Cross-Strait Relations

EVOLVING CROSS-STRAIT RELATIONS
Will Smith
POS 563-Comparative East Asia Security Policy
December 8, 2014

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There are three parties that define the Cross-Strait relationship: The
government of the People’s Republic of China (PRC) in Beijing, the government of the Republic
of China (ROC) in Taipei, and the United States. All three of these parties have been directly
engaged in issues regarding the Taiwan Strait since the ROC government fled to the island of
Taiwan in 1949. While the relationship between the island of Taiwan and Mainland China
predates the twentieth century, the two sides of the Strait have changed in profound ways. The
Mainland emerged from the chaos of the Cultural Revolution with a reform program that ushered
in an era of historic economic growth and social change. The island of Taiwan also emerged as
an economic center with a high standard of living and a democratic government that includes
multi-party elections and a strong civil society. The third political force in Cross-Strait relations,
the United States, has presided as a hegemonic power in East Asia since the middle of the
twentieth century and has helped to define the region’s political and economic order. Each of
these actors has also seen its relationships with the others evolve. The Mainland, with its
remarkable economic growth, is quickly becoming a political power in East Asia that is not
afraid to make higher demands of its neighbors, including the government on Taiwan. Yet,
Taiwan has also successfully democratized since 1986, despite threats from Beijing. Within this
environment, political groups like the Democratic People’s Party (DPP) have emerged arguing,
albeit cautiously, for a Taiwanese national identity. These political forces have complicated the
relationship across the Taiwan Strait. Nevertheless the relationship between Taipei and Beijing is
arguably closer than ever before thanks to greater economic partnership. The third actor, the
U.S., continues to leverage its position as a regional power in East Asia and behave as mediator
between Beijing and Taipei. Yet as the Mainland and Taiwan have become closer and as Chinese

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power in East Asia increases, the U.S. is concerned for its continued ability to act as mediator, let
alone perpetuate its special relationship with the Island of Taiwan.
For all three parties involved in the progress of Cross-Strait relations, a variety
of behaviors are necessary. For Beijing, continuing to understand the nuances of Taiwanese
democratic politics is key if it wishes to win over the hearts and minds of the people of Taiwan
and reassure Taipei of its political intentions in the Taiwan Strait. Taipei must continue to
nurture its special relationship with the United States, while diversifying its economic portfolio
to secure itself from the Mainland’s possible use of economic leverage in future dealings. For the
United States, the goal should be to continue its role as a credible mediator between Beijing and
Taipei which will also increase Washington’s credibility in the eyes of its other East Asian allies
as it rebalances to East Asia..
Cross-Strait relations, while they may be of greater importance in recent decades, have a
complex history. The island of Taiwan did fall under direct Chinese administration until 1683,
when the Kangxi Emperor defeated the island’s local rulers and established a colonial
infrastructure with a tax system. 1Although the island officially became a directly controlled part
of the Chinese Empire, Taiwan’s population was mostly indigenous, with very little Han Chinese
migration from the mainland.2 The Japanese annexed Taiwan as a colony in 1895. Under
Japanese colonial rule, the island’s infrastructure developed and the economy experienced robust
growth.3 Taiwanese literacy rates surpassed those on the Mainland. Culturally, Taiwan also
diverged, importing Japanese traditions. Japanese colonial rule ended in 1945 when the United
Nations Relief and Rehabilitation Administration placed the island under the administrative
1 William Rowe, China’s Last Empire, the Great Qing (London: Belknap Press, 2009), 137-
138.
2 Rowe, China’s Last Empire, 141.
3 Rowe, China’s Last Empire, 234-236.

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control of the Republic of China.4 Four years later however, the island became the seat of the
government for the ROC as it fled the Communist takeover of the Mainland in 1949.
The events of 1949 and 1950 set the stage for the standoff along the Taiwan Strait that
exists today. In December of 1949, as Chiang Kai Shek’s Nationalists regrouped on Taiwan, it
was generally believed on both sides of the Taiwan Strait, as well as Washington, that the
Republic of China would soon capitulate. The government of Chiang Kai-shek was in poor shape
thanks to a tremendous amount of corruption, disloyalty within the military, and a perilous
financial situation. The Republic of China suffered from rampant inflation that had wiped out the
savings and with it the remaining morale of the Chinese people.5 Additionally, the regime’s
policies on the island of Taiwan from 1945 onward were extremely brutal and included the arrest
of political prisoners as well as government-sanctioned extortion in order to provide desperately
needed funds. Thanks to his government’s practices and defeat in the Chinese Civil War, Chiang
Kai-shek had also alienated his closest ally and financial backer, the United States.6
Only several months later in the spring of 1950, the Nationalist’s odds of survival
dramatically changed. The outbreak of the Korean War pitted the United States and its allies
against the People’s Republic of China on the Korean Peninsula. In order to consolidate a
position against the spread of Communism, the Republic of China on Taiwan was quickly
deemed a strategic asset for the U.S. The Truman administration resumed economic and military
aid to the ROC and sent the Seventh Fleet to the Taiwan Strait in order to prevent the breakout of
4 Hannah Pakula, The Last Empress, (New York: Simon and Schuster, 2009), 588.
5 Pakula, The Last Empress, 588-598.
6 Pakula, The Last Empress, 599.

