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China Affairs Committee Expanded Meetings on China Policy

2014 2014 China Policy Review: Summary Report

2014 1 9 January 9, 2014 DPP China Affairs Department

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629 57 15 227

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GDP 1990 2000 WTO FTA FTA


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ECFA FTA

ECFA ECFA
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FTATPPRCEP

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530 250 30 1999 71 2012 1,216

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2013 11 2013 10


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China Affairs Committee Expanded Meetings on China Policy

2014 China Policy Review: Summary Report

January 9, 2014 DPP China Affairs Department

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Forward
The past 20 years have witnessed a major realignment of the power structure in East Asia. Chinas rise poses a challenge to the existing regional order, as well as to Taiwans defense and diplomacy. At the same time, substantive changes have also taken place in the relationship across the two sides of the Taiwan Strait, rendering more convenient travel, closer economic ties, increased frequency of people-to-people interactions, and deepened exchanges across all sectors, to say nothing of the multiple agreements signed between the two sides. The scale and scope of these developments are unprecedented. The people on the two sides of the Strait fundamentally do not harbor hostile feelings toward each other, and indeed are connected through shared languages and culture. Given this, both governments should strive, each from within their respective systems, to focus on resolving the issues of the most immediate concern to their people, promoting their rights and well-being, and seeking a sustainable path for the long-term maintenance of cross-Strait interactions. The Democratic Progressive Party (DPP) always assumes the peoples expectations as its mission, and is destined to shoulder greater responsibility for Taiwans future. Economic survival is the priority, with democracy as a cornerstone. As such, the DPP must take a solemn view of peoples expectations for the national agenda on cross-Strait stability and economic development, while upholding the core value that the future development of cross-Strait relations must be subject to the consent of people of Taiwan. Not only that, but we must also produce proposals that account for and are responsive to changes in the regional situation and cross-Strait relations. In consideration of the above, the DPP established the China Affairs Committee (CAC) to examine the past and plan for the future. After consulting with approximately 30 advisors, the CAC convened the first plenary meeting on May 9, 2013, and proposed an agenda on Taiwans China policy to serve as discussion outlines for the subsequent meetings. As of November 14, 2013, the CAC has convened a total of four plenary meetings. Simultaneously, at the suggestion of committee members and all sectors of society, the CAC convened its first expanded meeting on July 4, 2013, which was attended by party officials, party opinion leaders,
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civic groups leaders, scholars, and experts. As of December 26, 2103, the CAC has convened a total of 9 expanded meetings. The expanded meetings, each chaired in turn by a different member of the CAC, have as a whole engaged in a deep probing of a wide range of issues, including core values and vision of Taiwans China policy, Taiwans economic strategy towards China, how to deal with the Ninety-Two Consensus, how to respond to the China Factor in Taiwan, how cross-Strait civil societies can interact, strategies for Chinas democratization, and the implications of current trends in regional security. A total of nine meetings consisted of 629 participants, 57 introductory presentations, 15 written statements, and 227 floor statements. This has been the most comprehensive and thorough discussion of cross-Strait relations in Taiwans history. This report summarizes the key arguments, written statements, consensus opinions, and the session chairs conclusions from each of the CAC plenary and expanded meetings. The report begins with a statement of Taiwans core values and visions and continues on to summaries of the political, economic, socio-cultural, and national security dimensions of the central question, with the goal of providing a deeper, more comprehensive policy research, analysis, and proposals for Taiwans China agenda.

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I. Fundamental positions and core values remain unchanged.


An examination of the positions and attitudes of the Taiwanese people towards China policy reveals that their national identity and preferences for independence versus unification have solidified. Taiwanese identity and preference for independence have consistently been the mainstream public opinion in recent years. Recent polls have also shown that the public rejects defining Taiwan and China as one country. The current national identity, preferences for independence versus unification, and attitudes towards Taiwans relationship with China among Taiwans public have all fallen in line with the DPPs Resolution Regarding Taiwans Future passed in 1999. After years of public scrutiny, our partys fundamental positions have been accepted by most of the people of Taiwan. To safeguard the countrys sovereignty, our view is that we must uphold the core values of freedom and democracy, and must ensure peoples right to freely choose their future. With regard to future cross-Strait relations, it is not necessary to alter our stance that any change in the independent status quo must be decided by all the residents of Taiwan by means of plebiscite. Although the fundamental positions and core values of the DPPs Resolution Regarding Taiwans Future remain unchanged, our China policy must be adapted over time to pragmatically address new issues that arise as a result of closer crossStrait ties, more bilateral agreements, and deeper economic and social exchanges in all walks of life. We must convince the public that the DPP is capable of managing cross-Strait relations so as to respond to the peoples desire to safeguard Taiwan.

