The Exodus
The centennial celebrations of the foundation of the Chinese Communist Party’s (CCP) rule in what is now the People’s Republic of China (PRC/China) are fast approaching. China watchers and experts around the world agree that reunification of Taiwan with the mainland before 2049 is a major goal of the CCP. [2] This would symbolically mark the end of China’s century of humiliation at the hands of the West, and also mark its return to the world stage as a global hegemon. Strategically too, the reunification of Taiwan would allow Beijing to yield massive influence over global supply chains, as some of the largest semiconductor foundries of note are located in Taiwan. [3] On another slightly related note, as Russia invaded Ukraine in a bid to “reclaim” territories lost during the Soviet collapse, watchful and wary eyes turn towards Taiwan, as across the straits of Formosa lies an economic giant with a GDP of around 11 times that of Russia, and is right now the beating heart of global supply chains.
Taiwan’s situation would potentially be dire if its large neighbor to the west decides to resolve the re-unification problem via force. Western democracies and other countries in a bid to access China’s large market have acknowledged the PRC as the sole legitimate government in the Greater China region, which includes Inner Mongolia, Tibet, Manchuria, Hong Kong/Macau, and most importantly, Taiwan. Of the aforementioned five regions, only Taiwan is free from the PRC’s rule. However, Taiwan lacks official diplomatic recognition from a majority of the world’s nations, and as a consequence, lacks a concrete defensive alliance with the United States. This is something that Japan and South Korea, the United States’s other allies in East Asia, have. The dichotomy of either acknowledging the PRC’s sovereign rule over Greater China or not having diplomatic relations with the PRC at all is known as the “One China” policy. [4] Over the years, the PRC has used this One China policy to great effect, so much so that after 1971 almost a hundred countries, including the United States, switched diplomatic recognition from the PRC to the Republic of China (ROC). [5]
Like any major conflict, to truly understand the roots of why there exist two separate governments and two separate political systems in a territory that is essentially Chinese, one must take a look at the past, specifically the year 1949.
In 1949, émigrés and refugees from all across Greater China crossing the Fujian Straits by boatload would not have been an uncommon sight. Historical estimates suggest that over 2 million people fled to Taiwan. This added to the already 6 million-strong population of Formosa. The émigrés came to be known as Waisheng Ren. The Waisheng Ren consisted of KMT (Kuomintang) elites and have been a mainstay of Taiwanese politics in the decades to come. They took with them their cultural treasures, and quite a bit of mainland China’s gold reserves. [6]
The Taiwanese Economic Miracle
The Kuomintang or Nationalist Party proceeded to rule Taiwan under Martial Law, which wasn’t repealed until 1987, 38 years after its imposition in 1949. In what came to be known as the “White Terror,” people with perceived pro-communist sympathies either disappeared or were executed. Even more were tortured due to their perceived links with Communist sympathizers. Again, according to historical estimates, the White Terror claimed the lives of around 140,000 Taiwanese souls which is roughly about 2.3% of the population. Contrary to the later attempts to whitewash the brutality of the KMT regime, Taiwan before the 1970s was just as repressive as Mao’s China. During the 1970s, Taiwan saw rapid year-on-year economic growth, seen once before only in its neighbor to the north, Japan. [8]Incomes steadily rose and infrastructure projects such as freeways, nuclear plants, and deepwater ports were launched. Tax incentives, infrastructure along with a cheap and well-trained labor force attracted foreign investment, mainly from the United States and Japan. [9] This investment manifested in the electronics industry where the manufacture of electronic products required cheap, well-educated labor. Taiwan was well poised to reap the benefits of the electronics-led export boom. Although most of the profits went to Japanese and American firms, millions of Taiwanese were able to pull themselves out of poverty by working in export-related industries. The facts speak for themselves. Foreign trade reached 38 billion U.S. dollars a year, with a trade surplus of 48 million U.S. dollars in 1980. [10] The income ratio of the highest earners to the lowest decreased from 15:1 in 1952 to 4:1 in 1978, making Taiwan one of the most economically equal countries. [11]
Politically, however, the KMT Government had to deal with increasing criticism from Western governments, particularly as the Martial Law imposed in 1949 was still being upheld. Furthermore, the Sino-American Mutual Defence Treaty, which guaranteed Taiwan’s protection against PRC aggression, was terminated. [12] This was mainly due to the Sino-Soviet split, and the American foreign policy agenda had more to benefit from the PRC acting as a bulwark against Soviet military doctrine in the Far East. Following Nixon’s landmark visit to Communist China, the United States switched diplomatic recognition from the ROC to the PRC. Naturally, this dealt quite a blow to the legitimacy of the KMT regime. Furthermore, along with the United States, other Western democracies too switched diplomatic recognition from ROC to PRC. To add insult to injury, the Republic of China lost its permanent seat at the UNSC to the PRC and was excommunicated from the United Nations itself.
Perhaps due to all the ostracization from abroad, the KMT gradually increased the political freedom of the people. Another factor would be the gradual rising of people’s incomes. At the time, Taiwan was the second richest East Asian country in terms of per capita GDP. A definite turning point in the transition from an authoritarian state to democracy would be the Kaohsiung incident, a pro-democracy protest which involved a celebration of human rights. Although the protest was rapidly crushed by KMT officials, this was the definitive turning point that united the opponents of the KMT. Chiang Kai-Shek’s son, Chaing-Ching-Kuo, began massive reforms to the political system. He reduced the power of the Waisheng Ren, which by now had grown into a hereditary cabal. [13]
Lee Teng-hui, a U.S.-educated economist and most importantly, a native Taiwanese won the first democratically held elections in 1996. Lee’s party, the DDP, is in favour of Taiwanese independence from China. The KMT, however, would prefer a peaceful reunification with the mainland. Under Lee, Taiwan grew to become one of the largest trading partners of the PRC. At one point, Taiwan ran a trade surplus of 152 billion U.S. dollars with PRC, by far the largest in the world.
As the incomes of the average Taiwanese approached European levels, Taiwanese contract manufacturers needed another source of cheap labor. The newly created Special Economic Zone (SEZ) near the sleepy fishing village of Shenzhen, a couple of hundred kilometers off the west coast of Taiwan, proved the answer. [14] Over the decades, investment by Taiwanese electronics manufacturers such as Pegatron and Foxconn transformed Shenzhen from a fishing village into a global megacity over two decades.
Conclusion
To put it simply, the Taiwanese and Chinese economies are joined at the hip. Chinese manufacturing firms on the mainland depend on the complex microchips that arrive from Taiwan’s foundries, without which the said product would be worthless.
Moreover, almost the entirety of the global demand for microchips is satisfied by Taiwanese foundries, and any disruption to the production would be disastrous for the global economy as most of the products being manufactured and used today require these microchips to be functional. Hence, while Vladimir Putin’s approach made his country an international pariah overnight, the same will not work with Taiwan.
Chinese warships crossing the Straits would spell doom for both economies and could even herald the biggest recession the world has seen since the Great Depression.
But with how the situation is escalating, we can only hope for a good outcome.
Article by:
Rohit N
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