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conflict.7 This renewed support for Chiang’s government culminated with the 1954 signing of
the Sino-American Mutual Defense Treaty that virtually guaranteed the long-term survival of the
government of the Republic of China and the continued administrative separateness of the island
of Taiwan from Mainland China. Additionally, until 1979 Washington did not view the island of
Taiwan as an official part of the Chinese state and took the stance that it was an occupied
territory administered by the Republic of China, some day to become a part of China proper.8
Throughout the 1950s and 1960s, the Republic of China on Taiwan was marketed as
“Free China,” and considered instrumental in the containment of and defense against the spread
of Communism in East Asia. What’s more, economic and military aid from the U.S. totaled $4
billion, with $1.5 billion earmarked for industrial development, throughout the 1950s and 1960s.9
These economic circumstances quickly changed however due to the island’s rapid economic
development. The island’s per capita income rose between 1949 and 1996 from $170 to $13,500
while unemployment remained low and inflation post-1949 remained generally stable.10
Taiwan’s economic success prior to the 1980s has a great deal to do with the ROC government’s
economic policies. This included initial reforms in the education system that caused the rate of
illiteracy to fall between 1949 and 1989 from 40.25 percent to 6.8 percent (Brown). A more
educated workforce and increased agricultural production during the 1950s allowed for heavy
investment in Taiwan’s fledgling industrial sector. Government-imposed high tariffs and a policy
of import-substitution helped to foster domestic industry while carefully regulated interest rates
encouraged the accumulation of financial capital that could be invested into Taiwanese
7 Pakula, The Last Empress, 603-604.
9Kerry Brown, Justin Hempson-Jones, and Jessica Pennisi, “Investment Across the Taiwan
Strait,” (2010): 3.
10 Brown, “Investment Across the Taiwan Strait,” 4.

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businesses.11 The result was a booming economy both in absolute terms as well as relative to its
neighbor on the other side of the Strait.
Coinciding with Taiwan’s impressive economic growth however was changing political
and social circumstances that ultimately prompted the ROC government in Taipei to institute
dynamic reforms by the 1980s. In terms of international space, the ROC on Taiwan had
successfully preserved its diplomatic standing with much of the international community until
the 1970s. This was thanks to its strategic role in a U.S.- dominated international order opposed
to the Communist bloc. This favorable environment however began to change by the end of the
1960s. With President Nixon’s inauguration in 1969, Washington’s policy toward China began
to shift in the midst of an unfavorable situation in Vietnam and a need to wedge apart the
People’s Republic of China from the Soviet Union. 1971 was the beginning of a process toward
diplomatic isolation for Taiwan. In that year, the “representatives of the government of Chiang
Kai-Shek” were expelled from the United Nations, to be replaced by representatives of the
People’s Republic of China.12
Throughout the 1970s, greater engagement continued between Washington and Beijing.
This included visits by the Nixon administration to Beijing in 1972 and 1975. Of the major items
agreed upon between the U.S. and the People’s Republic of China, the Shanghai Communiqué in
1972 was very significant for Taiwan. Within the Communiqué, the United States agreed to
acknowledge the One-China Policy as well as dismantle a number of military installations on the
island. This emerging cooperation between the Mainland and the U.S. was met with hostility on
Taiwan, where the general public felt “betrayed and isolated.” Indeed, as their closest ally and
biggest enemy both continued with rapprochement, the ROC government and the people of

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Taiwan began to rethink their own political identity. The Kaohsiung protests of 1979 that saw the
island’s political opposition united for the first time and put pressure on the ruling KMT
government to reform. 13
With the death of Chiang Kai-shek in 1975, his son and successor Chiang Ching-kuo
sought a new political path for Taiwan in the wake of growing diplomatic isolation. Ching-kuo’s
efforts at democratization reached a turning point in 1986 with the lifting of martial law and the
ban on opposition political parties. In that same year, the Democratic People’s Party (DPP) was
formed to challenge the incumbent Kuomintang.14 With the democratization of Taiwanese
politics initiated in 1986, the need for the KMT and other political organizations like the nascent
DPP to appeal to the Taiwanese public in free and fair elections led to a reshuffling of policy
objectives. Cross-Strait relations and the identity of the island of Taiwan were significant pieces
of this reshuffle. Until 1986, the official policy of the KMT government in Taipei toward cross-
strait relations was “no contact, no negotiations, and no compromise”.15 Coinciding with the end
of martial law in 1986, President Chiang Ching-Kuo announced in a Washington Post interview
that the island of Taiwan would pursue democratic reform and liberalization. This move toward
democratization was as much in response to the growing political opposition forces on the island
as it was to Taiwan’s political isolation after the United States shifted diplomatic recognition to
Beijing. A democratic and free Taiwan had the potential to garner greater sympathy from the
13 Yu-Shan Wu, “Taiwan’s Domestic Politics and Cross-Strait Relations,” The China Journal:
2005, 3.
15 Wu, “Taiwan’s Domestic Politics and Cross-Strait Relations,” 22-25.

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United States, and thus grant Taipei greater access to political engagement with Beijing and
Washington.16
While Chiang Ching-Kuo’s KMT government utilized democratic reform in order to
change the character of cross-Strait relations, opposition parties, finally able to participate openly
after 1986, further complicated the discussion about Taiwan’s relationship with the Mainland in
domestic politics. One of the emerging political forces in the 1980s was “native political
activism” that challenged the KMT’s prevailing belief that Taiwan and the Mainland must
eventually be reunified. These nativists, who were for the most part ensconced in the major
opposition Democratic People’s Party, generally believed that Taiwan was emerging as a very
separate entity from Mainland China.17 While opinions varied amongst nativists regarding
Taiwan’s political destiny relative to the Mainland, the very radical wing of the Democratic
People’s Party supported the island’s eventual independence. Although only a small minority of
Taiwanese agreed with the idea of outright independence, it became clear that, by the 1990s,
most individuals saw themselves as Taiwanese rather than Chinese. In addition perceptions of
identity, Taiwanese attitudes toward the Mainland also demonstrated a level of cultural
disassociation, wherein Taiwanese looked dismissively toward Mainland culture, society, and
national identity.18
While Taiwan increasingly saw itself from the 1980s onward as possessed with a unique
identity and culture that was separate from Mainland China, the island’s economic relationship
across the Taiwan Strait moved closer. While initial Taiwanese investments in the Mainland
16 Wu, “Taiwan’s Domestic Politics and Cross-Strait Relations,” 27.
17 Wu “Taiwan’s Domestic Politics and Cross-Strait Relations,” 8.
18 Peter Hays Gries and Jenny Su, “Taiwanese Views of China and the World: Party
Identification, Ethnicity, and Cross-Strait Relations,” Japanese Journal of Political Science:
2013, 9-10.

