Sam Nunn School of International Affairs Georgia Institute of Technology September 3, 2017
Cross-Strait Stalemate As a Commitment Problem A Dynamic Cold Peace
Cross-Strait Stalemate As a Commitment Problem A Dynamic Cold Peace The DPP and the CCP suffer from the commitment problem in international relations: The CCP worries reconciliation will enhance the DPP s position to pursue Taiwan independence The DPP worries concession will encourage the CCP to demand further steps toward unification
Cross-Strait Stalemate As a Commitment Problem A Dynamic Cold Peace Cross-strait relations froze after Tsai s inauguration, but a hot conflict is unlikely in the short-term: Tsai Ing-wen has no political needs to provoke China Median voters support her cross-strait discourse China believes time is on its side Xi Jinping is consumed with the 19th Party Congress
Tsai used three major occasions to lay out her cross-strait policies and signal goodwill to Beijing: Her inaugural speech on May 20th Her administrations reactions to the South China Sea ruling in July 2016 Her National Day Speech on October 10th
Inaugural Speech Tsai used four discourses to approach as closely as possible to the 1992 Consensus : She vowed to defend the territory and sovereignty defined by the ROC constitution She vowed to follow the Act Governing Relations Between the People of Taiwan Area and the Mainland Area She called the common understanding the two sides reached in 1992 a historical fact She called for the two ruling parties across the Taiwan Strait to dialogue
South China Sea Ruling Tsai rejected the ruling and did not ally with the United States to undermine China s claims.
National Day Speech In her first National Day speech, Tsai repeated every points in her inaugural speech and emphasized her 4 noes : her promises won t change her goodwill won t change but her administration won t bend under pressure though her administration won t return to confrontation with China, either
In sum, at the current state, the cross-strait relations defined by the ROC constitution is Tsai s bottom line, and she has shown no intention to go beyond that.
Unfortunately, Beijing did not find Tsai s embrace of the ROC good enough. China called Tsai s position an incomplete answer sheet on the nature of cross-strait relations This is intriguing, since Embracing the ROC constitution is no small step for the DPP China did not oppose Frank Hsieh s constitutional one China
The issue is the commitment problem, and the commitment problem becomes salient because The DPP has become the ruling party Tsai is the leader of the DPP regime and the Taiwan authority
Inconsistency also exacerbates the commitment problem. Inconsistency from the DPP: Pushing for joining the UN in the name of Taiwan Pushing for removing Sun Yat-sen s portraits and statues from schools and government buildings Inconsistency from Tsai: Nominating pro-independence justices of constitutional court Aborting adjustments in high school history course outlines Putting the Chinese history under the rubric of East Asian history in the textbook Snubbing official worship of Koxinga Open letter to the DPP s 30th Anniversary
China at the moment does not have incentives to use force: Relative power has tilted to China s favor and unlikely to change soon No swift alternation of relative power, so no imperative for war The CCP is consumed with the 19th Party Congress
China s strategy was to bring pressure on Tsai to squeeze out as many concessions as possible Diplomatic pressure Military pressure Economic pressure Aspects symbolizing sovereignty more were pressed harder
Diplomatic Pressure China suspended official (TAO-MAC) and semi-official (ARATS-SEF) contacts China blocked Taiwan s participation in ICAO and WHA China snatched Sao Tome and Principe and Panama China pressured Taiwan s trade offices to change names
Military Pressure
Military Pressure
Economic Pressure Beijing ended contract agricultural production with Taiwan Monthly numbers of Chinese tourists have dropped for more than 50% However, cross-strait trade has not been affected much
Economic Pressure 86,891 107,628 149,617 180,915 179,394 135,603 129,160 118,616 105,707 150,221 165,065 121,918 101,354 115,845 153,649 193,457 150,479 114,435 135,968 138,673 122,574 163,290 213,144 181,317 140,432 163,442 253,205 278,715 228,607 199,642 235,447 205,002 185,922 224,872 242,967 228,175 195,388 216,021 269,455 298,059 217,260 220,894 248,683 240,490 270,788 221,004 236,031 240,629 268,861 305,390 361,470 377,197 333,845 315,166 343,709 312,549 341,729 347,778 332,517 346,941 321,458 406,239 279,703 358,798 372,766 308,087 352,625 367,736 345,243 386,663 357,655 327,129 366,409 405,307 363,878 375,567 327,254 271,478 299,805 248,538 214,764 215,390 202,986 220,358 255,689 202,287 201,599 214,196 201,867 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Number of Tourists from Mainland Total Tourists
14,000,000,000 12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 - Overview Economic Pressure Cross-Strait Trade USD $ in billions Aug-92 Oct-92 Dec-92 Feb-93 Apr-93 Jun-93 Aug-93 Oct-93 Dec-93 Feb-94 Apr-94 Jun-94 Aug-94 Oct-94 Dec-94 Feb-95 Apr-95 Jun-95 Aug-95 Oct-95 Dec-95 Feb-96 Apr-96 Jun-96 Aug-96 Oct-96 Dec-96 Feb-97 Apr-97 Jun-97 Aug-97 Oct-97 Dec-97 Feb-98 Apr-98 Jun-98 Aug-98 Oct-98 Dec-98 Feb-99 Apr-99 Jun-99 Aug-99 Oct-99 Dec-99 Feb-00 Apr-00 Jun-00 Aug-00 Oct-00 Dec-00 Feb-01 Apr-01 Jun-01 Aug-01 Oct-01 Dec-01 Feb-02 Apr-02 Jun-02 Aug-02 Oct-02 Dec-02 Feb-03 Apr-03 Jun-03 Aug-03 Oct-03 Dec-03 Feb-04 Apr-04 Jun-04 Aug-04 Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06 Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Date Net Exports to China (USD) - Exports and Reexports Net Imports from China in Previous Year (USD) - Net Total Trade with China
Economic Pressure China-Taiwan Trade May 16 - May 17 Taiwan Exports to China Taiwan Imports from China Total trade with China 25,000,000,000 20,000,000,000 USD $ IN BILLIONS 15,000,000,000 10,000,000,000 5,000,000,000 - May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 DATE
Several possible explanations on the different policies: Tourism was easy to manipulate Tourism hurt Taiwan s domestic economy but not Taiwanese businesses in China Trade disputes could be brought to the WTO
What are possible scenarios for the future? A dynamic cold peace is most likely, unless China s domestic factors intervene A compromise between Tsai and Beijing cannot be totally ruled out Beijing has not totally given up on Tsai China s perception of the KMT s strength matters Who are the alternatives to Tsai inside the DPP?