The Paradoxes in Taiwan's 'Two-Level
Game' Concerning Cross-Strait
Relations*
Cal Clarkf and Alexander C. TanJ
ABSTRACT
This paper develops a model of cross-Strait relations in terms of a series of four paradoxes. The first is that China's aggressiveness in initiating the Taiwan Strait Crisis of 1995-96 set off a series of contre-temps between the two sides of the Strait that almost certainly made the achievement of Beijing's objectives considerably harder. Second, the polarization in Taiwan over national identity and cross-Strait rela-tions that erupted after the turn of the century was at least somewhat surprising, both because the partisan cleavage on these issues had noticeably de-escalated during the 1990s and because public opinion on them has always been decidedly unpolarized. Third, despite stri-dent DPP criticism that Ma Ying-jeou, the current KMT Presistri-dent, has threatened Taiwan by increasing its economic dependency upon the PRC, the huge surge in Taiwan's trade and investment with China this century actually occurred during the administration of his DPP predecessor, Chen Shui-bian. Fourth, the rapprochement be-tween Taiwan and China after Ma's election in 2008 is at least some-what paradoxical because it may not presage long-term stability in cross-Strait relations. Ma's reluctance to enter into political negotia-tions with the PRC indicates that he agrees with the DPP to some extent about the danger of falling into China's clutches (even if this belies their charges about his motivations) ; and the PRC's refusal to make any concessions about Taiwan's sovereignty suggests that future conflict might be likely.
* A previous version of this paper was presented at the Annual Meeting of the American Association for Chinese Studies, University of Pennsylvania, October 14-16, 2011.
t Dr. Cal Clark is an Alumni Professor of Political Science and MPA Director at Auburn University. His primary scholarly interests are the political economy of development and Taiwan politics; and his recent books include Clark and Tan, Taiwan's Political Economy; and Clark, Ed., The Changing Dynamics of Relations Among China, Taiwan, and the United States.
X Dr. Alexander C. Tan is Professor of Political Science at the University of Canterbury,
Christchurch, New Zealand. He is associated with the New Zealand Contemporary China Re-search, Southern Methodist University, Texas, and the Election Study Center at National Chengchi University. He has published widely in the areas of comparative political economy, political parties and elections. His most recent publication is the co-authored book, Taiwan's Political Economy.
90 AMERICAN JOURNAL OE CHINESE STUDIES [Vol. 19:89 INTRODUCTION
Taiwan's policies toward cross-Strait relations over the last two decades certainly constitute a "two-level game" in which domestic and foreign policy are intertwined' because relations with China are one of the central issues in domestic politics that divide the Democratic Progressive Party (DPP) and the Kuomintang (KMT). On the international level, China and TTaiwan contend, sometimes sharply and sometimes more implicitly, over the sovereignty of Taiwan. On the domestic level, the DPP and the KMT contend almost always sharply over whether the former's policies "stand up for Taiwan" or need-lessly provoke Beijing and whether the latter's bring stability to cross-Strait relations or threaten Taiwan's sovereignt)' and dignity.^
A little thought, furthermore, suggests that many aspects of this two-level game appear to be surprisingly paradoxical. This paper, hence, develops a model of cross-Strait relations in terms of a series of four such paradoxes. The first is that China's aggressiveness in initiating the Taiwan Strait Crisis of 1995-96 set off a series of contretemps between the two sides of the Strait that almost certainly made the achievement of Beijing's objectives considerably harder. Second, the polarization in Taiwan over national identity and cross-Strait relations that erupted after the turn of the century was at least some-what surprising, both because the partisan cleavage on these issues had no-ticeably de-escalated during the 1990s and because public opinion on them has always been decidedly unpolarized. Third, despite strident DPP criticism that Ma Ying-jeou, the current KMT President, has threatened Taiwan by in-creasing its economic dependency upon the PRC, the huge surge in Taiwan's trade and investment wth China this century actually occurred during the administration of his DPP predecessor, Chen Shui-bian. Fourth, the
rap-prochement between Taiwan and China after Ma's election in 2008 is at least
somewhat paradoxical because it may not presage long-term stability in cross-Strait relations. Ma's reluctance to enter into political negotiations with the PRC indicates that he agrees with the DPP to some extent about the danger of falling into China's clutches (even if this belies their charges about his motivations); and the PRC's refusal to make any concessions about Taiwan's sovereignty suggests that future confiict might be likely.
PARADOX 1: CHINA'S AccRESsrvENESS APPEARS COUNTERPRODUCTF^'E For most of the post\var era, relations between the People's Republic of China (PRC) and the Repubhc of China on Taiwan (ROC) have been fairly conflictual, which is understandable given their mutually contradictory claims to exercise sovereignty over Taiwan. Yet from the mid-1980s to the mid-1990s, relations between Beijing and Taipei were fairly amicable as both seemed willing to accept the other, at least tacidy. At least in the interna-tional arena, the government of Taiwan did not challenge the PRC claim of
de jure sovereignty over the area controlled by the ROC, while China did not
challenge the ROC's de facto exercise of sovereignty. The sudden eruption of 1 Robert D. Putnam, "Diplomatic and Domestic Politics: The Logic of Two-Level Games," International Organization'Vo\. 42 (Summer 1988) pp. 427-460.
2 Cal Clark, "The U.S. Balancing Role in Cross-Strait Relations: The Irony of 'Muddling Through,' " Issues & StudiesWol 42 (September 2006) pp. 129-163; Yu-Shan Wu, "Strategic Trian-gle, Change of Guard, and Ma's New Course," pp. 30-61 in Cal Clark, Ed., ÏSe Changing Dynamics of Relations Among China, Taixoan, and the United States (Newcasde upon Tyne, UK: Cambridge Scholars Publishing, 2011).