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II.

Securing Taiwans freedom and democracy in cross-Strait political relations and interaction.

Background Since the beginning of the 21st century, Taiwan has undergone two transition of power, and in this time the political consciousness of the people has consolidated. On the issues relating to national identity in particular, peoples viewpoints have become harmonized over time, with a stable, clearly evident mainstream public opinion emerging: we are Taiwanese; Taiwan is a sovereign and independent country, its official name is the Republic of China, and it is not subject to the jurisdiction of the Peoples Republic of China (PRC). Taiwans future should be decided by the 23 million people in Taiwanthis is the point of broadest consensus among Taiwanese at this stage. However, in contrast with the political changes that have taken place in Taiwan, China still retains an authoritarian state apparatus, and with its high-growth economic power, the Chinese Communist Party (CCP) regime has become more entrenched and gained more strength to threaten and influence Taiwan. Since both sides mutually opened up exchanges, cross-Strait relations have developed rapidly. Especially after China became Taiwan's largest trading partner, exchanges of all types between Taiwan and China have grown closer. But given that China still maintains its underlying agenda, its political relations with Taiwan will inevitably be complicated. The present challenge Although the current administration is fully aware that the people of Taiwan manifest an unequivocal mainstream preference regarding the cross-Strait political statusrecognizing that Taiwan is not subject to the jurisdiction of the PRCit nevertheless attempts to reverse this situation by consistently declaring that the two sides of the Strait are one country, two areas. For its part, CCP also ignores public opinion in Taiwan and wishes to lock Taiwan into its one China framework. However, the world has witnessed the achievements of Taiwan's constitutional democracy. Cherishing and upholding Taiwan's freedom, democracy and open way of life have come to be the greatest consensus in Taiwan, and this should also be the cornerstone for cross-Strait exchanges. Therefore, the most critical
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challenge before us is safeguarding the mainstream consensus regarding the definition of cross-Strait political relations within Taiwans democratic system, in the face of the CCPs threats. Other urgent problems that need to be overcome include how to extricate cross-Strait exchanges from the control of a small minority to create healthier and more positive interactions, and how to prevent the decoupling of Taiwans China policy from mainstream public opinion, so that it can represent the best interests of the majority of people in Taiwan. Recommendations 1. The definition of the political relationship and status between Taiwan and China must respect the will and democratic decision of all residents in Taiwan. This cannot be denied by any individual, political party or other countries unilateral claims. 2. With the tide of globalization, cross-Strait interaction is an inevitable trend. The DPP should participate proactively and with confidence in cross-Strait exchanges, including dialogues between think tanks and inter-city exchanges. 3. Cross-Strait exchanges must not undermine Taiwans sovereignty and security, and must preserve Taiwan's free, democratic, and open way of life. Taiwan should seek internal consensus to be the basis for cross-Strait dialogue. 4. Cross-Strait negotiations should observe democratic procedures and the principles of informational transparency. Taiwan should enact regulations on the oversight of cross-Strait negotiations, to include not only mechanisms for risk assessment and prevent conflicts of interest, but also provide for a public hearings process to ensure that any cross-Strait agreement will meet Taiwans best interests. 5. The cross-Strait exchanges should encompass more progressive thinking, particularly in the areas of facilitating the promotion by both sides of freedom and democracy, human rights protection, ecological protection, and civil society, etc., as well as outlining concrete plans for implementation.

