Fortnightly Review

Fortnightly Review

Fortnightly Review

Who and What Will Shape the KMT’s “New” China Policy?

After the new chairman of the Nationalist Party (Kuomintang or KMT), Johnny Chiang (江啟臣), took over the helm of the ailing centenarian Party, a central question has been how the 47-year-old former minister of the Government Information Office-turned-legislator will reorient the KMT’s relations with “China” and change the Party’s discourse on cross-Strait relations. The KMT’s traditional position of favoring closer cross-Strait interactions has been fundamentally challenged in recent years. This was especially true in the 2020 elections, when Beijing’s increasingly aggressive approach towards Taiwan and neighboring Hong Kong sent a warning signal to the people of Taiwan, serving as one of the factors contributing to the Party’s defeat in the elections. The KMT Reform Committee (改革委員會)—which has a total of 62 members—officially launched after the new chairman was elected and is headed by Chiang, with KMT Secretary General Li Chien-lung (李乾龍) serving as deputy-general convener. According to news reports, the Committee is divided into four groups: the “Cross-Strait Discussion Group,” the “Organizational Reform Group,” the “Youth Participation Group,” and the “Financial Stability Group.” The group that is most in the public spotlight is the Cross-Strait Discussion Group.

The “Cross-Strait Discussion Group” (兩岸論述組) is in charge of gathering ideas from the Party’s leading thinkers on cross-Strait relations and proposing a new platform for the Reform Committee and the new chairman to consider and the Party to adopt. Probably the single most contentious policy issue facing the Reform Committee will be whether the Party will retain in its original form, discard, or modify in some way the so-called “1992 Consensus,” which refers to the tacit agreement between the KMT and the Chinese Communist Party (CCP) that the two sides of the Strait belonged to “One China” and with each side free to interpret what that “China” is. There is reportedly a total of 16 cross-Strait experts and scholars included in the group. They are: Wang Hsin-hsien (王信賢), Chiang Shuo-ping (江碩平), Shen Ching-kuang (沈慶光), Lin Yu-fang (林郁方), Chiu Shih-yi (邱師儀), Yu Chen-hua (俞振華), Shih Wei-Chuan (施威全), Tu Li-Hsuan (涂力旋), Kao Wen-cheng (高文誠), Kao Su-po (高思博), Chen Wang-Chuan (陳汪全), Tseng Pai-wen (曾柏文), Liu Tai-ting (劉泰廷), Cheng Kuang-hung (鄭光宏), Su Chi (蘇起), and Huang Shao-ting (黃紹庭).

In an interview with the China Review News—a Hong Kong-based news outlet with close ties to Beijing— Professor Edward Chen (陳一新), a former deputy director for the KMT’s Mainland Affairs Department, stated that one the difficulties of determining how the KMT’s China policy may change stems from the fact that the Cross-Strait Discussion Group is comprised of many different opinions from various factions within the Party. As an example, Chen highlighted how the KMT’s brain trust on China policy includes former minister of the Mainland Affairs Council (MAC), Su Chi, National Chengchi University Professor Wang Hsin-Hsien, and National Taiwan University Professor Tso Cheng-tung (左正東), who is now the acting director of the Party’s Mainland Affairs Department. According to Chen, the three scholars represent starkly different views within the Party on China policy. Wang is associated with the “light Green” camp (in reference to the ruling Democratic Progressive Party coalition), Su favors a firm adherence to the “1992 Consensus,” and Tso advocates for the democratization of the People’s Republic of China. In Chen’s view, it will be very difficult to integrate these different views into one platform, much less satisfy Beijing as well as more than half of the Taiwanese people.

Moreover, regardless of the respective views of these individuals, Chen argues that the KMT will ultimately need to put forward a discourse on cross-Strait relations that is acceptable to Beijing. The KMT could shelve or even abolish the “1992 Consensus.” However, it would need to be replaced with a formula that Beijing could accept. According to Chen, the inclusion of Su in the Cross-Strait Discussion Group was intended to appease China, though whether Su alone could override the opinions of the others remains to be seen.

