Democratic Progressive Party (DPP) Chairperson Tsai Ing-wen was inaugurated as president on May 20. In her inaugural address, she did not accept “one China” but did reach out further toward Beijing. Beijing gave her address an “incomplete” grade and has continued to press her to accept the 1992 Consensus. Despite this fundamental divide and deep mutual mistrust, the two sides have been able to handle some issues in a pragmatic manner. Although the formal communications channels have been suspended by Beijing, contacts at other levels continue under the network of cross-strait agreements. Many issues will continue to complicate the management of relations. However, Tsai remains committed to maintaining stable relations and Xi Jinping, preoccupied with other challenges, prefers to avoid a confrontation with Taiwan.

President Tsai inaugural address and Beijing’s assessment

As the inauguration approached, various actors sought to influence how Tsai Ing-wen would discuss cross-strait relations in her address. On April 29, outgoing President Ma Ying-jeou stated that the cross-strait status quo, which Tsai had repeatedly vowed to uphold, is not “empty talk” and that only the 1992 Consensus is the proper political foundation for peace and stability; similarly, a May 4 editorial in China’s People’s Daily said that Tsai’s pledges on the status quo were “empty talk” without the 1992 Consensus. On May 11, a Taiwan Affairs Office (TAO) spokesman said “if there is a crisis, the responsibility will be on the heads of those who change the status quo.” Daniel Kritenbrink, senior director for Asian affairs on the US National Security Council staff, told reporters on May 18 that the United States had emphasized to both sides of the Taiwan Strait that both sides should show flexibility in the name of peace and stability. In the week leading up to the inauguration, People’s Liberation Army units in Fujian province staged military exercises featuring amphibious assaults, helicopter attacks, and other tactics.

Finally, May 20 arrived. At 9:00 am President Tsai and Vice President Chen Chien-jen were sworn in, and later that morning Tsai delivered her inaugural address. The focus of the speech, as throughout the campaign, was the economic and social challenges facing Taiwan. Toward the end of the speech she turned to regional stability and cross-strait relations, vowing to maintain peace and stability. She set the modest goal of “maintain[ing] the existing mechanisms for dialogue and communication across the Taiwan Strait,” and said the “governing parties” on each side of the Strait must engage in positive dialogue for the benefit of the people on both sides.

President Tsai said that her government would conduct cross-strait relations “in accordance with the Republic of China Constitution, the Act Governing Relations Between the People of Taiwan Area and the Mainland Area, and other relevant legislation.” This was the first time, in the context of cross-strait relations that she had referred to the ROC Constitution itself, rather than the “constitutional order,” and the Act Governing Relations; these two documents are seen as important sinews connecting Taiwan to “one China.”

Tsai repeated comments she made in January 2016 recognizing the historical fact that in 1992 representatives of the two sides “arrived at various joint acknowledgements and understandings,” but she did not use the term 1992 Consensus to describe this fact. Rather, as she has in the past, she defined the political foundation for cross-strait relations as consisting of four key elements: 1) the 1992 talks and “joint acknowledgement of setting aside differences to seek common ground,” 2) the existing ROC constitutional order, 3) the outcomes of over 20 years of negotiations and interactions across the Strait, and 4) the democratic principle and “prevalent will of the people of Taiwan.” Tsai’s spokesman said later in the day that the speech represented maximum flexibility and goodwill (Tsai herself has since repeated this), but that observers should not interpret her remarks as acceptance of the 1992 Consensus.

Beijing’s response was restrained. It did not indicate any flexibility, but also was not entirely negative. Several hours after Tsai’s address, a statement was issued in the name of the head of the Taiwan Work Office of the Central Committee of the Communist Party of China and head of the TAO. The statement noted Tsai’s comments on the 1992 talks but said “she was ambiguous about the fundamental issue,” that she “did not clearly acknowledge the 1992 consensus or its core connotation [“one-China”], and didn’t present a concrete means for peace and stability in cross-strait relations. This is an incomplete test.” The statement said that the communication mechanisms of the TAO and Association for Relations Across the Taiwan Straits (ARATS) with their respective with Taiwan counterparts could not operate without acceptance of the 1992 Consensus. A People’s Daily commentary on May 21 said that China “will not only listen to what Tsai says, but also see what she will do.” On May 23, ARATS Vice Chairman Zheng Lizhong went so far as to say that Tsai’s inaugural address was “pretty close” to what Beijing wanted to hear, and noted that her reference to the Constitution and Act Governing Relations marked a departure from previous DPP rhetoric. Still, Zheng said that without acceptance of the 1992 Consensus, cross-strait relations cannot be maintained. He repeated Xi Jinping’s March 2015 warning that “the earth will move and mountains will shake.” All mainland statements reiterated strong opposition to Taiwan independence, as always.

