How Taiwan can—and often does—help itself

Discussion of tensions in the Taiwan Strait often treats Taiwan as an object that is acted upon by the People’s Republic of China (PRC). And that is certainly happening. China has built up significant war-fighting capabilities and poses a clear—but not present—military danger to the island.

Yet there is no sign that Xi Jinping has scheduled his D-Day, and he has reasons to hope that a non-military solution is still possible. In addition, Taiwan must cope with a PRC campaign of coercion without violence, which seeks to undermine the confidence of Taiwan people about their future. This is a current danger, but not one that most Western analysts understand.

Also not understood is that Taiwan has ways to help itself and blunt Beijing’s effort to subdue it. This is a resilient, wealthy society that has survived many setbacks since World War II. But these self-help tools must be employed with great skill if they are to be effective. More fundamentally, the island’s greatest vulnerability is its political divisions over both domestic and external issues, particularly how to cope with the challenge China poses.

The basics

Since Mao Zedong’s death in 1976, the goal of Beijing’s leadership has been to incorporate Taiwan into the PRC system and do so without war. The cross-Strait disagreement has been over the terms the PRC has proposed for unification. Its formula—called “One Country, Two Systems” (1C2S)—has always been opposed by Taiwan’s government and public, in part because it would entail restrictions on the island’s vibrant democratic system. Thus, this is a political dispute with a military dimension.

The PRC says that it has built up its armed forces to deter political forces on Taiwan from moving to make the island a totally separate country, which would make unification impossible. Beijing attributes this intention mainly to the Democratic Progressive Party (DPP), even though evidence for that claim has been lacking. It was after the DPP won the 2016 presidential election that Chinese leaders, eschewing war, embarked on its less risky campaign of coercion.

It should not be surprising that there are legitimate differences of opinion in Taiwan’s democratic system on a range of policy issues—for example, caring for the elderly, taxation and spending priorities, energy security, adjudicating the island’s authoritarian past, and so on. But the most contentious issue is how to address the China challenge. On one side, the “Blue Camp,” dominated by the Kuomintang (KMT), has believed that economic engagement with China and emphasis on what the two sides have in common would be sufficient to restrain China from aggression. The “Green Camp,” dominated by the DPP, believes Beijing cannot be trusted; that economic interdependence is a slippery slope to political incorporation; and that deterrence—including reliance on the American shield—is Taiwan’s only guarantee of survival. Taiwan leaders from each camp have stressed the need for unity on this issue, but none has been able to forge it.

Taiwan’s self-help tools

Despite these challenges and divisions, Taiwan does have sources of strength. The first of these is its economic competitiveness. A combination of sound government policy, including on education; private entrepreneurs who have constantly adapted to shifts in Taiwan’s comparative advantage; and the open global trading system made the island one of the four “Asian tigers.”

Taiwan’s continuing success is due to its companies’ concentration on the information technology and computer (ITC) sector, with semiconductors at its core. Chip maker TSMC is the world’s ninth-largest company by market capitalization. Those companies’ leaders understand the need to maintain their technological lead over China, which itself aims to dominate the ITC sector worldwide, and to guard against Chinese theft of intellectual property.

Taiwan’s technological success is a powerful reason for China to achieve its unification goal, not through war but by a negotiated agreement. If PRC companies can gain easy access to Taiwan’s advanced know-how, including human talent, they can leapfrog their way over the stages of technological development. That a war to conquer Taiwan might—or probably will—result in the destruction of much of the island’s industrial infrastructure and the flight of its best engineers becomes a significant reason PRC leaders think twice about compelling unification through force.

Taiwan does face two significant economic challenges. The first is domestic: to create well-paying jobs for those people—especially younger people—who do not work in the ITC sectors. Failure to close this divide will further split society and create political problems going forward. The second is external and concerns President-elect Donald Trump’s threat to impose high tariffs on Chinese goods. Yet Americans consume a number of items that are labeled “Made in China” but are the product of a disaggregated manufacturing process in which much of the value is added in Taiwan, the United States, and other places (for example, iPhones and iPads). Imposing punitive tariffs on such “Chinese goods” actually will punish Taiwan and America.