October 2012] THE PARADOXES IN TAIWAN'S 'TWO-LEVEL CAME' 91 the 1995-96 Crisis in the Taiwan Strait changed this dynamic greatly, setting off a series of disputes and confrontations that lasted until a KMT president committed to improving relations with the PRC was elected in 2008.^
The seemingly stable situation in the Taiwan Strait area in the late 1980s ultimately broke down because of clashing perceptions between the ROC and the PRC. Both countries had fairly optimistic perspectives about their futures in the early 1990s vis-a-vis each other because they evidently believed that time was on their side in the sense that existing political and economic trends were working in their favor. Beijing thought that growing economic and social ties across the Strait would gradually undercut Taiwan's separation from the Mainland, while Taipei saw its separate international status being gradually established and consolidated through President Lee Teng-hui's "pragmatic diplomacy."*
By 1995, however, both began to fear that the other's positive assessments were coming true. Taiwan became increasingly worried that China was suc-cessfully isolating it diplomatically and making the island economically de-pendent on the Mainland, while China worried that Taiwan was on the verge of establishing Taiwan Independence. Cross-Strait relations then erupted in the summer of 1995 following a trip by President Lee Teng-hui to his alma
mater, Cornell University, which he had pressured the United States to allow
him to make. While this seemed to be simply an extension of Taiwan's ex-isting "pragmatic diplomacy," China reacted unexpectedly and extremely strongly to Lee's visit, arguing that this represented a major change in Ameri-can policy supporting Lee's alleged effort to turn "creeping offlciality" into Taiwan Independence. Indeed, China went ballistic (almost literally) during 1995-96 with a series of war games and missile tests close to Taiwan that were clearly aimed at intimidating voters in the December legislative and March presidential elections. The United States responded with very clear military deterrence aimed at the PRC by, for example, sending aircraft carrier groups through the Taiwan Strait.^
The confrontation quickly de-escalated after Lee handily won re-election, but as shown in Figure 1 this set off a series of crises that erupted, on average, every two years, with Beijing and Taipei alternating in the initiation of the confrontation. For example. Lee Teng-hui enraged China and flustered the United States in 1999 by proclaiming that Taipei and Beijing were linked by "special state-to-state relations;" and China retaliated by attempting to intimi-date Taiwanese voters in the 2000 presidential election and by ignoring the conciliatory policies of the new President Chen Shui-bian of the Democratic Progressive Party after the election. President Chen, for his part, set off an-other round of hostility when he proclaimed that there is "one country on each side ofthe Taiwan Strait" in July 2002. Subsequently, Chen's appeals to Taiwanese nationalism alternated with Chinese reactions such as its 2005
3 This historical sequence is modeled in Cal Clark, "The Taiwan Relations Act and the U.S. Balancing Role in Cross-Strait Relations," Ainerican Journal of Chinese Studies Vol. 17 (April 2010) pp. 3-18.
4 Murray A. Rubinstein, "Political Taiwanization and Pragmatic Diplomacy in the Eras of Chiang Ching-Kuo and Lee Teng-hui, 1971-1994," pp. 436-480 in Murray A. Rubinstein, Ed., Taiwan: A New History (Armonk, NY: M.E. Sharpe, 1999).
5 Stiisheng Zhao, Ed., Across the Taiwan Strait: Mainland China, Taiwan, and the 1995-1996 Crisis (New York: Routledge, 1999).
92 AMERICAN fOURNAL OF CHINESE STUDIES [Vol. 19:89 Anti-Secession Law; and Chen retaliated with a series of nationalistic policy changes in early 2006.®
FIGURE 1
CHALLENGE AND COUNTER-CHALLENGE ACROSS THE TAIWAN STRAIT
Date 1995-96 1999 2000 2002 2003-04 2005 2006 Event
China's "missile diplomacy" in response to Taiwan President Lee Teng-hui's visit to Cornell University
Lee Teng-hui's concept of "special state-to-state relations" Chinese Premier Zhu Rongji threatens Taiwan voters against electing a pro-Independence candidate; after election PRC demands Taiwan accept "one China" principle
President Chen Shui-bian of Taiwan warns that Taiwan "will go its own way" and states that there is "one country on each side of the Strait"
Chen Shui-bian's presidential campaign appeals strongly to Taiwanese nationalism: holding a referendum, plan for a new Constitution, and February 28th hand-in-hand rally
PRC's Anti-Secession Law
Chen Shui-bian orders the National Unification Council and the National Unification Guidelines to "cease to function" Jiang Zemin, China's leader in 1995, was under pressure from the mili-tary, hardliners in the political leadership, and a growing popular national-ism to "get tough" with Taiwan. Initially, at least, China claimed to be quite happy with the outcome and with stopping a perceived movement toward Taiwan Independence. A longer-term perspective makes this conclusion quite questionable, however. In the tit-for-tat sequence outlined in Figure 1, Taiwan's leaders regularly took far stronger stances in support of Taiwanese sovereignty after the 1995-96 Crisis; and the suspicion of the PRC that grew cumulatively among Taiwanese has made political concessions by the ROC increasingly more difficult. Thus, paradoxically, the PRC's greater aggres-siveness, if anything, has undermined its ability to pursue Unification with Taiwan.