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III. An economic strategy for strengthening Taiwans advantages, shared interests, and balanced development.
Background Taiwan currently faces three major forces: globalization, regional economic integration, and the economic rise of China. To preserve the countrys autonomy and facilitate its balanced economic and industrial development, Taiwans economic strategy towards China must be formulated as part of its overall approach to its external relations. Chinas economy is gradually transforming from a model dependent on investment and export-led growth, to one that relies on domestic markets. This shift will deeply affect the nature and content of cross-Strait economic and trade relations. As bidirectional investment becomes more central to the evolving cross-Strait trade relationship in the coming years, harmonizing this dynamic with Taiwans industrial policy and properly regulating the intersection between politics and capital will arise as challenges that Taiwan cannot avoid. The present challenge The main reason for Taiwan's poor economic performance in recent years is the lack of domestic investment and the bottleneck of the export-oriented economic growth model. The vertical division of labor that governed the early days of crossStrait industrial relations has gradually collapsed with Chinas economic development, and the present cross-Strait economic relationship has a far greater degree of competition than complementarity. Taiwan continued to expect local companies to keep their headquarters in Taiwan, but what occurred instead was a hollowing out of industrial development while the GDP became decoupled from domestic production activities, resulting in high unemployment, stagnant salary growth, a widening wealth gap, as well as other consequences that follow these phenomena. Chinas national support for certain industries, and for the flat-panel industry in particular, has severely impacted Taiwanese companies. Since the 1990s, some of the traditional industries in Taiwan that do not have comparative advantages, as well as high-tech electronics and information industries that are in fact suitable for cross-border operations, have all moved to China in

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significant numbers. Investment-led cross-Strait trade since 2000 has turned China into Taiwans largest export market. Excessive concentration of exports in the electronic information sector occurred simultaneously with the industrys booming heyday, highlighting the close correlation between Taiwans excessive export orientation and the imbalance of its domestic industries. While regionalism and free trade agreements (FTAs) gain increasing prevalence in the wake of the WTOs multilateral negotiations stalemate, Taiwan is excluded from these processes because of Chinas deliberate obstruction. Taiwan used to be isolated in the political and diplomatic realm, but the FTA trend has further endangered Taiwans external economic and trade expansion. Specifically under the circumstances that Taiwan can only sign an Economic Cooperation Framework Agreement (ECFA) with China but is not able to reach FTAs with other important trading partners, this will accelerate the marginalization of its economy and gradually make China its economic center of gravity. In recent times, Chinese government has systematically and in coordinated fashion exerted its influence on every level of the Taiwanese society. Chinese investment in Taiwan, mainly by state-owned enterprises (SOEs), is often deployed on the basis of more than purely business calculations. Apart from concerns over national security, Taiwan must also take precautions to prevent erosion of the foundation of the society and the norms and ethics of business that it has built up over many years. Recommendations 1. Taiwans ultimate economic strategy should aim to realize its institutional advantages, expand employment opportunity, and promote innovation. Only through maintaining its technological edge and leadership can Taiwan secure its autonomy and preserve its privileged position in the cross-Strait economic integration process. 2. In response to Chinas economic transformation and the rapid growth of its domestic market, Taiwan should vigorously develop its own national brands and consumer products so as to raise the added value of its labor and products, as well as the diversification of its industrial structure, and the ability to adapt to the fluctuations of Chinas business cycles.
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3. The benefits that result from cross-Strait economic and trade exchanges should be shared by all citizens. The government in particular should play the roles of guardian of common values and balancer of different interests. Through supporting the disadvantaged of trade liberalization via the social safety net, the government can expand the buffer zone for Taiwan to cope with the consequences of liberalization and external shocks. 4. Taiwan should continue examining the content and result of each cross-Strait economic agreements, especially ECFA and its follow-on agreements such as CrossStrait Agreement on Trade in Services, the agreement on trade in goods, and any agreement on mechanisms for business dispute resolution to be negotiated in the future. Furthermore, the agreements should conform to the international norms of reciprocity and transparency, and seek to mitigate the disadvantages that Taiwans enterprises face due to different scales and systems across the Strait. Besides SOEs, many large private enterprises in China also receive government subsidies and assistance. Therefore, the cross-Strait agreements should include special provisions to regulate unfair trade behaviors and the SOEs in order to facilitate fair competitions. The agreements should also require China to reinforce protection for Taiwans intellectual property rights. 5. ECFA has distanced the cross-Strait trade relationship from the established multilateral trade system, while moving it more firmly into the orbit of the bilateral relationship. Building on the basis of existing trade agreements, Taiwan should proactively seek to enter into FTA negotiations with its major trade partners, especially the Trans-Pacific Partnership (TPP) and the Regional Cooperation Economic Partnership (RCEP), in order to maintain a balanced development of external trade relations.

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IV.

The equal importance of freedom and human rights with economic development in cross-Strait civil society interactions.

