Written by Vincent Wei-cheng Wang.

It has been six months since the Sunflower Movement (SFM). The student protest movement initially caught the KMT, the Chinese Communist Party (CCP), and the United States by surprise because it appeared a sudden and unexpected reaction against the Cross-Strait Services and Trade Agreement (CSSTA), abruptly halting further progress in cross-Strait reconciliation, which many had applauded. But should they have been surprised and what is the impact of the SFM on cross-Strait relations?

After eight years of rocky cross-Strait relations during the Chen Shui-bian Administration (2000-2008), they entered a new era in 2008 with President Ma Ying-jeou’s election victory. Under the premise of the so-called 1992 Consensus,[1] the two sides’ semi-official bodies – Taiwan’s Straits Exchange Foundation (SEF) and China’s Association for Relations Across the Taiwan Strait (ARATS) — quickly restored a working relationship and were tasked to negotiate cooperation agreements. To date, twenty-one cross-Strait agreements have been signed under the aegis of SEF and ARATS.[2]

Economic normalization was an important pillar for the Ma Administration’s effort to normalize cross-Strait relations. He laid out an incremental strategy, “First the Urgent, Then the Less Urgent; First the Easy, Then the Difficult; First Economics, Then Politics” (xianji houhuan, xianyi hounan, xianjing houzheng). In 2010, Taiwan and China signed a historic Economic Cooperation Framework Agreement (ECFA) with additional agreements on trade in service, trade in goods, investment protection, and dispute settlement to be negotiated and added on later. The two sides also discussed the exchange of representative offices (SEF’s and ARATS’ offices on each other’s jurisdiction). This approach suffered a serious setback in the aftermath of the SFM and its future is uncertain.

The post-2008 cross-Strait rapprochement is based on the liberal assumption (also known as the commercial peace thesis or “the soothing scenario”), namely growing economic interdependence creates more common interests and makes war more costly and thus peace more likely.[3] Ma opines that economic engagement with China best help Taiwan “maximize its economic opportunities and minimize its security threat.” He also argued that passage of CSSTA and other follow-up economic agreements are key to unlocking the door for regional economic integration, such as entry into Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) for Taiwan. During the 2012 presidential debate, his DPP opponent Tsai Ing-wen criticized his approach as “globalization through China.” The SFM belied multiple factors (anti-globalization, anti-China, anti-Ma, anti-KMT, disappointment with representative democracy, and a sense of existential threat) opposing this soothing scenario and particular approach (from KMT-CCP consensus to SEF-ARATS negotiation with little public input to ratification by the Legislative Yuan where the KMT enjoys a large majority).

Cross-Strait trade, virtually nil before 1987, reached US$126.1 billion (or 22 percent of Taiwan’s total trade). China (including Hong Kong) is Taiwan’s largest trading partner and top export market, absorbing 40 percent of Taiwan’s exports, and second largest import source.[4]  An estimated 90 percent of Taiwan’s outward investment goes to China. On any given day, there is an estimated one million Taiwanese business people and their families living and working in China.

If trade is a measure of a reliable partnership, then growing cross-Strait economic integration (or more accurately, Taiwan’s asymmetric dependence on China) entails political and security externalities. Despite their shared interests in expanding and deepening cross-Strait economic integration, Taipei and Beijing’s end goals are divergent. As a US government analyst points out, Taipei seeks to leverage cross-Strait economic agreements to enhance Taiwan’s integration into the Asia Pacific economy and prevent further isolation, whereas Beijing aims to use expanding cross-Strait economic ties to bind Taiwan closer to China and make progress toward Beijing’s long-term goal of unification.[5]  With such fundamentally different end goals, cross-Strait economic integration entails considerable risk. Critics contend that cross-Strait economic cooperation so far has not benefited Taiwan much and follow-up agreements may actually do more harm than good, as it gives Beijing more leverage toward accelerating unification. One criticism of the CSSTA was that the trumpeted benefits would go to few well-connected business tycoons or conglomerates, leaving ordinary folks further behind. To safeguard their interests, these business elites might then do Beijing’s bidding, turning Taiwan’s body politic much like Hong Kong’s oligopolistic rule.

The U.S. government might have also contributed to this “surprise backlash.” Although the U.S. has applauded cross-strait reconciliation as it contributes to peace and stability in Asia, further cross-Strait economic integration could cause Taiwan to further gravitate toward China’s orbit, increasing Taiwan’s further isolation, which ironically was caused by China’s policies, and further diminish U.S. prestige and influence in the Asia-Pacific.

To speculate the future prospects for cross-Strait relations in the two remaining years of the Ma Administration, let’s revisit his roadmap for cross-Strait relations — “First the Urgent, Then the Less Urgent; First the Easy, Then the Difficult; First Economics, Then Politics.” The twenty one cross-Strait agreements hitherto signed indicate that most of the “low-hanging fruits” have been reaped. What lies ahead are more difficult, politically sensitive, and arguably not as urgent – or more likely results of positive spillover from a prolonged period of economic interaction – such as military confidence-building measures (CBMs), a peace accord, Taiwan’s international participation, and negotiation of a final political settlement between Taiwan and China. Even in the economic realm, the future looks uncertain. After the SFM, civil society has awakened. Many Taiwanese are concerned about the pace and direction of cross-Strait economic integration. The SFM is not an isolated unexpected episode propelled mainly by fear (loss of sovereignty, stagnation of income, uncertainty about future). It’s useful to view it as a “safety valve” for giving warning on an initially expedient but ultimately unsustainable path: a vision endorsed by the two ruling parties across the Taiwan Strait, negotiated between two semiofficial bodies (albeit with government officials participating talks as “advisors”), and potentially rubber-stamped by the legislature.[6]