Continued Beijing pressure re “one China”

Since the inauguration, Beijing has continued to focus on the importance of Tsai accepting “one China.” As noted, on May 20, the TAO said that the institutionalized communications could not function without accepting the 1992 Consensus. A few days later Vice Commerce Minister Wang Shouwen said that negotiations on the Merchandise Trade Agreement (MTA) could only proceed under the 1992 Consensus. In late June, the TAO spokesman announced that the institutionalized communications had been suspended after May 20 because the Taiwan side had not confirmed the 1992 Consensus and the “one-China” principle. On July 1, General Secretary Xi Jinping stated that the maintenance of the 1992 Consensus and opposition to Taiwan independence were the foundations for the peaceful development of relations. A few days later Politburo Standing Committee member Yu Zhengsheng added his voice. In August, the TAO stated that without acceptance of the 1992 Consensus no consultations could be held on Taipei’s desire for international space.  In late August, Beijing took steps to exclude Taiwan officials from certain cross-strait exchanges to underline that official contacts are not possible with the Tsai administration.

As there are no coming events requiring President Tsai to make some further statement on cross-strait relations, Beijing has been searching for other pressure points. Tsai has been focused on domestic economic and reform priorities and has generally avoided further comments on these core issues of principle. However, in an interview with the Washington Post in July, she was asked whether Beijing had a deadline for her acceptance of the 1992 Consensus and replied that, “it is unlikely the government will accept a deadline for conditions that are against the will of the people.” This frank statement did not knock Beijing off its message. The TAO promptly reiterated that the 1992 Consensus is essential.

Dealing with practical issues

While this stalemate over core issues of principle has continued, the two sides have had to deal with a host of practical issues. Some issues have been dealt with pragmatically; others have been handled in ways that feed the concerns and mistrust of the other side. Some things that could have disrupted ties have fortunately not occurred.

The most important example of issues being handled pragmatically involved Taipei’s participation in the World Health Assembly (WHA), which was held in Geneva the week after Tsai’s inauguration. A year earlier there had been speculation that Beijing would block the DPP health minister’s participation. Then, just days before the registration deadline, Taipei received an invitation from the WHO. Apparently, Beijing believed that, in the context of its campaign to get Tsai to accommodate their demands in her inaugural address, on balance extending the invitation was the wiser course. However, unlike previous years, this invitation stated that it was being extended under the “one China” principle. The Tsai transition team chose to accept the invitation while stating that, given the principle of universality, it was not relevant to set political conditions for Taipei’s participation. As noted above, Tsai’s inaugural address was viewed in Beijing as partially positive. The new DPP Health Minister Lin Tzou-lien attended the WHA and conducted himself in a way that avoided provoking Beijing.

It is somewhat misleading for Beijing to say that the institutionalized channels are suspended. Beijing is not using the high-level channels. However, the Mainland Affairs Council (MAC) and Straits Exchange Foundation (SEF) continue to send messages that are not rejected or returned by their counterparts. Rather Beijing is accepting the messages and dealing with the requests through other channels. For example, when SEF asked ARATS to facilitate visits by the families of suspects detained in China, ARATS then dealt directly with the families. The nominally private tourism and trade offices that have been exchanged continue to function and provide channels for handling issues. It also appears that many working level contacts are continuing quietly out of the public eye under the 23 SEF-ARATS agreements, all of which remain in force.