Background Along with emergence of the new global economic order, the trade, social, and cultural interaction between the two sides of the Strait draws closer by the day, with people coming and going more and more frequently. Taking cross-Strait tourism as one example, the number of Taiwanese that travel to China for tourism already exceeds 5.3 million per year, while the number of Chinese that come to Taiwan to travel and work reached 2.5 million last year. The number of Chinese nationals that reside in Taiwan as a result of cross-Strait marriage is already more than 300,000, while the value of cross-Strait trade has significantly increased from $7.1 billion USD in 1999 (when the Resolution on Taiwans Future was passed) to $121.6 billion. On the other hand, since China entered its era of reform, although it has unquestionably achieved significant accomplishments in the realm of economic development, a corresponding reform in the political realm has yet to materialize. An incipient civil society exists beneath the surface, but under the tremendous pressure exerted by the Chinese communist authorities in the name of maintaining stability, it faces grave limits on its space for survival. One resulting extension of this is that under the systematic, coordinated orchestration by these same Chinese authorities in the service of a political objective, cross-Strait exchanges are similarly restricted to realms of politics and economics. In the absence of meaningful interactions and linkages between the civil societies on the two sides, these exchanges have the adverse effect of eroding and damaging Taiwans free, democratic, and open way of life. The present challenge Chinas breakneck economic development has been driven at its core by a model of crony capitalism, relying on the monopoly of political authority that distributes economic benefits to a handful of elite cartels. Now this model has been linked up to the old authoritarian capitalist structure of the Chinese Nationalist Party
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(KMT), such that as cross-Strait economic integration accelerates, we will increasingly see the emergence of two twin phenomenathe restoration of the KMTs power, and growing Chinese crony capitalismeach to be accompanied by the following symptoms: systemic corruption and rent-seeking behavior, widening income inequality, increased social stratification, diminished social mobility, deterioration of labor rights, and environmental damage. Freedom and human rights are the mainstream values of Taiwanese society, the most important core values of the DPP, and the source of strength for our capacity to lead Taiwan. But just when freedom and human rights became the consensus in Taiwan, Chinese influence has, through Chinas economic power, now begun to permeate Taiwans society and gradually reshaped the free and open way of life that the people of Taiwan have enjoyed, subtly but tangibly restricting the range of political choice for the Taiwans votersthis is the so-called China Factor. Hong Kongs experience with gradual penetration and absorption serves as the most definitive evidence of the China factor. If we are to prevent the erosion of Taiwans open and democratic way of life by the China factor and correct the imbalances in the current mode of cross-Strait dialogue, then safeguarding Taiwans freedom and democracy in the course of interacting with China has become the most urgent challenge for the present phase of cross-Strait civil society exchanges. Recommendations 1. To prevent the concentration of cross-Strait economic exchanges in the hands of the few, Taiwan must work towards building a renewed civil society aimed at promoting liberty, democracy, and distributive justice. Achieving this end will require a further deepening of democratic ideals in Taiwans politics, as well as increased exchanges with Chinese civil society in addition to the Chinese government. In the area of economics, the proactive promotion of the well-being of ordinary citizens should be the main priority. 2. Taiwan must construct a set of equitable and universal social rights from the bottom up. Accordingly, one of the questions that the party must address in the course of Taiwans democratic deepening is how to build a more meaningful, deep rooted partnership with civil society, to project the realization of liberty, human rights, and distributive justice from the political realm more fully into all facets of the society through an effective reform of Taiwans social structures. Only then
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can these substantive interactions lead to the creation of a new model of relations among Taiwan, China, and Hong Kong. 3. Taiwan should closely monitor civil society organizations in China and Hong Kong, and, on an open and equal basis, actively seek multi-faceted engagement or dialogue with all types of non-governmental agencies or individuals, with the purpose of sharing Taiwans experiences in democratization, transitional justice, environmental protection, community empowerment, religious organizations, etc. Proactive concern for the development of Chinese democracy and human rights and a joining of forces between civil society in Taiwan, China, and Hong Kong will lead to a fuller realization of Taiwans potential to serve as a beacon for Chinas democratization. 4. Cross-Strait economic exchanges and the signing of cross-Strait economic agreements should conform to the standards embodied in the International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social, and Cultural Rights (ICESCR). The monopoly on cross-Strait relations currently wielded by the KMT-CCP platform and the cross-Strait state-business cartel must be broken to safeguard basic human rights, preserve employment opportunities, uphold labor protections, protect public health and the environment, and defend the interests of the agricultural and industrial workers and the middle class. 5. As long as national security interests are not compromised and complementary measures of regulations are in place, the respective laws and regulations can be gradually reviewed and amended to construct for the Chinese spouses, Chinese students, and Chinese visitors an environment conducive to a dignified and fulfilling life, productive studies, and safe travels, making them ideal candidates to become the best partners for supporting a democratic Taiwan.

