Taipei’s relations with Beijing have been adrift with the Ma administration in a reactive mode. The main interactions have been on unexpected issues – China’s M503 air route and Taiwan’s effort to join the Asian Infrastructure Investment Bank (AIIB) – and results were mixed. Meanwhile all players are preparing for a different future. The KMT is trying to reform itself; new chairman Eric Chu Li-lun visited China and met General Secretary Xi Jinping in early May. Beijing is focused on working with the new KMT and on deterring the DPP from returning to office in 2016. The DPP and Chairperson Tsai Ing-wen have begun defining its policy toward Beijing before Tsai visits Washington in June.

Cross-strait relations drift

Buffeted by domestic politics, relations between the Ma administration and Beijing appear to have little sense of impetus or direction; they are drifting. Taiwan’s Mainland Affairs Council (MAC) Minister Wang Yu-chi resigned on Feb. 10 and was succeeded by Andrew Hsia Li-yan, a career diplomat who had been serving as vice minister of national defense. Neither Wang nor Hsia has held a meeting with Zhang Zhijun of the mainland’s Taiwan Affairs Office (TAO), failing to continue the series of encounters that began in early 2014. A Wang-Zhang meeting planned for Feb. 7 was cancelled following a plane crash in Taipei and tension over China’s announcement of new flight routes in the Taiwan Strait.

Draft versions – there are eight of them – of a cross-strait relations oversight bill are continually blocked from review in the Legislative Yuan’s Internal Administration Committee. This bottleneck is holding up the two main items on the cross-strait agenda: LY consideration of the cross-strait Services Trade Agreement (STA), and the completion of negotiations on a companion Merchandise Trade Agreement (MTA). A tenth round of MTA negotiations was held in Beijing in late March, after which Taiwan’s Bureau of Foreign Trade said talks have slowed and may not conclude until next year.

In early April, President Ma Ying-jeou said he hopes for the establishment of reciprocal Straits Exchange Foundation (SEF) and Association for Relations Across the Taiwan Straits (ARATS) representative offices before he leaves office, but this was apparently not discussed in an April 10 meeting between the heads of the two organizations. ARATS President Chen Deming reported that negotiations on a double taxation avoidance treaty are completed, but that the Ma administration needs time to communicate with the LY and others before signing. Chen hopes the agreement can be signed at the next SEF-ARATS summit, which has not been scheduled yet. The April 10 meeting included discussion of State Council Notice No. 62, which the PRC issued in December to restrict local governments’ ability to provide investment incentives. The reform has unnerved Taiwanese businesses in China. As they typically receive more preferential treatment than other outside investors, they have more to lose. This concern is at least partly responsible for numerous statements from senior Chinese officials that they will protect the interests of Taiwan businesses investing in the mainland.

On Jan. 1, Taiwan began granting landing permits with no advance application to mainland tourists visiting the islands of Kinmen, Matsu, and Penghu. In 2014, the two sides discussed allowing onward travelers from the mainland to transit through Taiwan, a revenue generator, but Wang Yu-chi said in January that China has linked this to Taiwan allowing cross-strait flights to fly directly across the Taiwan Strait and not pass through Hong Kong airspace as they now do. Wang told the LY that the government would not consider this because of security concerns.

M503 civilian flight route

On Jan. 12, the Chinese government announced that on March 5 it would begin operating four new civil aviation routes in the Taiwan Strait. One route, M503, would run roughly parallel to the middle line, coming as close as 8 km to airspace controlled by Taiwan. The other three routes lead east from China into M503. Two rounds of “informal” cross-strait discussions about these routes took place in December, but on Jan. 13 Taiwan’s Civil Aeronautics Administration said that no consensus had been reached and that the routes could compromise the safety of Taiwan flights in certain circumstances; China’s “unilateral decision” to establish the routes was “unacceptable.” Both Democratic Progressive Party (DPP) and Kuomintang (KMT) legislators urged a strong response. Taiwan’s Foreign Ministry filed an objection to the routes with the International Civil Aviation Organization (ICAO), though it is not clear whether it was accepted as Taiwan is not a member of the organization.

