March 08, 2007

China & Taiwan's Running Dispute

The verbal shots across the Taiwan Strait were stark.

"Taiwan is our territory," said Tan Naida, a delegate to the National People's Congress in Beijing. "Just look at history. Why can't we take Taiwan back?"

"Taiwan wants independence," said President Chen Shui-bian of Taiwan in Taipei. "Taiwan wants to change its name, Taiwan wants a new constitution, Taiwan wants development."

That aspect of the running dispute between China and Taiwan over the island off the coast of China is clear enough. Much of the rivalry, however, is riddled with contradiction. The consequence is an uneasy and perhaps dangerous stalemate about which the Bush Administration has done little but wring its hands.

Perhaps the most evident contradiction is the difference between what Beijing says and what it does. The party line includes frequent appeals to "compatriots" in Taiwan to reunite with the mainland. It's a Communist Party version of: "Come back, Taiwan, all is forgiven."

Yet many Chinese actions alienate the people of Taiwan. Some is petty harassment. When Mr. Chen flew to Nicaragua in January to attend the inauguration of President Daniel Ortega, China pressed Mexico not to allow his airplane to fly through Mexican air space on the return trip, forcing the plane to swing out over the Pacific and adding several hours to the flight time.

Chinese officials seem to go out of their way to humiliate the Taiwanese. In international sports events, the team from Taiwan is forced to compete under the clumsy name of "Chinese Taipei." The same is often true in international economic forums.

During a seminar in Honolulu some months ago, the head of a Chinese delegation walked out in a huff when he discovered that staff members of Taiwan's quasi-official consulate were in the audience. Elsewhere, a senior Chinese official, approached by a TV reporter from Taiwan, sneered on camera: "Who cares about you?" That was televised all over Taiwan.

China's campaign to isolate Taiwan diplomatically is well documented. For years, Beijing has blocked Taiwan's application to join the United Nations and affiliated agencies such as the World Health Organization. That effort is often extended to non-governmental organizations.

Equally well documented is China's military modernization aimed primarily at Taiwan, including an estimated 1000 missiles aimed across the strait. Chinese leaders last week announced an 18 percent increase in military spending, to $45 billion. Many Western estimates place China's real military spending at twice that.

China's hostility clearly affects the attitudes of Taiwanese as seen in polls taken three times a year, the latest in December. About 85 percent opted for maintaining the status quo, meaning moving toward neither independence nor unification with the mainland. Taiwanese seem to take at face value the Chinese threat to launch an attack if Taiwan seeks formal independence.

Among the contradictions on Taiwan's side were those in the "Four Wants" proclaimed by President Chen last week.

Chen said earlier that Taiwan would not seek formal independence. He has said that Taiwan would not change its formal name, the Republic of China, to the Republic of Taiwan. He has said he would not seek a new constitution that would, in effect, be a declaration of formal independence. Only the desire for more economic development did not contradict earlier statements.

Buttressing President Chen's "Four Wants" have been new versions of history textbooks used in Taiwan's high schools that emphasize Taiwan's separate identity and renaming state-owned enterprises to substitute the word "Taiwan" for "China." Corporate executives say this is not easy as all sorts of legal and regulatory changes must be made.

Where the history of Taiwan was included in China's history before, the new series of four textbooks has a volume on Taiwan's history, another on China's history, and two on world history. Among the company name changes, the China Post Company has become the Taiwan Post Company and the Chinese Petroleum Corporation has become CPC Taiwan.

The Bush Administration, preoccupied with Iraq and other pressing issues, has tried to persuade both Taiwan and China not to make unilateral changes that would upset the status quo and what the White House and State Department see as stability across the Taiwan Strait.

A State Department spokesman said President Chen's "Four Wants" were "not helpful" about the same time the department issued a Congressionally mandates report on human rights in which China was accused of allowing human rights to deteriorate.

The open question is how long Taiwan or China will refrain from drastic measures to resolve the dispute.

January 19, 2007

The China Threat

While the U.S. military and diplomatic resources remain disproportionally focused on the Middle East (for obvious reasons), China continues to methodically move forward with its long-term objectives. From the front page of the Washington Post this morning:

The Chinese military used a ground-based missile to hit and destroy one of its aging satellites orbiting more than 500 miles in space last week -- a high-stakes test demonstrating China's ability to target regions of space that are home to U.S. spy satellites and space-based missile defense systems. The test of anti-satellite technology is believed to be the first of its kind in two decades by any nation and raised concerns about the vulnerability of U.S. satellites and a possible arms race in space......