The former deputy director of the KMT Mainland Affairs Department also said that the Party and Beijing are now at a stalemate. Interestingly, Chen claimed that the KMT did not send any representatives to participate in this year’s Tomb-Sweeping Day celebration—a traditional Chinese holiday that celebrates ancestor remembrance—at the Yellow Emperor’s Mausoleum in China’s Shaanxi province. The KMT has sent representatives to this event every year since former Chairman Lien Chan (連戰) visited in 2009. Additionally, he cited the annual KMT-CCP Forum, which is reportedly not going to be held this year because the two parties have not agreed to the matter. Through these actions, the new chairman appears to be signaling to Beijing that the KMT does not have to cooperate with the PRC since China clearly does not cooperate with the Party. For example, Chen claimed that the KMT did not know in advance before Beijing proposed the preferential policies for Taiwan (惠台政策), such as the 31 or the “one country, two systems, Taiwan plan” (一國兩制台灣方案).

While the KMT’s traditional position of favoring closer cross-Strait relations may once have been an advantage for the Party—especially during previous periods of tense cross-Strait relations when voters preferred stability—it clearly turned into a liability in the 2020 election after Beijing ratcheted up its bullying of Taiwan and Hong Kong. Furthermore, Beijing’s narrow interpretation of the “1992 Consensus,” which essentially equates it with the “One-China” principle and “one country, two systems,”  has squeezed the air out of the room to expand the interpretation of the supposed second clause of the tacit agreement of “different interpretations.”

According to Dr. Austin Wang in his GTI occasional report  “Surveying the Taiwanese Psychology on Self-Defense and Self-Determination,” which utilizes an original survey on the Taiwanese public’s views on the “1992 Consensus”:

If China and the United States wanted the Taiwan government to openly accept the “1992 Consensus,” they should at first loosen, rather than constrain, the definition of this magic word. … the public opinion in Taiwan on “1992 Consensus” is malleable depending on how Taiwanese people perceive and interpret the term.

The urgency of reform cannot be understated. As Bonnie Glaser of the Center for Strategic and International Studies observed at a conference co-hosted by Global Taiwan Institute and The Heritage Foundation after the January 11 elections:

The real question is whether the party [KMT] itself reforms. Whether some of the older generation people move aside [and] make way for the younger generation. Whether they try to redefine themselves as an indigenous party. There are younger people that I’ve talked to in the KMT that would like to be the ‘Taiwan Kuomintang,’ not the ‘China Kuomintang’—that may be a bridge too far in the immediate future. But they have to figure out their messaging and their policies, and, of course, fundamentally have to examine what their policies going to be going forward towards Beijing. Are they simply going to stick with the ‘1992 Consensus’ or are they going to come up with new policies? If they do not revise their policies going forward, then I doubt that they will be able to win support. The most important thing is [sic] KMT reform and generational change.

In the final analysis, if personnel determine policy, the formation of the Cross-Strait Discussion Group demonstrates that the Party has begun the steps toward reformulating its China policy and it is casting a wide net. The advisory report will reportedly be proposed by the Reform Committee on May 22. What policy recommendations will come out at the end remain to be seen, though any proposals must be adopted by the Party for it to have lasting, meaningful effects. One thing seems to be clear: the KMT Reform Committee must reconcile external pressures that will shape its China policy and also internal differences and contradictions among its members’ views on China policies. As recent polling data indicates, the population in Taiwan increasingly sees China as unfriendly, prefer independence, and favor a slower pace of cross-Strait exchanges, demonstrating that a reform of the KMT’s policy and approach to China are more necessary than ever. Failure to reform now could have long-lasting generational effects.

The main point: The policy recommendations that will come out of the KMT’s Cross-Strait Discussion Group must reconcile external pressures shaping its China policy but also internal differences and contradictions among the various views within the Party on China policies.

Taiwan Becomes More than a Tourist Destination for Hong Kong as Beijing Tightens Grip

The political and business environments in Hong Kong are deteriorating further as Beijing tightens its grip over the Special Administration Regions (SAR), once the poster child for business innovation and economic vibrancy. Local startups are increasingly looking outside the territory for expanding business opportunities. In a recent poll conducted by a Hong Kong organization, Taiwan has emerged as the top choice for local startup businesses looking for expansion opportunities. Indeed, amid Beijing’s suppression of Hong Kong’s political space, many business enterprises are looking at Taiwan and Southeast Asia as their top two destinations of choice.