In July, a tragic tour bus fire in Taoyuan killed 24 mainland tourists. While accusing Taipei for its poor record on such safety issues, Beijing had to deal with the incident pragmatically. It sent a nominally unofficial task force headed by Liu Kezhi, the secretary general of its nominally-private Association for Tourism Across the Taiwan Strait (ATATS) to Taiwan. The task force included officials from the TAO, ARATS, the Public Security Bureau and Ministry of Civil Affairs, all in unofficial capacities. The local TAO office in Dalian, home of the deceased tourists, led a delegation of family members to Taiwan. Although the TAO and ARATS officials did not hold meetings in Taipei with their counterparts, the officials from both sides handling the incident all attended the funeral ceremony for the victims in Taoyuan.

Beijing has continued a wide variety of cultural and exchange programs. These do not require agreement on a political basis and are part of Beijing’s united front efforts designed to win support from target groups in Taiwan. City-to-city exchanges however have proven to be politically sensitive. In early August, the DPP deputy magistrate from Penghu County was allowed to visit Shanghai to discuss tourism and investment issues. Later in August, arrangements were worked out to hold the annual Shanghai-Taipei Twin City Forum in Taipei. As had been the case a year earlier, Taipei’s independent Mayor Ko Wen-je, the host, repeated his respect for Beijing’s position concerning the need for a political foundation. In announcing the forum, the TAO noted the importance of the 1992 Consensus and said that such municipal exchanges can only occur under the “correct understandings.” Pro-independence groups have criticized Ko for caving in to Beijing’s pressure. As Shanghai Mayor Yang Xiong was traveling in the US, Sha Hailin, the head of the United Front Department of the Shanghai municipal Communist Party, a frequent visitor to Taiwan, led the Shanghai delegation. This exchange induced DPP Taoyuan Mayor Cheng Wen-tsan to express the hope that Taoyuan could revive its sister city ties, which have been suspended since his election in 2014. However, neither he nor other DPP mayors have been willing to accommodate Beijing’s requirements.

That some sensitive things have not happened is also important. Beijing has not agreed to establish relations with any of the half dozen of Taipei’s diplomatic allies who have indicated their desire to recognize Beijing. Scholars in Beijing have threatened that Beijing could do so at any time. For its part, Foreign Minister David Lee has indicated that the Tsai government will not pursue a campaign for observer status at the UN General Assembly this fall as had been done annually by Lee Teng-hui and Chen Shui-bian. Rather, the Tsai administration will focus on participating in specialized agencies and on making “meaningful contributions” to the international community. Taipei does wish to attend the International Civil Aviation Organization (ICAO) assembly in late September. Tsai took the unexpected step of stating publicly that it was willing to consult Beijing about its ICAO participation. The issue remains pending. Another sensitive issue was sidestepped when the DPP legislative caucus decided to table amendments to Taiwan’s Referendum Act that would have seriously provoked Beijing.

Fears, concerns, mistrust

Other aspects of cross-strait relations have fed mutual mistrust. Beijing’s deepest concern relates to actions they characterize as “de-sinification.” The day after her inauguration, Tsai’s new Education Minister Pan Wen-chung fulfilled a promise by rescinding the Ma administration’s proposed changes to the high school curriculum. Similarly, Beijing is concerned that the changes envisaged in the Transitional Justice Bill under consideration in the Legislative Yuan (LY) will weaken Taiwan’s historical connections with China. In addition, Beijing fears that the Act Governing the Handling of Ill-gotten Assets adopted by the LY in July is designed to destroy the Kuomintang (KMT) as a viable opposition party. The expectation that the KMT will return to office helps sustain Beijing’s confidence about progress in the future on cross-strait relations. When Tsai attended the ceremony for the opening of the expanded Panama Canal, she signed the guest book as the “President of Taiwan (ROC).” Beijing commentators saw this as confirmation that Tsai is a “separatist.”

For Taiwan, the most unfriendly development has been China’s success in getting foreign governments to deport Taiwan suspects to China for prosecution. In June, Cambodia deported 25 Taiwanese fraud suspects to China. After the fact, Beijing informed Taipei of the suspects’ detention as required under the cross-strait legal cooperation agreement, but it has not allowed Taiwan’s Ministry of Justice (MOJ) officers to visit those incarcerated. In August, Kenya deported five more Taiwanese to China. This was particularly offensive because the Kenyan courts had found the five not guilty and instructed that they should be returned to Taiwan. Beijing got the Kenyan police to send them to China. Taiwan’s MAC, MOJ, and the LY all protested and President Tsai expressed her deep regret at this and demanded their return to Taiwan, all without effect.