PARADOX 2: POLARIZATION DESPITE SEEMINGLY MITIGATING FACTORS Chen Shui-bian's election as President was followed by a growing bitter polarization between the DPP and KMT on the interlinked issues of national identity and cross-Strait relations. Two distinct types of issues were involved in this polarization. The first was an ongoing struggle over the "localization" or Bentuhua of the country's politics and especially culture which was
consist-6 Richard C. Bush, At Cross Purposes: U.S.-Taiwan Relations Since 1942 (Armonk, NY: M.E. Sharpe, 2004); Edward Friedman, Ed., China's Rise, Taiwan's DiUmrnas and International Peace (New York; Roudedge, 2005); Jing Huang with Xiaoting Li, Inseparable Separation: The Making of China's Taiwan Policy (Singapore; World Scientific Publishing, 2010); Nancy Bemkopf Tucker, Strail Talk: United States-Taiwan Relations and the Crisis Within China (Cambridge; Harvard Univer-sity Press, 2009).
October 2012] THE PARADOXES IN TATWAN'S 'TWO-LEVEL GAME' 93 ently pushed by the Chen administration. Tbe second involved cross-Strait relations with the People's Republic of China and was more episodic; and here Chen Sbui-bian's policies were far from consistent over time.
Domestically, Chen displayed a strong commitment to pursuing Bentuhua to create a "Taiwan<entric paradigm" for the nation.^ This, in turn, stimu-lated substantial opposition and pushback from the old guard KMT. Wei-chin Lee, for example, argues that Chen promoted a Cultural Reconstruc-tion Movement that included such initiatives as changing tbe name of many agencies and organizations to stress Taiwan, promoting Islander dialects in language policy, revising the official policy toward the mass media to reverse the previous KMT domination of outlets (including the encouragement of underground radio stations), and changing tbe focus from Chinese to Taiwanese history in education policy.® Thus, Daniel Lynch concluded that Chen and his "Green" bloc (named for the primary color of the DPP fiag) were trying to create a new nation rooted in Taiwanese history and culture.^ Relations with China were much more volatile, despite Chen Sbui-bian's image as a zealot in promoting the declaration of de jure Tdawan Indepen-dence. Chen's pushing the envelope on the Independence issue com-menced in the summer of 2002 when he proclaimed the theory that "one country on each side of the Taiwan Strait" existed, provoking significant un-bappiness in both Beijing and Washington. After that, he periodically set off contretemps with Beijing and Washington until be left office in 2008, as be challenged China's "red lines" ori Taiwan Independence by, for example, proposing or holding referenda on issues that might affect Taiwan's interna-tional status and by advocating fundamental change to tbe country's Consti-tution. Yet, there were also signs of pragmatism in Chen's policies toward cross-Strait relations. He was fairly conciliatory toward an unresponsive PRC for bis first two years in office and negotiated a "Ten Point Consensus" with tbe widely perceived pro-China James Soong in early 2005. More broadly, he followed a. pattern of being aggressive toward China during electoral cam-paigns to appeal to the "deep Green" Taiwanese nationalists and then sound-ing much more conciliatory after tbe election was over. Indeed, be only became stridently pro-Independence consistently in 2006 when burgeoning scandals deprived him of support from almost everybody except the deep Greens. \°
For tbeir part, the KMT and its "Blue" coalition (named for one of the colors in the KMT flag) returned to a much more "Cbina-centric" stance af-ter Lee Teng-hui left the party following its defeat in tbe 2000 presidential election. According to the model developed by Yu-sban Wu, this represented a direct response to their electoral situation. During elections, Wu argues that the KMT acts like a catch-all party and appeals to moderate voters with centrist policies. Between elections when the party is out of power (as it was from 2000 to 2008), in contrast, it focuses its appeals on keeping the support 7 John Makeham and A-chin Hsiau, Eds., Cultural, Ethnic, and Political Nationalism in Con-temporary Taiwan: Bentuhua. (New York: Palgrave Macmillan, 2005).
8 Wei<hin Lee, "Taiwan's Cultural Reconstruction Movement: Identit)' Politics and Collec-tive Action since 2000," Issues 6f StudiesVo\. 41 Qanuar)' 2005) pp. 1-51.
9 Daniel C. Lynch, "Taiwan's Self-Conscious Nation-Building Project," Asian Survey Vol. 44 (July/August 2004) pp. 513-533.
10 Cal Clark and Alexander C. Tan, Taiwan's Political Economy: Meeting Challenges, Pursuing Progress (Boulder, CO: L)'nne Rienner, 2011) Chapter 6.
94 AMERICAN JOURNAL OF CHINFSF STUDIFS [Vol. 19:89 of the pro-China "deep Blues," while acting in a more pragmatic or "realist" manner when it controls the government.
By the middle of the first decade in the 21st century, therefore, a harsh and viciously divisive debate over cross-Strait relations and national identity had come to dominate Taiwan's politics. The Greens argued that they must "stand up for Taiwan" and accused the Blues of selling Taiwan out to China. In stark contrast, the Blues contended that the Greens were needlessly pro-vocative and that a more accommodating policy could defuse the threat from China. Taken to the extreme (which they often were), these positions im-plied that one side was the savior and the other the destroyer of Taiwan and its statehood. Unfortunately, both critiques seem to have had some merit. President Chen's periodic appeals to his pro-Independence "base constitu-ency" for primarily domestic purposes both infuriated China and at times strained relations with the United States, thereby threatening to undermine Taiwan's position in the Taipei-Beijing-Washington "triangle." Conversely, the Blue attempts to "do business" with Beijing undermined Chen's ability to deal with China; and there were even fairly credible rumors that Blue leaders had urged both the PRC and US to "get tough" with the Chen administration which in itself might have created a security threat to Taiwan.^^
This polarization is now so prevalent that many, if not most, observers consider it "natural." Yet, it can be considered surprising or paradoxical for two distinct, though interlinked reasons. First, although political science the-ory posits that the positions of political parties reflect the distribution of pub-lic opinion in democratic societies, ^^ this does not appear to be the case in Taiwan. For the last two decades, for example, public opinion surveys have asked whether people identify themselves as Chinese, Taiwanese, or a combi-nation of both. Table 1 shows that combi-national identity clearly possessed a nor-mal distribution in 1992 as just over half the population (52%) expressed a dual identity, while Chinese identifiers slighdy outnumbered Taiwanese ones (28% to 20%). This changed dramatically in just eight years. In 2000, about half the population (47%) still had dual identification, but Taiwanese identi-fiers outnumbered Chinese ones 39% to 14%; and the trend toward greater Taiwanese identification continued apace in the new century. By 2010, 55% of the population identified solely as Taiwanese versus a minuscule 3% Chi-nese identifies, with 42% dual identifies. Interpreting these data is at least a litde ambiguous. On the one hand, the rapid growth to dominance of Taiwanese identifiers is consistent with growing polarization and the DPP's ability to create a new Taiwanese nadon. On the other hand, the strong mi-nority who continue to express a dual idendfication is inconsistent with the image of a new totally "Taiwanese" nadon, as is the DPP's poor performance at the polls in the 2008 legisladve and presidendal elecdons.
