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A New Era in Cross-strait Relations

A New Era in Cross-strait Relations. Dr. Chiang Pin-kung Chairman of the Straits Exchange Foundation November 2008. Content Social Development in Taiwan 2. Developments in Cross-strait Relations 3. KMT Cross-strait Policy 4. Future of Cross-strait Relations.

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A New Era in Cross-strait Relations

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  1. A New Era in Cross-straitRelations Dr. Chiang Pin-kung Chairman of the Straits Exchange Foundation November 2008

  2. Content • Social Development in Taiwan • 2. Developments in Cross-strait Relations • 3. KMT Cross-strait Policy • 4. Future of Cross-strait Relations

  3. 1. Social Development in Taiwan History 1624-1661 Colonized by Holland, and Spain (1626-1642). 1661 Governed by Cheng Chen-kung. 1683 Ruled by Ching Dynasty. 1895 Ceded to Japan with Treaty of Shimonoseki (Maguan). 50-year Japanese occupation. 1945 Potsdam Declaration returns Taiwan to Republic of China (R.O.C.) government. 1949 Civil war divides China  R.O.C. government moves to Taiwan, People’s Republic of China (P.R.C.) established on mainland, forming two sides of Taiwan Strait.

  4. 1. Social Development in Taiwan • Poll respondent sentiment as to whether people in Taiwan consider themselves Taiwanese, Chinese or both. Source: TVBS POLL CENTER

  5. 1. Social Development in Taiwan • Changes in number of seats in parliament Note: Since 2008, the number of seats has been halved, and a proportional representative system implemented. 6

  6. 2. Developments in Cross-strait Relations • Political timeline of Taiwan’s cross-strait relations policy. Relatives allowed to travel across the Strait President Chen’s “One country on each side” KMT Chairman Lien’s Peace Tour President Lee Teng-hui’s ‘special state-to-state’ theory ended cross-strait dialogue Diplomatic truce Cross-strait dialogues began Military confrontations Three No’s policy National Unification Guidelines promulgated Martial Law lifted 1949 1979 1987 1991 1992 1999 2002 2005 2008 First phase: 40 years Second phase: 20 years ※ in terms of economics Contacts prohibited Active opening with Effective management Statute Governing Relations between the Peoples of theTaiwan Area and the Mainland Area formulated Indirect trade andinvestment Effective opening witht Active management President Lee’s “No haste, be patient” Cross-strait dialogue resumed 1987 1991 1996 2001 2006 2008

  7. 2. Developments in Cross-strait Relations • Between 1949~1987, both sides of Taiwan Strait engaged in military and political face-offs.Economic exchangeprohibited. • China exhausted by Korean War, Vietnam War and Cultural Revolution. • In 1953, Taiwan implements economic development plan, goes on to achieves status asone of four ‘Asian dragons’.

  8. 2. Developments in Cross-strait Relations • Taiwan’s economic miracle • Average annual economic growth of 9.1% between 1952~1987 makes Taiwan world’s fastest growing economy. 9.2

  9. 2. Developments in Cross-strait Relations • Cross-strait relations between 1988~2007 • Developments across the Strait during this 20-year period influenced by the policies of two great men: • Deng Xiaoping: decided on China’s open-door policy in 1979, culminating with famous tour of South China in 1992. Foundation for high economic growth was laid. China and the world changed as a result. • (2) Chiang Ching-kuo: the late president of Taiwan implemented three measures in 1987 that change both Taiwan and China. • 1. Martial law lifted on July 15, 1987 - the first step in Taiwan’s move towards democratization. • 2. Veterans allowed to visit family in mainland China on November 2, 1987 - significant for making investment in China attractive to Taiwan’s businesses. • 3. Taiwan started to move towards an open free-market economy and allowed its currency to appreciate - Taiwan’s labor-intensive industries began to move to China, paving the way for economic and trade relations across the Strait to rapidly expand.

  10. Hong KongUS$2.87 billion (2.2%) Singapore US$5.38 billion (4.2%) Others US$17.95 billion (14%) USA US$10.49 billion (8.2%) Caribbean Sea US$21 billion (16.4%) China US$70.4 billion (55%) 2. Developments in Cross-strait Relations • Expansion of cross-strait trade and economic relations (1) Mainland China is the largest target country for investments from Taiwan. According to Taiwan’s statistics as of July, 2008, 36,959 investments worth US$70.42 billion had been made, accounting for 55% of all foreign investment. However, according to mainland China’s statistics as of April, 2008, 75,877 investments worth US$46.32 billion had been made. The actual value of Taiwan’s investment is somewhere between US$100-150 billion. Source: Investment Commission, MOEA, ROC. 資料來源：投資審議委員會

  11. 2. Developments in Cross-strait Relations • Mainland China is Taiwan’s largest trade partner, export market and source of trade surplus. Statistics for Taiwan’s External TradeUnit: billion US dollars Source: Customs Import & Export Statistics, Taiwan Customs, Ministry of Finance, ROC.

