Beijing has initiated a new strategy against Taiwan. China's Ministry of Commerce and the State Council's Taiwan Affairs Office said China wanted to sign a pact with Taiwan similar to the Closer Economic Partnership Arrangement (CEPA) it had signed with Hong Kong and Macau earlier this year.
Because China's attempts to interfere with Taiwan's presidential elections have failed twice over the past eight years, it has decided for now to stop using the tactics of military intimidation and propaganda. Instead, Beijing promotes "one China" and "opposing Taiwan independence" politically, while economically it encourages direct links and integration.
Such changes are only tactical adjustments. The ultimate goal remains the same; that is, China wants to annex Taiwan. So the CEPA is nothing but a new economic tactic invented by Beijing.
Basically, the CEPA deal tries to bait people by offering trade facilitation and by further opening the Chinese market. Under the CEPA, several industries in Hong Kong, including the service industry, enjoy a preferential entry into the Chinese market.
Beijing wants to use the arrangement to inject some life into Hong Kong's economy and fulfill further integration between the two economies. Once Taiwan also signs the deal, the "Chinese economic circle," or common market, would take shape.
In response to this strategy, the Chinese Nationalist Party (KMT) agreed immediately, saying that promoting cross-strait economic cooperation and establishing a common market is also what the party is working for.
No responsible political party should have responded in such a rash manner. Although trade liberalization and facilitation is conducive to a bilateral relationship, we cannot ignore some basic facts about cross-strait relations.
Economically, after sixteen years of cross-strait engagement, China now accounts for more than 60 percent of Taiwan's outward investment. The island's trade dependence on China is more than 25 percent.
But underneath China's brilliant economic performance lies the possibility of collapse. Taiwan's economy is thus at high risk as we have put too many eggs in one basket. If our finance and service industries, as well as our overall economy, were to be drawn to China as a result of the arrangement, it is not very difficult to see whether the CEPA would be good or bad for Taiwan.
In fact, an international conference called "Cross-Strait Exchanges and National Security of Taiwan," held by Taiwan Advocates earlier this month, pointed out that economic exchanges may have brought Taiwan several benefits but the whole economy and society will suffer from unemployment and a deteriorating distribution of wealth. Fortunately, unlike Hong Kong's, Taiwan's industries have not been completely hollowed out, thanks to former president Lee Teng-hui's (
However, Taiwan has tasted the bitter outcome of cross-strait exchanges over the past few years. And Hong Kong, as if quenching its thirst with poison, is now moving its service industry further north under the CEPA. Taiwan should not make the same mistakes.
Economic affairs cannot be handled outside a political context as long as China does not give up its attempt to annex Taiwan. We also have to take China into consideration during our engagement with the US and Japan.