11 Wu, "Strategic Triangle, Change of Cuard, and Ma's New Course."
12 Clark and Tan, Taiwan's Political Economy, Chapter 6; Dennis Van Vranken Hickey, "Complicating the Complicated: The Role of Societal Actors in Taiwan's External Relations," Paper presented at the Conference on Taiwan Issues, University of South Carolina, 2006; Shelley Rigger, "The Unfinished Business of Taiwan's Democratization," pp. 16-42 in Nancy Bernkopf Tucker, Ed., Dangerous Strait: The U.S.-China-Taiwan Crisis (New York: Columbia University Press 2005).
13 Anthony Downs, An Economic Theory of Democracy (New York: HarperCollins, 1957); Gio-vanni Sartori, Parties and Party Systems: A Framework for Analysis (Cambridge: Cambridge University Press, 1976).
October 2012] THE PARADOXES IN TATWAN'S 'TWO-LEVEL CAME' 95 TABLE 1
ETHNIC IDENTIFICATION OF TAIWAN'S CITIZENS
1992 1996 2000 2004 2008 2010 Taiwanese 20% 24% 39% 43% 51% 55% Both 52% 56% 47% 51% 45% 42% Chine 28% 20% 14% 6% 4% 3%
Source. Election Study Center, National Cheng Chi University, Mucha, Taiwan. Results
from Election Surveys. 1992, 1996, 2000, 2004, 2008, 2010.
There is no ambiguity, however, in public opinion about cross-Strait rela-tions. This can also be seen in how the citizenry views the best option for Taiwan's international status: 1) Taiwan Independence, 2) the current status
quo of an uncertain sovereignty, or 3) Unification with the PRC. Table 2
demonstrates that over the last two decades marked majorities of about 60% have supported the diplomatic status quo, ambiguous and even ridiculous as it may be. This distribution is not fully normal, though, because the two ex-tremes are not balanced. In particular, between 1994 and 2010 the relative support for Independence and Unification fiip-fiopped from 14% - 25% to 24% - 12%. Overall, though, popular opinion is certainly dominated by the moderate middle, perhaps because both the extreme positions are viewed as extremely dangerous.
TABLE 2
PREFERENCE FOR TAIWAN'S INTERNATIONAL STATUS
1994 1996 2000 2004 2008 2010 Independence 14% 17% 18% 24% 26% 24% Status Quo 61% 56% 59% 61% 63% 64% Unification 25% 27% 23% 15% 11% 12%
Source: Election Study Center, National Cheng Chi University, Mucha, Taiwan. Results
from Elecüon Surveys. 1992, 1996, 2000, 2004, 2008, 2010.
A second paradox is that the eruption of polarization over national iden-tity at the beginning of the 21st century followed a de-escalation of confiict about the issue in the 1990s. Following the evacuation of the Chiang Kai-shek regime to Taiwan in 1949 at the end of the Chinese Civil War, the island has suffered from a clear ethnic cleavage between the Mainlanders who came with Chiang (a litde under 15% of the population) and the long-time re-sidents of Taiwan or Islanders who also were almost all ethnically Han Chi-nese. The Mainlanders dominated the government and imposed a harsh and repressive rule termed the "White Terror" until the country's democratic transition in the late 1980s and early 1990s.'^
14 Makeham and Hsiau, Bentuhua; Douglas Mendel, The Politics of Formosan Nationalism (Berkeley: University of California Press, 1970).
