China "Must Learn From [My] Election" (int'l edition)

Chen: "The information they get is far from the truth"

Can a patient, determined democrat wear down Beijing's hard-liners? Taiwan President Chen Shui-bian, the 49-year-old former-opposition lawyer who has just finished his second month on the job, is betting that the answer is yes. Despite browbeating from the mainland, Chen shows no signs of being rattled. Indeed, he says, signs are emerging that pressures may be easing. Chen's strategy for Taiwan's survival as an independent country: Hold out an olive branch by offering to sit down and talk, but don't give ground on the issue of sovereignty. And bet that U.S. backing and a hunger to get into the WTO will restrain Beijing from lashing out militarily.

In one of his first interviews since taking office on May 20 (see below), Chen gave no quarter to Beijing. While indicating his eagerness to talk with Beijing and speaking about a "moral obligation" to promote peace and stability, Chen claimed that the mere fact that tensions with China had not escalated marked a triumph for his policy of standing up for Taiwan. He spoke boldly of Taiwan as "a sovereign and independent country" and said that it was his duty to protect the interests of the people of Taiwan. He also gave support for Washington's controversial "Star Wars" missile shield, known as Theater Missile Defense, saying it was necessary because of China's deployment of missiles.

MAINLAND INVESTMENTS. Taking aim at Beijing's leaders, Chen bluntly accused Beijing of not understanding Taiwan's people and said that the mainland leadership was being misled by Taiwanese visitors more intent on currying favor with Beijing than in representing the true picture on the island. And pointing to the 70% popular approval ratings of his cross-Strait policy and the backlash against Beijing's attempts to intimidate Taiwan's voters in the last two presidential votes, Chen urged Beijing to "learn from the election result" and "get to know me."

Certainly, China is getting to know Taiwan investors very well indeed. Despite tensions, entrepreneurs continue to pour money into mainland projects. Taiwanese businessmen are seeking Taipei's approval for ever-more sophisticated high-tech investments and want Chen to follow through on his promise to end a ban on direct trade and transportation links. But after pushing the idea for years, China suddenly appears cool to it. And for the first time, Beijing is pressuring Taiwan-backed mainland businesses to help bend the new President to China's will.

Still, Chen hopes relations with China have stabilized and may even be improving. More moderate remarks coming out of Beijing recently -- most notably from former Chinese Foreign Minister Qian Qichen -- may mean that relations are set to improve, says Tsai Ing-wen, Chairperson of the cabinet-level Mainland Affairs Council in Taipei. Officials in Taiwan, both local and foreign, say that the two sides are looking for a way to jumpstart negotiations. Any move will probably not come until after China's leadership holds its annual August meeting at the seaside resort of Beidaihe, where the vexing question of Taiwan will top the agenda.

FOCUS ON PRIORITIES. Chen's travel plans won't make restarting talks any easier. Chen said that he will ignore Beijing's threats and go to the inauguration of the new Dominican Republic president later this month. His trip to the Dominican Republic will be part of a larger swing through Central America and Africa, home to some of the few remaining countries that still grant diplomatic recognition to Taiwan. The trip will certainly anger China. Further complicating the diplomatic tangle is a planned refueling stop for the Presidential jet in Los Angeles. U.S. officials already are bracing themselves for a broadside from Beijing.

Methodical and coherent though Chen may be in person, his government is starting to look frayed after just three months in power. In late July, Chen was forced to replace his Vice Premier after a tragic flooding accident that took the lives of four people. Television cameras captured the agony of the victims trapped for hours, while government agencies squabbled among themselves over who was responsible for rescuing them, until rising waters swept the quartet to their deaths before a nationwide audience. And concerns about economic policies has knocked 20% off the stock market since April. Vice-President Annette Lu, cut out of the inner power circle, is shaping up as one of the Administration's most high-profile critics.

These troubles mean that Chen is scaling back his agenda of domestic reform. While vowing to push ahead with his anticorruption campaign, Chen acknowledged that reform of the business empire of the former ruling party, the Kuomintang, was "not a priority." With his Democratic Progressive Party controlling only a minority in the Legislative Yuan, Chen needs to stay focused on bigger issues -- above all else, China.

Following are edited excerpts of an interview, done in Taipei's grand, Japanese colonial-era neo-Victorian Presidential Office Building on July 27, with Chen by Business Week Asia Regional Editor Mark L. Clifford:

Q: What do you hope to accomplish vis-a-vis China during your term in office?

As president of the Republic of China and as a leader of a country in the Asia-Pacific region my natural obligation and mission is to jointly work with other leaders of Asia-Pacific nations to promote peace and stability in the region. We must promote peace and stability in the Taiwan Strait. This is not only my top priority -- it is a moral obligation.

Next of course, we need to clean up Taiwan politics. We must ensure economic prosperity and progress. As a leader I will work hard to terminate black gold or corruption in this country while at the same time working to create an improved climate for investment and business.

