In Asia, gifts matter. Consider the gift exchange during the recent high-level chat between Taiwan’s new president Ma Ying-jeou and Chen Yunlin. Chen is the chairman of the Association for Relations Across the Taiwan Strait (ARATS), Beijing’s primary negotiation body with Taiwan. He recently went to Taipei for five intensive days as the highest profile mainland visitor in the last 60 years. Although Chen only met Ma for a brief talk, they did manage to exchange gifts. President Ma gave Chen a fine porcelain ornament. Porcelain, a key symbol of Chinese culture, is also known as china. Ma’s gift, then, can be interpreted as a sign of the “One China” consensus because what he gave Chen was one “china.” Indeed, under the framework of the “1992 consensus,” which allows both parties to interpret the term “one China” differently, Beijing and Taipei are willing to promote their bilateral relationship while remaining ambiguous about more sensitive issues.

Both parties across the Taiwan Strait have been much more pragmatic and realistic after the Beijing-friendly Nationalist Party took office following Taiwan’s presidential election earlier this year. Chen Shui-bian, the former president of Taiwan, insisted on both political and cultural separation of Taiwan from its mainland rival. His successor, Ma, rejected the pro-independence approach and renewed talks with Beijing in order to thaw the long icy cross-strait relationship. After Ma’s inauguration in May, representatives from the Taiwan-based Strait Exchange Foundation (SEF) met with officials from ARATS in Beijing for the first time in nearly 10 years. The visit marks a recent warming trend between Beijing and Taipei, though the Democratic Progressive Party (DPP), the major opposition party in Taiwan, continues to claim Ma’s approach has led to a tremendous loss of Taiwanese sovereignty.

Both sides of the Taiwan Strait have been avoiding direct confrontation on sensitive issues like sovereignty these days, focusing instead on economic reciprocity. Ma has promised that he would neither propose unification talks with Beijing nor advocate independence, which would spark a potentially catastrophic war. The majority of Taiwanese favor this status quo, which is a kind of de facto independence. However, fundamental disputes between Beijing and Taipei remain, such as Taipei’s desire for more international space and U.S. arms sales to the island.

Landmark Meeting

The landmark agreements signed during Chen Yunlin’s recent visit ranged from trade and transportation to food security. The two sides discussed broader cooperation through economic, financial, and cultural exchanges. These agreements also finally established the long-debated “three linkages” of direct postal, transportation, and trade links across the Taiwan Strait. The Taipei-based SEF and the Beijing-based ARATS signed 13 agreements in total, tripling direct cross-strait charter flights, initiating tax-free cargo shipments, and shortening the delivery time span for postal services. The lack of direct transportation, which required the transfer of flights and cargo in Hong Kong before reaching the ultimate destination, perennially troubled businessmen on both sides and increased costs substantially. These artificial barriers against free trade across the Taiwan Strait were probably the most self-defeating policy of Chen Shui-bian’s administration, as it sacrificed numerous business opportunities on the altar of politics.

Having suffered an unprecedented economic recession and rising unemployment rate under Chen, the Taiwanese want fundamental changes in their economic environment and expect Ma’s Beijing-friendly approach to turn around the economy. In contrast with his predecessor, who was afraid of the potential sovereignty risk of economic dependence on Beijing, Ma is willing to tie Taiwan more closely to the most booming market in the world. By pitching Taiwan as a destination for mainland tourists, Taipei has acknowledged the obvious benefit of exploiting the market on the other side of the strait. At the same time, Beijing is more than happy to lure more Taiwanese businessmen to invest in its enormous market.

Accompanying Chen Yunlin on his historic trip were high-profile officials from mainland financial institutions. Negotiators from both parties started discussing the possibility of banks from each side establishing branches in the other. At the same time, clearly influenced by the recent tainted milk case, SEF and ARATS agreed to promote bilateral cooperation on food security. Given the poor reputation of China’s food and drug security, Beijing is taking pains to convince Taipei it is making every effort to regulate the market. A few days before departing for Taiwan, Chen Yunlin publicly apologized to the Taiwanese for the tainted milk.

