China-Taiwan Relations

Introduction

China and Taiwan, while in practice maintaining a fragile "status quo" relationship, periodically grow impatient with the diplomatic patchwork that has kept the island separate from the Communist mainland since 1949. After losing the civil war to Communist Chinese and fleeing to Taiwan in 1949, the nationalist Kuomintang (KMT) leaders of the Republic of China regarded the Communist Chinese government as illegitimate, claiming the mainland as rightfully their own. KMT held power until the election of President Chen Shui-bian and his Democratic Progressive Party (DPP) in 2000. The DPP has engaged in policy that widely departs from the KMT. Since becoming the first non-KMT leader of the Republic of China in Taiwan, President Chen has invigorated efforts to seek Taiwan's sovereignty. Beijing, in turn, regards Taiwan as a renegade province, and has tried repeatedly to persuade the island to negotiate a return to the fold under terms similar to those governing the former British colony in Hong Kong. While the threat of hot war appears low, and economic ties have grown steadily since the two began serious bilateral exchanges in the 1980s, periodic spasms of anti-Taiwan feeling in Beijing, and of pro-independence sentiment on the island, severely test the peace that has reigned in recent years across the Taiwan Strait.

"One China" Principle

The two sides sharply disagree on Taiwan's de jure political status, and have differing interpretations of the "One China" principle that theoretically governs their relationship. The principle states that "China" includes the mainland, Hong Kong, Macau, and Taiwan. Diplomatically, Taiwan, the United States, and most of the world's other nations abide by the One China principle, though Taiwan has used foreign aid to convince some small developing countries to recognize its as a separate country. Taiwan's government, then governed by the KMT, held talks in Hong Kong with officials from Beijing in 1992. Beijing insists the meeting produced what has become known as the "1992 Consensus," obliging Taiwan to abide by the One China principle. But Taiwan's current president, Chen Shui-bian, rejects the very existence of the consensus. Taiwan's current opposition, including the old KMT, accepts it.

Regardless of the controversy inside Taiwan itself, the One China principle has provided the template for foreign relations between Taiwan and other nations, including the United States, which signed a joint communiqué reaffirming the principle when it reestablished relations with Beijing in 1979. At that time, President Jimmy Carter terminated diplomatic relations with the ROC government in Taiwan. Just months later, the Taiwan Relations Act of 1979 affirmed U.S. support for the island's democratic system. That essential conflict has been the source of intermittent friction ever since. When Beijing judges these principles have been violated or even stretched a bit¿as it did in late 2007 when the United States announced the sale of advanced Patriot missile defense systems to the island¿China makes its displeasure known. Soon after the Patriot sale, China denied a request for routine port access to several U.S. naval vessels, and the U.S. Navy then sent one of those ships, the carrier Kitty Hawk, through the normally avoided Taiwan Strait. Over the years, in fact, U.S. arms sales to Taiwan, detailed in this report (PDF) by the Congressional Research Service, frequently have led to U.S.-China friction and an upsurge in bellicose rhetoric across the Strait. Another CRS report (PDF) looks at the agreements and communiqués that have shaped the U.S.-China-Taiwan dynamic over the years.

Challenging the Status Quo

Taipei and Beijing have appeared less satisfied than ever with the status quo since President Chen's election in 2000. Threats by Chen's government to break away formally have led China repeatedly to warn, sometimes with words and other times with overt displays of military power, that such a move could spark a conflict. Both say talks on the issues which separate them are possible, but Beijing mandates the One China principle as a precondition, as President Hu Jintao reaffirmed during the Seventeenth Congress of the Communist Party. Taiwan's President Chen denounces that as surrender of sovereignty. Taiwan has scheduled a national referendum for March 2008 asking whether its government should bid to join the United Nations under the name of "Taiwan" instead of "Republic of China." Beijing already is warning of a "high-risk period" if Taiwan does not relent. In 2005, China adopted an Anti-Secession Law that legalized "non-peaceful means [. . .] to protect China's sovereignty and territorial integrity" in the event that "possibilities for a peaceful reunification should be completely exhausted." The law holds clear implications for any move by Taiwan to declare independence. Analysts say a victory by the opposition KMT over the ruling, independence-leaning DPP in January 2008 legislative elections may ease tensions between China and Taiwan.

Military Situation

China has deployed ballistic missiles along the Taiwan Strait and continues to modernize both its missile forces and its amphibious assault capabilities. Taiwan continues to purchase weapons abroad, primarily from the United States, and its defense budget looks likely to begin rising again after several years of decrease. Analysts say China orients a good deal of its military focus on the cross-strait conflict..

Taiwan's defense budget dropped 25 percent between 2001 and 2006. Chen's government recently pledged to reinvigorate defense spending, increasing the defense budget to 3 percent of gross domestic product (GDP) by 2008, and the candidate of Chen's DPP in Taiwan's 2008 presidential election advocates further defense funding increases. Additionally, Taiwan is developing a native cruise missile designed to counter the Chinese missile threat.

Between 1998 and 2005, $13.9 billion of arms were sold to Taiwan, making it one of the leading recipients of armaments among developing countries. Of that, U.S. sales accounted for more than $10 billion (PDF) during that period. Besides the United States, Taiwan made purchases from Canada, France, Germany, Israel, and the Netherlands. These countries have since ceased to export arms to Taiwan, in part prompted by the concern that such sales would damage valuable commercial ties with China. For instance, France has officially banned transferring arms to Taiwan after China closed the French consulate in Guangzhou in 1992, an apparent response to an agreement by France to sell Taiwan sixty Mirage 2000-5 warplanes.

In June 2007, the Taiwanese parliament approved the purchase of another $190 million in weaponry, including P-3C maritime patrol planes, PAC-2 upgrades for Patriot missile batteries, and F-16C/D fighters. Such acts, governed by the Taiwan Relations Act, are interpreted by the United States as fulfilling Washington's pledge "to provide Taiwan with arms of a defensive character" so that Taiwan can "maintain a sufficient self-defense capability." The contracts have faced delays, however, due to opposition domestically inside Taiwan. The so-called Pan-Blue Coalition, comprised of the KMT and an ally, the People First Party (PFP), hold a majority in Taiwan's parliament and blocked the defense outlays, citing excessive prices and other domestic priorities. The parliament, however, did relent in December 2007 on the question of Patriot missiles, allowing part of the sale to move forward.