  12. 2. Developments in Cross-strait Relations • Taiwan’s import and export figures since 2000 Unit: billion US dollars or % Note: Statistics for 2008 as of July. Source: Customs Import & Export Statistics, August 7, 2008, Ministry of Finance, ROC.

  13. 2. Developments in Cross-strait Relations • China is an external factor in Taiwan’s economic growth. China’s contribution to Taiwan’s economic growthUnit:% Source: May 29, 2008, Directorate-General of Budget, Accounting, and Statistics, Executive Yuan, ROC.

  14. 2. Developments in Cross-strait Relations • China, including Hong Kong, is Taiwan’s… • Largest trade partner. Trade with China amounted to US$130.28 billion in 2007, accounting for 28% of total. • Largest source of trade surplus. Taiwan enjoyed a US$70.6 billion trade surplus with China, compared to US$27.38 billion with the rest of the world. • Largest export market. Exports to China in 2007 amounted to US$100.44 billion, or 40.7% of the total. • Second largest source of imports. At US$29.84 billion, imports from China made up 13.6% of 2007 total. • Largest target country for investment. Taiwan’s investment in China reached US$64.87 billion, or 54% of all foreign investments, in 2007.

  15. 2. Developments in Cross-strait Relations • Taiwan’s average annual economic growth rate between 2001 and 2007, during DPP rule, slumped to 3.84%, the lowest among developing countries in Asia. The unemployment rate increased to 4.45%. Average economic growth rate of East Asian Countries between 2001 and 2007 Taiwan Singapore Korea Malaysia Philippines Hong Kong Indonesia Thailand Japan Source: Official statistics from each government.

  16. 2. Developments in Cross-strait Relations • Factors for economic slowdown: weak consumer spending and decreasing private sector investment. Source: Directorate-General of Budget, Accounting, and Statistics, Executive Yuan, ROC.

  17. 2. Developments in Cross-strait Relations • Reasons for low investment from private sector: • Confrontation in parliament as the ruling party holds only a minority of seats, with the opposition holding a majority. The decision to halt construction of the 4th nuclear power plant in December 2000 creates a feeling of instability. • (2) Pro-independence tendencies, tensions across the Taiwan Strait and the threat of war. • (3) The rise of China as a world factory and market. Government statistics show Taiwan’s investments in China have reached US$69.96 billion. However, the actual figure is likely to be over US$100 billion.

  18. 3. KMT Cross-strait Policy • The beginning and eventual suspension of cross-strait talks during Lee Teng-hui presidency. (1)March 9, 1991Straits Exchange Foundation (SEF) set up in Taiwan, with Koo Chen-fu as chairman. December 16 that year, Association for Relations Across the Taiwan Strait (ARATS) set up in China, with Wang Daohan as president. (2)The1992 Consensusreached by SEF and ARATS - “One China, with each side having its own interpretation”. Taiwan’s interpretation is that one China is the Republic of China (in R.O.C. Constitution, its territory includes mainland China). By shelving cross-straitpolitical issues through this ambiguous statement,Taiwan hopes to democratize mainland China through economic and cultural exchange. (3)April 27, 1993 First Koo-Wang talks held in Singapore, four points agreed. (4)October 14-19, 1998 Koo visited China, met with Wang Daohan and Jiang Zemin. President Lee’s ‘special state-to-state’ theory ended cross-strait dialogue.

  19. 3. KMT Cross-strait Policy • On April 29, 2005, Lien Chan and Hu Jintao met in Beijing and announced a joint vision on the following goals: (1) Resume dialogue between SEF and ARATS on an equal footing and foster healthy cross-strait relations based on the 1992 Consensus. (2) Cease cross-strait hostility, sign a peace accord and establish a mechanism for building mutual trust in military affairs. (3) Launch weekend charter flights, open Taiwan to mainland Chinese tourists, promote economic exchange and cooperation, and discuss priority issues on a cross-strait common market. (4) Enter negotiations on Taiwan’s participation in international organizations

  20. 3. KMT Cross-strait Policy • Ma Ying-jeou’s platform on cross-strait relations during the 2008 presidential election campaign: • Political (1) 3 No Principle: no negotiations on unification with mainland China, no pursuit of de jury independence, and no use of force by either side. • (2) Based on the 1992 Consensus: “one China, with each side having its own interpretation”, both sides are to pursue peaceful and stable relations and build military mutual trust. • (3) Resumption of cross-strait talks, signing of a peace accord, and an end to hostility

  21. 3. KMT Cross-strait Policy B. Economic (1) Start negotiations on equal footing for the normalization of economic ties. (2) Launch direct sea and air transportation. (3) Allow tourists from mainland China to enter Taiwan. (4) Relax restrictions on Taiwan’s investments in China and on China’s investments in Taiwan’s industries. (5) Seek economic cooperation agreements on such areas as investment protection, intellectual property rights, industrial standards and certification cooperation.