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were small, amounting to only $20 million by 1986, the number rocketed to $100 million in 1987
following the Mainland’s Foreign Direct Investment (FDI) liberalization, and $420 million by
1988. By 2007, 37,488 Taiwanese companies were invested in the Mainland totaling
approximately $100 billion.19 Beyond geographic closeness and shared language, Taiwanese
companies have sought out the Mainland’s low labor costs and relatively lax environmental
regulations. This strong level of Cross-Strait investment, primarily flowing from the island of
Taiwan to the Mainland, has created greater economic interdependence on both sides of the
Strait. This made any action on the part of the government in Taipei to upset the status quo with
the Mainland very unpopular with the Taiwanese public.
These push and pull factors concerning feelings of changing identity and greater
economic interaction with the Mainland have left most Taiwanese with moderate, almost
ambivalent feelings about cross-Strait relations. Functioning within a democratic environment,
political parties like the KMT and the DPP have responded in kind. The 1992 Consensus formed
in Hong Kong via an unofficial meeting between the Association for Relations Across the
Taiwan Strait (Mainland) and the Straits Exchange Foundation (Taiwan), was a significant move
by the KMT government to address the new political and economic realities surrounding Cross-
strait relations. The consensus generally states that both sides of the Strait agree that Taiwan and
the Mainland are each a part of one China, however that One-China Principle has different
interpretations in Taipei and Beijing.20 This mutual recognition of different interpretations of the
One-China principle meant a move away from the political extreme for the KMT, and toward
warmer relations with the Mainland, chiefly through the acknowledgement and respect for
20 Robert Ross, “Taiwan’s Fading Independence Movement,” Foreign Affairs: March/April
2008, 1-2.

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Beijing’s different interpretation of one China. The Democratic People’s Party has refused to
recognize the 1992 consensus, and has included individuals who have championed the cause for
Taiwanese independence. Yet despite this, the DPP throughout the 1990s departed from its
radical calls for independence in order to maximize votes that are largely moderate. This
departure has included phrases such as “boldly moving westward,” and other calls for greater
engagement with the Mainland. The DPP’s move toward the center was further enforced during
the 2000 presidential elections wherein the party’s presidential candidate and former staunch
independence advocate, Chen Shui-bian, swore against independence and called for better links
with the Mainland.21 A significant milestone in Chen’s and the DPP’s move to the center was the
Resolution on the Future of Taiwan in which Chen and other DPP leaders acknowledged the
legitimacy of the government of the Republic of China. This acknowledgement in 1999 was a far
cry from previous beliefs that the ROC must be replaced with a purely Taiwanese political
system.22
Even with its move toward the center in the 2000 presidential election, the DPP’s
conspicuous attempts to expand Taiwan’s international space and status as independent from the
mainland ultimately ensured its political demise in 2008. The DPP President Chen Shui-bian
strained Cross-Strait relations starting with his refusal to accept either wording of the One-China
Principle, or the 1992 Consensus. This was followed by Chen’s evocation of the United Nations
Charter as proper framework for continued talks between Taipei and Beijing, a move that
suggested that interactions between Taiwan and the Mainland were of a state-to-state nature.23
22 Wu, “Taiwan’s Domestic Politics and Cross-Strait Relations,” 18-20.
23 Sheng Lijun, “Chen Shui-bian and Cross-Strait Relations,” Contemporary Southeast Asia:
April 2001, 13-15.

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The result of the DPP government’s more radical agenda regarding cross-Strait relations strained
Taiwan’s relationship with the United States, hindered the development of business partnerships
between Mainland and Taiwanese businesses, and proved to be unpalatable for a largely
moderate Taiwanese public. The 2008 elections consequently were a landslide victory for Ma
Yingjeou and the KMT.24
While the Taiwanese viewpoint on Cross-strait relations has grown to become a complex,
nuanced series of opinions thanks to the island’s democratization and emerging sense of a
separate identity, the Mainland Chinese perspective has remained largely unchanged and
obstinate with the belief that both sides of the Strait are part of one China. As the Nationalist
government of the Republic of China regrouped on Taiwan at the end of 1949, Chairman Mao
Zedong of the Chinese Communist Party founded the People’s Republic of China in Beijing.
Throughout the 1950s and 1960s, Mao’s Communist regime focused on consolidation of control
over Mainland China through what became a series of disastrous policies such as the Great Leap
Forward and the Cultural Revolution. As with Taipei, the PRC absolutely refused negotiation,
compromise, or contact with the government of Chiang Kai-shek with whom they were
technically still at war. Although the ROC on Taiwan was guaranteed protection through a
mutual defense agreement with the United States, the island’s international space throughout the
1960s and 1970s gradually diminished as more states formally recognized Beijing as the
legitimate government of China. This culminated with rapprochement throughout the 1970s
between Washington and Beijing, and finalized with formal recognition in 1979. For Cross-strait
relations, a relatively warmer relationship between the PRC and the U.S. meant that Taipei’s
24 Jianwei Wang, “United States and Evolving Cross-Strait Relations,” Journal of Chinese
Political Science: October 2010, 4.

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closest ally was willing to facilitate warmer relations between Taiwan and the Mainland. The
Mainland’s economic reforms from 1979 onward and the ensuing Taiwanese investment only
encouraged informal dialogue between Taipei and Beijing, done through the Association for
Relations Across the Taiwan Strait and the Straits Exchange Foundation in Hong Kong. What is
arguably the most significant milestone of this era of warmer Cross-Strait relations was the 1992
Consensus and the acknowledgement that there are different interpretations of the One-China
Principle. Indeed, this Consensus demonstrated that Taiwan and the Mainland were willing and
able to discuss more sensitive issues of political division.25
Significant diplomatic progress and economic interdependence notwithstanding, the
Mainland’s military and political measures to counter Taiwanese political continued, even
increased distrust on both sides of the Strait. While the buildup of armaments directly across
from Taiwan is not a new phenomenon, Beijing’s arsenal there has been enhanced with missiles
and other weaponry that can strike more decisively should war ensue. What’s more, the PRC has
demonstrated its capabilities without hesitation at several points throughout the 1990s and 2000s.
One of these major military exercises occurred in 1996 as Taipei held its first free and fair multi-
party elections. Missile tests in the Taiwan Strait coincided with stern warnings from Beijing
demanding that the Taiwanese not elect leaders who did not adhere to the One-China principle.26
This behavior of threats and military demonstrations was repeated in 2000 with further warnings.
In addition to a sore response to Taiwanese democratization, Beijing has periodically jockeyed
with Taipei for greater international space. The Mainland has economically rewarded or
politically pressured a number of the ROC’s remaining diplomatic allies in sub-Saharan Africa,
Latin America, and the Pacific to switch recognition to Beijing, actions that have decreased trust
25 Wang, “The United States and Evolving Cross-Strait Relations,” 3.
26 Ross, “Taiwan’s Fading Independence Movement,” 2.