96 AMERICAN JOURNAL OF CHINESE STUDIES [Vol. 19:89 Consequendy, it was widely expected that Taiwan's democratic transition in the late 1980s and early 1990s would unleash previously repressed ethnic tensions and frustration. Political forces soon began to push both parties away from these stark alternatives, as sketched in Figure 2. In the KMT, Is-lander Lee Teng-hui, who as Vice-President succeeded Chiang Kai-shek's son Chiang Ching-kuo as President after his death in 1988, responded to this opportunity with what appeared to be inspired statesmanship on the national identity question. As Lee consolidated his power, he managed to straddle the national identity issue quite astutely, implicitly portraying himself as a moderate between the pro-Independence DPP and the pro-Unification mem-bers of the KMT and (after 1993) the New Party who tended to be Mainland-ers. While retaining a commitment to Unification with China in the indefinite future, he aggressively began to pursue the "pragmatic diplomacy" of trying to upgrade Taiwan's international status. Furthermore, the victory of Lee's "Mainstream" faction clearly promoted the "Taiwanization" of the party — which made it hard to blame it for the repression of the "old" KMTi^
DPP
FIGURE 2
How DEMOCRATIZATION MODERATED THE NATIONAL IDENTITV AND CROSS-STRAIT RELATIONS ISSUES
Trashing at polls in 1991 leads to. some moderation
Huge Peng loss in 1996 & Chinese threats convince most DPP leaders that Independence is impossible KMT Lee victory leads to
commitment to eventual unification coupled ivith aggressive "pragmatic diplomacy" New Party Pro-Unification after 1993 break with KMT Taiwanization of KMT reduces Islander resentment \
Chinese threats during 1995-96 Taiwan Strait crisis make supporting Unification untenable
Growing consensus among parties & in society on ' national identity and
cross-Strait relations 1. "New Taiwanese" identit)' 2. Consensus on cross-Strait relations at 1996 NDC 3. Candidate moderation
& similar stances on cross-Strait relations in 2000 elections
For its part, the DPP began to moderate its position on Taiwan Indepen-dence in the early 1990s after the inclusion of a pro-IndepenIndepen-dence plank in the party charter cost it significandy at the polls in 1991. In particular, che Chinese military threats during the 1996 presidential elections and the woe-ful showing of the pro-Independence DPP candidate evidently convinced most of its leaders that Taiwan Independence was simply unfeasible. Conse-quendy, the DPP began to downplay Independence without ever formally
15 Linda Chao and Ramon H. Myers, The First Chinese Democracy: Political Life in the Republic of China (Baltimore: John's Hopkins University Press, 1998); Steven J. Hood, The Kuomintang and the Democratization ofTaiiuan (Boulder, CO: Westview, 1997).
October 2012] THE PARADOXES IN TAIWAN'S •'TWO-LEVEL GAME' 97 renouncing it. For example, some (but far from all) DPP leaders began to argue that Taiwan already was an independent country, so there was no need for a formal declaration of Independence.^® Similarly, the threat from China made advocating Unification politically untenable for the New Party and old guard KMT.
Taiwan's political dynamics in the late 1990s, therefore, suggested that partisan differences over national identity were narrowing and losing their intensity. The result on the right side of Figure was a series of events that would have been considered quite remarkable just a few years earlier. First, in terms of national identity, Lee Teng-hui's concept of a "New Taiwanese" identity that was open to both Islanders and Mainlanders proved to be very popular. Second, the National Development Conference of 1996 produced a consensus among the DPP, KMT, and New Party on the prexiously highly contentious issue of cross-Strait relations. Finally, this growing moderation on national identity and cross-Strait relations carried over into the extremely competitive presidential campaign of 2000. Although the three major candi-dates certainly criticized each other (and especially caricatures of each other), they all really advocated the moderate position of toning down hostil-ities wth Beijing, while strongly protecting Taiwan's sovereignty.''
PARADOX 3: TRADE STATISTICS AND THE DPP'S CHARGE THAT MA IS SELLING OUT TAIWAN
By the end of his second term. President Chen Shui-bian had become highly unpopular for a combination of reasons: fears that he had unduly provoked the PRC, growing economic problems in Taiwan, and burgeoning political scandals. Thus, it was not surprising that the KMT candidate. Ma Ying-jeou, won the 2008 presidential election easily with 58% of the vote. Ma proposed a rapprochement with China and, in particular, argued that ex-panding economic relations with the PRC was \d.tal for Taiwan's economic recovery. To allay fears that he might be perceived as "selling out" Taiwan, he also advocated a set of "Three Nos" that pledged commitment to the status
quo in cross-Strait relations: No Unification, No Independence, and No use
of force.i^
Still, Ma's Mainlander status made many Greens quite suspicious of his intentions. Thus, his promotion of cross-Strait economic ties, in particular the agreement on the "Three Direct Links" in November 2008 and the much broader free trade agreement or Economic Cooperation Framework Agree-ment (ECFA) in June 2010, prompted massive popular demonstrations and, in the case of ECFA, a major brawl in the Legislative Yuan.'® Critics felt that Ma was putting Taiwan's sovereignty and dignity at risk by giving the PRC substantial economic leverage over it and was leading the country to
eco-16 Shelley Rigger, From Opposition to Power: Taiwan's Democratic Progressive Party (Boulder, CO; L)'nne Rienner, 2001); T.Y. Wang, "One China, One Taiwan; An Analysis of the Democratic Progressive Part)''s China Policy," pp. 159-182 in Wei<hin Lee, Ed., Taiwan in Perspective (Leiden; Brill, 2000).
17 Clark and Tan, Taiiuan's Political Economy, Chapter 3; Dafydd Fell, Party Politics in Tai-xuan: Party Change and the Democratic Evolution of Taiwan, 1991-2004 (London; Routledge, 2005). 18 John F. Copper, Taiwan's 2008 Presidential and Vice Presidential Election: Maturing Democ-racy (Baltimore; University of Mai"yland Series in Contemporar)' Asian Sttidies, 2008).
19 Thomas B. Cold, "Taiwan in 2008; My Kingdom for a Horse," Asiari Survey Vol. 49 (Janu-ary-February 2009), pp. 88-97; Hung-Mao Tien and Chen-Yuan Tung, "Taiwan in 2010: Mapping for a New Political Landscape and Economic Oudook," Asian Survey Vol. 51 (January-February 2011) pp. 76-84.
98 AMERICAN JOURNAL OE CHINESE STUDIES [Vol. 19:89 nomic decline because the growing economic integration with China was un-dercutting the viability of important Taiwanese industries and tended to benefit a fairly narrow business and professional elite.^"^
One would expect, therefore, that Ma's economic deals with China would have set off a huge surge in trade and investment across the Taiwan Strait that would present a stark contrast to what happened under his predecessor, Chen Shui-bian, who "stood up" for Taiwan and bad fairly frosty relations with Beijing. The data on trade and investment flows between Taiwan and China present a much different picture, however. In general and quite sur-prisingly perhaps, they rapidly expanded during most of Chen's administra-tion and have remained fairly stable during the first three years of Ma's presidency.
