That China is trying to bribe Taiwan, not browbeat it, is good news. But Taiwanese caution is still warranted

China and Taiwan

Know your customer

THE Economic Co-operation Framework Agreement, or ECFA, reached this week between Taiwan and China was hailed by both sides as one of the most important landmarks on the road to lasting peace since 1949. That was when the Communists routed the Nationalist Kuomintang, the KMT, leaving it with Taiwan as a last redoubt. The ECFA is indeed a welcome development, though it guarantees neither peace nor China’s ultimate goal, the “reunification” of Taiwan with the mainland. It should be taken for what it is: a trade deal that should help Taiwan both economically and politically.

Fear that it brings Chinese sovereignty closer has made the ECFA bitterly divisive in Taiwan itself. Its critics point out that China has never ruled out the use of force to bring about unification, nor stopped adding to its battery of coastal missiles menacing the island. They regard the ECFA as war by another means; a Trojan horse that Taiwan should have shunned.

These critics are right about China’s intentions—to win support in Taiwan. But there are still at least three good reasons why Taiwan (and the West) should welcome the deal.

First, it is, as befits a sop to public opinion, a good one for Taiwan’s export-oriented economy (see article). It not only opens up the Chinese market further; it also reduces the risk that Taiwan, the world’s 17th-biggest exporter, will be left isolated, by the “noodle-bowl” of bilateral trade agreements, in which its regional competitors are entangling their economies.

Second, its impact on Taiwan’s domestic politics will be limited. Voters there understand China’s intentions very well and are unlikely to be swayed by a few tariff cuts. A tiny minority favours imminent unification. A slightly larger minority would like the island to declare formal independence soon. But, since a declaration of independence might provoke a Chinese invasion, the vast majority would like to prolong Taiwan’s current, peculiar status of de facto independence. Politics in Taiwan looks like a battle between pro-independence and pro-unification camps. In fact it is about how best to preserve the status quo.

Since the alternative might mean a war, possibly even with America, Chinese moderates also have an interest in that status quo. That is the third advantage of the ECFA. In China it can be used to show hardliners that, slowly, progress is being made towards unification. China’s bellicose approach to Taiwan as it embraced democracy in the 1990s achieved the opposite: its sabre-rattling boosted support for Taiwan’s pro-independence opposition.

The wonders of democracy

Those who accept bribes should do so warily. Taiwan needs to be careful that the secretive way ECFA has been negotiated does not become a model for the future. The Beijing regime has always preferred to clinch deals behind closed doors. It remains petrified of democracy in Taiwan, and in particular of anything, such as a referendum on ECFA, that might smack of a plebiscite on Taiwan’s future. And it is still not clear whether China will now tolerate its other trading partners signing trade agreements with Taiwan. This could provide China with the chance for a new form of blackmail over Taiwan.

Against that, such skulduggery would lose China the goodwill it has bought this week. China has always played a huge role in Taiwan’s politics. Better that it should play it the ECFA way, with trade and other benefits meant to entice and reward, and gain popularity, than the old one, with belligerent threats and diplomatic pressure designed to frighten and coerce. The Economist