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4.3 Case Study – Taiwan’s New Southbound Policy
In the aftermath of President Tsai’s election success in 2016, and entrusted with a sizeable political mandate, President Tsai declared in her inaugural address that her administration would concentrate on five specific policy areas— (1) transform Taiwan’s current economic structures; (2) strengthen the country’s “social safety net”;
(3) enhance social fairness and justice, “so as to further deepen and evolve Taiwan’s democratic institutions”; (4) “pro-actively” help promoting regional peace and stability and cross-Strait relations; and (5) effectively handle diplomatic and global issues (Republic of China [R.O.C.] Office of the President, 2016). Of particular interest to this thesis is the first policy area President Tsai mentioned – transforming Taiwan’s current economic structure. In politicians’ speak this meant a shift away from an overreliance on the economic relationship with a single market – China - which had become a by-product of economic globalization and cross-Strait trade. To help achieve her goals, Tsai formulated the “New Southbound Policy” (NSP) – a concerted effort to expand Taiwan’s presence across the Indo-Pacific.
Tsai’s NSP was not entirely original. The drive to reduce dependency economically on China was also central to a number of previous administrations’ own policies. President Lee Teng-Hui himself took the KMT on a course of “Go South” in 1994. Lee’s strategy saw remarkable shifts in foreign direct investment in 1994: FDI into ASEAN countries leapt from 1.76 billion USD the previous year to 4.98 billion USD, while FDI flows to mainland China dropped by nearly the same amount, falling from 3.17 billion USD to a mere 962 million USD (Department of Investment Service, Ministry of Economic
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Affairs, Taiwan, 2013). Lee’s successor, Chen Shui-bian of the DPP also launched his own Go South Policy in 2002. Between 2002-2008, Taiwan’s FDI in particular to the ASEAN region grew significantly, rising to 10.4 billion USD in 2008, but it was outmatched by FDI to mainland China, which grew at a comparable pace, and investment in Southeast Asia fell to 2.04 billion USD in 2009 (Department of Investment Services, Ministry of Economic Affairs, Taiwan, 2013).
As well as the obvious economic factors, a second driving factor of Tsai’s NSP, as stated in her National Day address in October 2017, was “to hold a more advantageous position in international society.” This can be interpreted as Tsai striving to “increase [Taiwan’s] international space,” or room for strategic maneuverability (Ministry of Foreign Affairs, Taiwan, 2018). Due to the PRC’s continued efforts to block the ROC from yielding any influence in the international political arena, as well as continued efforts to reduce the number of states recognizing the ROC over the PRC, the NSP can also be seen as a good example of Taiwan’s recognition of the importance of non-traditional economic and diplomatic niches. In short, the NSP is a way to promote Taiwan’s international space away from dependence on China economically, as well as socially and culturally. As Tsai stated in a speech last October 2018 at the Yushan Forum, the spirit of the NSP is “Taiwan helps Asia, and Asia helps Taiwan” (ROC Ministry of Foreign Affairs, 2019).
The overriding theme of the NSP as told by the NSP Website of the Executive Yuan is
“forging win-win relationships” with regional countries with the Asia and Indo-Pacific region. 21 countries are considered part of Tsai’s NSP plans, they are: Thailand,
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Indonesia, Philippines, Malaysia, Singapore, Brunei, Vietnam, Myanmar, Cambodia, Laos, India, Pakistan, Bangladesh, Nepal, Sri Lanka, Bhutan, Australia, and New Zealand. According to the promotion plan on the executive Yuan’s website the NSP is
“a major element in Taiwan’s external economic strategy that calls for developing comprehensive, mutually beneficial relations with the aforementioned countries. It goes on to state ‘people-centred’ policy areas that will help “drive regional growth and prosperity” (Executive Yuan, 2019). They are:
2.3 Economic collaboration 2.4 People-people exchange 2.5 Resource sharing 2.6 Forging regional links
For the first area - promoting economic collaboration, Tsai’s strategy remains quite vague, however, it is expected that the NSP will lead to greater levels of exports from Taiwan, as well as collaborating on critical infrastructure projects in NSP countries.
