China and Taiwan: Uneasy Détente

After drifting toward crisis for much of 2004, the outlook for stability across the Taiwan Strait has improved. Constraints on Taiwan pursuing pro-independence initiatives that risk conflict with China will likely remain strong through to the end of President Chen Shui-bian's term of office in 2008. These include a reinvigorated political opposition and Chinese initiatives that have won some poplar support in Taiwan and weakened the drive for independence. Most importantly, the U.S. appears determined to deter not only a Chinese attack but also provocative Taiwan independence moves.

Election politics, personal conviction, and the drive for a political legacy were key motives prompting President Chen and his government to break with earlier moderation on cross-strait issues and, between late 2003 and late 2004, pursue pro-independence initiatives that neither Beijing's warnings of war and diplomatic pressure nor positive trade and economic relations appeared able to halt. Chen's political opponents were put on the defensive, and business people hung back despite heavy investments in China. Concerned for cross-strait stability, however, the U.S. sought to rein in Chen, issuing repeated public statements and private official comments opposed to the pro-independence initiatives.

Washington's interventions were widely credited for moderating Taiwan government policy and influencing popular opinion in the lead-up to the December 2004 legislative elections that resulted in a significant setback for President Chen and his administration. Mutually encouraged, Taiwan political opposition leaders and the Chinese leadership held meetings in Beijing in April and May 2005. The improved atmospherics that resulted from those talks and anticipated benefits from proposed new trade and exchanges offset the negative fallout from passage in March of an anti-secession law that formalised China's promise to use force against any attempt by Taiwan to separate permanently.

Taiwan politics remains sharply divided over cross-strait issues, with President Chen and his supporters unwilling to follow the example of the opposition leaders who renounced Taiwan independence and generally accepted the "One China" principle that Beijing considers a prerequisite for improved relations. U.S. officials continue to encourage both governments to show greater flexibility in order to promote dialogue.

How far the Taiwan and China governments might go in easing tensions and resolving differences over the next few years is less clear. Chen remains strongly committed to his pro-independence agenda and somewhat encouraged by an improved performance in the May 2005 National Assembly elections. Nationalistic imperatives and leadership sensitivities constrain the Chinese leadership from initiatives toward reconciliation with him. The U.S., while favouring dialogue, is not prepared to take extraordinary measures to mediate or resolve differences. The potential costs for the leaders of all three governments seem too great to expect one of them to make major moves to change existing policies. Nonetheless, anticipated progress on some smaller steps, including enhanced cross-strait economic and personnel exchanges, could improve the atmosphere somewhat, help keep tensions under control, and perhaps lead to a revival of formal cross-strait dialogue in what remains a dangerously volatile region.

Crisis Group last reported on cross-strait issues in February 2004. At that time and in a series of earlier reports, we reiterated that the "One China" principle, which had helped stabilise the region for three decades, was moribund and the risk of war -- while not great -- was still real, and we suggested a number of strategies for maintaining peace in the short and medium term, as well as how long-term reconciliation might ultimately be achieved.^[fn]Crisis Group Asia Report N°75, Taiwan Strait IV: How an Ultimate Political Settlement Might Look, 26 February 2004. See also Crisis Group Asia Report N°53, Taiwan Strait I: What's Left of 'One China'?; Crisis Group Asia Report N°54, Taiwan Strait II: The Risk if War; and Crisis Group Asia Report N°55, Taiwan Strait III: The Chance of Peace, all 6 June 2003.Hide Footnote  This briefing brings our assessment up to date, focusing on the outlook for the remainder of President Chen's term.

Seoul/Brussels, 21 September 2005