A surge in economic interactions across the Strait commenced in the early 1990s due to the confiuence of tbe political relaxation at that time be-tween Taipei and Beijing noted in tbe first section and the complementary economic change that was occurring in the two countries (i.e., China was developing the very industries that were leaving Taiwan). Furthermore, the two sides went well beyond simple trade or the exchange of goods and ser-vices. Rather, Taiwan's businesses set up integrated production networks across tbe Strait in which different stages (e.g., design and tbe manufacture of advanced components in Taiwan and final assembly in China) were con-ducted in tbe ROC and PRC,^' creating what Gary Gereffi has called "com-modity chains."^^
Because of the large amounts of goods sent from Taiwan to China for final processing, exports are a key indicator of how cross-Sti'ait economic in-tegration is proceeding. Table 3 shows that exports from Taiwan to China jumped sharply during the first half of the 1990s and then stabilized during the second half of the decade. A new surge began in 2001, Chen's second year in office. Overall, the share of Taiwan's exports going to China rose by three-quarters from 17% in 1999 (tbe year before Chen took office) to 30% in 2007 (his last full year in office). For Ma's first three years in office through the first quarter of 2011, in contrast, this level remained almost con-stant at about 30%. Tbe corresponding data on imports in Table 4 show a fairly similar pattern. Goods from China jumped dramatically from 4% to 13% of Taiwan's import mix between 1999 and 2007 but then only increased to 14%-15% in 2010-11.
20 Thomas B. Gold, "Taiwan in 2009: Eroding Landslide," Asian Survey Vol. 50 (January-February 2010), pp. 65-75; Chung-Hsin Hsu, "ECFA: The Emerging Crisis Facing Taiwan," pp. 240-254 in Cal Clark, Ed., The Changing Dynamics of Relations Among China, Taiwan, and the United States (Newcastle upon Tyne, UK: Cambridge Scholars Publishing, 2011).
21 Barry Naughton, Ed., The China Circle: Economics and Electronics in the PRC, Taiwan, and Hong Kong (Washington, DC: Brookings, 1997); Yu-Shan Wu, "Economic Reform, Cross-Straits Relations, and the Politics of Issue Linkage," pp. 111-133 in TJ. Cheng, Chi Huang, and Samuel S.G. Wu, Eds., Inherited Rivalry: Conflict Across tlie Taiwan Straits (Boulder, CO: Lynne Rienner, 1995).
22 Gary Gereffi, "More Than the Market, More Than the State: Globai Commodity Ghains and Industrial Upgrading in East Asia," pp. 38-59 in Steve Chan, Cal Clark, and Danny Lam, Eds., Beyond the Developmental State: East Asia's Political Economies Reconsidered (New York: MacMil-lan, 1998).
October 2012] THE PARADOXES IN TAIWAN'S 'TWO-LFVFL GAMF' 99 TABLE 3
TAIWAN'S EXPORTS TO CHINA
(ESTIMATED BY THE MAINLAND AFFAIRS COUNCIL, ROC)
1984 1985 1986 . 1987 1988 1989 1990 1991 1992 1993 1994 1995 . 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* VALUE OF EXPORTS ($US bil) — — — — — 14.4 $7.5 $10.5 $14.0 $16.0 $19.4 $20.7 $22.5 $19.8 • $21.3 $25.0 $25.6 $31.5 $38.3 $48.9 $56.3 $63.3' $74.2 $74.0 $62.'l $84.8 $21.9 PERCENT OF TAIWAN'S TOTAL EXPORTS 1% 3% 2% 2% 4% . 5% • 7% 10% 13% 16% 17% 17% 18% 18% 18% 17% 16% 20% 23% 25% 27% 28% 28% 30% 29% 30% 31% 30% *Januai7 through March only.
Source. Cross-Strait Economic Statistics Monthly, Number 220. Taipei: Mainland Affairs
loo AMERICAN JOURNAL OE CHINESE STUDIES [Vol. 19:89
TABLE 4
TAIWAN'S IMPORTS FROM C H I N A
(ESTIMATED BY THE MAINLAND AFFAIRS COUNCIL, R O C )
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* VALUE OF IMPORTS ($US bil) — — — — $0.7 $0.3 $0.7 $1.0 $1.9 $ 3 . 1 • $3.1 $3.9 $4.1 $4.5 $6.2 $5.9 $8.0 $11.0 $16.8 $20.1 $24.7 $28.0 $31.4 $24.4 $36.0 $10.3 PERCENT OF TAI\VAN'S TOTAL IMPORTS 1% 1% • 1% 1% 1% • 1 % 1% 1% 1% 2% 3% 3% 3% 4% 4% 4% 5% 7% 9% 10% 11% 12% 13% 13% 14% 14% 15% *January through March only.
Source. Cross-Strait Economic Slalislics Monthly, Number 220. Taipei: Mainland Affairs
Council, www.mac.gov.tw, 2011, pp. 24 & 26.