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V.

Foreign policy, national defense, cross-Strait relations, and a balanced national security strategy.

Background As Chinas economic growth continues to sustain a corresponding expansion of its national power, the global influence that accompanies its diplomatic and military strength is increasing by the day. In the Asia-Pacific, the disparities in national power between China and the U.S. are closing, leading to the emergence of the phenomenon of a Sino-American dual leadership power structure in the region. The rebalancing policy put forth by the Obama administration seeks to strengthen the political, security, and economic cooperation among the various Asian countries, jointly forging a peaceful and stable security environment by lowering tensions in all the major flashpoints from the Korean peninsula, to the East China Sea, the Taiwan Strait, and the South China Sea. With its eyes on the Diaoyutais and the South China Sea, China has augmented its military exercises and activities in its neighboring seas and airspace. The November, 2013 designation of the East China Sea Air Defense Identification Zone (ADIZ), which elevated tensions across the region, signaled that China no longer plans to conceal its burgeoning military capabilities. At the moment China is actively seeking to build a new model of great power relations with the United States that includes relegating Taiwan within the scope of Chinas core interests, which demands that the U.S. not interfere as well as terminate arms sales to Taiwan. Regardless of whether the trajectory of Chinas expanding national power is sustainable, the existing trends are certain to have a profound impact on the security environment in the region and in the Taiwan Strait. Taiwans geostrategic importance is indisputable, given its position in the first island chain. In October, 2013, the U.S. Department of State expressed its hopes that Taiwan will assume a regional leadership role on various transnational issues, demonstrating the potential part that Taiwan could play within the U.S.s rebalance to Asia strategy. Thus, strengthening the connections with neighboring democracies, maintaining the peaceful and positive interaction between the two sides of the Taiwan Strait, and preserving regional and peace and stability are the foundations of Taiwans national security strategy.

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The present challenge The most critical flaw in the national security strategy of the current government is its overreliance on the relationship with the Peoples Republic of China, which leads to a distorted conception of national defense. The Ma administration prioritizes cross-Strait relations above foreign relations, responding positively to the one China framework dictated by China, neglecting national defense and diplomacy while the disparity in military capability across the Strait continues to widen, and allowing Chinas Taiwan policy to progress from opposing independence to promoting unification. The administrations repeated declaratio n that cross-Strait relations are not international relations has removed Taiwan from the global geostrategic map while thwarting the legitimacy of the assistance from our allies. The diplomatic truce, the conducting of foreign relations conditioned upon Chinese goodwill, and seeking international participation via negotiation with China, have all undermined Taiwans sovereignty and the right of Taiwans people to international space, relegating Taiwans international participation to a subset of cross-Strait relations. Recommendations 1. Taiwans national security strategy is founded on identification with the values of freedom, democracy, and human rights, which views China affairs from a global and regional perspective. The development of cross-Strait relations should not diminish Taiwans international status; and cross-Strait engagement should be buttressed by the broader national defense and foreign policy strategy. Taiwan should forge a relationship of peaceful, stable coexistence and mutual prosperity with China, in which parties bear the responsibility for maintaining regional peace. 2. Taiwan is a model for new democracies, and should proactively participate in the activities of international organizations, strengthen relations with diplomatic allies, and deepen its cooperation with advanced democratic countries. Taiwans foreign relations should revolve around values diplomacy, combining the universal values of freedom, democracy, and human rights with Taiwans accumulated experiences in the area of good governance. By utilizing national soft power, multilateral organizations, inter-city exchanges, disaster assistance, and other diverse and flexible avenues for advancing international standards, Taiwans

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sustained existence can become regarded as a positive asset to the global community and to the Chinese people. 3. Taiwan seeks a peaceful and secure environment and the establishment of regional conflict avoidance mechanisms to preserve regional stability. We must strengthen its self-defense capability and resolve, so as to prevent Chinese miscalculation and deter military adventurism. Taiwan has no intention of engaging in an armed race with the PRC, but to this day China still continues to increase its preparations for a military takeover of Taiwan. Under these circumstances, the national defense budget must be raised, with primacy given to the buildup of asymmetric capabilities, in order to rebuild confidence in Taiwans defense among our people, our armed forces, and our friends and allies.

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