Graduate Institute for Social Sciences and Humanities at National Chengchi University in Taiwan. In 1986, he taught as a distinguished professor at the Sigur Center for East Asian Studies, George Washington University in the United States. Dr. Chao's books include China's Legislative and Electoral Politics (in Chinese) (Taipei: Wunan, 2001) and PRC Reforms at Twenty, co-edited with Bruce Dickson (London: Routledge, 2001). His forthcoming works include President Lee Teng-hui's Legacy, co-edited with Bruce Dickson, and Political Change and Democracy, co-edited with Gerhard Goehler. Sheng Lijun is Senior Fellow at the Institute of Southeast Asian Studies in Singapore. He is the author of China's Dilemma: The Taiwan Issue (Singapore: Institute for Southeast Asian Studies, 2001). He has published articles in Washington Quarterly, Journal of Strategic Studies, Cambridge

264

Taiwan in Uncertain Times: Views on the Chen Shui-bian Presidency

Review of International Affairs, Security Dialogue, Asian Perspective, Journal of Northeast Asian Studies, Far East Economic Review, Contemporary Southeast Asia, Issues and Studies, and Pacific Focus. Dr. Sheng is currently working on a book to be entitled Cross-Strait Relations under Chen Shui-bian.

Tsai Wei is Research Fellow at the Institute of International Relations, National Chengchi University in Taiwan. He is also the editor-in-chief of the magazine Liang-an Shuang-yin. Dr. Tsai has published more than 30 articles, in English, Japanese, Spanish and Chinese in professional journals. Dr. Tsai's most recent book concerns the making of Taiwan policy in the People's Republic of China.

Taiwan in Troubled Times Essays on the Chen Shui-bian Presidency

Taiwan in Troubled Times is concerned with Taiwan's politics and its relations with China following the election of Chen Shui-bian as President in March 2000. This event created problems between Taiwan and China and led to political gridlock in Taiwan. The Chen Administration is evaluated in this book. So is President Chen's party, which evolved as an opposition party and is now in power but is unaccustomed to the role.

World Scientific www. worldscientific. com 4912 he