One China or Two? page 4 of 6
The exchanges have also facilitated increased trade and investment between the two sides. In fact, bilateral trade since 1987 has exceeded $272 billion. In the first nine months of 2002, two-way trade rose 26 percent ($25 billion) over the previous year—more than 20 percent of Taiwan’s total exports went to the mainland, 30 percent if exports to Hong Kong were included. In short, mainland China has now surpassed the United States as Taiwan’s biggest export market.
The number of Taiwan-based capitalists investing in mainland China has also risen rapidly. According to Taiwan’s figures, as of June 2002, Taiwan’s private sector had invested $24.2 billion on the mainland, although the number is closer to $60 billion according to the PRC government figures–using either figure, with this level of investment Taiwan ranks fourth (behind Hong Kong, the United States, and Japan) as an external source of investment. Other nongovernment sources estimate that Taiwan has actually invested well over $140 billion in the mainland. And now that both Taiwan and the mainland have joined the World Trade Organization, this trend may continue to get stronger since they both must abide by the same rules and regulations and meet the same standards.
Other encouraging developments include some less publicized events, such as the start of links between Taiwan’s offshore islands and the mainland, the decision by Taiwan to allow mainland Chinese to visit Taiwan as tourists and to allow Taiwan-based banks to set up representative offices on the mainland. Most recently indirect charter flights (via Hong Kong) have been established between the two sides for shuttling Taiwan and mainland residents back and forth during the Chinese New Year holiday. And very recently China has granted permission for Taiwan’s international flights en route to Europe to fly over the mainland so as to avoid flying in the Middle East airspace. All of these developments are products of one of the Chinese people's best-known characteristics—they are “pragmatists.”
These positive factors have had and will continue to have an impact on the relationship between Taiwan and the mainland, but there have been some negative developments as well:
First and probably the most fundamental has been the PRC’s continued insistence that Taiwan is a province of China and therefore is subject to Chinese leadership. This formulation is contrary to the facts, and it alienates the people of Taiwan.
Second, the PRC objects strenuously to Taiwan’s presence and/or participation, even as an observer, in certain nonpolitical international organizations such as the World Health Organization or the Civil Aviation Organization. Of course, the membership of both the PRC and Taiwan in the World Trade Organization is an exception, and that would appear to be a pragmatic decision on the PRC’s part.
Third, the PRC refuses to resume talks with Taiwan. In 1995, you may recall, the PRC abruptly interrupted a two-way dialogue and began firing missiles through Taiwan’s airspace. This action was directed at Taiwan’s first-ever direct election of a president. The United States responded by sending aircraft carriers to the waters off Taiwan. Direct talks were resumed in 1998, only to be halted again the next year. Currently the PRC insists that no talks can be held unless Taiwan first agrees to the “one China principle.” Taiwan has said it is willing to discuss any issue, including the “one China issue," but the talks should be held without any preconditions.
Fourth, the PRC refuses to renounce the use of force, and in recent years it has deployed more than 350 ballistic missiles along the coastline opposite Taiwan. This has driven Taiwan to purchase more defensive weapons from the United States.
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Now let me summarize the current policies of Taiwan and the PRC regarding their mutual relationship. Taiwan’s President Chen has declared that as long as Beijing has no intention of using military force against Taiwan, he will not declare Taiwan’s independence. On January 1, 2002, President Chen said that “if the Chinese mainland can renounce military intimidation and respect the people's free will, the two sides can begin with integration in the cultural, economic, and trade fields, before further seeking a new framework for permanent peace and political integration.” And on January 1, 2003, he reiterated this policy formulation and called on both sides of the Taiwan Strait to “ strive toward building a framework of interaction for peace and stability.” He said the two sides should “foster an environment conducive to long-term engagement, and work together, abiding by the principles of democracy, parity, and peace in an effort to resolve longer-term issues.”