With the number of Chinese tour groups in Taiwan plummeting, tour operators have protested. I have researched China’s economic sanctions and would like to make a few long-term strategic suggestions:
When Beijing applies economic sanctions, it usually does not announce them outright. Instead, it uses red tape, tariffs and a “voluntary boycott” by Chinese to decrease trade volumes between itself and the target nation. The sanctions are usually terminated under one of three conditions: Beijing has achieved its political objectives; intervention from international organizations; or China has incurred great economic losses itself.
In April 2012, there was a standoff between a Chinese frigate and Philippine maritime surveillance ships near Scarborough Shoal (Huangyan Island, 黃岩島). The number of Chinese visiting the Philippines decreased the next month. In June that year, Philippine ships evacuated the region due to typhoons and the Scarborough Shoal fell into Chinese hands. China’s political mission was accomplished and the number of Chinese visiting the Philippines surged from February 2013.
In September 2010, a collision near the Diaoyutai Islands (釣魚台) saw Japan detain a Chinese trawler, its captain and crew. After the incident, China used an investigation into smuggling as an excuse to impose stringent inspections on exports of rare-earth minerals to Japan. Although the measure ended at the end of November that year, the market panicked and prices of rare-earth minerals rocketed. Japan collaborated with the US and EU to bring a case to the WTO against China’s actions. Several years of lawsuits later, China lost. Near the end of 2014, China abolished the restrictions.
In September 2012, Tokyo nationalized the Diaoyutais, drawing protests in China. The next month, the number of Chinese visiting Japan plunged. However, from January last year, the number started to increase. Why would China ban its people from traveling to Japan for two years and then suddenly lift the ban? The reason might be that China wanted to improve the trade levels between the two countries. In 2012, demonstrators vandalized Japanese stores in China, shocking the Japanese public. China became a risky place to invest and in 2014 Japanese investment in China dropped by 38.8 percent. Beijing realized it had to improve its economic relationship with Japan.
China has made it clear that it will only remove the restrictions on visitors to Taiwan if the government recognizes the “1992 consensus” or that “both sides of the Taiwan Strait belong to one China.” However, even a United Daily News poll in March said more than 70 percent of the public regard themselves as Taiwanese, while only 20 percent see themselves as Chinese, or as both Taiwanese and Chinese. When the majority of Taiwanese do not regard themselves as Chinese, to ask the government to acknowledge “one China” is asking it to act against public opinion.
Although it is possible to resolve disputes through the WTO’s dispute settlement mechanism, tourism is not the WTO’s responsibility. A reduction in Chinese tourists visiting Taiwan will not really hurt China economically, with the exception of a few Chinese airline companies.
The Chinese government is keeping its people from traveling to Taiwan, and there does not seem to be a way out of this situation for the time being. Hence the government has to continue to negotiate to minimize the damage. Meanwhile, the government should make long-term adjustments, facilitate transformation of the tourism industry and minimize the ramifications of Chinese economic sanctions.
Guo Yung-hsing is a professor at National Taichung University of Science and Technology’s department of international trade.
Translated by Ethan Zhan
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