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across the Strait.27 Beneath the Mainland’s behavior toward Taiwan are Mainlander attitudes that
have remained largely obstinate in the belief that Taiwan is a part of China. Indeed, a 2005
survey estimated approximately 70% of Mainland Chinese believe that Taiwanese independence
must be prevented through whatever means necessary.28 Consequently, while those on Taiwan
possess a more complex and dissenting mix of viewpoints about the future of Cross-Strait
relations, Mainlanders remain relatively unchanged in their beliefs.
Taiwan’s democratization has also made progress on Cross-Strait relations for the
Mainland more difficult. Throughout the 1990s and 2000s, Beijing struggled to sustain warmer
relations with Taiwan while also remaining steadfast to its view that Taiwan is a part of China.
Major political blunders on Beijing’s part occurred in the 1996 and 2000 elections when military
demonstrations across the Taiwan Strait in response to the DPP’s and other group’s growing
popularity caused public opinion in Taiwan to sway toward political factions that supported a
more autonomous Taiwan. This outcome however was the opposite of what Beijing had tried to
encourage. The Mainland had attempted to intimidate the Taiwanese into voting against
candidates like Lee Teng-hui in 1996 and Chen Shui-bian in 2000, both of whom supported
“more separatist policies,” that included greater distance in the Cross-Strait relationship.29 The
strategy backfired, and a frustrated Taiwanese electorate threw their support toward Lee and
Chen at the expense of Lien Chan and other candidates who wished to be more steadfast to the
One-China Policy. Learning from its miscalculations, as early as 1997, PRC President Jiang
Zemin invited representatives from “all of Taiwan’s political parties to participate in
27 David Brown, “Building Trust Across the Taiwan Strait,” Triannual E-Journal on East
Asian Bilateral Relations,” 5.
28 Zheng Yongnian, “China’s New Nationalism and Cross-Strait Relations,” International
Relations of the Asia-Pacific: 2007, 62.

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reunification talks” under the condition that the DPP abandon its “Taiwan independence
stand.”30 This conciliatory tone continued into the 2000s with increased exchanges between
ARATS and SEF and repeated invitations to Chen Shuibian’s DPP government to participate in
reunification talks. The culmination of Beijing’s change in posture toward Taiwanese politics
was a groundbreaking visit to Beijing by KMT Chair Lien Chan in 2005. This visit spurred
successive trips to the Mainland for political meetings by Taiwanese leaders from both the KMT
and DPP.31 Amidst the Mainland’s cooperation and development of a new approach to relations
with Taipei however is also a continued buildup of armaments along the Taiwan Strait. Most
significantly, this includes short and medium-range missiles that give PRC forces the ability to
“destroy Taiwan’s prosperity before the United States has a chance to intervene” in the Strait.32
The third party involved in cross-Strait relations, the United States, can be credited for
the political divide between the Mainland and Taiwan. It was the U.S. that, in 1950, guaranteed
the survival of the Republic of China on Taiwan when the island was suddenly considered to be
of strategic importance in the greater struggle against the expansion of the Communist bloc in
Asia. Consequently, Taipei and Washington signed the Mutual Defense Treaty in 1954 and the
U.S. and its allies around the globe recognized the ROC on Taiwan as the official government of
China, isolating the PRC. By the beginning of the 1970s however the U.S., faced with an
unsuccessful war in Vietnam and interested in a new strategy of isolating the Soviet Union,
began to pursue rapprochement with the Beijing. Secret meetings in Beijing between Secretary
of State Henry Kissinger and Zhou Enlai in 1971 were followed by an official state visit by
30 Sheng, “Chen Shui-bian and Cross-Strait Relations,” 16.
31 Richard Weixing Hu, “Taiwan Strait détente and the changing role of the United States in
cross-Strait relations,” China Information: 2013, 7.

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President Nixon in 1972. Successive agreements between Washington and Beijing to normalize
relations, including the Shanghai Communiqué in 1972, were met with feelings of betrayal in
Taipei. Fears of abandonment also extended to Washington, where it was generally believed that,
as relations normalized with Beijing, unofficial relations and security guarantees should remain
in place between the United States and the island of Taiwan. Consequently, the Senate passed the
Taiwan Relations Act in 1979 that promised U.S. defense of the island of Taiwan in the event of
attack.33 Additionally, the American Institute in Taiwan, an organization reporting to the State
Department, replaced formal diplomatic relations.
With diplomatic recognition switched to the PRC in Beijing, the U.S. role in Cross-Strait
relations transformed from staunch supporter of the government on Taiwan, to concerned
mediator for cross-Strait dialogue with the goal of eventual reunification. Indeed, in the 1972
Shanghai Communiqué, Washington agreed to the One-China policy, including the belief that
Taiwan is a part of China. What this agreement does not specify is the manner in which China
should be reunified, leaving a level of “constructive ambiguity” that allowed the U.S. to not
delegitimize its former diplomatic ally on Taiwan.34 Washington supported Cross-Strait
investment in the 1980s as well as Taiwan’s democratization from 1986 onward. Just as the
Taiwanese public has mixed feelings toward cross-Strait relations, leaning toward neither the
extreme of prompt reunification or full independence, so too does the United States support a
status quo in which economic issues are tackled in lieu of more sensitive political difficulties.
One of the main reasons for this is because of fears in Washington that aggressive posturing
between Taipei and Beijing could lead to U.S. entrapment thanks to its security commitments
spelled out in the Taiwan Relations Act. What’s more, it is generally believed in Washington that
34 Chen Weihua, “U.S. Arms Sales to Taiwan Protested.” China Daily: December 2014.

