Taiwan and Europe: An Uneasy History

Written by Ian Inkster.

Image credit: taiwan formosa vintage history travel maps by pohao liu/Flickr, license CC BY-NC 2.0

When considering Europeans in Taiwanese history much is usually made of the initial forays of the Spanish and the Dutch in the 17th century, when early commercial expansion and colonialism converted the small island into a potential staging-post for European ambitions in the so-called ‘Far East’. Numerous commentators made reports on the island from then on, most of them, to be frank, either absurdist or fantastic. Thus, the pure fabrications of George Psalmanazar (1679-1762), or the ferocious yet preposterous claims of Maurice Benyowsky (1741-1786).

Nevertheless, in a more meaningful and contemporary sense, the real history of Taiwan as an active element in global modernism came with the aggressive industrialism of Britain and that small group of European Great Powers—joined happily enough by the increasing military power of the USA after the bloody rehearsals of the Civil War—who controlled most of the world by the early 20th century. Misleading news continued, of course. So, the first Thomas Cook (yes, he whose global tourist enterprise ceased trading in September last year), when guiding his first Asian tourist pleasure ship past its dangerous shoals in June 1873, pointed out to his passengers ‘that island of cannibalism, Formosa. A recent investigation has been going on there, with reference to cannibalism, three Japanese and fourteen of some other nationalities having been eaten by the inhabitants.’

More seriously, for Taiwan, the years from the 1860s were used by Europeans, mostly the powerfully mercantilist British, as a strategic outpost for the ripping apart of the Chinese state and economy and for the exploitation of the island’s natural products such as tea, sugar, and camphor. Importantly, such aggressive trading led to huge frictions in the relations between established Chinese settlers and the indigenous peoples of the eastern mountain and forest areas. The Europeans had awoken to the possible importance of Taiwan (Formosa) as either commercially lucrative or strategically well-placed for further moves on Asia and China in particular.

As the first great industrialiser and coloniser of the modern era, Britain was of course in the lead. The island could be seen both as a stepping-stone and a treasure trove. As one rather enthusiastic army colonel put it to the Secretary of State in 1857; ‘Before the end of our last war with China, I submitted to Lord Derby a suggestion for our taking and keeping the Island of Formosa … it is not impossible that our present disputes at Canton may lead to a war with China’; seeing Formosa as the ‘granary of the tea province of Fohki’ [Fujian], a British Formosa ‘could force the emperor to give us tea in exchange for rice’.

In fact, during the years from the opening-up of treaty ports to the Sino-Japanese war of 1895, the European powers were foremost in developing modernised shipping and communications in order to facilitate trade in opium, tea, sugar, and camphor. When it was clear that Imperial China was losing against the aggressive newness of Meiji Japan, and the Chinese showed a desperate, twelfth-hour willingness to lease out Taiwan to any European in exchange for military help against Japan, the British were at the head of a long line of negative responses. It is clear that Japan was seen as one bastion whereby British interests in the Far East could be managed indirectly, rather than through more of the costly direct colonialism that had exhausted her coffers in India and was to cost her many lives and much money in Africa from the 1880s. The wager was a good one.

Europe was cagey about Formosa because the small island was already being developed as one pawn in a game of Great Power strategies. In essence, Japan was considered a much better bet than China in the management of Eastern commerce to the advantage of Western industry and colonial ambition. Japan was John Stuart Mill’s ‘other island’ in the same way in which Hong Kong was viewed as a bastion of acceptable Eastern capitalism. The Great Powers went on to nurture the Japanese relationship until the 1930s and well into the period when Japan had descended on China in the most appalling manner.

We now live in complex times where China is recovering from such earlier aggression and the bargaining pawn of Taiwan remains a global reality. Today, Taiwan has a GDP around a quarter of that of Britain but in a population about one third that of Britain’s. In terms of a strict per capita comparison (which would take account of purchasing power parity), there really is not that much in it, and Europe will never again be in any position to refuse the purchase of Taiwan from China.