Continued Divide

Based on these positive discussions, the next three-and-a-half years under Ma may well be a boom time for cross-strait relations. However, fundamental disputes between Beijing and Taipei persist. For instance, Taiwan continues to desire more international recognition as a state even though most countries in the world do not recognize it as such. It has lobbied to be awarded observer status in the World Health Organization (WHO) but has been rejected 12 years in a row. It will try again in May 2009 in hopes for more flexibility from Beijing.

Beijing treats this issue with tremendous caution, as it’s connected with the legitimacy of its communist rule. Since Chiang Kai-shek fled to Taiwan after his defeat in China’s civil war in 1949, China’s Communist Party (CCP) has claimed sovereignty over Taiwan. Beijing has also chosen not to give up the option of using force against Taiwan if necessary. The CCP, at least in the near future, isn’t likely to acknowledge Taiwan as an independent state. Nevertheless, as long as Taipei doesn’t declare formal independence, Beijing is willing to sidestep the sovereignty issue.

The distrust between Beijing and Taipei also stems from military confrontation. The arms race across the Taiwan Strait has persisted for decades. Beijing modernized its military force by substantially increasing its military budget. Relying on the Taiwan Relations Act, which requires the United States to “provide Taiwan with arms of a defensive character,” Taipei continues to place arms orders with Washington. In October, Washington sent Taipei $6 billion worth of advanced weapons. The package contained $3.1 billion in Patriot Advanced Capability-3 guided missile systems, a sophisticated array of missiles, radars, and control systems designed to defend against missiles and aircraft. Also included in this deal were $2.5 million worth of Apache attack helicopters and support systems, more than $300 million in spare parts for F-5 and F-16 jet fighters, and $47 million in Javelin guided missiles and command systems. Beijing harshly denounced this deal and warned that it threatens the triangular relationship of Washington, Beijing, and Taipei. At the same time, the deal also triggered debate within Taiwan. Some believe that Taipei wasted too much money in buying U.S. weapons, many of which are unnecessary and undercut Taiwan’s own arms production capability. In addition, the deal threatens the military balance across the strait with a new round in the no-win arms race.

U.S. Stakes

The changes that occurred across the Taiwan Straits in the six months since Ma took office are considerable. The three linkages are in place, and the two sides are contemplating increased economic and social integration.

The United States can play an important role in supporting these developments. President-elect Barack Obama didn’t address Taiwan a lot during his campaign. Four years ago, though, he declared that the United States “should be firm on issues that divide us [from the Beijing government] — like Taiwan — while flexible on issues that could unite us.” It’s likely, then, that the next administration will continue to abide by both the Taiwan Relations Act and the Three Communiquésin formulating its Taiwan policy. Obama’s support for the latest arms sales suggests he will maintain the status quo on this issue as well.

The Obama administration should continue to hold to the principle of strategic ambiguity with regard to China and Taiwan. Washington needs to cooperate with Beijing on economic issues, North Korea, and even anti-terrorism endeavors. By maintaining a long-term strategic partnership with the rising superpower while also raising human rights concerns, Obama can mitigate the pain of the financial crisis and establish his own credibility by managing economics wisely and effectively. At the same time, though Washington acknowledges Beijing as the sole legitimate representative of China, it should never tolerate any form of military action in realizing the cross-strait reunification. The Bush administration sent several wrong messages to the Chen Shui-bian government, infuriating Beijing and compromising the delicate status quo. Obama, the consummate diplomat, won’t be likely to make such obvious missteps.

Perhaps the next U.S. president can also find some new common ground between Taiwan and China. Obama deeply understands Taipei’s desire for more international space and Beijing’s permanent opposition to the arms sales. He could accommodate both sides here by arranging a quid pro quo with Beijing, in which the United States provides security assurances in exchange for Beijing allowing Taipei observer status at the WHO. The cross-strait relationship is on the verge of a significant détente. With delicacy and diplomacy, the Obama administration can help the two sides get along even better.

Erdong Chen is a Foreign Policy In Focus contributor and a student at American University. He interns at the American Center for International Labor Solidarity.

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