The U.S. security partnership

If Taiwan’s economy is one reason for Beijing to eschew war, the security partnership with the United States is another. Washington provides Taipei with advanced weapons systems, and American military specialists train members of Taiwan’s armed forces in a range of areas. The two defense establishments hold regular dialogues at various levels. Washington has also consistently asserted its abiding interest in a peaceful resolution of cross-Strait differences.

The bumper sticker version of U.S. policy toward Taiwan is “strategic ambiguity”: using deliberate vagueness about its intentions to restrain both Beijing and Taipei. A better phrase is “dual deterrence”: declaring that Washington opposes a unilateral change in the status quo by either side. Implicitly, Washington warns Beijing not to use force against Taiwan but offers reassurance that it does not support de jure independence for the island. Conversely, Washington warns Taipei not to take political initiatives that would provoke the PRC into using force, while reassuring Taiwan that the United States will not sacrifice Taiwan’s interests for the sake of good relations with Beijing.

Some ambiguity remains in this formulation, of course. The United States does not say how it would respond to a PRC attack on Taiwan, and Washington does not define “status quo.” But there is also policy flexibility. Washington can calibrate the strength, direction, and clarity of its warnings and reassurance to both Beijing and Taipei, depending on which party it believes is changing the status quo.

There was a period from 1995 to 2008 when first the Clinton and then the George W. Bush administrations believed that Taiwan’s leaders’ penchant for politicizing Taiwanese nationalism for electoral gain signaled an intention to move to de jure independence. Taiwan leaders also assumed that America would come to the island’s defense under any circumstances. At a minimum, Washington worried, Beijing would incorrectly read the worst into Taipei’s actions and then miscalculate, leading to war.

Since 2008, Taiwan has become more risk-averse in its behavior toward China. For example, DPP president Tsai Ing-wen followed this balanced approach by reiterating “that Taiwan’s consistent position on cross-strait relations is neither to succumb to [PRC] pressure nor to advance rashly when we get [U.S.] support.” Also, importantly, the Taiwan public has a clear preference for the status quo and politicians have adjusted accordingly.

At the same time, Taiwan is gradually increasing its own deterrence capabilities and appears to be moving to an asymmetric strategy to delay a PRC military campaign and give U.S. forces more time to intervene. For its part, the United States has increased its support for Taiwan and consistently called out Beijing for employing a strategy of coercion. Given that China is targeting its coercive strategy on the confidence of the Taiwan population, Washington has sought to counter it by giving more publicity to its contributions to the island’s security.

Yet helping Taiwan enhance deterrence against a PRC attack remains a work in progress. It requires sustaining bilateral agreement on the right defense strategy, the right advanced weapons systems, the right level of budgetary and personnel resources, and effective diplomacy vis-à-vis Beijing to reduce the risk of misperception and miscalculation.

Democracy

Taiwan’s gradual democratization began in the late 1980s. In many ways, this has helped blunt China’s effort to get Taiwan to yield to unification on its terms. Most profoundly, it took a fundamental decision out of the hands of a small leadership group and gave the public, which strongly opposes unification, a seat at the negotiating table with Beijing. Democratization has meant that the PRC needs to convince Taiwan’s public that unification is in its interests, which it has failed to do. Nor has it significantly improved its offer.

As already discussed, in the early phase of Taiwan’s democracy, Taiwan’s leaders harnessed nationalistic, anti-China sentiment to win elections. Since then, most politicians have chosen to follow the broad social consensus in favor of the status quo, and to try to reassure Beijing through word and deed that it need not fear any move to de jure independence.

The U.S. government has a role to play here: remaining deeply engaged with all parts of the Taiwan political spectrum; understanding how different politicians address the China challenge and Taiwan-U.S. relations; and making clear how Washington defines U.S. interests and objectives. The Biden administration has done a good job in this regard, but this too is a work in progress.

The key

There is one other way that Taiwan can help itself. That is for political leaders from various political parties to develop a consensus on policy toward China—in the realms of politics, economics, security, and culture. Efforts to craft a common approach over the last two decades have failed, but that does not negate the importance of working harder to reach one. The stakes for Taiwan are too high to simply continue the debate. After all, if Taiwan remains divided, who benefits?