The TAO condescended that Taiwan should be “more understanding and less suspicious,” but Beijing agreed to discussions with Taiwan. On March 2, Taiwan officials announced that after five rounds of talks China had agreed to shift M503 10km to the west, would delay implementation, and that the three feeder routes would not be launched “at present.” Taiwan Premier Mao Chi-kuo said the compromise was “acceptable.”

China conducted a test flight along M503 on March 15, following notification to Taiwan. Five days later it announced that commercial flights along M503 would begin on March 29. Flights began on that day without incident, though several DPP and Taiwan Solidarity Union (TSU) legislators accused the Ma administration of accepting China’s unilateral plans. The status of the three feeder routes is unresolved.

Asian Infrastructure Investment Bank

In late March, Taiwan sought to join the international stampede toward the new China-led AIIB. President Ma listed three reasons he favored joining: 1) Taiwan should be an asset to the international community; 2) membership would help Taiwan’s pursuit of participation in regional economic integration; and 3) many other countries were seeking to join so Taiwan should go along instead of sit on the sidelines. But he noted that the AIIB’s requirement of statehood for membership and the name under which Taiwan would participate would have to be worked out.

On March 28, PRC Foreign Minister Wang Yi said that China would welcome Taiwan’s participation in accordance with “international practice,” but the one-China principle must be observed and participation by both Taiwan and Hong Kong would require further discussion. Wang’s reference to Taiwan and Hong Kong together indicated that not only Taiwan’s name, but also its status, would likely present a problem. A Hong Kong representative attended an AIIB planning meeting on March 30-31 as part of the PRC delegation. In April, Hong Kong’s financial secretary said the Special Administrative Region (SAR) would continue to discuss “with the Central Government” a way to join the bank as a “non-sovereign entity.”

On March 31, Taiwan submitted a letter of intent to join the bank as a founding member. The letter was faxed both from the MAC to the TAO and also from the Ministry of Finance to the AIIB’s interim secretariat in Beijing. On April 1, the TAO said it had received the letter and had passed it to the AIIB interim secretariat. China has restricted communication on the issue to the MAC-TAO channel.

The DPP and TSU criticized the vague identifiers and wording in the letter, and the fact that it was sent to the Chinese government. Tsai Ing-wen called it degrading and said the government had not communicated with the legislature and society. Most opposition, however, has been on tactical grounds, not on the strategic decision to seek to join the bank.

AIIB reportedly was not discussed in an April 10 SEF-ARATS meeting. On April 12, the TAO privately told the MAC that Taiwan would not be able to join as a founding member. Xinhua released a short statement from the TAO on April 13, which added that AIIB would welcome Taiwan under “an appropriate identity (适当名义)”. China did not publicly express a reason for the rejection, but Andrew Hsia said later it was because China does not view Taiwan as a sovereign state. The Ministry of Finance said that after the AIIB charter is completed Taiwan will apply to join as an ordinary member “if we feel there is no downgrade to our status”; President Ma has also said this and has indicated that “Chinese Taipei” is the preferred nomenclature. Reports indicate that the TAO and MAC are currently negotiating the name issue, and presumably they are also discussing Taiwan’s status within the bank.

On April 15, a TAO spokesman said China would consider “constructive opinions from all sides” regarding Taiwan’s potential membership, perhaps referring to the 57 prospective founding members who have input into the drafting of the charter, expected to be completed in June. Public statements indicate that China will not reject membership for Taiwan out of hand, but they also make it clear that the Chinese government – not the AIIB itself – will decide on the conditions for Taiwan’s membership. It is inconceivable that Taiwan would agree to participate in the bank as a unit of the PRC, as Hong Kong did at least for the March planning meeting.

Looking to a different future

While dealings between the Xi and Ma administrations have drifted, each of the major players has been preparing for a different future shaped by the KMT’s defeat in local elections, the influence of the Sunflower student movement, and the campaigns for Taiwan’s presidential and legislative elections in January 2016.

