To Members and Friends

One China Committee Update 31
December 2010

Season's Greetings


China says in no rush to talk politics with Taiwan


China is in no rush to begin talks with historic rival Taiwan over sensitive military or political issues, Beijing's top man in charge of policy toward the self-ruled island was quoted as saying on Wednesday October 20.

Wang Yi, head of China's Taiwan Affairs Office, told overseas Chinese in New York that promoting economic ties with Taiwan was still the priority, state news agency Xinhua said.

"For the time being complex issues of politics or the military cannot be talked about, but various kinds of political dialogue can be opened to increase understanding," Xinhua cited Wang as saying.

"What is important is to seek and maintain the stable development of relations, for only then can setbacks be avoided," he added. "The focus for the time being and to come is still to deepen economic cooperation

Taiwan's ruling Nationalist Party has said the two sides must trust each other more before seeking agreements on thorny political or military matters. Reflecting that position, Taiwan Premier Wu Den-yih said in a statement on Wednesday Ma could not consider meeting Chinese President Hu Jintao as the two sides "still haven't accumulated enough mutual trust."

China offered last week to open talks on military issues with Taiwan in a move that could cool a potential flashpoint in the Asia-Pacific region and help the warming ties, but it drew a cool reaction from the island. (Source: Ben Blanchard and Ralph Birsel, Reuters, Oct 20, 2010).

AP interview: Taiwan's Ma moves ahead with China

Taiwanese President Ma Ying-jeou said Tuesday October 19 he is open to a political dialogue with China once remaining economic issues are resolved, though he gave no timetable for when those discussions might start.

In an interview with The Associated Press, Ma credited his outreach to China, which has so far centered on trade and commercial ties, with easing tensions in one of East Asia's longest-running feuds. Though Ma struck generally positive tones about China's future, he made it clear that he did not intend to push democratic Taiwan into a political agreement that would hasten Beijing's long-stated goal of unification.

In between the poles of union and separation, Ma said his government is prepared to discuss political agreements, including security issues, as soon as the priority economic issues are dealt with. He suggested that those political talks could start as early as a second four-year term if he wins re-election in 2012.

The remarks underscore how Ma's policy toward China is evolving as Taipei and Beijing - antagonists from the Chinese civil war - look to build on their growing economic ties. Taiwan politics are bitterly partisan, particularly on relations with China. For much of his 2 1/2 years as president, the Harvard-educated Ma has generally focused on selling the economic benefits of better ties and playing down the prospects for broader political agreements.

Having concluded an initial economic agreement with China, Taiwan is now discussing trade arrangements with the U.S., Japan, Singapore and Indonesia, Ma said.


Ultimately, he said that the economic ties would pay off in enhanced security for Taiwan with a China that has built a robust military and still has more than 1,000 short- and medium-range missiles pointed at the island.

He called the presence of the missiles "an illogical situation" given the thousands of Chinese tourists visiting Taiwan on any given day.

Even so, Taipei will upgrade its defense and in doing so continue to rely on Washington for assistance, "We are not seeking war with any country," he said. "This is very much understood in Washington. Of course China continues to oppose that. So we have made it very clear that to maintain the adequate defense of Taiwan is the intention." (Source: Brian Carovillano and Peter Enav, AP,, Oct 19, 2010).


Ma letting Taiwanese military wither


Taiwanese President Ma Ying-jeou has always insisted on the need for a strong military, and he persistently requests that the United States sell advanced weaponry to the island. But under his tenure, the military has become weaker. Budgets are strained and resources have been allocated for inappropriate purposes. Taipei said it's so desperately short of money that it can't pay for key weapon systems the US had agreed to deliver.

Two Patriot 3 (PAC-3) missile launching systems and 60 UH-60M Black Hawk helicopters Taiwan now says it can't pay for as promised were part of the January sales package. Another four batteries of PAC-3 were authorized in 2008. According to Taiwan's Ministry of National Defense, the procurements of all items will be delayed for as long as three years.

While the private sector and investors are jubilant over record earnings, Taiwan's fiscal condition has been deteriorating due to increasing public debt and declining tax revenue after the government adopted measures to mitigate the effects of the global financial crisis. To stimulate the economy, Taiwan cut its inheritance tax in January last year to a flat 10% from a range of 2% to 50%, and recently lowered corporate income tax to 17% from 25%. Its accumulated outstanding debts totaled about $134 billion at the end of 2009, and are expected climb to $162 billion this year.

Apart from US weapons sales, there are other undertakings that have fallen victim to budget allocation issues, one being the replacement of compulsory military service with a voluntary system.. A full-scale mercenary system would be much more punchy than an unmotivated force of draftees who undergo a year's worth of basic military training, even if the total number of Taiwan's soldiers would be cut from 240,000 today to around 210,000 in the future.

In the two years Ma has been holding office, a conflict over the internal distribution of the defense budget has also been emerging. The aimed for ratio of 40% for personnel, 30% for the maintenance of operational readiness and 30% for hardware investment can no longer be achieved. But instead of reacting to the repeated calls for structural reform of the military, the Ma administration has resorted to calling for Beijing's goodwill in the withdrawal of mainland missiles targeting Taiwan. (Source: Jens Kastner and Wang Jyh-Perng, Asia Times, Nov 11, 2010).


WilkiLeaks: Lee Kuan Yew on unification


Senior US officials were allegedly told during a private meeting with Singaporean Minister Mentor Lee Kuan Yew that Beijing aims to bring Taiwan into its fold by forging greater economic links and that it did not matter if the process took one or even three decades.

Held in Singapore's Presidential Palace in May last year, the meeting was attended by US Deputy Secretary of State James Steinberg and former US charge d'affaires Daniel Shields, according to reports of the confidential talks revealed as part of the recent cache of classified US Department of State cables released by whistle blower site WikiLeaks.

In the copy of the meeting transcript, Steinberg asked Lee for his assessment on recent political and economic developments between Taiwan and China. Lee, a former prime minister who still holds significant authority in Singapore through his son, the current prime minister, said that what mattered to Beijing was that Taiwan did not declare independence.

However, Lee said that Chinese President Hu Jintao does not appear to be in a hurry to unilaterally change the cross-strait status quo, differing from his predecessor, former Chinese president Jiang Zemin, who "wanted to show he was a great man by solving the Taiwan issue in his lifetime."

Beijing's calculation, he added, appeared to be preventing Taiwanese independence in the short term and then "bringing Taiwan 'back to China'" in the long term. (Source: Vincent Y. Chao, Taipei Times, Dec 1, 2010).