Critics of the ROC's close economic relations with the PRC raise several major concerns. Taiwan's businesses will become dependent on the Main-land, making them vulnerable to economic pressure; import surges from China will destroy important economic sectors in Taiwan: Taiwan's economy will "hollow out" as even its most advanced industries migrate across the Strait; and the country will lose its sovereignty as China gains leverage.^"' The trade data in Tables 3 and 4 are not necessarily inconsistent (or consistent, for that matter) with these argurhents. What is totally inconsistent with the data, though, is the image that the KMT prorhotes and the DPP retards these 23 Peter C.Y. Chow, "The Emerging Trade Bloc Across the Taiwan Strait: The Implications of ECFA and Its Aftermath for U.S. Economic and Strategic Interests in East Asia," pp. 255-276 in
Cal Clark, Ed., The Chan^ng Dynamics of Relations Among China, Taiwan, and the United States
October 2012] THE PARADOXES IN TAIWAN'S 'TWO-LEVEL GAAffi'lOl economic trends. The data on investment in Table 5, in contrast, are more consistent with the fears that Taiwan's, advanced industries are leaving since both total investment and the average size ofthe projects jumped by 40% to 60% between 2007 and 2010 here. Both of these substantial increases, though, were continuations of trends under the Chen administration. Over-all, therefore, this discussion suggests two conclusions. First, cross-Strait trade and investment appear to respond primarily to economic, not political, factors;^* and, second, political rhetoric on the issue departs substantially from recent economic history.
TABLE 5
TArwAN INVESTMENT IN CHINA APPROVED BY M O E A (APPROVED BY THE MINISTRY OF ECONOMIC AFFAIRS, ROC)
1991 1992 1993* 1994 1995 1996 1997* 1998* 1999 2000 2001 2002* 2003* 2004 2005 2006 2007 2008 2009 2010 2011** TOTAL AMOUNT (in billion US$)
$0.2 $0.2 $1.1 $1.0 ti 1 $1.2 $4.3 $2.0 $1.3 $2.6 $2.8 $6.7 $7.7 $6.9 $6.0 $7.6 $10.0 $10.7 $7.1 $14.6 $3.9 AVERACE INVESTMENT (in million US$)
$0.73 $0.94 $0.90 $1.03 $2.23 $3.21 $0.50 $1.58 $2.57 $3.10 $2.35 $2.16 $1.99 $3.46 $4.63 $7.01 $10.01 $16.63 $12.11 $15.99 $17.43 *Includes some projects from previous years that were registered in that year. **January through March only.
Sources:. Cross-Strait Economic Statistics Monthly, Number 220. Taipei: Mainland Affairs
Council, www.mac.gov.tw, 2011, p. 28. Cross-Strait Economic Statistics Monthly, Number 141. Taipei: Mainland Affairs Council, www.mac.gov.tw, 2004, p. 26.
There is a subsidiary paradox about the growing economic integration across the Taiwan Strait. This one, however, is at variance w t h the wishes and intentions of China and the deep Blues who assume that growing eco-24 Steve Chan, "The Political Economy of Détente. Taiwan's Economic Integration with China," pp. 68-87 in Seyom Brown, Cal Clark, Hiroki Takeuchi, and Alexander Tan, Eds., Tai-wan at a Turning Point (Baltimore: Maryland Series in Contemporary Asian Studies, School of Law, University of Maryland, 2009); Clark and Tan, Taiwan's Political Economy, Chapter 4.
102 AMERICAN fOURNAL OF CHINESE STUDIES [Vol. 19:89 nomic ties will gradually stimulate better relations across the Strait, paving the way for ultimate Unification. This is consistent with theories in Interna-tional Relations which predict that narrow funcInterna-tional ties should promote broader integration. Yet, the growing economic linkages between Taiwan and China over the last two decades discussed in this section were actually accompanied by a growing^, not decreasing, Taiwanese consciousness in the ROC (see Table 1 above).^^
PARADOX 4: THE MA RAPPROCHEMENT: CURRENT STABILITY MASKING THE THREAT OF FUTURE INSTABILITY?
Ma Ying-jeou immediately implemented a much more conciliatory policy toward China in order to reduce the Chinese threat in general and to pro-mote Taiwan's economic recovery in particular. Hu Jintao responded quite favorably continuing a policy that placed its central emphasis on deterring Taiwan Independence rather than pushing for immediate Unification. The result was a rapid de-escalation of tensions in the Strait that evidendy pleased Washington as well as Beijing and Taipei.
In the period since Ma came to office in Taiwan, the Hu administration's cross-Strait policy has included; a de/acio diplomatic truce . . .; acceptance of a modest expansion of international space for Taiwan (including, most notably, "Chinese Taipei's" participa-tion as an observer at the World Health Assembly meetings beginning in 2009); and ECFA and other cross-Strait economic arrangements that have been, in narrow eco-nomic terms at least, fairly generous to Taiwan. Such measures have seemingly helped to calm the fear or sense of desperation in some quarters in Taiwan that had generated support for Chen Shui-bian's more confrontational and risky policies. And they helped to flesh out a scenario in which stability and ongoing improvements in cross-Strait rela-tions offer a significant upside for Taiwan.
The long-term stability of this rapprochement can certainly be questioned, however. Beijing's and Taipei's views about Taiwan's sovereignty remain to-tally incompatible. In particular, while the PRC has seemingly deferred de-mands for Unification, it has not exhibited any wllingness to compromise its long-term principles and objectives regarding Unification. Consequently, the potential for the eruption a more confiictual relationship in the near future remains significant.^' More ominously perhaps, fears of and propos-als for a decrease in America's security commitment to Taiwan are now ap-pearing, based on some combination of China's increasing economic and military leverage, the U.S.'s entanglements elsewhere in the world, ill will toward Taiwan left over from the Chen administration, the State Depart-ment's long-standing tilt toward Beijing, and fears that Taipei will embrace C h i ^ ^
This creates the paradox that the current stability in cross-Strait relations may well be a harbinger of future tensions and instability. Indeed, the very 25 Cal Clark, "Economic Integration between China and Taiwan; No Spillover into the Idendty and Security Realms," pp. 71-90 in Shale Horowitz, Uk Heo, and Alexander C. Tan, Eds., Identity and Change in East Asian Conflicts: The Cases of China, Taiwan, and the Koreas. New York: Palgrave Macmillan, 2007.