KMT developments

The KMT’s defeat in the November local elections led to Ma Ying-jeou’s resignation as KMT chairman. In January, Eric Chu Li-lun, the mayor of New Taipei City, was elected the new chairman. His appointment occasioned the normal exchange of congratulatory messages with Chinese Communist Party (CCP) General Secretary Xi. Chu has sought to convey a new reformist image of the KMT by bringing in a completely new party leadership team and by talking about constitutional changes he would support to address public concerns about the Ma administration’s widely-criticized practices. In February, as one of many changes, Chu persuaded former SEF Secretary General Kao Koong-lian to become the director of the KMT’s Mainland Affairs Department where he would be his chief advisor on cross-strait relations.

Almost from the day of his appointment, the Taipei press began to speculate about whether Chu would visit China and meet Xi Jinping. This possibility led to some internal debate within the KMT about whether it would be wise for Chu, whom many want to be the party’s presidential candidate, to take the political risks inherent in such a meeting. For his part, Chu fed speculation about a meeting by attending a forum in Hong Kong, meeting Chief Executive C. Y. Leung, and commenting that it would be quite natural for the KMT chairman to attend the planned KMT-CCP Forum. Later in March, Kao Koong-lian visited Beijing to plan that event. In mid-April, the TAO announced that the KMT-CCP Forum would be held May 3 in Shanghai.

The DPP once again criticized the KMT for obscuring the difference between party and official exchanges with China, reminding Chu that he did not represent all the people of Taiwan. At a pre-departure meeting with the press, Chu commented that, as the DPP was free to have its own dialogue, the question was why the DPP could not do so. Chu led a small KMT delegation to Shanghai May 2. He gave a speech at Fudan University that day and met Yu Zhengsheng in the evening. Yu and Chu each addressed the 10^th KMT-CCP Forum May 3. The Forum was a relatively modest event that did not issue a report nor lay out an agenda for future cooperation.

The next day, Chairman Chu met General Secretary Xi for an hour in Beijing. The two party leaders met the press together for 10 minutes after the meeting. Again, no document was issued. Xinhua highlighted comments by Xi that cross-strait relations were at a crucial juncture in which all people must think carefully as their decisions could affect the future of the Chinese people and nation. In language similar to comments made March 4 (see below), Xi said that, if the 1992 consensus were rejected, it would be impossible to preserve cross-strait peace and prosperity. Xi also commented positively on how to promote cross-strait relations for the benefit of all and called for those on both sides to join hands for the rejuvenation of the Chinese nation. For his part, Chu endorsed the 1992 consensus and called for cooperation to maintain peace, protect the environment and achieve broad based prosperity. Chu also spoke of expanding Taiwan’s international space through participating in AIIB, regional economic integration, and other international organizations.

Opposition DPP leaders immediately accused Chu of accepting Beijing’s interpretation of the 1992 consensus.  Tsai Ing-wen said she was alarmed that Chu wanted to act as a custodian of the 1992 consensus and reiterated that relations should not be controlled by one party but reflect the will of the whole people. However, beyond this the opposition has yet found little to criticize.

Chu has continued to say that he will serve out his term as New Taipei City mayor. When the KMT primary process began in April, Chu reiterated that he will not run for president. This leaves the party in some disarray, with many believing that Chu will eventually relent and agree to be drafted.

DPP cross-strait policy

The DPP’s attention has been focused on the 2016 elections. One element of this has been to make constitutional reform a priority for the spring legislative session to convey a reform image that allows it to criticize the KMT and appeal to Sunflower Movement supporters. But Tsai and the party understand that successfully handling cross-strait issues will be an important element in her campaign. Avoiding a repeat of Washington’s 2011 criticism of her cross-strait policy is a priority. To this end, party Secretary General Joseph Wu visited Washington last December, Tsai confidant Bi-khim Hsiao visited in February, and Wu returned in April. Their goal has been to lay the groundwork for a successful Washington visit by Tsai, now planned for early June, and get assurances from the US government that it would not take sides in the presidential election.