The U.S. military is especially dependent on satellites for navigation, communications and missile guidance, while the American economy could also be broadly damaged by disruptions of communications, weather and other satellites. Some in the administration believe that this has left the nation especially vulnerable to attack and have proposed efforts to develop ways to defend its assets in space...

"In my view, the Chinese are sending a strong signal here," said Jeffrey Kueter, president of the George C. Marshall Institute, a nonprofit space and defense think tank in Washington. "They're saying they can hold our space-based, war-fighting capability at risk, and are putting into doubt our ability to challenge them. They're a rising space competitor."

There is no question that China is a competitor of the United States. The real question is how the China-U.S. relationship will mature as China's strength -- both economic and military -- continues to expand. Will the relationship remain more or less friendly or at least a peaceful competition among what will soon be the world's two super powers or will it deteriorate into a more confrontational/adversarial state of affairs?

The growing military threat posed by China is clearly the primary geo-strategic impetus behind the U.S. outreach to India, and to a lesser degree Japan; both of which have been very good, long-term strategic moves by the Bush administration.

April 21, 2006

Where Is China Going?

During a discussion on the Special Report with Brit Hume roundtable last night, Mort Kondracke said the path of China is one of the big unknowns of the future of the world. Will China continue to open up, becoming more liberal economically and politically, or will it remain a corporatist, repressive police state with (perhaps) imperial ambitions? Fred Barnes responded:

We know where China is going. They're not going to be a bitter adversary, a country that is conspiring to overtake the United States and conquer the United States and so on.

But we know they're not going to help us. They're not helping with Iran. They should be the people -- they could get the North Koreans, they could snap their fingers and the North Koreans would get rid of their nuclear weapons but they don't do that. They're just not going to help us anywhere and meanwhile the Indians, the Japanese, the Australians and many others in Asia want the U.S. to be there to help check Chinese power and we're doing it.

I'm not quite as confident about China's future relationship with the U.S. The issue of Taiwan strikes me as one that can and probably will blossom into a crisis that could poison U.S.-China relations, moving them from the realm of being an unhelpful "strategic" adversary into being a full blown "bitter" one. Whether that happens in five years or fifty years, it's impossible to say.

February 16, 2006

Why China Won't Become Super

In a word: demography.  Here's the short version, delivered by Mark Steyn today in The Australian:

"Demography doesn't explain everything but it accounts for a good 90 per cent. The "who" is the best indicator of the what-where-when-and-why. Go on, pick a subject.....Will China be the hyperpower of the 21st century? Answer: No. Its population will get old before it gets rich."

Andy Mukherjee of Bloomberg goes into much more detail:

Qiao's research shows that China's dependency ratio -- the number of people too young and too old to work divided by the working-age population -- will start rising at the end of this decade and approach 50 percent in 2030, from less than 40 percent at present, making China as gray as Japan was last year.

By 2050, every 10 Chinese workers in the age group of 15 to 64 will support a total of seven younger and older people -- a dependency ratio of 70 percent.

An aging society may be an inevitable part of demographic transition, though ``what makes China's case unique is that the sharp rise in dependency ratio will arrive earlier in terms of per capita income level relative to other countries,'' Qiao says in her report.

In 2030, China's annual per capita income will be a little more than $11,000 measured in current prices, compared with almost $36,000 in Japan last year, according to Goldman Sachs's estimates. South Korea's dependency ratio will approach 50 percent in 2025, with its citizens earning $52,000 a year.

Does it matter if China gets old before it gets rich? It does, for a number of reasons. First, economic growth rates taper off with aging: It's difficult for a developing nation to get rich after its population has already grown old.

Second, aging will put further stress on China's underdeveloped pension system as an increasingly smaller cohort of workers gets saddled with the responsibility of sustaining a growing number of retired people.

A third reason is that as European nations and Japan age further, their governments may have to raise tax rates to transfer incomes from the workers to the retirees. That will create a shortage of capital.

A combination of cultural changes and the Communist Government's "one-child policy" implemented in 1979 have helped keep birthrates in China under 2.0% for the last twenty-five years, accounting for a population reduction of roughly 300 million people.

As Mukherjee reports, the result is that for the last 20-plus years, China has had a relatively high number of working-age people relative to its overall population, a major factor contributing to the country's explosive economic growth.  But the "demographic dividend" China has enjoyed is poised to turn into a deficit as the pre-1978 baby boomer generation begins to retire, potentially leaving the country with a very gray, yet still relatively poor population.