Strategic, Economic, Political Interests Shaping Taiwan’s Future

Written by Andreas Sierek.

Image credit: Taiwan flag by Luke/Flickr, license: CC BY-SA 2.0

Will the Taiwanese retain self-rule as well as the personal freedoms and rights gained in recent decades? The answer to this question will be determined by the following three major issues.

Big-Power Rivalry

China has direct access to the East China Sea and to the South China Sea only. In both cases the People’s Liberation Army Navy (PLAN) is hemmed in by a chain of islands dotted with US military bases. The growing PRC-US tensions require the PLAN secure access to the Pacific to protect the PRC’s developing global interests. Taiwan is China’s gateway to the Pacific. Consequently, it is a strategic imperative for the PRC to gain control over Taiwan – the sooner the better.

Should this happen, the PLAN could use bases on Taiwan to threaten supply lines to Okinawa and other military bases that secure US dominance in the West Pacific. Consequently, it is a strategic imperative for the US to deny the PRC control over Taiwan.

The more bellicose PRC-US relations become, the more likely a military confrontation will ignite with Taiwan at the centre.

How can Taiwan avoid this fate? The best option for the people of Taiwan is to establish credible neutrality by maintaining equal distance from both the PRC and the US while demonstrating an unbending will to defend Taiwan against any intruder. Switzerland is the best model to emulate.

Economic Globalisation

There are two approaches for labour intensive industries to maintain or increase profits. Either invest in productivity and innovation (option A) or relocate to a country with the lower wages and weaker worker and environmental protections (option B). When investment is restrained from crossing a country’s borders and local production is protected, a rise of prosperity can be brisk and rather evenly distributed among the population where:

  • Option B is largely absent and nearly all investment follows option A.
  • Trade unions have strong bargaining power and state institutions have strong regulatory power.

Following the influence of globalisation:

  • Option B becomes more widely feasible and a substantial portion of investment is diverted from option A.
  • Trade unions lose bargaining power and competitive forces unleashed in global markets curtail state institutions’ ability to regulate.

Consequently, productivity improvements and innovation can stall, leading to reduced low-skilled worker wages and stagnant demand for highly educated workers.

Taiwan has been more affected by these developments than most other countries because of its proximity to China, predominantly low-wages, and weak regulation. These conditions have positioned Taiwan as uniquely vulnerable to specific forms of PRC influence.

First, Taiwan’s business dependence on China gives the PRC leverage with which to pressure Taiwanese business owners. Second, Taiwan’s lack of opportunities for university graduates gives the PRC leverage to lure highly educated Taiwanese to China. Third, Taiwan’s growing internal wealth and income gap gives the PRC leverage to exploit the dissatisfaction of large population segments. The PRC uses these opportunities to further its political agenda, eroding Taiwan’s ability to defend against a hostile take-over.

Curiously, the US’s recent blunt, gloves-off, America-first policy may induce Taiwanese businesses to invest locally, following the aforementioned option A and halting the undesirable effects of globalisation. Let us hope that it will not be too little, too late.

Value Hierarchy

Taiwanese cherish their country’s independence, democratic government, protected human rights and personal freedoms. But they also highly value wealth and prosperity. Unfortunately, a majority may become convinced that these values are mutually exclusive and, in the face of the PRC’s demands, choose wealth over freedom. The recent election for mayor of Kaohsiung is indicative of such a choice. One way or another, the upcoming presidential election will solidify the ranking of these values in Taiwanese society, and perhaps even decide conclusively Taiwan’s destiny.

This analysis points out three major perils threatening Taiwan’s de facto independence. None of those threats can be easily dissolved. Together they will test to the limit the resolve of the Taiwanese. I hope they succeed.

Andreas Sierek, aka Henri Dutilleux, friend of Taiwan, intrigued and inspired by the many wonderful Taiwanese he has met.

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