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conflict in the Taiwan Strait, regardless of its cause, is seriously damaging to U.S. political and
economic interests on both sides of the Strait and elsewhere in East Asia.35 Subsequently, the
U.S. has banned state visits by Taiwanese officials, with the exception of ROC President Lee
Teng-hui’s visit to his alma mater Cornell University in 1996, and has also criticized Taiwanese
overtures for greater international space in organizations like the U.N and calls for
independence.36 Conversely, Washington has reacted swiftly to security threats from the
Mainland. The Taiwan Relations Act was put to the test in 1996 when, in the midst of the
island’s first free and fair elections, President Clinton ordered the deployment of “two aircraft
carrier battle groups within the vicinity of Taiwan” and warned Beijing against further missile
tests in the Taiwan Strait.37
Apart from these flashpoints of military posturing, the United States has repeatedly
promoted continued negotiations. Shortly after pro-independence candidate Chen Shui-bian one
the 2000 presidential election, the Clinton Administration reaffirmed the One-China Policy and
encouraged continued dialogue between Taiwan and the Mainland.38 Other U.S. allies like Japan
and Australia followed suit with similar statements in support of the One-China Policy, despite
the victory of a Taiwanese political party that sought to overhaul the nature of cross-Strait
relations. In 2007, when President Chen pushed for a referendum in the UN on the political
status of Taiwan, the Bush Administration sent “stern warnings” to Chen’s government that such
actions would strain relations with the U.S. possibly force Washington to reconsider the state of
its relationship with the island. These actions on the part of the U.S are credited for appealing to
the Taiwanese people in the 2008 election, as well as sent a strong signal to Beijing about
35 Wang, “United States and Evolving Cross-Strait Relations,” 3.
36 Wang, “United States and Evolving Cross-Strait Relations,” 6.
37 Sheng, “Chen Shui-bian and Cross-Strait Relations,”
38 Sheng, “Chen Shui-bian and Cross-Strait Relations,”13.

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Washington’s commitment to cross-Strait dialogue. Indeed, in 2008 the Bush Administration
encouraged Taipei to consider “reopening dialogue” with the Mainland, after years of strained
relations thanks to Chen Shui-bian’s pro-independence policies. 39Ultimately, the U.S proved in
the 1990s and 2000s to be able to successfully leveraged its special relationship with Taipei
while avoiding a serious strain on relations with Beijing.
The current state of affairs in the Taiwan Strait continues to be wracked with ambiguity.
The most encouraging portion of cross-Strait relations is economic. In fact, what is considered to
be “the crowning achievement” of Ma Ying-jeou’s administration is the signing of the Economic
Cooperation Framework Agreement (ECFA) between Taipei and Beijing in 2010. Generally
speaking, the ECFA eases trade regulations, lowers tariffs, and allows for greater commercial
and industrial cooperation between Taiwan and the Mainland.40 Although the Ma
administration’s broader reason for the ECFA is to integrate Taiwan into the global economy
through the easing of regulation, tariffs, and other blockages, the agreement’s primary purpose
and impact has been on Cross-Strait economics. Following the signing of the ECFA, an initial
list of 267 exports from the Mainland valued at $2.86 billion and 539 items for export from
Taiwan totaled at $13.83 billion were earmarked for lower tariffs and relaxed trade barriers. It is
predicted that, as the ECFA is implemented in more areas of trade between Taiwan and the
Mainland, the nearly $100 billion Cross-Strait trade will continue to grow, creating 260,000 jobs
on Taiwan.41 In addition to economic dividends across the Taiwan Strait, it is hoped that
Beijing’s signing of the ECFA means that it will accept the legitimacy of Free Trade Agreements
(FTAs) between Taiwan and other states, an issue that is currently a barrier to the island’s further
39 Weixing, “Taiwan Strait détente and the changing role of the United States in cross-Strait
relations,” 12.
40 Brown, “Investment Across the Taiwan Strait,” 20-32.

18
integration into the global economy. Indeed, the Ma administration had this benefit on its mind
after the Mainland signed a China-ASEAN FTA that gave Mainland businesses greater access to
Southeast Asian markets than their Taiwanese counterparts.42 Taipei also seeks membership in
the Regional Comprehensive Economic Partnership that has been championed by China and the
ECFA is meant to be a stepping-stone to possible future participation.
While the ECFA has been heralded by Beijing, the Ma administration and many in the
KMT as a triumph for Taiwan’s economy, skeptics in the opposition have pointed to the
possibility that the ECFA may push Taiwan’s economy towards a dangerous level of dependence
upon the Mainland. Indeed, already 40% of Taiwanese exports are destined for the Mainland
and, although high technology and service industries continue to thrive on Taiwan, cheaper
Mainland factories now manufacture many components of their products. What is also
concerning to skeptics is that Taiwanese business has inordinately invested in one market,
Mainland China.43 By 2013, approximately 60% of Taiwanese FDI was concentrated in
Mainland China. With the ECFA making it easier than ever for Cross-Strait investment, this
percentage is expected to increase unless diversification to other markets is encouraged.44
From a Mainland perspective, Taiwan’s economic closeness since the end of the 1980s
has been extremely beneficial. The ECFA in 2010 meant even greater access to Taiwan’s
markets for a growing list of Chinese exports such as petrochemicals, cars, and textiles, as well
as granting access to Taiwanese markets for Mainland business sectors ranging from medicine to
aircraft maintenance. Although the Mainland has always provided Taiwanese industry with
cheap labor, the ECFA has cut down regulations to allow Taiwan business even more access to
43 Sheng, “Chen Shui-bian and Cross-Strait Relations,” 7.