According to the Youth Entrepreneur Warrior (青年創業軍)—a Hong Kong organization set up in 2011 by local startup entrepreneurs—an online survey that interviewed 218 startups in the SAR in different industries indicated that 18.4 percent of respondents are considering expanding into the Taiwan market. In the poll, Taiwan topped Southeast Asia (14.7 percent), Japan and Korea (8.3 percent), Europe and the United States (4.8 percent), and mainland China (1.8 percent) as the destination that Hong Kong start-ups would most want to expand to. Coupled with other events, the polling data suggests that Taiwan is becoming far more than a popular tourist destination for Hong Kong residents.

The public sentiment reflected in the Hong Kong poll builds on an already robust economic linkage between Taiwan and the SAR. While the total trade volume between Taiwan and China captures most news headlines, Taiwan was Hong Kong’s third largest trading partner and Hong Kong was Taiwan’s fourth largest trading partner in 2019. Moreover, Hong Kong has been and remains a critical “entrepôt for cross-Strait indirect trade.” According to the Hong Kong Economic, Trade, and Cultural Office, in 2019, 22 percent of the total trade between Taiwan and China, which amounted to around USD $52.5 billion (HKD $411.5 billion), was routed through Hong Kong.

Strong economic links between Taiwan and Hong Kong have been accompanied by increased people-to-people ties. Despite the ongoing civil unrest and protest in Hong Kong, a combined total of 5,000 visitors from Hong Kong and Macau go to Taiwan on average every day, according to data from Taiwan’s Tourism Bureau cited by the South China Morning Post. Especially after the 2014 popular student-led protests in both Taiwan and Hong Kong, which stirred awake the youths in the two democracies, there has been a growing sense of solidarity between the two people. Furthermore, as a consequence of the anti-extradition law protests last year and Beijing’s unrelenting suppression, many young protestors have fled to Taiwan—some even seeking asylum. As NPR noted in a story, “as Chinese control grows over Hong Kong, Taiwan is again becoming a destination for political refugees from across greater China—especially from Hong Kong.” Most recently, the arrest of many Hong Kong pro-democracy legislators has only added fuel to the political and business risks. This will likely reignite the issue of Taiwan’s refugee law and whether it can provide political asylum for people from the SAR.

Beijing’s further restrictions on Hong Kong’s political space will fuel growing concerns that China will ultimately curtail Hong Kong’s high degree of autonomy, causing the business environment to suffer as well. Indeed, according to a survey of companies conducted by the American Chamber of Commerce in Hong Kong released in October 2019, “over half of the companies (61 percent) surveyed have started to feel the heat as they consider moving operations from Hong Kong, making contingency plans, or have had difficulties hiring people from overseas while also experiencing a talent drain.” In comments related to the AmCham survey, Tara Joseph, AmCham President, stated: “This survey should sound as an alarm bell for all who value Hong Kong as a vibrant business hub with rule of law and free flow of information. It’s crucial now to see an end to violence and for the government to step up and promote reconciliation before Hong Kong’s long-term reputation faces permanent damage.”

According to the Ming Pao news report, the vast difference in percentage of Hong Kong startups preferring to expand into the Taiwan market rather than the China market are for two main reasons: First, many small and medium-sized enterprises (SMEs) do not have the capacity to explore the huge inland market and compete with much larger Chinese companies in China. Second, during the COVID-19 pandemic, Taiwan has experienced a much smaller impact than in Hong Kong and many other places. While the results of the Hong Kong poll may reflect mostly business considerations, its correlation with other trends is hard to ignore. As Beijing squeezes Hong Kong ever more tightly, more people in the SAR see opportunities—political and business—in neighboring Taiwan.

The main point: As the situation in Hong Kong further deteriorates as Beijing tightens its grip over the Special Administration Regions (SAR), local startups are increasingly looking outside the territory for expanding business opportunities. Taiwan has emerged as the top choice for local startup businesses looking for expansion opportunities.