As a condition for their withdrawal from the legislature, the students demanded, and Speaker Wang Jin-ping agreed, to postpone the review of CSSTA until a Cross-Strait Agreements Review Act is passed and a review body established. Wrangling over the text of the Review Act ensued. The government accused its opponents of attempting to draft the “two states theory” into the Act,[7] which violates the 1992 Consensus – the political basis for all the cross-Strait relations thus signed – and will not be accepted by Beijing. The opposition party boycotts legislative sessions to consider the Review Act. Since the Review Act is the prerequisite to CSSTA and all other future cross-Strait agreements, and it is not even being rationally discussed, let alone passed, CSSTA could face considerable delay. The service-in-goods agreement (CSSGA) faces even bleaker prospects. Even the exchange of SEF and ARATS offices is put on hold, despite a “concession” made by Beijing in March over the “humanitarian visits” – a pseudo-consular visits right. To maintain some momentum, the head of China’s Taiwan Affairs Office (TAO), Zhang Zhijun, visited Taiwan in June, but he was splashed with paint in Kaohsiung. A deep freeze descended in August when Chang Hsien-yao, vice minister of Taiwan’s Mainland Affairs Council (MAC), was relieved of his duties pending investigation.

Other issues such as the Taiwan-proposed meeting between Taiwanese leader Ma Ying-jeou and Chinese leader Xi Jinping at this November’s APEC  meeting in Beijing, CBMs, and peace accord are even more far-fetched. Although the two sides had publicly expressed interest to sign a peace accord, the idea was fraught with problems and the suitable political window appears closing with Taiwan’s upcoming election schedules (municipal elections in November 2014 and presidential and legislative elections in early 2016).[8]

Despite Ma’s repeated emphasis on CSSTA, given his low approval rating and the prevailing vigilant environment awakened by the SFM, breakthroughs in cross-strait relations are unlikely. Cross-Strait relations have entered a period of caution and uncertainty, as Beijing is also preserving its political capital and assessing its options in a post-Ma Taiwan and the possibility of DPP returning to power. How much patience can Beijing afford would be a critical unknown. Meanwhile, the cooling-off period may offer an opportunity for the KMT and the DPP to work toward a consensus between them (such as the recent “Greater One China” idea proposed by several prominent politicians across the Blue-Green divide), as whichever party winning 2016 must continue dealing with China’s steadfast economic statecraft. This period also offers U.S. decision-makers a chance to reflect on the wisdom of their liberal-inspired policy toward cross-Strait economic integration. In that regard, SFM has reset and recast cross-Strait relations.

Vincent Wei-cheng Wang is a Professor of Political Science at the School of Arts and Sciences, University of Richmond.

Notes:

[1] It is doubtful that China and Taiwan interpret what they agreed to in 1992 similarly.  China interprets The 1992 Consensus as gebiao yizhong (the two sides each verbally accepts the one China principle), whereas Taiwan interprets it to mean yizhong gebiao (one China, but each side has its own interpretation).  Nonetheless, this ambiguous term of art allowed the KMT and the Chinese Communist Party to “agree to disagree” and move on.

[2] For a list of these agreements and status of their implementation, click here  and here.

[3] The German philosopher Immanuel Kant considered commercial peace as one of the three pillars for “perpetual peace.”  Perpetual Peace, and Other Essays on Politics, History, and Morals (Hackett, 1983).  It should be added that many American politicians and scholars also invoked this tradition to justify giving most favored nation (MFN) status to China in that trade would unleash the middle class, which would be an agent for political liberalization.  See James Mann, The China Fantasy: Why Capitalism Will Not Bring Democracy to China (Penguin, 2007).

[4] Author’s calculation of data from the CIA World Factbook,

[5] Matthew Southerland, “Taiwan and China Agree to Enhance Communication, but Cross-Strait Economic Agreements Face Uncertainty,” U.S.-China Economic and Security Review Commission Staff Report, 29 April 2014, 4.

[6] The Ma Administration has argued that the signed cross-Strait agreements are not treaties between states, which need the Legislative Yuan’s ratification, but agreements between two semiofficial bodies (as if they did not involve official authority), therefore they should only be submitted to the legislature after the fact for pro-forma post-facto filing (bei cha), rather than substantive review (shen cha).  Even a vote is required, the KMT enjoys over two-thirds of the seats in the legislature, ensuring passage.

[7] The “two states theory” or “special state-to-state relationship theory” was used by President Lee Teng-hui in 1999 to describe the relationship between Taiwan and China.

[8] On the practical aspects of a possible peace agreement, see Phillip C. Saunders and Scott L. Kastner. “Bridge over Troubled Water? Envisioning a China-Taiwan Peace Agreement.” International Security 33, no. 1 (Spring 2009): 87-114, and Vincent Wei-cheng Wang, “Commentary: The Eight Dimensions of a Cross-Strait Peace Agreement,” in Chung-sen Lin and Shu-fan Ding, eds., The Conference on the Twentieth Anniversary of the “1992 Consensus” Proceedings (Taipei: the Strait Exchange Foundation and Institute of International Relations, 2012), pp. 137-146 (in Chinese).