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US, TAIWAN, CHINA- A Foreign Policy Case Study


Paper 858                                                      11.12.2003

Guest Column-by Gaurang Bhatt       

During WW2 America made the Chinese Nationalist party fighting the Japanese occupation its ally.  The corrupt Chiang government lost the struggle to Mao and the communists and retreated to Taiwan to set up a one party dictatorship. When the UN was formed after the war, the winning five allies took the five permanent seats on the Security Council.  The tiny island of Taiwan was allowed to occupy the seat and represent the whole of China.  To perpetuate this myth and continue wishful thinking, the One China fiction was maintained. The US gave military support to Chiang and allowed Taiwan to prosper under its umbrella by giving it preferential trade and other benefits.  Taiwan today has over 100 billion dollars of reserves. 

In the first term of the Nixon presidency the political and financial pressures of the Vietnam war, Nixon made his overtures to China and almost overnight Taiwan was made to vacate its permanent seat, which was reassigned to China by America.  Taiwan was kicked out of many international bodies and became an instant pariah non-entity.  China conceded at that time that the unification would be non-violent.  Frantic Taiwan sought new alliances even with apartheid South Africa.  Backdoor assurances by a powerful American Conservative faction and trade and economic exigencies permitted a quasi-official status and unwritten guarantees of a US-Taiwan treaty.  Over the years, the corrupt dictatorial monopoly of the Nationalists was breached and Taiwan started on the path of a multi-party democracy.  The return of the conservative wing of the Republicans to power under Reagan started the swing of the foreign policy pendulum towards Taiwan and the Chinese Tianamen Square massacre froze it in the pro-Taiwan mode.  

Bush Sr. had been the US envoy to Beijing and the Chinese-American trade was increasing.  Taiwanese business interests and the Chinese Diaspora began investing in manufacturing enterprises on the mainland to take advantage of the cheap labor and to avoid embarrassing trade surpluses with America, which was bashing Japan for surpluses.  Taiwan today has invested over 50 billion dollars on the mainland.  Japanese used the same tactic by shifting manufacturing to China.  Hong Kong Chinese adopted the strategy as well and the trend accelerated after Britain returned sovereignty of the occupied territories.  American industry jumped on the bandwagon and being the 800 pound gorilla now account for over half of the annual 360 billion dollar Chinese exports to America that result in the 120 billion trade surplus of China with America. 

Taiwan rapidly progressed on its path to democracy fulfilling the American strategy that increasing wealth and education will peacefully move totalitarian nations to full fledged democracy. Ironically the US hope and strategy was for Mainland China, where it has failed so far.  Its success in Taiwan leads to an unwillingness to merge with a communist oligarchy.  Aggressive posturing by China with maneuvers in the Taiwan straits and firing of missiles by China in the mid-nineties, led the Clinton administration to send two aircraft carriers to the mouth of the straits to warn China not to use force. They also offered Taiwan new airplanes, Patriot ABMs and other sophisticated arms, but denied the Aegis class ships.  It is worth noting that when Taiwan was not a democracy, it received whole-hearted support. Now that it is a democracy and trying to be even more so, American support is lukewarm at best.  In reality America is trying once again to pull the rug out from underneath Taiwan’s feet, as it did once before when it needed to cozy up with China to extricate itself from the Vietnam War. 

China currently has nearly 500 missiles aimed at Taiwan and has been increasing them at nearly 15% each year.  In addition, it periodically issues loud threats to the renegade province and even warns the US to rein in Taiwan and restrain itself.  This leads to insecurity and anger on the island.  The Taiwanese president seeking re-election and previously flirting with declaring independence has chosen to hold a referendum on the withdrawal of Chinese missiles. This is a euphemism for independence.  China has stated indirectly through high-ranking Peoples Liberation Army officials, that it is willing to face economic and military setbacks to prevent Taiwan from declaring even an intention of independence. The warning is to America that trade sanctions or gunboat diplomacy will not work and the One China policy is sacrosanct.  China is smart. It knows that America is bogged down in Afghanistan and Iraq.  North Korea has thumbed its nose at the US in nuclear proliferation and it needs Chinese help in the six party talks to put the North Korean genie back in the bottle.  China and Hong Kong hold over half a trillion dollars in US treasuries and can sink the dollar. This, an America with budgetary and current account deficits projected infinitely in the future cannot afford, especially with an ambivalent Saudi Arabia and hostile Iran waiting in the wings to price oil in Euros and dethrone the dollar as a reserve currency.  China has ignored the desperate pleas of the Bush administration to revalue its currency upwards. Not that it would help too much, because it would ultimately ignite the dormant fire of American inflation.  The Congress is sliding towards huge tariffs on Chinese exports.  TVs and textile quotas have already been restricted.  Punitive tariffs would decimate the Chinese economy and aggravate the regional economic disparities that are already a present threat of fissiparous disintegration to China. This would make it abandon restraint and make it more aggressive towards renegade Taiwan. 

This is why America is sending emissaries to stop the Taiwanese referendum and contrary to its hypocritical democracy preaching preventing the progress of democracy in Taiwan.  Latin America and much of Asia have already realized that.  The Middle East and Africa are getting there.  When Taiwan utters the words that some Cherokee nay have uttered on the Trail of Tears---The Great White Father in Washington speaks with a forked tongue the whole world may become enlightened. 

There are many smart people and foreign policy mavens in America who see through the  follies of the current administration and the cataloguing of neo-con blunders is not the intent of this article. It is meant as a case study of how a powerful nation like America can change policy direction like a pendulum in a short span of fifty years to suit its self-interest and yet proclaim it as benevolent and high principle.  It also is meant to highlight how China, a lesser power counters the strategy with sophisticated smartness. Finally, it is meant to show the futile idiocy of Nehruvian pontification from some self-made pulpit and to teach the lessons of Realpolitik to fanatic ideologues and foolish disarmament peaceniks.  I will also go out on a limb and predict that within a couple of decades if not less, China and Taiwan will unite. They are more or less one people with no dividing religious chasm or obsessive concern for an imaginary afterlife.

(The author is a retired neurophysician and an occasional writer. Email-  .)