Taiwan's Political Gridlock Threatens Its Regional Position and Cooperation with China

7 MINS READFeb 10, 2014 | 23:03 GMT
Taiwan's Political Climate Undermines Cooperation with China
Taiwanese President Ma Ying-jeou speaks at a meeting of the Kuomintang party, Taipei, June 20, 2013.
(SAM YEH/AFP/Getty Images)

Taiwan's Minister of Mainland Affairs, Wang Yu-chi, is due to visit China from Feb. 11 to Feb. 14 in what has already been hailed a major step forward in China-Taiwan relations. Wang and his Chinese counterpart, Zhang Zhijun, are expected to discuss a number of trade and diplomatic issues, including a long-anticipated agreement to relax controls on cross-strait trade-in-goods and — according to recent speculation — a possible meeting between Chinese President Xi Jinping and Taiwanese President Ma Ying-jeou during an Asia-Pacific Economic Cooperation summit later this year.

But Wang's visit comes amid prolonged political gridlock in Taipei and an internal crisis within Taiwan's ruling Kuomintang (Nationalist) Party. These factors threaten to undermine the Ma administration's efforts to deepen cross-strait economic cooperation and could exacerbate what Ma, in a Jan. 30 speech, called Taiwan's unprecedented crisis of marginalization.

Wang's visit to China will coincide roughly with the start of the spring session of Taiwan's parliament. The first session of the year will be critical for the Ma administration and the ruling Kuomintang party for a number of reasons. First, it will test Ma's ability to rebuild trust and unity among Kuomintang legislators in the wake of an internal power struggle that began last September between Ma and Wang Jin-pyng, president of the parliament and a one-time rival of Ma's for the Kuomintang Party chairmanship. That struggle, which helped drive Ma's voter approval ratings to a record-low of 9 percent in late 2013, has exposed deep rifts within the Kuomintang — namely, between its "mainlander" (referring to inhabitants who came to Taiwan from China after 1949) and "native" contingents. In doing so, it has raised concerns over the party's long-term unity and its ability to compete in upcoming local elections, including that for Taipei's mayor, due at the end of 2014. These elections will set the stage for legislative and presidential elections in 2016.

Ma's failed attempt to oust Wang Jin-pyng from his positions in the parliament and Kuomintang, coupled with the subsequent intraparty power struggle, intersect directly with the second key issue of the spring session: the Ma administration's struggle to get parliamentary approval of a China-Taiwan services trade agreement, originally signed in June 2013. It was Wang Jin-pyng's decision to subject that agreement to a line-by-line review that, in large part, triggered Ma's push to oust him from office last September, on grounds that Wang had abused his political power. Wang's decision followed widespread protests from opposition politicians and local business leaders, who argued that the pact would hurt small and medium-sized Taiwanese businesses. Those critical of the pact believe that such businesses would not be able to compete with deep-pocketed mainland companies in sectors like entertainment, logistics, e-commerce and finance. Opposition leaders also complained that the Ma administration did not properly consult with Taiwanese commercial interests before — as some businesses claimed — rushing into a deal with China.

Taiwan: A Party Dismissal Bodes Ill for the Kuomintang

Taiwan and China

The Ma administration has since made a public point of meeting with industry groups in Taiwan, promising to resolve any remaining issues surrounding the agreement by late-March, though this may prove too little too late. In recent months, public support for the services trade agreement has declined precipitously, with at least one poll conducted by the opposition Democratic Progressive Party reporting 62.5 percent of the country opposed to the pact (though this figure is likely overstated). This is despite the fact that the agreement, which opens 80 service sectors in the mainland to competition from Taiwanese companies (compared to only 64 sectors in Taiwan) is widely seen as favoring larger Taiwanese firms, which generally have more experience in overseas franchising than their Chinese counterparts. Complicating matters even further is the fact that, according to Taiwanese legislative stipulations, if any one of the pact's provisions are voted down, the entire agreement will be annulled.