There is little that is more topsy-turvy than that short account. In fact, you need to resort to fiction to find similar bargains and turnings of the world. Memories are short, and post-1945 history seems to have evolved as if there had been no real past much before the arrival of Hitler, Stalin, Mao Zedong, and Chiang Kai-shek. During and after WWII, the old ‘great power’ relations were markedly altered with the economic and technological rise of the USA and its early intrusion into Chinese and Taiwanese affairs. In the period to 1971, the height of the Cold War and the Golden Age, the USA was indubitably the major Taiwanese alliance, forging and then defending Taiwan’s representation as China in the UN and elsewhere. The Nixon diplomatic revolution of 1971-73, of course, changed this, the most precise and important reconfiguration being the entry of mainland China as member of the UN, representing China unambiguously, and its vast increase of global status as a member of the Security Council.

However, this did not serve to automatically bring Taiwan into a closer economic and cultural relationship with Europe generally. Whatever window of opportunity was missed then, the likelihood of this remaining open was reduced with the wider changes in trade and investment globally. My thesis is that this underlying global economics, spurred by dramatic technological changes, has since dominated relations between Taiwan and Europe.

The basic statistics show Taiwan was losing ground in its foreign trade with Europe from the 1980s to 2009. Thus, in those years Taiwanese exports in total rose from US$19,978 million to US$ 203,675 million; of this, exports to Europe rose 7-fold from US$3,121 million to US$22,577; to the US 3-fold from US$7,220 to US$25,014. Nevertheless, exports to Asia arose mightily, 25-fold from US$5,681 to US$140,108. Asia ousted all. The long haul of Japanese miracle growth from 1960 to 1990 and rapid Chinese growth from 1980 to 2009 pushed out both the USA and Europe.

We might postulate that the solid-alliance, pure cold-war years of 1952-1980, when much was spoken of democracy and a new world of liberation, were indeed primarily a commercial trajectory based on a dominant US technology. This position resulted from US leadership as it drew upon the technological ruinations of WWII, Europe, China, and Japan. So, as a small speck in US globalism, Taiwanese exports to the entire world arose rapidly as a measure of her success in the novel race of the Newly Industrialising Countries, catching-up from nowhere. The trade take-over was precisely in 1980-1995 when Taiwanese exports to Asia grew 10-fold, to the USA just over 3-fold, and then during 1995-2008 exports to Asia grew 3-fold, whilst USA exports were stagnant, and the Europeans just held on. By 2008, exports to Asia were three times those of Europe and the USA combined.

Furthermore, and often forgotten, Asia loomed increasingly large in providing the positive surplus on Taiwan’s overall trade account. Especially from 2002, Asia was producing substantial positive surpluses for Taiwan, offsetting her losses with Africa, South America, Oceania and elsewhere. Before and aft of the 2008 recession, Asia provided the export revenue whereby Taiwan could take annual losses on her trade with the rest of the world. This was precisely the time (from 2004-05) of the large rise in the value of Taiwan’s exports of electronic products, and machinery – the great bulk of semiconductors, integrated circuits and micro-assemblies went to mainland China, Hong Kong, Japan, Singapore, and South Korea, with only small exports to the USA, Germany, France, Netherlands, and the UK.

So, the relative fall of Europe (and to a lesser extent the USA) in Taiwanese exports accelerated before and aft of the 2007/8 beginnings of the recession and was associated with a very favourable balance of trade with Asia, this directly linked to the new microelectronics capacity of Taiwan. Whatever its impacts on contemporary political rhetoric and diplomacy, the underlying cause of Taiwan’s lesser relationships with Europe in the earlier years of the present century were techno-global, and represented Taiwan optimising its newly achieved advantages in micro-electronic and related high-tech capability. There can be little doubt that this transition was aided and abetted by both high levels of Chinese economic growth and an acceleration of Taiwanese Research and Development expenditure as a percentage of GDP in comparison to other technology producers and traders.

