US, Taiwan goals for China differ

Although Taiwan continues to get considerable attention in the media with former president Lee Teng-hui's (李登輝) visit to Japan, the arms sales and President Chen Shui-bian's (陳水扁) transit through the US, more is being written about Taiwan's growing economic ties with China. When discussing the American economic interchange with the same country, the stories make clear that neither the US nor China is letting the many problems between them encroach on their objective to strengthen ties. On the Taiwan side, there are a great many reports and analyses on the growth of Taiwan investment in China. Although reports in both countries are about the growth in economic exchanges with China, the significance is nonetheless different for the US and Taiwan.

The American objective in this economic interchange with Bei-jing is twofold: trade and the hope that it will be a major catalyst in encouraging China to become an open and responsible player in the international community.

But there is a dichotomy in pursuing Washington's broader national interests with China. We have seen recently a considerable number of studies being published, and heard news of internal "reviews" being conducted by the government. These are generated by a greater concern about China's intentions with regard to the US, and the need to develop strategies and strengthen its military posture in the Pacific. Studies by the Army War College and the Rand Corp are the most recent. Statements by the president and the secretary of defense point not only to a more assertive stance in dealing with China generally, but also the broader shift of US military priorities from Europe to the Pacific.

At the same time, US businesses seem to be going in the opposite direction. US business-people, especially those who are already committed to operations in China, speak glowingly about how recent bilateral tensions have not been allowed to interfere with the growth of economic relations. The Fortune Global Forum, held this year in Hong Kong, was as well attended as in the past. China's president Jiang Zemin (江澤民), who made a speech there, never referred to the EP-3 incident, arms sales to Taiwan, or any other issues grating on its relationship with the US.

This was assessed by some in attendance as demonstrating a more mature attitude, and by others as a necessity given China's need for investment. Jiang understands that corporate America is China's friend. One could not imagine Jiang now voicing the threats of the past against companies that were not helpful in supporting Beijing's political objectives. The rhetoric in China's media however, continues with the familiar language of anti-hegemonism, unilateralism, etc. But at the Hong Kong meeting, Jiang's purpose was to encourage foreign investment and demonstrate that China can separate economics from politics.

US investment continues to grow to the point that the US is now the largest foreign investor in China after Hong Kong. Bilateral trade between the two countries is also growing -- the US now buys one-third of China's exports. Success for US investments would benefit not only the companies involved, but China as a whole. Should China's economic reforms fail, larger US companies may be hurt but not necessarily destroyed. America's economy might get bruised but not profoundly harmed. In other words, a collapse of this bilateral economic exchange would be serious for the US, but manageable.