MS Risk Blog

The One China Policy and China-Taiwan Relations

Posted on in China, United States title_rule

A new friction is triggered between China and the US when the US president-elect Donald Trump said that the “One China Policy” is up for negotiation. Following Trump’s phone conversation with the Taiwanese president Tsai Ing-wen, China has become more suspicious of Taiwan’s intent of wanting to push for its independence and Trump grabs this opportunity to use as a bargaining chip against China. The Obama administration, on the other hand, has repeatedly reinforced the US commitment to “One China Policy”. According to Trump, this notion is likely to change under his administration unless Beijing agrees to alter its terms of trade with the US.

“The One China Policy” is a view that there is only one Chinese government and that the US has formal ties with China rather than Taiwan. China also holds that any country that wants diplomatic relationship with Mainland China must break official ties with Taipei. This has resulted in Taiwan’s diplomatic isolation from the international community. “The One China Policy” is, however, different from the “One China Principle” of the “1992 Consensus”, which urges that Taiwan and China are inalienable parts of a single China. The Consensus allows both Taiwan and China to agree that there is only one sovereign state of China but either cannot agree on which of the two governments is the legitimate government of the state.

Although the US, China and Taiwan, apparently, seem be pursuing their respective agendas in this friction, Taiwan should know better than to fully trust the new US administration in its suspected pursuit of independence. Trump, in his election campaign has often tried to portray the US on the loser end of US-China terms of trade, a position that he vows to change. This indicates that Taiwan will only be used as long as it can be used as a bargaining chip to potentially secure US trade advantages over China. Moreover, the Taiwanese President’s recent out-reach to Trump can only endanger Taiwan’s position in relation to China, but not as much, the vested stakes between the US and China relations. There is just too much to lose in the US-China trade relations if diplomacy gets bitter between the two super-powers.

In 2005, China’s parliament has passed an anti-cessation bill authorizing use of force if Taiwan declares independence. Taiwanese companies have invested over $49 billion in China and up to 1 million Taiwanese live in the Mainland. While Taiwanese may worry that their economy is dependent on China, but closer business ties makes Chinese military action on Taiwan less likely, but not necessarily impossible.

The US-China trade relations will unlikely be the lynchpin of China-Taiwan relations in the near future. The US jumping to seize the opportunity to challenge the “One China Policy” is more of a giveaway in negotiation with China because China already knows what is very important to the US and both the countries have mutual stakes in trade partnership. China in 2017 is not the China in 1958 when the Mainland bombarded the offshore islands held by the Nationalist troops in Taiwan, nearly sparking a war between the US and the Mainland. Taiwan being seen as a province of China continues to be an important agenda item of the Communist Party of China (CPC) and it can be said with much certainty that the Asian superpower will not subject itself to be compromised on national sovereignty over trade deals with the US or any country for that matter.

Status quo will, therefore, most likely prevail on the China-Taiwan relations now and in the near future with, however, intermittent escalation of political and military tensions. In terms of trade with the US, China will likely offset Trump’s rivalry with the Mainland with essentially economic strategies. These will soon enough get the US busy in battling China’s economic strategies and to see Taiwan as merely a futile factor to benefit from trade deals with China.