“Cold peace” is a term often used to define cross-Strait relations after May 20, 2016. The essential parameters of “cold peace” are a set of policies carried out by both China and Taiwan. On the one hand, Beijing has indicated or implied—since long before Tsai Ing-wen’s election as president of the Republic of China (ROC)—that, unless she accepted the People’s Republic of China’s (PRC) precondition of the “1992 Consensus,” there would be no official or semi-official communications between China and Taiwan, no international space for Taiwan, and no more “economic handouts” to Taiwan.
On the other hand, Tsai was reluctant to accept the term “1992 Consensus” during the electoral campaign. Rather, she was elected president with an ambiguous pledge to maintain the status quo across the Taiwan Strait. In her inauguration speech, President Tsai stated that her government would respect the “historical fact” of the 1992 meetings and all developments thus following; would abide by the ROC constitution, and implement existing cross-Strait law and agreements as the previous administration had; and would construct a “consistent, predictable, and non-provocative” framework of interactions with mainland China. More specifically, in her National Day speech, President Tsai reiterated her pledge with “four noes:” there will be no change of good will toward China, no change of her previous promises, no succumbing to China’s pressure, and no return to old ways of cross-Strait confrontation.
As a result of the implementation of China’s “three noes” policy and Taiwan’s “four noes” policy, cross-Strait relations have evolved into a sort of deadlock, in which communication channels in the public sector are cut off and exchanges in the private sector reduced. However, the status of “cold peace” is not a static concept. Rather, it is an unstable, suboptimal, Nash equilibrium; a result of both Chinese and Taiwanese “no” strategies.
For China, the dominant strategy is to increase diplomatic, economic, and military pressures on Tsai’s government, in the hope that Tsai will make a mistake and retaliate, thus escalating tensions across the Taiwan Strait to a tipping point where the US would have no choice but to rein in Taiwan. If Tsai is smart enough not to retaliate, China will continue to strangle Taiwan’s international space and weaken Taiwan’s economy up to a point where regime change in Taiwan would allow China to have a quick political settlement with Taiwan under a “One-China” framework.
Such a strategy is premised on Xi’s commitment to his previous remark: that is, the political difference across the Taiwan Strait cannot be left unresolved from generation to generation. Notice that Xi’s remark does not necessarily imply a complete unification between China and Taiwan. Rather, a political settlement that legally implies both mainland China and Taiwan “belong to” or “commit to” one and the same China (or country) could be sufficient to establish Xi’s historical legacy. Supposing a political settlement with Taiwan is what Xi intends, what would he do to realize this objective within his tenure as the president of PRC? Xi is correct to elevate the Taiwan issue as part of national security strategy, which will be decided by Xi’s office, rather than by the Taiwan Affairs Office. The top priority for Xi now is to consolidate his own power in the 19th CCP Congress. In order to secure this objective, he cannot afford to be criticized by his opponents for being soft on Taiwan. That is why Xi allows the TAO and Chinese media to appear hawkish on Tsai’s government, while officially still not writing her off by defining her as a die-hard independence leader on par with Chen Shui-bian or Lee Teng-Hui.
If Taiwan is part of China’s national security strategy, then Xi’s initial objective is to seek Taiwan’s strategic neutrality in East Asia, in the hope that Tsai’s government will follow Ma’s policy of maintaining equal distances in Taiwan’s relations with the United States, China, and Japan. Xi understands that Tsai and the DPP have a natural inclination to rely on the US-Japan alliance. So, for Xi, if Tsai can be pressed to accept the term of the so-called “1992 Consensus,” it would solve China’s geo-strategic problem as well.
Given that China has implemented its dominant strategy, Tsai is smart enough to keep sending olive branches to China, while not accepting the term “1992 Consensus.” Tsai knows that maintaining the status quo inherited from Ma’s government will at least fulfill Beijing’s initial strategic objective in Asia. This would build up some trust between Xi and Tsai. This is why Tsai’s government was, at first, optimistic about attending ICAO. Tsai’s government believes that it has done a good job, and Beijing should reciprocate with goodwill. However, Beijing has nothing to lose by pressing harder on Tsai, and knows that she has few cards to play against China. If Tsai punches above Taiwan’s weight, leading to an unwanted spiral of tensions, then the United States will presumably rein in Taiwan. Moreover, if Tsai loses her patience and acts against China before the 19th CCP Congress, Xi would have no choice but take drastic measures against Taiwan. Therefore, the best strategy for Tsai is to keep her promise of maintaining the status quo as long as possible, even under the circumstances of increasing pressure from China.
But such counter-strategy only works in the absence of domestic pressure on Tsai. Unfortunately, due to a series of publicly exposed instances of domestic policy mismanagement, Tsai’s approval rating has dropped precipitously since May 2016. At this moment, survey data reveals that 41.4 percent of Taiwanese people approve of Tsai’s performance, while 42.6 percent of them disapprove.
The recent decline in Tsai’s approval rating has little to do with her cross-Strait policy. A Mainland Affairs Council poll shows that a plurality of respondents feel that the current speed of cross-Strait interactions is just about “right.” But Tsai’s domestic challenges will constrain her, limiting the options for a more moderate policy toward China. In response to the widespread disappointment that followed China’s sabotaging Taiwan’s participation in ICAO, and perhaps in an effort to alleviate pressure from DPP supporters, Tsai’s recent remarks seem to suggest that her government would resist and counter China’s pressure by all means, if China continues to bully Taiwan. Yet, Tsai will be able to maintain her earlier, moderate policy toward China, if she demonstrates sound management of Taiwan’s economy and good results from her reform programs.
China certainly understands Tsai’s domestic constraints and is leveraging its power to make Tsai’s economic strategy fail and domestic pressure increase, so that either a regime change in Taiwan is made possible or Tsai mistakenly provokes China. Contrary to the the conventional wisdom that China will step up military posturing, China will probably downplay its military threat. Neither will China carry out explicit measures against Taiwan’s economy such as imposing sanctions. China will probably concentrate most of its efforts on depriving Taiwan of international space and containing Taiwan’s trade diversion measures. The reduction in Chinese tourists visiting Taiwan and delegations purchasing Taiwan’s products are simply two face-saving measures to signal China’s displeasure. They will be partially restored, once China again finds them useful for propaganda.
The main point: President Tsai Ing-wen faces increasing domestic constraints, which China is leveraging to make the new administration’s economic strategy fail, with the objective of regime change or prompting Tsai to mistakenly provoke China.