Implications of the Services Trade Agreement

It remains to be seen whether the parliament will approve the Taiwan-China services trade agreement. If passed, the Ma administration stands to benefit on several fronts: It would help cement the administration's influence within the Kuomintang Party and could boost the party's voter approval ratings and confidence among the business community, simply by giving Ma his first tangible policy achievement since the start of his second term in 2012.

Internationally, it would do two things. First, the pact would likely provide a tangible boost to China-Taiwan trade — a key imperative for Taiwan, which exported the equivalent of 63 percent of its gross domestic product in 2012, 40 percent of which went to China and Hong Kong. Second, and more important, it may also help Taiwan secure the mainland's blessing as it pursues other regional trade agreements, notably participation in the Trans-Pacific Partnership. The trade-in-goods agreement with China was originally expected to be signed before the end of 2013, but it has been delayed by the ongoing legislative struggle over the services agreement. A combined agreement on goods and services trade would help bolster Taiwan's competitive advantage in the mainland market. This is especially important at a time when South Korea — which many in Taiwan see as the island's key economic competitor — is also negotiating a free trade agreement with Beijing.

If the services trade agreement is voted down or delayed beyond the first half of the year, it will likely erase what little political capital the Ma administration retains within the Kuomintang, as well as nationally. More important, it could damage whatever confidence mainland China has in Ma's administration. In addition, it would almost certainly mean pushing any cross-strait agreement on trade-in-goods back to the end of 2014 or 2015. That, in turn, would cast a pallor over any meeting between Xi and Ma later this year — it could indeed prevent such a meeting from taking place altogether. 

The Diplomatic Challenge

It is against this backdrop that Wang Yu-chi, the Minister of Mainland Affairs, heads to Nanjing on Feb. 11. Wang and the Ma administration likely view the visit as an opportunity not only to strengthen ties with Beijing, but perhaps more important in the near-term, help in expanding Taiwan's international space for its already marginalized status. But the Ma administration remains deeply constrained by growing opposition and obstructionism in the legislature, in addition to genuine public anger over what many in Taiwan see as a lame duck presidency at a critical moment in the nation's political and economic history. After a half-century of rapid economic growth under authoritarian rule, many Taiwanese feel disillusioned with the lack of economic progress generated by nearly two decades of political democracy.

The Taiwanese public's disappointment is by no means limited to Ma and the Kuomintang; it encompasses virtually the entire national political spectrum, including the opposition Democratic Progressive Party. In recent months, the unprecedented lack of support for both major parties has prompted a wave of editorials in Taiwanese media, speculating whether some political breakthrough or so-called third path was needed to help protect the country against Ma's aforementioned crisis of marginalization. While there is a widespread sense that the current structure of Taiwanese politics cannot hold, amid concerns that the current dysfunction could well undermine the country's long-term geopolitical interests and national security, there is little public recognition of an alternative. In the meantime, as the party and ruler in power, it will be the Kuomintang and Ma who bear the brunt of the political system's paralysis until at least 2016, when the next presidential and legislative elections promise some respite.

For China, political gridlock and crisis in Taiwan present an unexpected strategic problem. Since the mid-2000s, the Communist Party in Beijing has sought a less confrontational approach to cross-strait relations, emphasizing economic cooperation over politics, including the signing of the landmark Economic Cooperation Framework Agreement. Tightened cross-strait economic cooperation had given hope to the mainland, which is now looking to pursue a long-desired political dialogue. At the same time, the Kuomintang needs support from the mainland in order to strengthen its constituent base and provide economic leverage.

At present, however, with domestic politics in Taiwan threatening to undermine or at least stall efforts to enhance economic integration, Beijing may be forced to accelerate its approach to relations with the island. Xi may have already indicated the start of such a shift, with comments on the sidelines of last year's Asia-Pacific Economic Cooperation summit in Baoao, China. There, Xi told former Taiwanese Vice President Vincent Siew that the two countries' "long-standing political division ... will have to eventually be resolved ... as it should not be passed on generation after generation." While by no means a break from China's core line on Taiwan, Xi's comment nonetheless suggests that his administration will take a more overtly political tone in negotiations with Taiwan than its predecessor took. Beijing walks a fine line between expanding its influence within Taiwan and provoking a backlash from the island's already troubled political scene.

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