However, Taipei’s most serious concern is that Beijing will complicate its efforts to revive the Taiwan economy and block its plans to diversify its trade relations under Tsai’s “new Southward policy (NSP).” Mainland tourism to Taiwan, particularly group tours, has been on a downward trajectory since Tsai’s election. In July, mainland tourists had declined 15 percent from a year earlier, and the tragic bus fire that killed 24 tourists appears to be accelerating the decline. In August, two travel companies specializing in mainland group tours went out of business. Beijing correctly views the NSP as designed to reduce Taiwan’s dependence on the China market. Some China scholars argue that Beijing should frustrate the NSP and block Taipei’s desire to join the Trans Pacific Partnership (TPP) in order to weaken the Taiwan economy and lay the groundwork for the DPP being voted out of office.

Despite the absence of institutionalized communications and deep mistrust, relations have been more stable and calm than predicted by many a year ago. Developments since Tsai’s election indicate that both sides have an interest in maintaining stability. It is in Tsai’s interest to show voters that the DPP can maintain cross-strait stability and it is in her interest to minimize Beijing’s opposition to her economic policies. With so many more pressing domestic, economic and foreign policy challenges – and with President Tsai not forcing his hand – it is in Xi Jinping’s interest to avoid a confrontation over Taiwan.

Continued KMT disarray

Disarray in the KMT has continued, and the party remains unable to challenge Tsai effectively on cross-strait policy or other issues. Chairwoman Hung Hsiu-chu is doubling down on the focus on China and inflammatory rhetoric that made her so unpopular as the KMT’s presidential candidate. Hung is seeking to include the pursuit of a peace agreement with China in the party platform. On July 30, she said that the concept of unification with China should not “spark fear.” With President Tsai going out of her way to avoid appearing to promote political or de jure independence, Hung and her supporters frequently warn of “cultural Taiwan independence” or de-sinification, which, like some in the mainland, they perceive in the Ministry of Education’s repeal of certain textbook guidelines, and Tsai’s official apology on Aug. 1 to Taiwan’s indigenous peoples for 400 years of mistreatment.

Despite its crushing electoral defeat, the KMT has sought to portray itself as Taiwan’s main interlocutor with Beijing, much as it was during the Chen Shui-bian administration. On May 14, Chairwoman Hung said that if cross-strait relations deteriorate “because the incoming government … holds a different view from the KMT’s,” the party would take the responsibility to mediate. On June 10 in Yunnan, KMT Vice Chair Hau Lung-bin called for continuation of economic, trade, and non-governmental exchanges, and said that the KMT will function as a Track 2 party to maintain cross-strait peace and development. That same week, in Xiamen, Central Standing Committee member Tseng Wen-pei said that the party’s mainland affairs office would be elevated in importance and would “replace SEF and MAC.” In late August, former Chairman Wu Po-hsiung met Zhang Zhijun in Shanghai to discuss cross-strait relations; Hong Kong’s Wen Wei Po reported that they also discussed arrangements for an 11th KMT-CCP forum; the forum has been held every year since 2006, but is not yet scheduled for 2016.

In a significant blow to the KMT on July 25, the DPP-dominated LY passed the Act Governing the Handling of Ill-gotten Properties by Political Parties and their Affiliate Organizations. The act, which clearly targets the KMT, declares most party assets acquired after August 15, 1945 to be illegal and property of the state, unless proven otherwise; parties have six months to declare assets for review by a Cabinet-level committee. Chairwoman Hung said the DPP used “majority violence” to pass the bill and that it is evil, illegal, unconstitutional, and anti-democratic. Some KMT legislators, however, especially those identified as “Taiwanese,” saw a silver lining in this dark cloud. Like many in the KMT, Wu Den-yih, vice president during the second Ma administration, objected to the name and the mechanism. But he said that returning any illegally obtained assets is “the right thing to do,” and, otherwise, the issue will continue to be a political goldmine for the DPP. Former LY Speaker Wang Jin-pyng said the bill is an “opportunity for re-birth” for the KMT.