19
competitively priced labor. The ECFA and preceding agreements in 2009 have also opened up
100 new sectors of Taiwanese industry for Mainland direct investment. 45While regulations on
Mainland investment continue to remain stringent, such as a 10% institutional investment cap,
greater cooperation between Mainland and Taiwanese business has occurred. One example is
China Mobile’s talks for a stake in one of Taiwan’s major telecommunications companies.
Coinciding with a closer Cross-Strait economic partnership, the United States has also
moved closer economically to both Taiwan and Mainland China. Taiwanese imports to the
United States amount to $13.4 billion and, despite its lack of formal diplomatic recognition from
Washington, Taiwan maintains a bilateral Trade and Investment Framework Agreement (TIFA)
since 1994 with the United States.46 Washington has also stated numerous times, most recently
through the 2013 Taiwan Policy Act, that it seeks an eventual Free Trade Agreement (FTA) with
Taiwan. This expansion in U.S. investment and economic partnership with Taiwan has happened
alongside greater U.S. investment and economic partnership with the Mainland. Most recently
economic dialogue between the Washington and Beijing has focused around the Strategic and
Economic Dialogue (S&ED) in which both sides called for greater “macroeconomic
cooperation” and the U.S. in particular stated the need for a more balanced trade relationship47.
Over the subject of Cross-Strait economic cooperation, the Obama Administration has applauded
the signing of the ECFA and has continued Washington’s encouraging stance toward economic
openness between Taiwan and the Mainland.
Aside from relatively cordial economic relations, the Taipei-Beijing-Washington
triangular relationship’s political and security issues remain difficult to tackle. In December
46 Weixing, “Taiwan Strait Détente and the Changing Role of the United States,” 14.
47 Weixing, “Taiwan Strait Détente and the Changing Role of the United States,” 14-16.

20
2008, after the landslide victory of the KMT, PRC President Hu Jintao announced the “Six-Point
Proposal for Future Cross-Strait Relations” at the 17th Party Congress in Beijing. The Proposal
included goals of greater confidence building, informal dialogue through ARATS and SEF, and
continued economic cooperation. What the Proposal signaled to Taipei and East Asia as whole
however was that “Beijing was not looking for immediate reunification,” and was content to
continue a gradual dialogue over sensitive political issues while broadening the already
developed economic relationship.48This affirmation of a gradualist approach toward the security
and political dimensions of Cross-Strait relations suggests that Beijing may have learned a
valuable lesson after its military exercises and intimidation tactics of the 1990s and early 2000s
helped encourage the Taiwanese public to vote in pro-independence political leaders. Indeed, the
hope for greater exchanges and confidence building through political dialogue is that Beijing can
win the hearts and minds of the Taiwanese. Yet despite this enthusiasm from the Mainland, its
moves to undermine the democratic institutions governing the Hong Kong Special
Administrative Region in Hong Kong damaged it’s the credibility of its argument for an eventual
peaceful and respectful reintegration of Taiwan.49
Taipei, particularly since the inauguration of President Ma Ying-Jeou in 2008, remains
even more ambiguous than the Mainland regarding the discussion of political integration. As has
been the case since the early 1990s, the government’s stance reflects public opinion on the island
that leans neither toward separation from the Mainland nor toward a clear path for reunification
with the Mainland. What has changed since 2008 on the Taiwan side of Cross-Strait dialogue has
49 Tok, Sow Keat, Managing China’s Sovereignty in Hong Kong and Taiwan. Palgrave
Macmillan, (2013).

21
been Taipei’s return to the One-China Policy of the 1992 Consensus.50 A marked change that
heralded the reopening of dialogue between Taipei and Beijing was Ma’s insistence that such
dialogue was not state-to-state but rather between two regions within a state, a clear signal of
assurance to his counterparts on the Mainland. What has become the theme of Cross-Strait policy
for the Ma administration since 2008 is the Three No’s: no unification, no independence, no use
of force.51 In other words, Taipei, like Beijing, wishes to tackle easier issues like economic
cooperation before moving to the more sensitive issues of political integration or separation that
dominated events during the Chen years.
Beneath a mutual agreement to hold off on the more sensitive issues however, is the
reality of a growing asymmetric relationship that may prove detrimental for Taiwan. Beijing is
clearly becoming more assertive in East Asia on subjects such as territorial disputes in the East
and South China Seas as well as the U.S. “pivot” toward East Asia. This assertiveness is a
product of the Mainland’s growing economic power and expanding interests, as well as a new
nationalism. The latter cause is believed to have developed rigorously since the early 1990s as
the PRC sees itself to be reclaiming its place as a great power in the international community.
What’s more, increased national pride amongst the citizenry on the Mainland is reflected in
Beijing’s behavior toward maritime disputes and the continuity of U.S. power in East Asia52. For
Cross-Strait relations, it means that greater moves on Taiwan’s part for separation from the
Mainland will result in greater mass support on the Mainland for a strong response. The public’s
views have been reflected in discussions in Beijing in 2013 to raise the Taiwan issue to the level
of “core interest” a status already given to the East China Sea dispute. If Taiwan were to become
52 Zheng Yongnian, “China’s New Nationalism and Cross-Strait Relations,” 6.

22
a “core interest,” it could mean consequences like military action, if the island moves toward
independence or at least refuses reunification.53 Backing the Mainland’s ever more fervent
claims to Taiwan is its nascent military development, which includes greater strike capabilities
across the Taiwan Strait. Such capabilities translate to the Mainland’s ability to successfully
cripple Taiwanese defenses and infrastructure before the U.S. Seventh Fleet has the chance to
intervene on Taiwan’s behalf.54
While Taiwan may not be able to expand its military to the scale and cost of the
Mainland’s, it continues to purchase arms from the United States with the goal of providing a
sufficient deterrent against possible future strikes. The ultimate hope is that, through a sufficient
deterrent, a military option in the Taiwan Strait can be ruled out as too costly. Arms sales from
the U.S. have continued even after the end of formal diplomatic recognition of the ROC and
despite repeated protests from Beijing. As the subject of arms sales to Taiwan has continued to
be of great sensitivity to Sino-American relations, the sales often take place when political
backlash from Beijing is less costly. Often such sales occur during the second half of an
administration such as the Bush Administration’s 2008 arms sale and, more recently, the Naval
Vessel Transfer Act signed by President Obama in December of 2014 that granted the sale of
four Perry-class guided missile frigates to Taiwan.55 For the Mainland, arms-sales to Taiwan are
an unfortunate reality, as spelled out in the Sino-American 1982 bi-lateral agreement wherein it
was understood that the U.S. might continue to sell arms to Taiwan with a gradual phase-out as
Cross-Strait relations improved.56 Nevertheless, with nationalism ever more fervent, Beijing
53 Zheng Yongnian, “China’s New Nationalism and Cross-Strait Relations,” 15.
54 Ross, “Taiwan’s Fading Independence Movement” 3.
55 Chen Weihua, “U.S. Arms Sales to Taiwan Protested.”