Within Taiwan, the DPP has endeavored to create the impression that it has good lines of communication with Beijing and to develop a new statement of Tsai’s cross-strait policy. In January, Tsai revived the party’s dormant China Affairs Committee (CAC). The CAC meeting produced a recommendation that all DPP mayors and magistrates should establish “cross-strait exchange taskforces” to develop ties with China. Subsequently, several local DPP officials have travelled to China. Penghu County Magistrate Chen Kuang-fu and Taoyuan City Deputy Mayor Chiu Tai-san have made business visits to China. In April, Chao Tien-lin, director of the CAC, visited China as a member of a delegation of members of the SEF Board of Trustees, of which Chao is a member. (The TAO spokesman made clear that Chao was not visiting in his party capacity.) Kaohsiung Deputy Mayor Hsu Li-ming led a delegation to China to promote tourism to southern Taiwan. From Beijing’s perspective, such visits are not party-to-party or government-to-government contacts and hence do not require agreement to the 1992 consensus. Tsai herself has privately hinted that she has a reliable channel of communication with Beijing, but neither she nor others have provided any detail on the channel.

When asked about her policy toward Beijing, Tsai has stuck mostly to generalities about maintaining peace and stability. When pressed about the 1992 consensus, she reiterated on March 6, shortly after comments by Xi Jinping noted below, that the party does not accept the 1992 consensus. A second meeting of the CAC was held on April 8 and produced a policy statement titled “Maintain Cross-Strait Status Quo.” In this statement, Tsai said the goal is “maintaining the status quo, preserving cross-strait peace, and continuing the current stable development of the cross-Strait relations.” She expressed confidence that “we can manage cross-strait relations in a way that avoids surprises, and we certainly would not provoke contradictions, conflict, or confrontation.” The party understands that if it returned to office, it would “shoulder the responsibility to the international community of maintaining cross-strait peace.” She pointed out that “The predominant desire among Taiwan’s people is to see the maintenance of peace and stability in the Taiwan Strait, while also safeguarding Taiwan’s democratic values and future autonomy (自主性).” The document has been quoted because it contains Tsai’s most specific comments on her cross-strait policy and resulted from a careful internal policy review process.

A week later, Tsai formally accepted her party’s nomination for “president of the Republic of China.” Her acceptance speech indicates that her campaign will focus on a variety of domestic economic and social reform goals more than external policy. Tsai repeated that her cross-strait policy would be to maintain the status quo. She “ask[ed] the Taiwanese people to trust that I absolutely will not fail to live up to this mission.” She added that the party would promote passage of a cross-strait agreements oversight bill as a “framework for the continuation of cross-strait negotiations.” If the DPP returns to office, current cross-strait agreements and those under negotiation would be monitored under that framework. In late April, Tsai urged the DPP LY caucus to pass an oversight bill during the current LY session that ends in June. Nevertheless, party disputes in the LY continue to block consideration of the bill.

When asked for comment on Tsai’s acceptance statement, the State Department spokesperson limited the response to commenting on US policy and interests, without addressing Tsai’s views. The spokesperson reiterated Washington’s one China policy, noted the abiding US interest in preserving cross-strait peace and stability and said the US encouraged further progress in building cross-strait ties.

While containing some positive reassuring views, these statements are silent about how Tsai’s goals could be achieved when there is no political basis for dialogue agreed between the DPP and Beijing. Tsai sees the oversight bill as a domestic framework for achieving a more democratic process for cross-strait policy making. Her request that the Taiwan people “trust” her implies that, at least for the time being, she does not wish to explain more fully how she will deal with Beijing. Whatever she might say could complicate her appeal to either core DPP voters or independents. However, given Washington’s interest in cross-strait peace, she will certainly be pressed to explain how she believes she can maintain cross-strait dialogue. In late April, National Security Council Senior Director for Asia Evan Medeiros commented that he looked forward to learning more when Tsai visited Washington.

Beijing’s policy

As noted above, Beijing continues to hope that there can be some forward movement on cross-strait relations this year. When Xi Jinping met with delegates to the China People’s Political Consultative Conference (CPPCC) in March, he listed “four things that would certainly be done,” including further developing cross-strait “peaceful development” and promoting cross-strait prosperity. Along this line, both Premier Li Keqiang and Zhang Zhijun indicated special attention will be given to expanding economic benefits for Taiwan people. Beijing is increasingly seeking to make this progress through the new KMT leadership rather than through the Ma administration.

