ECFA: China’s Primacy of Politics

As early as in February this year, the Neue Zürcher Zeitung (NZZ, Switzerland) assessed demands by Chinese military officials – reacting to US arms sales to Taiwan – to sell American bonds in retaliation, to create disturbance on the markets:

"Taiwanren are also Chinese"

Did I say something wrong? (Click on this picture)

[…] Of course, in China, military officials aren’t entitled to make such decisions either. But these demands are showing that the Chinese leadership’s much-lauded economical pragmatism is under strong political-ideological pressure which can, at any rate, eclipse economic self-interest. The primacy of politics boosts dangerous trends in China.

It is exactly the example of Taiwan which shows that, when dealing with China, one can’t conclude from economic pragmatism that there would be political pragmatism. Since the Kuomintang and president Ma Ying-jeou define Taiwan’s policies, the relationship to China has strongly improved. Connections with mainland China in terms of travelling, trade, and tourism, have been facilitated. Now, within the usual semi-official framework, talks about some kind of free trade agreement (Economic Cooperation Framework Agreement, ECFA), are underway. But all these pragmatic steps change nothing about the fact that Peking, by means of economic attachment, is trying to get Taiwan back under its wings, and that this is exactly what the majority of the Taiwanese population doesn’t want to allow that to happen.

So, for example, there is the question if Taiwan’s signature to the agreement would allow the island to conclude free-trade agreements with other countries, too. If that should not be the case, the fear of a “Hong Kong-ization”would be refuelled. The suspicion that the agreement is paving the way to “one country, two systems”, would have been confirmed. And under this slogan, a majority of the Taiwanese, still doesn’t want to live.

The NZZ warned that Beijing’s and Taipei’s goals were different – especially as it was facing the ASEAN-plus-One arrangement, a common south-east Asian and Chinese market -, Taipei feared a marginalization of its economy. China on the other hand didn’t have liberalization on its mind, but the implementation of its political claim on the island. Therefore,

the danger that they are talking at cross-purposes, consciously or unconciously, is very high. The two China’s are having their dialog with very different, and possibly unreconcilable, goals. If they will ever be able to understand each other is doubtful. In any case, Beijing’s pragmatism will hit political limits whereever Taiwan’s independence appears.

During the past months, many “international experts” assisted Beijing and Taipei in advocating ECFA. Much of what is written now, after the signing of the ECFA between China and Taiwan in Chongqing on June 29, sounds like if the proponents are becoming scared of their faith in the negotiators’ good (i.e. “unpolitical” or “pragmatic”)  intentions.

“A watched frog never boils”, the Economist wrote on May 8 last year, reacting to Yeh Chu-lan, former Taiwanese Presidential Office secretary-general who deplored that It’s sad that most people in Taiwan are not aware of it — they’re like frogs gradually cooking alive in warm water: By the time they realize the water is boiling, it’ll be too late.

The same or another author with the Economist now takes a much more sober look at the situation:

[…] Among the Chinese concessions will be to let Taiwanese banks in China start doing business in renminbi within two years of opening their branches, as against three years under the WTO rules that apply to most foreign banks. This is similar to the deal China offered Hong Kong banks under a 2004 trade agreement—perhaps a little too similar for Mr Ma’s political comfort, given that Hong Kong is officially part of China. Finally, the two sides will also sign an agreement on intellectual-property rights, which will help Taiwanese firms, a rich source of patents and Mandarin-language entertainment, as well as high-grade varieties of fruit, to battle piracy on the mainland.

China’s largesse is clearly political. It has learned that sabre-rattling, such as it employed in 1996 by launching ballistic missiles over the island, only encourages Taiwanese voters to choose pro-independence politicians. Now it is trying economic sweeteners instead. It hopes that these will prompt voters to choose Mr Ma’s Kuomintang party in the 2012 presidential election rather than the independence-leaning Democratic Progressive Party (DPP).

