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Chen faces tough task in a shifting global economy

President Chen Shui-bian (陳水扁) is promising that his National Day address tomorrow will soothe tensions with China that have ratcheted up dangerously in recent months.

But conciliatory words from Chen, or even an attempt to revive a bilateral dialogue frozen since 1999, cannot shield Taiwan from accelerating, adverse geopolitical and economic shifts involving the Asian region, the US and the EU.

"There is a possibility that China and Taiwan are now approaching the moment of truth," the Japanese commentator Masahiro Wakabayashi said.

Developments inside China, in particular last month's consolidation of President Hu Jintao's (胡錦濤) leadership, are key to the shifting strategic balance.

Hu's "peaceful rise" approach to China's advancement may in time herald a more enlightened policy. But for now he is maintaining a tough stance on Taiwan.

Speaking at the UN last month, China's Foreign Minister Li Zhao-xing (李肇星) bluntly warned Tai-wan's regional neighbors to keep their noses out of China's business.

Australia and Singapore have certainly got the message. Both countries recently told Taiwan not to expect help if it got into a shooting war with China. All this might not matter so much if Taiwan could count on unambiguous US backing. Washington is preoccupied with Iraq and the "war on terror" and already has one Asian "crisis" on its hands, with North Korea.

But it is China's growing economic clout that may ultimately prove decisive in influencing US policy as well as that of Taiwan's neighbors.

China has been dubbed the new workshop of the world. Its rapid economic expansion is driving Asian and global growth; it is set to become the world's biggest importer and exporter. Its GDP is projected to surpass that of the US and all others by 2050.

Whatever it thinks about China's policies on Taiwan, Tibet and human rights, the US increasingly cannot afford to ignore Beijing's aspirations. Much the same goes for the EU, which this year will become China's biggest trading partner. This provides the context for French President Jacques Chirac's state visit, which began yesterday.

The French president is touting for business. But, by going to China, Chirac, an arch opponent of what he sees as American global hegemony, is also demonstrating to the US that France, and the rest of Europe, have alternative strategic options.

Chirac says talk of independence in Taiwan is "irresponsible." And he is pushing for the EU's post-Tiananmen embargo on arms sales to be lifted. That raises the extraordinary prospect of the US arming Taiwan while the EU arms China.

It is against this hazardous backdrop that Chen will speak tomorrow. Taiwan and China have their own substantial economic ties.

Both sides say they want a peaceful solution. But no one knows how to achieve it. Approaching Taiwanese legislative elections may inflame the situation. And whether Chen realizes it or not, Taiwan's freedom to manoeuvre is rapidly diminishing.
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