The 2020 Yushan Forum: Can Taiwan Become a “Regional Resilience Hub”?

Written by Corey Lee Bell.

Photograph courtesy of the author.

The annual Yushan Forum was inaugurated in 2017, yet has quickly come to assume the mantle of one of Taiwan’s leading non-governmental platforms for international dialogue. Its 2020 incarnation was no different, and featured keynote speeches from influential political figures including President Tsai Ing-Wen, Australia’s former Prime Minister Malcolm Turnbull, and Sweden’s former Prime Minister Carl Bildt. While the impact of the COVID19 pandemic meant that this year’s forum was relatively low key, its impressive register of foreign dignitaries, and the profound security, economic and health crises that formed its backdrop, arguably made it the most significant to date. While among these, the pandemic loomed large and condemned many international guests to virtual rather than physical participation, Taiwan’s success in containing it – and its extensive efforts to assist other affected nations – made this year’s event an opportune moment to strengthen the case for the island to play a greater role in international affairs. This was pressed home through promotion of Taiwan as a partner that embraces global values and respects international law, and repetition of the Tsai administration’s slogan that “Taiwan can help and Taiwan is helping.”    

Convened on 8 October 2020 at Taipei’s Grand Hyatt, this year’s event dealt with these ideas through the theme “Forging a Resilient Future Together.” While the choice of this topic resonates with the concerns of many nations who suffered shortages of critical medical and other supplies during the early peaks of the pandemic, it was also aligned with President Tsai’s recent appraisal of her nation as an “island of resilience,” and Taipei’s aspiration to become a “regional resilience hub.” Having evolved from a prior policy of attempting to shape Taiwan into a regional or global “logistics centre” [PDF], the notion of becoming a resilience hub envisions Taiwan as playing a key role in helping countries wean off over-reliance on a single supplier and manufacturer of essential/critical goods – read China – through helping establish alternative supply chains and production bases. According to this vision, Taiwan, as a small island, would be able to overcome the obstacle of its capacity constraints by exploiting the extensive networks Taiwan and its business community have developed in South East Asian/Austronesian under the direction of the Tsai administration’s signature New Southbound Policy.

While this year’s event explored a number of themes, much of its content elaborated on why Taiwan fits the bill as a viable, like-minded and capable partner for nations looking to improve their resilience. Taiwan’s chief trade negotiator John Chen-Chung Deng noted that due to the sophisticated nature of modern medical equipment and other critical goods, retaining entire production chains within a single nation – or practicing isolationist resilience – is unfeasible. The key to resilience, as such, lays in choosing suppliers who are also share similar values. Australia’s former prime minister Malcolm Turnbull – the leader that famously banned China’s Huawei from building Australia’s telecommunications infrastructure – also stated that nations should resist the tide of isolationism and populist nationalism, but warned that states which monopolise the supply of critical goods can potentially use this capacity to leverage other nations when their relationship is marred by incompatible ideologies and conflicts of interests. Resonating with Malcolm Turnbull’s comments, Sweden’s former prime minister, Carl Bildt, called the isolationist model a “dangerous delusion”, but also noted that a view had solidified in Europe that open democratic states such as Taiwan are preferred above autocractic ones in areas where trade and security intersect, because only the former are themselves resilient.

Aside from highlighting Taiwan’s democratic values and transparency, Mr Bilt also praised Taiwan’s prowess in technological innovation – something reflected also in appraisals forwarded by Clete Willems, the Deputy Assistant to the President for International Economics, as well as representatives from Japan, the Philippines and Vietnam. Taiwan’s deputy minister of the Ministry of Economic Affairs Chern-Chyi Chen cited Taiwan’s enormous success in quickly ramping up its production of masks to 10 million units per day by March this year as an achievement that reflected the largely unsung strength of Taiwan’s production capabilities. Finally, Chen and President Tsai commented on Taiwan’s accomplishments in producing effective platforms for tracking cases and managing the pandemic which also observe international standards for privacy protection. The key point pressed home was that Taiwan was not only a like-minded democracy that could be trusted – as an ‘island of resilience,’ it has a demonstrated capacity to get the job done to improve resilience, especially in the critical area of medical (and enabling) technologies.

In addition to marketing the unique advantages Taiwan offers as a partner for improving resilience in a post-pandemic world, the forum also served as a platform for promoting Taiwan’s own domestic model for improving resilience. Deputy Minister Chen noted that for Taiwan, the policy of resilience meant ultimately making a mature decision to accept sub-optimal situations, which is to say that in the short term at least, putting a higher value on security came at the expense of government efficiencies and commercial profits. Rather than issuing directives, the government approached this challenge by listening to, and negotiating strategies with, the private sector, and by being open to providing fiscal and logistic support and other incentives. In Taiwan’s situation, these processes resulted in the formation of a number of new policies and initiatives that encouraged domestic firms to create and relocate manufacturing bases (i.e., shifting facilities to like-minded countries), reshore, shorten supply chains through direct foreign investment (FDI) in locations closer to the end market, and increase participation in regional integration initiatives/bilateral trade agreements (BTA).