So Mr Ma must now prove that the ECFA will indeed help Taiwan sign free-trade pacts with other countries, or else risk a public backlash. Much here depends on what Taiwan calls itself in these agreements. “Republic of Taiwan” would please the voters but infuriate China; “Taiwan, Province of China” would do the reverse. Mr Ma has talked of a possible compromise: Taiwan’s WTO moniker, “The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu”. The DPP claims that China will use its clout to block other Taiwanese free-trade deals no matter the nomenclature. When asked about it on June 24th, Zheng Lizhong, who led China’s talks, appeared to duck the question. […]

Mr Ma will have to show more economic progress before the municipal elections due on November 27th. These will set the tone for the 2012 presidential election. And the DPP is ready for a fight.

And even another more pro-ECFA article of the same paper which moans that Taiwan is entering a lengthy season of frantic politics in which a nuanced debate about trade will be an early casualty concludes with a meeting at Taiwan’s defense ministry.

A defence-ministry official in Taipei points to a map of the island and sweeps his arm around to its east to show where, in the past year or so, Chinese naval forces have begun to extend their war-gaming reach. China is still, he says, a “clear and present danger”. Greed for China’s market is good for the KMT’s electoral prospects; but fear of its long-term intentions can still boost the DPP.

A South China Morning Post (SCMP) article points out that

Much as the United States once believed that economics drove politics in China in the 1990s, the mainland now thinks the same about Taiwan. Beijing’s strategy is to wait for the magical economic elixirs it has given Taiwan to take effect. Once the Taiwanese have tasted the benefits of direct flights, millions of mainland tourists in Taiwan, and the fruits of free investment and trade across the Taiwan Strait, Beijing is optimistic that a political accommodation with Taiwan can be reached through negotiations and patience. This betrays a fundamental lack of understanding about the arc of Taiwanese history over the past three decades and what matters to the Taiwanese now. During the 1980s and the first half of the 1990s, a mass democracy movement forced the KMT to hold free elections, end military law and censorship, and normalise Taiwanese society. While Taiwan’s politics are messy and its judiciary weak, Taiwan’s vibrant civil society enjoys the same political freedoms as people in North America or Europe.

And Ma, the article suggests, is

politically vulnerable because, although Taiwan’s economy has made a sparkling recovery in terms of gross domestic product and other conventional economic indicators, Taiwan’s working people are waiting, with increasing impatience, for some of the benefits to trickle down to them.

They will be waiting for a long time since the main effect of Ma’s mainland-oriented economic policies is that Taiwanese businessmen are being enabled to extend the life of their moribund business model even longer by relocating to the mainland to exploit its cheaper labour, instead of investing in new technologies and the service industry in Taiwan.

It was rather exceptional for the international media early this year that the Neue Zürcher Zeitung’s (see beginning of this post) actually realized that there is a Chinese primacy of politics. But it still didn’t quite wrap it up. When you are dealing with a country that puts ideology first, you can’t put business before politics yourself without risking security.

This isn’t only true for Taiwan, but for every free society.


ECFA: The Price of letting Taiwan Down, July 1, 2010
The Primacy of Politics, June 13, 2010

8 Responses to “ECFA: China’s Primacy of Politics”

  1. Have you heard about this?

    Land was taken away from farmers in Miaoli, even though they didn’t want to. Smells like China to me.. pretty sad.


  2. Well, Liu Cheng-hung certainly looks like that kind of politician… Sending the caterpillars in as early as possible to create facts is nothing unusual in East Asia, but in Hong Kong, they usually wait until a final court decision has been made – and in mainland China, farmers may not see much compensation at all, because the state owns the land and determines the price for a transfer of land-use rights and may not even care about existing regulations.
    So yes, it smells like China. And why not – after all, the lad in charge there in Miaoli belongs to the KMT, who are currently great “business” partners of the CCP. 😉
    Practical habits (from politicians’ perspectives) spread quickly.



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