Focus on the DPP

Nevertheless, the prospect that the DPP may return to office in 2016 has been the main focus of Beijing’s attention. While official statements have avoided mentioning Tsai by name, Beijing officials and experts have expressed deep distrust of her. At the meeting with CPPCC delegates March 4, Xi made clear that another thing that would certainly be done was “maintaining the political basis (政治基础)” for cross-strait relations. Reiterating that the 1992 consensus is the basis for Beijing’s relations with Taiwan authorities and Taiwan political parties, Xi said the “core is to agree that the mainland and Taiwan both belong to one China.” He added that if this political basis is damaged, “mutual trust would no longer exist and cross-strait relations would once again return to the road of turbulence.” Lest anyone should miss that this was a message to the DPP, ARATS President Chen Deming said the next day that this was a warning to all advocates of Taiwan independence.

Xi’s comments have set the tone for subsequent comments about policy toward the DPP. When Tsai Ing-wen reiterated on March 22 that the DPP does not accept the 1992 consensus, the TAO spokesman repeated that the 1992 consensus and opposition to Taiwan independence are the basis for cross-strait relations and that the key was to accept that the mainland and Taiwan belong to one China. After the DPP released its policy statement on maintaining the status quo on April 8, the TAO spokesman repeated those statements and added that persisting in the idea that there were separate countries on each side of the strait would destroy the political basis and lead to turbulence. When asked what the “status quo” is, the TAO spokesman said: the mainland and Taiwan are both part of one China, China is not yet reunified, and the peaceful development of relations is being pursued on the basis of the 1992 consensus.

Taipei Mayor Ko Wen-je

DPP-related concerns have also shaped Beijing’s approach to Ko Wen-je, the popular mayor of Taipei. As noted in our previous edition, Mayor Ko wants to continue the Taipei-Shanghai Forum but has expressed confusion about what the 1992 consensus is. In January, Ko proposed expanding this city-to-city forum to include other cities. In response, Shanghai mayor Yang Xiong said that the 1992 consensus was the basis for conducting the forum. In Beijing, the Global Times attacked Ko and called for the Taipei-Shanghai Forum to be suspended and for China to withdraw from the 2017 Universiade Games in Taipei. An editorial in Xinhua said that Ko’s statements denying the 1992 consensus had created obstacles to exchanges.

Subsequently, Ko has tried various approaches to accommodating Beijing. In February, he proposed that the Forum should proceed on its existing basis without mentioning what that basis was. On March 31, Ko told Chinese reporters that since everyone knows there are not two Chinas, “One China is not a problem.” However, he added that, with respect to the 1992 consensus, Beijing needs to explain what one China means. The TAO chose to see his comments positively, and on the same day, a spokesman welcomed Ko’s “clear statement on One China” and said planning for the Forum could proceed on that basis. Unfortunately, the TAO statement led Ko to immediately say that interpreting his statements as accepting one China took his remarks out of context. In late April, Ko said that he had sent a letter to Shanghai proposing that the Forum continue on its existing basis and that his deputy mayor would travel to Shanghai in May. How things will develop remains to be seen.

Looking ahead

A meeting between Andrew Hsia and Zhang Zhijun may take place during the summer. If so, it could help identify priorities and provide some direction in the bilateral relationship. Tsai’s planned visit to Washington in June will provide an opportunity for her to explain how she will be able to maintain dialogue with Beijing. If the KMT primary procedures do not produce a candidate who has wide support, Eric Chu will likely be faced with a decision on whether to accept a party draft to run for president.

This summer, Beijing will most likely think about steps that could help the KMT’s prospects. The most important of these would be expanding Taipei’s international space. As the AIIB charter drafting proceeds, Beijing will have to shape procedures for non-sovereign states such as Taiwan to become members. However, smoothing the way for Taiwan’s participation in the AIIB would have far less impact than expanding opportunities for Taiwan’s participation in regional trade liberalization and/or UN system organizations.