26 Jacques de Lisle, "Strait Ahead? China's Fifth Ceneration Leaders and Beijing's Taiwan Policy," Foreign Policy Research Institutes Afotei, July 2011, \vww.fpri.org.
27 Elizabeth Hague, "China Debates the Way Forward for Cross-Strait Relations," pp. 155-174 in Cal Clark, Ed., The Changing Dynamics of Relations Among China, Taiwan, and the United States (Newcasde upon Tyne, UK; Cambridge Scholars Publishing, 2011); Huang with Li, Insepa-rable Separation.
28 John Copper, "Could US Policy Abandon Taiwan?" Taipei Times, May 11, 2011; Charles Claser, "Will China's Rise Lead to War?" Formgn AffairsVol. 90 (March/April 2011) pp. 80-91.
October 2012] THE PARADOXES IN TAIWAN'S 'TWO-LEVEL GAME'103 success of economic negotiations over the past few years, regardless of tbeir ultimate effects on Taiwan's economy, may be destabilizing because they cre-ate pressure and momentum to move on to political issues where the posi-tions of the two sides remain irreconcilable. This also produces a paradox in tbe domestic debate in Taiwan oyer cross-Strait relations. Clearly, Ma has been quite reluctant to engage the PRC on political questions. This strongly suggests that he agrees with his DPP critics about China's ultimate intentions about Taiwan and the dangers that they create for his country. Conversely, Ma's actions (or in this case inactions) cast some doubt about the DPP charges that the KMT is destroying Taiwan's sovereignty.^^
THE PARADOXES AND THE TWO-LEVEL GAME IN CROSS-STRAIT RELATIONS^° The four paradoxes, in essence, represent cases in which actions by one or more parties to cross-Strait relations turned out to be detrimental to tbe objectives that they clearly wished to pursue. These anomalies can be ex-plained, in turn, by the fact that cross-Strait relations constitute a two-level game because domestic politics often interact with the relations between Beij-ing and Taipei. Consequently, tryBeij-ing to achieve goals at one level may prove counterproductive at the other.
In the first paradox, China's attempts to intimidate Taiwan changed the nature of Taiwan's domestic politics, but in ways unanticipated by the PRC. During the second half of tbe 1990s, this had somewhat countervailing impli-cations for Beijing. On the one hand, the DPP moderated its pro-Indepen-dence stance, but on the other appeals for Unification became politically infeasible, all parties began to stress their support for Taiwan's sovereignty, and President Lee Teng-hui directly challenged China at the end of tbe decade.
After the turn of tbe century, furthermore, the escalating polarization in Taiwan politics on national identity and cross-Strait relation made the situa-tion even worse for Cbina because tbe DPP and the Pan-Greens openly and at times stridently advocated Independence. This polarization created the second paradox since it contradicted the moderating trend on this issue over the 1990s and the substantial support for the diplomatic status quo among the general public. Undoubtedly, Chinese hostility pushed the Greens toward a more assertive policy toward China, but tbe major impetus for this polariza-tion appears to have come from domestic electoral politics. Both the Blues and the Greens saw value in mobilizing and energizing tbeir ideological ba-ses; and other issues, such as democratization, corruption, and social welfare policies, faded in importance for various reasons.^^
The third paradox arose from the discontinuity between political and eco-nomic dynamics. Despite the Greens' harsh criticism that KMT policies un-dermined Taiwan's sovereignty by promoting economic dependency upon 29 This interpretation was challenged and then, we argue, re-enforced in the heat of the 2012 presidential campaign. In October 2011, Ma proposed that Taiwan should try to negotiate a "peace accord" with China within the next decade, implying that he would tr)' to start such negotiations if he won a second term. However, the sharp negative reaction to his proposal caused an almost immediate backtracking. Thus, he quickly said that this would not be a Unifi-cation Treaty and indicated tbat it could only be signed if approved by a popular referendum. See Amber Wang, "Ma Rattles Hornets' Nest with Talk of Peace Pact," Taipá Times, October 27, 2011, p. 3.
30 The structure of this conclusion was suggested by the anonymous reviewer for AfCS. 31 Clark and Tan, Taiwan's Political Economy, Chapter 6.
104 AMFRICAN JOURNAL OF CHINFSF STUDIFS [Vol. 19:89 the Mainland, the major surge in Taiwan's exports to China occurred during the administradon of Chen Shui-bian. Conversely, growing economic inte-gradon between China and Taiwan over the last twenty years has not, as might have been expected, created more favorable attitudes toward China in Taiwan. Rather, Taiwanese consciousness has risen steadily over this period. This implies that the economic dimension, which is certainly central to cross-Strait reladons, consdtutes a "third level" which follows its own disdnct logic. Taken together the first three paradoxes explain the fourth that the Ma
rapprochement of 2008-11 does not necessarily represent a major movement
toward peace and stability in the Taiwan Strait area for two disdnct reasons. First and more narrowly as illustrated by paradox 3, its emphasis on eco-nomic des, while certainly posidve in the short term, may not have much of a long term impact, given the isoladon so far between economic and polidcal dynamics. Second and much more broadly, the incongruence between the logics of domesdc polidcs and diplomadc interacdons illustrated in para-doxes 1 and 2, means that domesdc forces (such as the rivalry between Blues and Greens in Taiwan and the pressures of popular nadonalism and the PLA on the government in China) make negodadons that start out with good will on both sides difficult and unstable.