The second area, people-people exchange, pertains mainly to educational ties, and the two-way flow of workers. Since the policy was implemented, Taiwanese students studying in NSP countries has risen 20% whilst the number of students from NSP countries has also risen significantly, with 90% of those coming from the ASEAN region (Taipei Times, 2018) (Marston; Bush, 2018). By resource sharing Taipei intends to capitalize on Taiwan’s sometimes understated soft power capabilities by promoting bilateral and multilateral cooperation in sectors such as culture and tourism. Indeed, in-bound tourism from a number of NSP countries has rocketed in the last two years. A good example is Vietnam, which increased from 193,483 tourists visiting Taiwan in
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2016 to 490,774 making the journey in 2018 – an increase in over 100% in two years (Taiwan Tourism Bureau MOTC, 2019).
Nowhere in the NSP’s sphere have its benefits been more widely felt than in SE Asia – and in-particular, Vietnam. Taiwanese investment in Vietnam goes back over twenty years when it opened its doors to foreign direct investment in 1988. Since then Taiwan has invested in 2,551 projects between 1988 and the end of July 2018, totalling over 30.9 billion USD in value, and is the fourth largest foreign investor in Vietnam, accounting for 9.28 % of total registered foreign direct investment (B. Glaser; S Kennedy; D Mitchell, 2018) According to the Ministry of Economic Affairs, Taiwanese investment in Vietnam reached NT$680 million in 2017. Investment in the first season of 2018 alone exceeded NT$400 million — 233 % growth from the same season the year before, demonstrating Taiwanese companies’ increasing confidence in investing in Vietnam (ROC Ministry of Foreign Affairs, 2019). In both Taiwan and Vietnam, the initial 3 years of increased bilateral ties as part of NSP have been extremely successful.
There are hopes on both sides that Taiwan can increase investment in industries such as high-end agriculture, electronics manufacturing, as well as public infrastructure and healthcare.
An increase in direct flights between the countries has also allowed the conditions to make such exchanges possible. Budget Vietnamese carrier Vietjet now operates 52 direct flights a week from airports in Vietnam to Taipei, Tainan, Taichung, and Kaohsiung. Taiwanese carrier Eva Air has followed suit, and increased consumer demand has resulted in Eva quadrupling its number of flights from 7 a week in 1992,
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to 28 a week in 2018 (CSIS, 2019). Direct transportation links, whilst essential for boosting tourism numbers are also the lifeblood of commercial exchange and the development of business ties. Taiwanese FDI in Vietnam is concentrated mainly in and around Ho Chi Minh City – Vietnam’s commercial centre. Taiwanese companies have also set up operations in the surrounding provinces of Binh Duong, Dong Nai, and Ha Trinh. The Taiwanese companies are establishing smart city planning projects to help with Vietnam’s fledgling public infrastructure as well as establishing factories making anything from high-end consumer electronics to footwear.
This deepening of regional integration is part of a sustained effort by President Tsai to move Taiwan away from the Sinosphere and to gain Taiwan much needed credentials on the global stage. Whilst it’s unclear how sustainable the NSP will be in the long term – with elections just half a year away – Tsai’s drive to move Taiwan away from an over-reliance on a single market (China) is signalling a shift in Taiwan’s political direction. This has a number of implications for the cross-Strait relationship. Firstly, the NSP repositions Taiwan’s place in East Asia. By promoting people-people exchanges, the NSP can familiarize NSP countries more with Taiwan’s unique culture – boosting soft power capabilities – as well as incorporating Taiwan as an indispensable link in Asia in its own right. Increased economic exchange also opens up doors for Taiwanese nationals to explore work opportunities in NSP countries with Taiwanese companies. A vital development considering the ‘brain drain’ out of Taiwan and loss of talent in recent years to the PRC.
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So far, this thesis has analysed a number of issues relating to the globalization process which have had implications for the security relations across the Taiwan Strait. Firstly, China’s domestic and internal situation remains uncertain. Beijing is facing a whole range of problems deriving from the globalization process, including political and economic fragmentation, and an uneven distribution of wealth and economic development, all of which create security problems for the state. Secondly, globalization enhanced the democratization process and political and economic liberalization in Taiwan, strengthening the emergence of a Taiwanese identity.