To lead Taiwan into the 21st century we must also make Taiwan into a new indicator of high human rights standards in the world. While we have made a number of reforms in our constitution in the process of democratization, there are a number of problems currently. I hope there is the opportunity to make additional reforms and improvements in the Constitution.

In terms of economic development, I hope that the phrase 'Green Silicon Island' will become a new name for Taiwan. I hope that by the year 2010 Taiwan will become a pioneer in digital economy.

Q: How will you, as you put it in your inaugural speech, "expand Taiwan's room for survival in the international arena," and how does your planed forthcoming trip to Latin American and Africa fit in with this goal?

In my May 20 inaugural speech, I said that "Taiwan stands up." Standing up means that I must also go out into the world as the leader of a sovereign and independent country. We must naturally push our diplomacy. We hope that Taiwan will take part internationally. The people in this country expect the government to take them back into the United Nations. Naturally, we face some difficulties, but we must not give up. At the same time, we must try to participate in other international organizations, including nongovernmental organizations.

During my Presidential inauguration, many heads of state visited from other countries to celebrate with us. While some other leaders of nations were not able to come, they nevertheless sent high-level or special delegations. These representatives of countries that are Taiwan's diplomatic friends invited me to visit [their] countries to strengthen relations. I hope to have the opportunity to reciprocate and on behalf of the Taiwanese people to thank them for their friendship and support. We hope to enhance the substantial relationship between the Republic of China and our diplomatic friends.

As to whether I or not I will travel, when I will travel and which countries I will visit -- all these issues are being arranged right now by the relevant government institutions. We will make a formal announcement when these issues are settled.

Q: Aren't you concerned that Beijing will be enraged by these visits?
I believe that, as President of a sovereign state, going abroad and exchanging meetings with our diplomatic friends is my duty. I believe I will be supported by our citizens for representing our interests on their behalf.

Q: What role would you like the U.S. to play?
I believe that permanent peace and the security and stability of the Asia-Pacific region are not only in the interests of Taiwan but also in the interests of the U.S. Therefore security and stability in the Asia-Pacific region is the common language between Taiwan and the U.S. I believe we can cooperate on this.

Therefore the concern on behalf of the U.S. for the Taiwan Strait and Cross Straits relations is quite normal. For the U.S. government and [its] people, improvement of Cross Straits relations is in their interest. I think the U.S. can play a more active role. I think the role of the U.S. can be [as] a balancer and stabilizer.

Q: Are you in favor of the proposed Theatre Missile Defense system? If so, would you like to see it extended to Taiwan?
The issue of TMD exists because of the deployment of missiles [by China] across the Taiwan Strait. This has been a threat to the peace and stability of the Asia-Pacific region. This is why the U.S. is considering the development of TMD.

Furthermore, TMD is not yet fully researched and developed, and it is too early to say whether Taiwan would invest in this project, but the government is seriously studying this policy. The decision to join is not a unilateral decision on our part. It also depends on the attitude of the U.S. as well as the threat imposed by the PRC's missiles.

According to opinion polls in Taiwan most people want to invest in TMD. We know that TMD is not absolute in terms of resolving our problems. It is not 100% secure. In addition to TMD, we must exert creativity and wisdom to improve Cross Straits relations.

Q: What is that creativity and wisdom?
This is related to the improvement of Cross Strait relations. We know that the purchasing of weapons does not provide 100% security. Taiwan's security does not rely only on traditional defense. It must incorporate political, economic, social, and energy-resource security, as well as the broader issue of regional security. We must not believe in [only] the hardware of weapons nor do we want to start an arms race.

Q: Relations seem stuck. Do you see any signs of progress, or are you disappointed at the lack of progress?
Although there are no significant breakthroughs, the situation has not worsened.

Q: Does China require radical change before reconciliation can occur?
Recently, I have noticed that U.S. Secretary [of State Madeline] Albright and Secretary [of Defense William] Cohen have visited China. In terms of Cross Straits relations, our information tells us that it is not seen as tense right now. There is not a sense of urgency or of crisis.

How we should grasp that opportunity is the greatest issue right now. We hope to sit down and resume negotiations. We can only do that by offering goodwill and through the wisdom of leaders on both sides. I have confidence that relations can improve.

I have noticed that there have been some adjustments and differences in some statements by PRC leaders before the March 18 elections and after the May 20th inauguration. I do not know if this can solve the problem. However, we prefer to interpret such adjustments as indications of goodwill. We feel it is most important to sit down and talk without prejudice before reaching an ultimate resolution. We should put aside our differences and seek a foundation that is acceptable to both sides.

Q: Can China and Taiwan negotiate on the basis of the 1992 agreement about "one China"? If so, what is your understanding of that agreement?
According to our understanding, in 1992 there was discussion of a so-called "one China". However, there was a disagreement and no consensus. Most Taiwanese people cannot accept Taiwan becoming a second Hong Kong or a second Macao. They cannot accept the one country-two systems policy [applied to Hong Kong and Macao], nor can they accept the "one China" principle interpreted as Taiwan becoming part of the PRC.

