Each side’s most preferred solution for resolving the continuing Taiwan Strait issue – in the case of Taipei, widely recognised de jure independence; and in the case of Beijing, reunification of China on the same ‘one country, two systems’ basis as Hong Kong – are both non-starters. Neither society is likely to accommodate the other or change to the degree necessary to make either option realistically achievable, even ten or fifteen years down the road. If the risk of conflict across the Taiwan Strait – too serious to be accepted with equanimity, as the tensions of the last few months have shown – is to be reduced, then there has to be new thinking about what an ultimate political settlement might look like, and how to get there.

This report follows three earlier ones, published together in June 2003,^[fn]ICG Asia Reports N°53-55, Taiwan Strait I: What’s Left of ‘One China’?; Taiwan Strait II: The Risk of War; and Taiwan Strait III: The Chance of Peace, 6 June 2003.Hide Footnote which demonstrated that for all practical purposes the ‘One China’ approach that has helped stabilise the region for three decades is dead; argued that the risk of war – while not great – was still real; and suggested a number of strategies for maintaining peace in the short to medium term. While noting the turbulent state of the current debate, heightened as it has been by the campaign for the 20 March 2004 presidential election, this report seeks to stand back from current events and focus on what it would take to produce a longer term solution that both sides could live with.

Four different reunification or reintegration models are considered:

• China’s preferred ‘one country, two systems’ federal model, a refinement of that applied to Hong Kong. But the degree of subservience to central authority still implied continues to have no attraction for Taiwan.
   
• An asymmetric ‘federacy’ linking an autonomous entity to a larger state, offering Taiwan a stronger separate identity and more actual autonomy, as well as demilitarisation and international security guarantees. But even a very ‘thin’ federal model would remain hard for Taiwan to accept and the last two elements would be particularly difficult to achieve.
   
• A ‘confederation’ yoking China and Taiwan as sovereign equals in a state that retained full reunification as its ultimate goal. Originally put forward by the Kuomintang party (KMT), this has lingering support in Taiwan but not in Beijing, which continues to find antithetical any notion of sovereign equality.
   
• The idea of a ‘Greater Chinese Union’, somewhere between a confederation and the ‘thinnest’ possible federation, for which no existing terminology is quite suitable: both sides would recognise a larger common identity, but Beijing would allow Taiwan not only to maintain its political system and way of life but also to have considerable international space, including membership of many international organisations. In its most extreme form – probably not realisable in any foreseeable future – it could be contemplated that Taiwan, while part of a greater sovereign entity, would nonetheless occupy its own UN seat.

Clearly a number of developments will have to take place over many years on both sides of the Strait before any such settlement is achievable. The prerequisites include:

• Emergence of forward looking leaderships. This will probably involve political generations not yet on the scene.
   
• Evolution of political systems. Substantial political liberalisation in China is a precondition for progress, but the path toward more pluralism is likely to involve many interruptions and detours, some quite severe.
   
• Economic integration. Commercial relations have never been better and such integration is likely to deepen. Taiwan’s economic performance will impact on its willingness to consider a new political arrangement. If its technological and economic lead is eroded, there is likely to be greater willingness; if its economy flourishes, the desire for political integration may be less.
   
• The emergence, or re-emergence, of a stronger sense of common identity, particularly in Taiwan. The evolution of a more tolerant and pluralistic China will likely weaken the search for a wholly separate Taiwanese identity.
   
• International attitudes. Maintenance of a steady course, particularly by the U.S., will be crucial, with strong discouragement being given both to any use of force and to any unilateral attempt to change the sovereignty status quo. The wider international community can foster progress by encouraging further political liberalisation in China, refraining from de jure recognition of Taiwan but at the same time opening further international space for it, and doing everything possible to encourage links between the two societies.

A successful ultimate settlement will draw on the uniqueness of Chinese history and culture – including a centuries old tradition of indirect imperial governance, with more weight on ceremony than substance, in areas where circumstances made direct administration difficult – and an elastic interpretation of “what it means to be Chinese”. It will respond to the highly distinctive situation in the Strait, and not be a pattern copied from political science or international law text books.

Some variation on the theme of a ‘Greater Chinese Union’ seems the most attractive option. Its loose and flexible form would allow Taiwan to keep its distinct political, economic and social identity and satisfy much of its desire to be treated with more respect internationally, while allowing China to plausibly claim that reunification is a reality.

Beijing/Taipei/Washington/Brussels, 26 February 2004