As China extends its economic and political reach with the One Belt One Road Initiative (OBOR), Taiwan has kept a low profile. While other states have established varying manners of addressing the OBOR, the Government of Taiwan has been unable to arrive at a clear consensus on a proper approach to the OBOR. There are several reasons for this indecision, including is conflict between China and Taiwan regarding the Asian Infrastructure Investment Bank (AIIB), the current economic condition of Taiwan, and political disputes fueled by internal polarized opinions centered around Cross-Strait relations.
AIIB membership dispute
The connection between the Asian Infrastructure Investment Bank (AIIB) — with its strong influence on the OBOR — and the latest presidential and ruling party change in Taiwan is important to note. Former President Ma Ying-jeou of Taiwan expressed a strong desire to join the AIIB in March 2015. This resulted in the country applying for AIIB membership as “Chinese Taipei” (official name was never disclosed but is speculated). Two complications soon emerged that fueled Taiwan’s hesitancy to make any official statement on the OBOR. The AIIB rejected “Chinese Taipei’s” application, and Tsai Ing-Wen was sworn in as the new president of Taiwan.
As reported by CNBC in 2015, China’s State Council Taiwan Affairs Office rejected Taiwan’s application to become a founding member of the AIIB because of Taiwan’s name choice, but future membership is welcome if applied “under an appropriate name.” This boils down to the Cross-Strait conflict between Taiwan and China. This conflict is reflected in the approach the former and current presidents have taken to resolve Taiwan’s economic concerns. Former President Ma aimed to strengthen ties with China during his presidency and current President Tsai is intent on diminishing Taiwan’s economic dependency on China. As shown, China plays a significant role in shaping Taiwan’s economic policies.
Taiwan’s economic woes
Despite rejection from the AIIB, Taiwan’s persisting economic problems forces Taiwanese politicians to still consider the OBOR as an option of economic support. In the recent years, Taiwan struggled to adapt to the changing economic landscape. The country went through a huge economic boom between the 1950s and the 1990s, also known as the Taiwan Miracle, yet it has been speculated that this ‘miracle’ might never occur again.
Pointed out by Forbes, Taiwan’s economy is highly dependent upon tech-based exports but the country’s software industry has not been faring well. One speculation for the economic struggle is that low industry wages have been keeping university-graduate students away. Taiwan has not been able to provide reasonable wages to citizens, which is highly protested by Taiwanese labor groups on numerous occasions. A concern stemming from the inequivalent wages is the country’s housing price-to-income ratio that now sits at 9.4 (San Francisco has a value of 9.1), Taipei is currently one of the most unaffordable places to live in in the world.
Both citizens and policymakers have been attempting to find solutions to growing concerns surrounding the country’s economic situation. There are two ‘solutions’ attracting attention, but simultaneously prompt, either join the OBOR established by the Government of China, or push forward with the implementation of the New Southbound Policy as proposed by the current Government of Taiwan.
Polarized opinions centered around Cross-Strait relations
Launched a few months after President Tsai was elected in 2016, the New Southbound Policy is a initiative devised to broaden Taiwan’s relation with 18 nations in the Southeast Asian Nations (ASEAN), South Asian nations, as well as New Zealand and Australia. President Tsai seeks to diversify the country’s economy and international relations reacting to concerns that Taiwan is over dependent on China for trade, which currently constitutes more than 20 percent of the country’s total trade. The initiative has resulted in success as Taiwan’s has renewed investment with the Philippines under the New Southbound Policy. Further, the country’s new foreign policy of granting ASEAN tourists visa-free entrance into the country has created a positive outlook on improving the country’s economy.
Subsequently, this shift in Cross-Strait relations has led to vocal disagreements from China. David An, a senior research fellow at the Global Taiwan Institute, wrote an analysis on the relationship between the New Southbound Policy and the OBOR in the weekly publication for the Global Taiwan Institute. The Tsai Administration clarified that the New Southbound Policy is purely for economic purposes. Meanwhile, the establishment of a more independent Taiwanese economy has led to conclusions that the New Southbound Policy may be a form of establishing overall independence away from Mainland China.
The coexistence of the China’s OBOR and Taiwan’s New Southbound Policy has led to a stalemate in the Taiwanese parliament. Supporters for the OBOR present rhetoric similar to those who supported Taiwan’s application to join the AIIB: they wish for a positive change in the country’s economy and do not want Taiwan to be economically excluded. Of course, critics of Taiwan’s joining the OBOR initiative also have their own rationale. Chienwu (Alex) Hsueh, an assistant professor at the National Chengchi University in Taiwan, concludes that Taiwan’s membership in OBOR would not lead to greater economic advantage. As pointed out in his article, Taiwan does not have strong economic relationship with the other 26 participating Asian countries and that the OBOR will not guarantee a positive economic change.
Nevertheless, the main conflict preventing a consensus on the OBOR lies within conflicting opinions on the Cross-Strait relations, which can be directly observed through party polarization. Parties of the Pan-Blue Coalition and Pan-Green Coalition hold differing perspectives regarding the one China rhetoric and often vote differently when policies have the possibility of affecting the political status of Taiwan, which is why it’s difficult to achieve an unanimous consensus on the exact way to approach the OBOR. Important figures of major political parties have provided an example of this complication.
One exemplary conflict took place at the 2017 Asia-Pacific Economic Cooperation (APEC) CEO Summit in Vietnam. James Soong, Founder of People First Party (a smaller party within the Kuomintang-led Pan Blue Coalition), expressed opposing views towards the Tsai Administration’s New Southbound Policy, praised China's OBOR, and voiced Taiwan's desire to hopefully join in on the initiative one day. In response, former vice president and member of the Democratic Progressive Party, Annette Lu, expressed strong disapproval for Soong’s actions and commented that based on reports from the Summit, the expected exclusion of Taiwan from the 2018 investment plans proposed by other countries may mean not achieving any of the nation's greater goals (such as the New Southbound Policy).
Taiwan’s uncertain role in the OBOR
Despite Taiwan’s political hesitancy and divided opinions on the OBOR, it simply is not Taiwan’s top priority to resolve the disagreement. Currently, Taiwan is focused on building a good relationship between the citizens and the new president, though paying attention to political and economic shifts in foreign nations is still urgent. The approach the Government of Taiwan will take towards the OBOR is uncertain, despite the fact that this initiative is central to Taiwanese politics and the Cross-Strait conflict.
Amelia is a third-year undergraduate student majoring in Psychology with a minor in Sociology at the University of Texas at Austin.