In all, these proposals were greeted enthusiastically by both local and international attendees. Enthusiasm for Taiwan assuming such a role was particularly notable from speakers from the Philippines and Vietnam, with encouraging signs on the prospects of enhanced engagement in the area of medical technology resilience coming from the United States representative Clete Willems. Yet the challenges that Taiwan faces to morph this vision into a reality were perhaps understated. A key issue on this front is the extent to which the Taiwan experience, as a model of improving resilience, is applicable to the disparate political economies of Taiwan’s prospective partners.

An example of this challenge is the contrast between the political-economy of Taiwan and the situation in modern Western economies. Taiwan may no longer be the capitalist developmental state it once was, let alone the home of party-state capitalism as it was during earlier stages of KMT rule. However, the positive role of the state in macroeconomic planning, and the robust coordination between government and industry elites, differs from the situation in the West, the latter of which have by and large gone much further down the road of global capitalism. The globalised political economies of the West have given capital more power not only to resist political dictates and become relatively emancipated from the fetters of state agendas, but have even given them the facility to set agendas and adjust the parameters of economic policy. While Taiwan sees assuming a new role as a resilience hub as a win-win scenario for the nation and its partners, global capitalists less trifled by security issues are likely to view such proposals as an imposition, and Western political elites – who are often to varying degrees beholden to these capitalist forces – may be convinced to treat Taiwan’s resilience role as a privilege that should exact a hefty access or license fee in the form of concessions or opportunities for their own ‘champion’ industries.

What makes matters worse for Taiwan is that its proposal faces even greater challenges in the Asian region. To the north, the fact that the major economies have largely parallel as opposed to complementary economic models has been a perennial source of conflicts in the shape of protectionist measures, crippling tariffs and even occasional embargoes. Nowhere is this more the case than South Korea and Japan, both of which recently removed each other from the white lists which grant their members access to simplified trade procedures. Not only does this situation work against Taiwan’s idea of working cooperatively with partners to establish resilience networks, but Taiwan’s New Southbound Policy, which lies at the centre of its resilience hub plan, will also likely face competition with South Korea’s New Southern Policy and not dissimilar Japanese political initiatives, each of which are guided by similar economic realities, capacity constraints and industry needs. In short, having ratcheted up dialogue around the concept of an East Asian resilience hub, Taiwan will likely face growing competition from its northern neighbours who are similarly suited to the role, and equally likely to covet it. The additional advantage these neighbours have is their own resilience – unlike Taiwan, their very survival is not under threat by an increasingly bellicose China.

Lastly, there is the problem of the South East Asian and Austronesian island nations that are incorporated under Taiwan’s New Southbound policy. The harsh but ultimate reality for many of these economies is that their industries already operate under ‘sub-optimal’ situations, and are not in a position to make further compromises on this front. Put another way, while wealthy countries can frame the issue of resilience by dichotomising security and efficiencies/economics, for developing nations these remain inextricable. While Taiwan’s resilience strategy involves other forms of partnerships with these nations other than that between buyers and sellers (i.e., investors and manufacturers etc), the very different priorities of developing countries underlines the point that Taiwan needs to develop a strong stand-alone economic case for implementing measures with regional partners that improve resilience.               

The above perhaps seems pessimistic. But it does not lead to the assumption that the resilience hub agenda should be relegated to the too-hard basket. In fact, there have already been successes (i.e., Taiwan-America trade in medical supplies), and there is a great deal of potential for more to come in the future, especially should these challenges be confronted head on and overcome. One way to do this is for Taiwan to focus on selling its role as a resilience hub to most of its customers as a product and not as an idea – the product having been built through making concrete arrangements with a select body of relatively influential nations. Two possible partners in this regard are India and Australia – two globally prominent ‘Southbound policy’ nations with whom Taiwan’s relations have recently improved, and whom are both seeking urgent alternatives for improving resilience in the backdrop of escalating diplomatic and trade disputes with China. Adopting this strategy could have three advantages. Firstly, in uncertain times, customers are often more keen to opt-in to something concrete than purchase off the plan. Secondly, selling a product at more of a premium to those desperate to acquire it will give one the facility to reduce costs for other prospective customers who are sitting on the fence. Lastly, nothing helps a service or product sell better than a satisfied clientele – especially when that clientele has some standing.

Yet perhaps the strongest case to be made for the resilience hub idea is the potential cost of letting this opportunity pass by. Throughout the conference, Taiwanese representatives emphasised Taiwan’s increasingly ‘indispensable’ role in the region. This seemed to be a call to allies for solidarity, reflecting anxieties about the growing threat China poses to the island’s independence. While this may appear self serving, the argument that Taiwan’s security and the system of trade based resilience are linked is not unfounded. If geography is destiny, then the history of the western Pacific, from the Dutch East Indian Company’s occupation of Taiwan in the 17th century, to the Opium Wars and the subdivision of China’s eastern seaboard entrepôts by Western powers, up to the more recent militarisation and continentalisation of the South China sea, tells us that the control of islands and ports close to maritime trade routes in this region is both a key measure of, and potent instrument for attaining, geostrategic power and geopolitical influence in an interconnected world. In the backdrop of the growing intensity of great power competition between China and the United States, a failure to keep Taiwan ‘free’ may perhaps spell the end of globalisation as we know it and make the undesirably option of isolationist resilience an inevitability.  

Corey Lee Bell is an editor at Taiwan Insight.

This article is part of the special issue on Taiwan’s partnerships with Asian nations.

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