South China Sea

On July 12, a tribunal at the Permanent Court of Arbitration (PCA) in The Hague, Netherlands, issued an expansive and unanimous ruling on a case brought by the Philippines challenging China’s claims and behavior in the South China Sea. China’s formal claims to the South China Sea are based on maps published by the Republic of China in the 1940s. The mainland government routinely states that both sides of the Taiwan Strait share the responsibility of defending China’s sovereignty in the South China Sea. While both Beijing and Taipei retain some ambiguity about whether they each claim the entire maritime area in addition to all land features, many of which are also claimed by other nations, Taipei in recent years has implied that its claims are limited to land features and their surrounding territorial waters. Beijing would view too much movement by Taiwan away from the ROC’s traditional claims as a violation of its “one-China” principle (ARATS deputy Zheng Lizhong had noted approvingly in May that President Tsai’s inaugural statements on the South China Sea were similar to President Ma’s). Beijing and Taipei each said consistently that they would not accept the tribunal’s ruling – Beijing because it viewed the panel as illegitimate, and Taipei because it was not invited to participate.

Most significantly, the tribunal ruled that there is “no legal basis for China to claim historic rights to resources within the sea areas falling within the ‘nine-dash line,’” which derives from Republic of China claims published in 1947. Somewhat surprisingly, because it was not specifically cited in the case brought by the Philippines, the tribunal ruled that Taiwan-occupied Itu Aba or Taiping Island (as well as all other land features in the Sea) is not an island – meaning that it is entitled only to a 12nm territorial sea and not a 200nm exclusive economic zone. Beijing and Taipei each rejected the ruling and each claimed that it is not legally binding. Taiwan objected once again to not being invited to participate, though a nongovernmental legal society was permitted to submit a brief supporting that Taiping is an island, and also objected to the tribunal’s use of “Taiwan Authority of China” to identify Taiwan; the Foreign Ministry said in a statement that that designation is “demeaning to the status of the ROC as a sovereign state.” Taiwan’s interior minister visited Taiping Island on Aug. 16; in late August President Tsai said she had no plans to visit, but had not ruled the idea out.

In arguing the case, Taiwan’s and China’s positions were often conflated, or supposed to be aligned, by the Philippines and tribunal members. On July 12, China’s Foreign Ministry and the TAO suggested that Taiwan join China in defending sovereignty over the South China Sea islands and their surrounding waters (a less expansive claim than the nine-dash line), which they said are “traditional assets of the Chinese people.” Taiwan, however, under both Presidents Tsai and Ma, seeks to distinguish ROC claims from Beijing’s. MAC Chairwoman Katharine Chang told the LY the day after the ruling that each side is pursuing its rights based on its own interests and that there had been no communication; her deputy said that Taiwan will not cooperate with China on South China Sea sovereignty issues. While China has continued to express its historical rights to the maritime area, the Tsai administration reportedly made a decision not to talk about the ROC’s “eleven-dash line” or “U-shaped” line or about “historical waters.” Former President Ma, who said before he left office that he planned to stay active on South China Sea issues, published an op-ed in the Wall Street Journal and a letter in Taiwan’s United Daily News; both focused on Taiping and its island status, and did not touch on historical rights to maritime areas.

Looking ahead

As long as Beijing and Taipei have not reached a new understanding on a political basis for dialogue, the institutional channels of communication will remain closed and cross-strait relations will remain unstable. Thus far, it is Beijing that has not been flexible. Without progress on these matters of principle, Beijing may decide to take counterproductive actions that would damage relations. The coming months will also occasion several foreseeable challenges which could raise tensions and further damage trust. Whether a way will be found to allow Taipei to attend the ICAO assembly in late September remains uncertain. When the LY resumes, it will address two politically sensitive issues – the transitional justice bill and the cross-strait agreements oversight bill.

President Tsai is caught between Beijing, which pressures her to move further toward accepting one China, and pro-independence supporters, who believe she has already gone too far in reaching out to Beijing. Many DPP LY members will want to use the transitional justice bill to remove KMT symbols that represent ties to the mainland. Beijing will see this as further de-sinification, feeding fears that Tsai is pursuing peaceful separation under the guise of the status quo. Hardliners could then demand tougher action against Tsai. There are many issues, some unanticipated, that will challenge both sides’ ability to maintain stability.