Taiwan is Moving Closer to China, So Why Isn't the U.S. Freaking Out?


The Obama administration’s promises to deepen economic and military ties with allies in the Asia-Pacific region have fallen flat in light of budgetary realities. Defense cuts totaling nearly $1 trillion over the next decade, and the necessity of focusing diplomatic and military attention on the Middle East, most notably Syria, exposed the gap between the White House’s unrealistic expectations and the reality of limited resources. The U.S. Pacific Command and U.S. Air Force are decreasing troop numbers and cutting exchanges with key allies in the region, revealing to our allies that the U.S. is losing the ability to project power in multiple spheres.

Perhaps no other ally is left more vulnerable from the U.S. withdrawal than Taiwan. In the last five years, Beijing has used its influence to dissuade other countries from signing trade agreements with Taiwan. As the number of trade alliances in Asia exploded, Taiwan was not included in any of the 40 regional trade agreements. An export-driven economy, Taiwan can’t afford to be marginalized. Coupled with the U.S. inability to fully rebalance to Asia, Taiwanese President Ma was left no option but to sign a trade agreement with Beijing, a government that for decades has encouraged the island to assimilate.

In 2010, the People’s Republic of China and the government of Taiwan signed the Economic Cooperation Framework Agreement (ECFA). The ECFA will benefit Taiwan by opening up the mainland service sector to Taiwanese investment; lowering tariffs on 539 items, which account for 16% of total imports from Taiwan; and by making the island more attractive to foreign investors looking to use it as an access point into mainland China. By 2020 the ECFA could increase Taiwan’s GDP by 4.5% and employment by around 2.5%. At first glance, these gains are momentous but, in reality, Taiwan will experience economic benefits simultaneously with loss of political self-determination. Over time, the ECFA will put a straitjacket on Taiwan vis-à-vis China.

Taiwan’s investment in the mainland during 2010 accounted for 80% of its total foreign direct investment. In the same year, China was Taiwan’s largest export destination (28%) and second largest import source (14.2%), yet Taiwan is China’s fifth largest import source (8.3%) and exports to Taiwan only accounted for 1.7% of China’s total exports. This highlights Taiwan’s weak position at the bargaining table, one that will only continue to weaken now that Taiwan signed a trade agreement and fully inserted itself into the “China-centered” regional order.

While reducing barriers to trade serves an economic goal for Taipei, it serves a political one for Beijing. Chinese leaders have openly stated that deepening economic relations with Taiwan is part of an “embedded reunification” strategy. It does not help that 86% of goods Taiwan produces are industrial and therefore fungible. If conflict arises, Beijing can easily change to Japanese or South Korean producers. This would destroy the Taiwanese economy, which would be left flailing to find another market for semi-industrial goods.

Today, the American punditocracy believes that Taiwan’s reunification with China through intensifying economic reliance is inevitable. If Taiwan integrates with China, however, U.S. strategic interests in Asia will be greatly diminished, both for the U.S. and for our regional allies. As policy commentator John Tkacik advises, we need to form a military strategy that envisions an Asia in which Taiwan and Beijing work in unison. Although the Bush and Obama administrations unconsciously allowed Taiwan’s military to deteriorate as time and resources were pulled toward the Middle East, sophisticated weapons systems and basing structure remained. Should China reclaim Taiwan there are a number of deeply unnerving strategic advantages it would inherit:

1. Radar sites on Taiwan’s mountaintops scan the mainland for ballistic missiles, but China could use them to search for U.S. Navy ships in the Pacific.

2. Deep-water naval bases at Su Ao and Hualien would provide a safe haven for Chinese submarines in the deepest maritime trench in the Pacific.

3. Pratas Reef would provide the Chinese navy with a base equidistant from Hong Kong and Taiwan, and would extend China’s jurisdiction anther 200 miles towards the Philippines and contested waters in the South China Sea.

4. Control of Itu Aba, the largest islet in the South China Sea's Spratly Islands, would bolster China’s claims in the islands. The islet also has a functioning airstrip, providing another military base in contested waters.

5. Most significantly, the Taiwan Strait would become an inland waterway. Complete control of the strait would allow China to block Japan and South Korea’s access to vital Middle Eastern ports. It would also allow China to halt the average of 675 commercial ships that transit the strait each day.

Admittedly, Taiwan is not likely to pass a referendum in the near future, but since Taiwan’s increasing economic integration is strikingly clear, our next president needs to do everything in his power to ensure that political integration remains a far-off prospect. In past years, the White House reduced help offered to Taiwan through the Taiwan Relations Act of 1979. The Bush administration agreed to help Taiwan upgrade its F-16s, but this was a limited measure designed to avoid increasing tensions in the Washington-Beijing relationship. President Bush judged China’s military too weak to build up Taiwan’s military capabilities and President Obama has been unwilling to sell arms to Taiwan in hopes that China will become a responsible stakeholder in the international system. The U.S. government lost an opportunity to provide Taiwan with sufficient capabilities to maintain a military balance vis-à-vis China.

It is also interesting that after signing the ECFA, Taiwan was allowed to sign free trade agreements with other countries. In 2013, Taiwan concluded a free trade agreement with New Zealand. It is also currently in the midst of a productive trade negotiation with Singapore. While signing the ECFA might seem to have opened new trade possibilities for Taiwan, it is important to note that in these new free trade agreements, Taiwan is not acknowledged as a sovereign nation. Indeed, in the FTA with New Zealand, Taiwan is called the Chinese Taipei.

While these issues may seem secondary after 12 years of war in the Middle East, their importance remains undiminished, and even in the face of tremendous budget cuts, it is time to reevaluate our policy towards mainland China and Taiwan. Subsequent U.S. administrations should help Taiwan become a member of the Trans Pacific Partnership (TPP) to decrease its economic reliance on China, as well as increase joint military training exercises. The bottom line is that Taiwan can’t fall off the strategy-making table. Tactics that encourage Taiwan to remain politically less “Chinese” are necessary for U.S. security in Asia.