Associated with this turning-point was, of course, some change in outward investment trends towards Asia from 2003, a sustained surge in approved outward investment into Asia but a fall away of Europe – in 2006 outward investment from Taiwan to Europe was one-third that of Asia measured in US$. A related factor is that in the recession years, the collapse of industrial production was much greater in Britain, the USA, and major European nations than in Asia – indeed industrial output was much recovered in China, Korea, Singapore, Indonesia and almost so in Taiwan by 2009. In other words, Taiwan’s exports to those nations were part and parcel of their quicker industrial growth.

There is a final politico-economic point that might be suggested here. In the years before the recession, and certainly well into the 1990s, small and medium-sized enterprises (SMEs) were vital in increasing productivity. At the same time, they were often essential as suppliers to exporters, they therefore were an important element in rapidly rising export values, especially as suppliers to the new high-tech producers of the turning-point switch to Asia described above. We would argue that the SMEs tended to have more flexibility than the existing large conglomerates that were more stuck in the structures of influence, localism, factions, and corruption of the earlier KMT developmental state. Perhaps ironically, then, the switch from Europe and the USA to Asia in trade, technology and investment (as identified in mundane statistical detail above) might have encouraged the sturdy growth of a middle ground of flexible and innovative enterprises that have induced and benefited from the greater liberalism of the DPP years. This, in turn, could be interpreted as an important element in greater pluralism and a breakdown of the older dualism of the two-party system.

In brief conclusion, the historical relations of Taiwan with Europe are by no means unproblematic. When free of Chinese imperial power, Taiwan became subject to the western Great Powers and then to an expanding, industrially founded Japanese colonialism and militarism. At this point, relations with Europe were commercially close but politically and culturally distant. Led by Britain, the European involvement in Taiwan was never truly benign. After the war of 1937-45, Europe’s interest in Taiwan was principally as a developing economy that traded in a range of complementary goods and services. But the US Cold War alliances meant that America was always dominant until the weakening of the deeper Cold War coincided with the rise of both the Japanese and Chinese economies. We have argued that a real turning point occurred before and aft of the 2007/8 recession and was based on new technologies that favoured a large increase in Taiwan’s trade, technology, and investment linkages with Asia in general. Much of the political culture and rhetoric that developed can be seen as ancillary to the changing character of the global economy.

Professor Ian Inkster is a global historian and political economist who has taught and researched at universities in Britain, Australia, Taiwan and Japan. Author of 13 books on global dynamics and history, with a focus on industrial and technological development, and the editor of History of Technology since 2000. Forthcoming books are Distraction Capitalism: The World Since 1971, and Invasive Technology and Indigenous Frontiers. Case Studies of Accelerated Change in History with David Pretel.

This article is part of special issue on Taiwan-EU relations.

One comment

  1. While I agree with the broad thesis about EU-Taiwan relations the argument about the relative attraction of Asia for Taiwan leaves out some important and fundamental points. Up to the turn of the century Taiwan’s trade with Europe was relatively much more important; in 2001, Taiwan was the EU’s 3rd largest bilateral trading partner in Asia after Japan and China, today it is the 7th (until the mid 1990s, Taiwan’s trade with the UK was greater than the UK’s trade with China). The change since then is due to two important factors, first, Taiwan’s own relaxation on its companies trading with the PRC, one consequence of the island’s democratisation (until the mid-1980s such trade was illegal) and second, China’s accession to the WTO in 2001. Taiwanese owned companies trade more with Europe than they have ever done, just much more of the trade today comes from factories they own in China (last time I checked, 8 of China’s top 12 exporters were all Taiwanese owned). So the surge in Taiwanese exports to China (and Vietnam) is largely due to semiconductors etc going to Taiwanese owned factories for assembly into finished products for export to Europe and North America. It remains to be seen how far and for how long Trump’s trade war with China will affect this

    Liked by 1 person

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