23
evermore assertive, and its military growing stronger, arms sales to Taiwan continue to be an
activity with political consequences that Washington must continues to carefully calculate.
As Washington sells arms to Taiwan and guarantees the island’s security, it also operates
a useful facilitator of Cross-Strait dialogue. In addition to providing a credible deterrent against a
possible invasion, it is argued that arms sales to Taiwan provide the island with greater
confidence in negotiations with the Mainland. On the other hand, Washington also helped to
maintain the improved relationship across the Taiwan Strait through its warnings and diplomatic
distance from the pro-independence Chen administration, actions that sent a message to the
Taiwanese that continued assistance from the U.S. was dependent upon continued dialogue with
the Mainland. Indeed, the landslide victory of Ma Ying-jeou and his popular Three No’s policy
further demonstrates the fear of alienating Washington.57
Yet the U.S. role in Cross-Strait relations is changing and not necessarily to the benefit of
U.S. interests. Once again, growing Chinese assertiveness and its increased ability to project
regional power has resulted in less trust and patience for the U.S. over the Taiwan issue. Political
leaders in Beijing have more frequently referred to Taiwan as a core interest and framed U.S.
relations with Taiwan in the context of a broader belief that the U.S. seeks to contain waxing
Chinese power. Yet, this increasing fervor over the Taiwan issue has not stopped the U.S. from
remarking on the economic political consequences for U.S. power in Asia that would accompany
“loss” of Taiwan, as officials in the Bush Administration did in 2008.58 It also did not stop
members of Congress in 2008 from requesting a review of Washington’s Taiwan policy, with
attention paid to upgrading U.S.-Taiwan relations.
57 Wang, “The United States and Evolving Cross-Strait Relationship,” 8.
58 Weixing, “Taiwan Strait Détente and the Changing Role of the United States.”

24
As the Ma administration on Taipei continues to foster calmer relations with the
Mainland, it is important that all three parties involved in Cross-Strait relations take steps to
continue to improve the situation in the Taiwan Strait. Of all of three parties, the Mainland’s
position in the Taiwan Strait is becoming more imposing and thus its decisions regarding its
relationship with Taiwan are more significantly defining the island’s political future. If Beijing
wishes to continue to bring Taiwan closer through peaceful means, as President Hu Jintao stated
in 2008, then it must become more reticent to the nuances of Taiwanese politics. The Mainland’s
first experiences with Taiwanese democracy in the 1990s were damaging to Cross-Strait
relations, as Taiwanese reacted to Beijing’s missile tests in the Taiwan Strait with anger.
Ultimately, the Mainland’s bullying in order to force certain political outcomes in Taipei resulted
in a pro-independence government led by Chen Shui-bian.59 Leaders in Beijing however did
show progress in the 1990s when President Jiang Zemin declared that all Taiwanese political
factions were welcome to participate in Cross-Strait dialogue with the Mainland, albeit with the
stipulation that the DPP and other parties denounce their aspirations for independence. Further
progress was made to “win the hearts and minds of the Taiwanese people,” and to court
Taiwanese political leaders when, in 2005, Lien Chan’s KMT delegation met with leaders in
Beijing for a summit that called for warmer relations. More recently, the 18th CCP Congress
called for “the two sides to ‘jointly explore political relaions’” and subsequently invited scholars
from numerous political factions in Taiwan to take part in discussions on how to establish better
political relations.60 What was even more encouraging was that scholars from the KMT and the
DPP accepted the invitation and began an open debate on both sides of the Taiwan Strait about
the possibility of a peace agreement. Another signal that Beijing is learning to catch flies with
59 Sheng “Chen Shui-bian and Cross-Strait Relations.”

25
honey came in January 2014 when President Xi Jinping met with KMT Chairman Wu Poh-
hsiung. Chairman Wu openly admitted that Taiwan must seriously consider Beijing’s One-China
Framework when exploring its political future, a break even from the KMT who traditionally
refer to the 1992 Consensus on the subject of unity with the Mainland.61
It is clear that Beijing’s recent success with warmer Cross-Strait relations came not from
political threats and military demonstrations, but rather through initiating dialogue, inviting
discussion, and welcoming Taiwanese leaders of all stripes to discuss Cross-Strait relations. The
Mainland’s ability to influence Taiwan’s political future is already strong thanks to the island’s
growing economic dependence and asymmetric military power. In addition to these frightening
realities, continued reassurance signaling through initiating dialogue and can further convince the
Taiwanese of closer relations with the Mainland as well as prevent future rifts.
While Beijing continues to take a more dialogue-friendly approach to Cross-Strait
Relations, Taipei must proceed cautiously. As is the case for the Mainland, the biggest lessons
for the Taiwanese moving forward should be taken from the degeneration of Cross-Strait
relations during the Chen Shui-bian administration between 2000-2008. Although President
Chen did not openly call for independence from the Mainland during his time in office, he did
initiate a number of actions that suggested independence, and alienated both the Mainland and
the United States. One of the first suggestions that Taipei was interested in political separation
from the Mainland came in the language used by Chen and other members of his administration。
They described themselves as Huaren（华人), just as ethnic Chinese in Singapore and other
diaspora communities do, rather than Zhongguoren (中国人).62 This behavior continued
throughout the 2000s, and included Chen’s remark on Cross-Strait relations as equivalent to
62 Sheng, “Chen Shui-bian and Cross Strait Relations.”