  22. 4. Future of Cross-strait Relations • Resumption of cross-strait dialogue On May 26-29, 2008, SEF and ARATS resumed cross-strait dialogue based on the 92 Consensus. On June 11-14, SEF Chairman Chiang and ARATS President Chen Yunlin met in Beijing, thereby resuming bilateral negotiations. On June 13, two agreements were signed on: (1) Weekend charter flights: 18 flights each way, 36 flights total. (2) Mainland Chinese tourists in Taiwan: max of 3,000 visitors entering per day.

  23. 4. Future of Cross-strait Relations • The Second Round Chiang-Chen Talks On Nov 3-7, 2008, SEF Chairman Chiang and ARATS President Chen Yunlin met in Taipei, Chen is the highest-ranking mainland Chinese official to set foot on Taiwan since 1949. The second round of Chiang-Chen talks are the first cross-strait negotiation held in Taiwan since 1992's opening of dialogue.

  24. 4. Future of Cross-strait Relations • The Second Round Chiang-Chen Talks On Nov 4, four agreements were signed on: (1) Increasing direct charter flights:The two sides will operate a total of 108 round-trip flights per week, with each side operating 54 round-trip flights. (2)Direct shipping:Vessels registered in the ownership of shipping companies on the two sides of the strait can engage in direct cross-strait transport of passengers and cargo. The mainland will open 48 seaports and 15 river ports, for a total of 63 ports .

  25. 4. Future of Cross-strait Relations • The Second Round Chiang-Chen Talks (3) Expanding postal cooperation:Cross-strait postal services such as small packet, parcel post, and express mail will be made available. With direct cross-strait air and sea transportation, delivery times are expected to decrease dramatically. (4) Food safety:The two sides agree to carry out prompt notification of major food safety information and suddenly arising incidents affecting the health of people across the Taiwan Strait.Establish a mechanism for coordinating the handling of major cross-strait food safety incidents.

  26. 4. Future of Cross-strait Relations • Four Agreements To Benefit Taiwan (1)Direct Flight Routes to Save Time and Money: It will take only one hour and 22 minutes to fly from Taoyuan to Shanghai, with saving of to 45 percent of fuel per trip. It will decreasing the operation costs of airlines. If the number of flights goes up, consumers will benefit directly from the lowering of ticket prices due to market competition.

  27. 4. Future of Cross-strait Relations • Four Agreements To Benefit Taiwan (2) Direct Cargo Transport to Lower Costs and Raise Taiwan’s Competitive Edge: The most obvious benefit of direct cargo flights will be shorter transport times and lower costs. Trade in goods that can be directly distributed in the East China region. Industries with higher competitiveness will be able to make better use of division of labor between operations on either side of the Taiwan Strait.

  28. 4. Future of Cross-strait Relations • Four Agreements To Benefit Taiwan (3)Resume dialogue between SEF and ARATS, establish bilateral negotiation mechanism The two courtesy visits which the executive officials of both SEF and ARATS had paid to each other within 6 months, a structured cross- strait negotiation mechanism has established. In the future, both SEF and ARATS will continue the bilateral economic negotiation and cooperation in order to create peace and stable economic environment on either side of the strait.

  29. 4. Future of Cross-strait Relations • Four Agreements To Benefit Taiwan (4)Change/Chance is Coming : Once Taiwan and China start the direct air and sea transportation,it will help raising Taiwan’s international competitiveness and attracting more foreign investment. This important economic cooperation will not only create more business opportunities to industries both in Taiwan and Asia, but also help to fight global financial crisis.

  30. 4. Future of Cross-strait Relations • 2009 Talking Agenda (1) Establish a mechanism for coordinating the handling of major cross-strait affairs such as joint crackdown on crime, expanding food safety cooperation, and quarantine and inspection of agricultural products. (2) Cross-strait financial cooperation (establishing a banking supervision and management mechanism, signing a memorandum of understanding on cross-strait securities and futures supervision and management, and promoting cross-strait financial interaction). (3) Cross-strait economic and trade cooperation ( investment protection agreement, avoidance of double taxation, a mediation mechanism for cross-strait economic and trade disputes, cross-strait cooperation on standard inspection, measurement and certification, and intellectual property rights protection).

  31. 4. Future of Cross-strait Relations • Comprehensive strategies for cross-strait relations (1) Win-win economic conditions, Comprehensive Economic Cooperation Agreement (CECA). Signing FTAs with the United States, ASEAN members and Japan to avoid Taiwan’s marginalization. To normalize cross-strait economic relations, we are creating a win-win environment for both sides of Taiwan Strait. (2) Key political goal: a peace accord. The plan calls for an end to the expanding military buildup, maintaining of the status quo in diplomatic relations, advancement of cross-strait relations and building of relations on mutual trust. We will construct a framework for the peaceful development of the Taiwan Strait through a mechanism for mutual trust in military affairs, so as to lay a permanent foundation of cross-strait peace. (3) International relations: Taiwan is a peace maker, not a trouble maker. Taiwan encourages US-Taiwan and Japan-Taiwan cordial relations, supports the Treaty of Mutual Cooperation and Security between the US and Japan, and contributes to prosperity and stability in Asia.

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