Q: But if you go abroad and you are not willing to accept the one China policy won't relations with Beijing get worse?
It is most important to please the Taiwanese people. I must [represent] the Taiwan people. Everything I do must be accepted by the people. It is a democratic country and I cannot do whatever I wish without respecting the wishes of the people.

Over the past few months, it has been clear that Cross Straits relations have not deteriorated. I will continue to express sincerity and goodwill, and I call on the leaders of the other side to react with sincerity and goodwill. With wisdom and creativity, the two leaders can sit down and negotiate the question of the future of "one China."

Q: Are you disappointed that China hasn't responded to your offer of allowing direct trading and transportation links?
As long as Taiwan's national security is maintained under the principle of market functions and mutual benefits, this government can adjust the present policy in regards to the three links. Whether we care [to talk] about the mini three links or in a broader sense, it requires officials on both sides to sit down and talk.

Q: What can China learn from your election, and do you expect your election to act as a spur to democratic change in China?
First, democracy, freedom, and human rights are universal human values. No individual political party or government can block the development of these values. Neither can they ignore public opinion in Taiwan.

Second, as a democratic country we feel that the spirit of democracy is in the alternation of power from one party to another through a process of a peaceful transfer of power. This is a necessary trend in democratic countries. Taiwan has not been left out of this trend. It also illustrates that a political party, no matter how hard it tries, cannot govern forever. There will always be a time when it must step down or transfer power.

Third, the election results demonstrate that the leadership in the PRC does not understand the Taiwanese people. Over the past two presidential elections, they have applied the same methods of threats and intimidation. However, the choices of the people of Taiwan have proven them wrong.

Finally the PRC doesn't understand the DPP nor do they understand me. They believed that a DPP victory would bring a declaration of independence. Thus far, my Cross Strait policy has been supported by 70% of the people in this country. It represents a consensus of the Taiwan people. The PRC leadership listens to people who visit China and often mislead them. The information they get is far from the truth. This leads to miscalculations and misjudgments on their part. They must learn from the election result. They must see our sincerity in improving relations. They should see the gestures made by the new government. They need to get to know me, and they need to get to know the DPP.

Q: Are you concerned that China could use Taiwan's business community as a wedge to divide Taiwan, as happened in Hong Kong in the runup to the 1997 handover?
We have noticed that the PRC has used tactics of trying to split our society. In the past, they have done this through selected businesses or industries. We have noticed that recently not only do they apply such methods through businesses, [but] they have also been reaching out to political parties and legislators. They are even extending their influence to representatives of the government and the military, as well as overseas Taiwanese groups. I think it is not so important to notice how they split or pressure our society. It is more important to put our attention on how to build confidence among ourselves to build solidarity so that we have greater strength to resist outside pressures.

Q: What will you do to promote greater Taiwanese investment in the mainland?
Promoting Cross Straits relations and the three direct [transportation and trading] links is already the set policy of the new government. To do so we must sit down and talk. Without doing so, there will be no breakthroughs.

By the end of this year, it is very likely that both sides will be joining the WTO, and this will of course affect direct investment on both sides. Once both sides join, the question of opening up direct investments will have to be further examined and implemented.

Q: How, specifically, do you propose to eliminate "black gold" and do away with the widespread perception, especially among Chinese outside of Taiwan, that the island's "democracy" has been little more than a "mafia-ocracy"?
The termination of black gold policies and corruption is a top priority of this government. Right now the relevant agencies are preparing to act. I expect grand action after the end of this term of the Legislative Yuan.

Q: What moves are you making to dismantle the KMT business empire and how important a priority is this?
For the KMT party assets, there are still many questions as to how much they have as well as the source of such assets. Right now there are still efforts being made to clarify these questions. This issue is not a priority.

Q: Was President Lee Teng-hui's formulation of "special state-to-state relations" correct?
It is not appropriate for the new government to criticize or comment on the former President's positions. However, as the President of the ROC, it is my obligation and responsibility to maintain sovereignty, dignity, and security, and to enhance the well-being of Taiwan's people.

In my May 20 inaugural speech, I emphasized that the improvement of Cross Strait relations must be based on the principles of democracy and parity. The leaders of both sides must respect the will of the people. Only the 23 million residents of Taiwan have the right to decide their future.

Q: What lessons do you draw from the Korean summit and from Kim Dae Jung's "sunshine diplomacy" that preceded it?
The greatest lesson we have learned in witnessing the two Korean leaders is that they sat down and reconciled. They have been able to put aside prejudices and differences. Only by putting aside such prejudices and differences in Cross Straits relations can reconciliation occur. We believe it is also essential to put aside our differences in search of some consensus.

Although the two Koreas and the Cross Strait relations result from very different historical circumstances, reconciliation is a global trend. If [both Koreas] can sit down, why can't the leaders on the two sides of the Taiwan Strait sit down?

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