26
relations between two states as well as his insistence that Cross-Strait dialogue follow UN
Charter guidelines for relations between two states.63 Additionally, Chen’s government sought to
gain greater international space for Taiwan through membership in the World Health
Organization and an application to be admitted as a member state, in the United Nations.
Domestically, a “defensive referendum” was called in 2004 that asked the Taiwanese public how
they believed Cross-Strait relations and a military build-up in the Taiwan Strait should proceed.64
As relations improved through more open dialogue and Ma Ying Jeou’s Three No’s, Taiwan
must continue to proceed with caution. Given domestic politics, it is clear to leaders in Taipei
that the status quo regarding political issues with the Mainland is popular amongst many
Taiwanese who fear the consequences of either reunification or independence.
In addition to the political risks, the ECFA has raised the economic costs for greater
Taiwanese political distance from the Mainland. Not only would tense relations between Taipei
and Beijing hurt investment opportunities for both Mainland and Taiwanese businesses, but also
inhibit job creation, one of the major benefits of the ECFA for Taiwan.65 Additionally, Beijing’s
adherence to the ECFA means for Taiwan that the Mainland may recognize the legitimacy of
Free Trade Agreements signed between Taipei and other states in East and Southeast Asia, a
move that can help to integrate Taiwan into the global economy. Strained Cross-Strait relations
can upset this arrangement and seriously damage Taiwan’s economic prospects.
Taiwan’s cautious but warm relationship with the Mainland also benefits its special
relationship with the United States. In addition to the strong economic relationship between
Taiwan and the U.S., the need for continued U.S. arms purchases and a U.S. commitment to the
63 Ross, “Taiwan’s Fading Independence Movement.”
64 Sheng, “Chen Shui-bian and Cross-Strait Relations,” 15-17.
65 Brown “Cross-Strait Investment.” 38.

27
island’s defense means that maintaining a good relationship with Washington is important to
Taiwan’s security and ultimate survival. The Chen years saw Washington join Beijing in stern
warnings against calls for greater international space and separation from the Mainland. Not only
did Chen’s policies lead the U.S. to fear entrapment in its security agreement with Taiwan, but it
also threatened to strain Washington’s relationship with Beijing. Taipei’s Cross-Strait policies
must therefore take into greater account the U.S. reaction. Indeed, this has happened, with
President Ma’s more moderate policies and adherence to the 1992 consensus. The result has been
further arms sales to Taiwan in 2008, 2012, and 2014 and no serious change in the U.S. security
commitment to Taiwan.66 Additionally, bolstering its security apparatus gives Taiwan a level of
deterrence that can discourage the Mainland from seeking a military option to reunification.
While Taiwan will never have a military equal to the Mainland’s in size and scope, it can provide
enough deterrence that any military solution to reunification could be deemed too costly.67 Such
deterrence is possible through U.S. arms sales, which in turn is predicated on good relations with
the U.S.
For the United States, its continued position as a party to Cross-Strait relations is ensured
by its security commitment to Taiwan, its economic interests regarding shipping and investment
in the Taiwan Strait and Mainland China, and its larger schemes for regional order in East Asia.
However, as Taipei and Beijing have warmed to one another since 2008, the need for
Washington to intervene as a mediator (as it did during the Chen years) is not as strong.
Additionally, greater assurances for peaceful dialogue from Beijing and Taipei, as well as the
67 Wang, “The United States and Cross-Strait Relations,” 19.

28
Mainland’s developing military capabilities, might make the U.S. security commitment to
Taiwan less meaningful in Cross-Strait relations.
In regards to the Mainland’s ascendancy as a regional power seeking to help define or
completely revise East Asian regional order, the U.S. must take this into account when
participating in Cross-Strait relations. With China’s new nationalism that has emerged since the
1990s, combined with its nascent political and economic power, it is more important than ever
that Washington convince Beijing that it staunchly opposes greater Taiwanese political distance
from the mainland, let alone independence. Washington accomplished this during the 2000s and
must be prepared to take a strong stance against any similar signals from Taipei in the future.
This sends assurance signals to Beijing at a time when Chinese political leaders increasingly
refer to Taiwan as one of China’s “core interests.”
In addition, the U.S. must also preserve its relationship with Taiwan, not only for
Taiwan’s sake, but also for the sake of key U.S. allies in East Asia. It is felt by the Obama
administration that Taiwan, like other areas of East Asia, is a key part of U.S. regional
framework. The “loss” of Taiwan, as was remarked by the Bush administration, would be
detrimental to U.S. security and economic interests.68 Of great significance is the importance of
the Taiwan Strait as an artery of global shipping, the loss of which would be economically
disadvantageous to the U.S. and its allies in East Asia such as Japan. Beyond this however, the
future of U.S. security guarantees for Taiwan can set an example for its East Asian allies and
strategic partners. Reinterpreting promises of protection too broadly in order to avoid entrapment,
or ending arms sales, could signal to U.S. allies like South Korea, Japan, and the Philippines that
the U.S. rebalancing in East Asia lacks seriousness. Moreover U.S. relations with Taiwan and its
68 Weixing, “Taiwan Strait Détente and the Changing Role of the United States.”

29
continued insistence on involvement in Cross-Strait relations can signal that Washington is a key
balancer to growing Chinese regional power.
As with other major issues in East Asia, Cross-Strait relations are subject to changing
factors like growing Chinese power, U.S. rebalancing, and Taiwan’s domestic politics. The
character of relations across the Taiwan Strait have also transformed since 1986 from silence to
tentative dialogue, to military posturing, to reopened dialogue and economic interdependence.
The relationships amongst the Taiwan Strait’s three parties, the U.S., Mainland China, and
Taiwan, have gone through tumultuous change. Taiwan, faced with international isolation at the
end of 1970s, reinvented itself through democratization and a new economic relationship with
the Mainland. The Mainland also took part in opening dialogue with Taiwan in the 1980s while
it underwent significant economic reform to become a rapidly developing regional power. The
United States has been present s as a mediator whose security guarantees for Taiwan and official
relationship with the Mainland leave it, sometimes precariously, in the middle of disputes and
dialogue between both sides of the Strait. As these three parties continue to define Cross-Strait
relations, their roles will certainly transform. Nevertheless, each party has a role to play, whether
through greater dialogue over sensitive political issues on the part of Taipei and Beijing, or
through continued commitments to the Taiwan Strait’s stability on the part of the U.S. as it
rebalances to East Asia.

30
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