Although at the moment it seems unlikely that the emergence of such an identity will lead to formal independence, it remains a crucial factor in shaping contemporary cross-Strait relations. Thirdly, globalization has resulted in the rise in nationalism in China.
Thus, increasingly we can see the conflict between the two sides as a clash of two emerging identities. If the link between the globalization process and international security can be found in the penetration of state sovereignty, its effects on the domestic situation of a state, and the consequences for its foreign policy outlook, the developments mentioned above all have a number of implications for the future security of the Taiwan Strait.
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This study was tasked with analysing the relationship between the globalization process and the security of states. This study applied this to the China-Taiwan relationship to allow us to see more clearly just how much globalization has altered the security dynamics in which states tend to operate. My central research question also looked to analyse how domestic developments affected by the globalization process influence state security – in-particular the cross-Strait relationship. This can be summarised as follows: Globalization is diluting the power of nation states by triggering an increase in social, economic, and political transnational activities and penetrating space that was previously sovereign. Owing to globalization’s interconnected nature - which has seen states become increasingly interlinked - distant occurrences and developments can have serious domestic implications, while local events are often felt all over the world.
This thesis also suggests that globalization has fundamentally changed the international environment so much so that domestic and foreign policy are no longer entirely exclusive of one another. It implies that domestic policy of a state such as the PRC is has an impact on its approach to its foreign policy. The case of Hong Kong is a good example of this – a domestic issue for the PRC that also shapes the way it focuses policy on the ROC. Likewise, domestic issues and occurrences in Taiwan as analysed in this thesis often mould the ROC’s stance on cross-Strait relations. Of particular importance to the focus of this thesis is the part globalization has played in the development of identity issues. The rise of the Taiwanese identity which coincided with the ROC’s spectacular economic development of the 80’s and 90’s is perhaps the single greatest influencing factor on cross-Strait relations with it being such a barrier to Chinese
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attempts to incorporate Taiwan into the PRC. As shown in the data on page 48, the
‘Taiwanese’ identity is only growing deeper and deeper and China will be hard-pressed to reverse this trend. The forces of globalization are undoubtedly involved in this rise.
Another key element of this thesis was the study of China’s internal challenges and how they are impacting upon its security along with its behaviour toward other states. As this study has shown, China faces a number of significant challenges, many of which have arose as a by-product of the globalization process. The globalization process has altered China in ways not imaginable only a few decades ago, and whilst it has worked to benefit the country in a number of ways – mainly sustained economic development from economic globalization – challenges remain and continue to put pressure on Beijing. The fact that Beijing’s legitimacy is so reliant on economic growth presents one key area this thesis has focussed on as well as matters related to income disparity and income equality between provinces. A number on non-state actors have also emerged in recent years, bringing their own challenges to the CCP, and at times, shaping policy toward Taiwan.
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5.1 Limitations
This thesis, does possess a number of limitations. The cross-Strait relationship is susceptible to frequent changes due to the nature of affairs being shaped by players China, Taiwan, and the US – who all have sway in how developments unfold. At times, these players can be unpredictable if not all out impossible to read, in particular President Trump. As such, what could one day be official policy could equally be reversed the very next day – the Huawei case being one such example. This problem, however is not exclusive to this thesis and is a constant challenge to international relations scholars when trying to write contemporary analysis on the cross-Strait environment.
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5.2 Contributions
International security and globalization are topics that already feature heavily in academic publications analysing the international relations of the post-Cold War world.
However, despite this, there has only been a small amount of research undertaken that adequately interconnects the two. This can be down to the case of security studies often being entrenched in the long-lasting debate between competing neorealist and neoliberal schools of thought, whilst the globalization debate focuses predominantly on only the social and economic effects of globalization. Thus, it is hoped that this thesis can interconnect both the globalization and security debates and add to the existing literature whilst making a valuable addition based on its own merits.
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