China's Rise as an Economic Power and the Future Direction of the Cross-Strait Relationship

Author Name ITO Shingo  (Mizuho Research Institute Ltd.)
Creation Date/NO. January 2011 11-J-003
Research Project The Rise of China and the Transformation of the East Asian Regional Order
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China's rise as an economic power has enriched its source of influence to be mobilized in realizing its policies toward Taiwan. There is no doubt that China's high economic growth has boosted the economic resources that Beijing can use in increasing its military power with an eye on Taiwan, establishing diplomatic ties with those countries that recognize the Republic of China (Taiwan) as a sovereign nation, and seeking to exclude Taiwan from various international organizations. Moreover, China's high growth has also served as a source of power to force Taiwan to increase its economic dependence on China. The Taiwanese authorities, for their part, have been vigilant against the possibility that Beijing may intensify its drive toward unification with Taiwan by taking advantage of Taiwan's increasing economic dependence on China. In reality, however, the Taiwanese authorities have had no other choice but to intermittently ease restrictions on economic exchanges with China, endorsing the practices of the Taiwanese business community. Indeed, Taiwan is more dependent on China than China is on Taiwan, creating a notable "asymmetric economic interdependence" across the Strait. In recent years, Beijing's policy toward Taiwan appears to be focused on preventing Taiwan's independence, rather than aggressively promoting Taiwan's unification with China, at least for the foreseeable future. It is inferred that the formation of this asymmetric economic interdependence structure between mainland China and Taiwan has played a role in raising the cost of Taiwanese independence. However, judging from the experiences of other countries, it would be no easy task to achieve unification with Taiwan by means of economic sanctions. Will Beijing be able to achieve democracy and social stabilization along with economic development? And will it be able to present a viable unification and integration model that can ensure the self-determination and dignity of Taiwanese citizens? These two questions hold key to the success or failure of China's peaceful unification/integration with Taiwan.