China: A Guide to Economic and Political Developments

Ian Jeffries

• Publisher: Routledge
• Year: 2007
• Print ISBN: 9780415514224
• eBook ISBN: 9781134177622
• Edition: 1
• Topic: Volkswirtschaftslehre
• Subtopic: Wirtschaftsbedingungen

There is currently widespread interest in the Chinese economy, due to its huge and rapid growth, and the consequent impact on world business and the world economy. At the same time, there are concerns about China's political system, China's human rights record and the degree to which reform - the development of 'socialism with Chinese characteristics' - represent real liberalization.

Providing an overview of earlier events in order to set the context in which economic and political development have taken place, the book traces economic and political growth in China from the early 1990s to the present. Covering Hong Kong, Macao, Tibet and Taiwan, the book discusses China's relations, including international trade with its neighbours and with the international community more widely. Other key topics covered include the growth of the market, the reform of state owned enterprises, human rights and SARS.

1 Politics

China and Taiwan

Taiwan was inhabited by non-Chinese peoples who spoke their own language and are ethnically and linguistically closer to modern Indonesians than to Chinese. Chinese fishermen and farmers began to settle along Taiwan’s coastal areas, particularly in the sixteenth and seventeenth centuries. Holland seized Taiwan in 1624 (IHT, 22 March 2000, p. 2). ‘Large-scale settlement from the mainland only began in the seventeenth century and the original Malayo-Polynesian inhabitants remained a majority till the nineteenth century … Today 40 per cent of the island’s trade is with China’ (IHT, 27 December 2003, p. 6).

Except for a tiny aboriginal minority, well over 90 per cent of Taiwanese trace their ancestry to China. But only roughly 15 per cent of the population came to this island since 1949, the start of the communist era. In cultural terms this minority, many of them followers of the nationalist leader Chiang Kai-shek, known here [Taiwan] as ‘mainlanders’, still identifies closely with the motherland. To a large degree, today the rest of the population sees itself simply as Taiwanese.

(IHT, 27 May 2005, p. 2)

Kinmen is also known as Jinmen or Quemoy (IHT, 7 February 2001, p. 7).

China exercised various degrees of control over Taiwan, increasingly settled by Han who drove the non-Han people into the mountains until 1623 (The Times, 19 March 1996, p. 11). In 1623 the Dutch demanded a trading post to match Portugal’s at Macau and were ceded Taiwan. The Dutch lost control in 1662 when a half-Japanese general fled there from China with the remnants of the Ming dynasty. (The Manchu dynasty conquered China in 1644.) Manchu China gained control of Taiwan in 1683. In 1887 Taiwan’s status was upgraded to that of a full province, but eight years later it became Japan’s first colony (after the Sino-Japanese War). Japan ruled Taiwan from 1895 to 1945. Chinese sovereignty over Taiwan dates from the 1943 Cairo Declaration, in which the Allies decided what to do with Japan’s empire after the war (The Economist, 16 March 1996, p. 72). According to Peng Ming-min (leader in Taiwan of the opposition Democratic Progressive Party, which favours independence), the Qing dynasty relinquished sovereignty over Taiwan ‘in perpetuity’ in the 1895 Treaty of Shimonoseki. Except for a brief period from 1945 to 1949, when the island was ruled as a part of China by Chiang Kai-shek’s Kuomintang regime, Taiwan has had an independent government (IHT, 6 March 1996, p. 8). When Chiang Kai-shek’s troops took control in 1945 ‘they treated the island like a captured enemy stronghold, looting it. In 1947 they massacred thousands of indigenous Taiwanese who demonstrated against their “liberators”’ (Jonathan Mirsky, The Times, 19 March 1996, p. 11). On 28 February 1947 nationalist soldiers launched a month-long massacre, spreading through the island killing thousands of perceived political opponents. After 1949 the nationalists ran a dictatorship. President Chiang Ching-kuo (Chiang Kai-shek’s son and successor) took charge in 1975 and it was he who recognized the changes brought about by Taiwan’s new affluence. In 1980 an anti-government demonstration was crushed and opposition leaders arrested. But the president then saw that reform was inevitable. ‘Chiang recognized that change would come because of Taiwan’s ethnic mix – about 88 per cent of the island’s population is native to the island’ (Keith Richburg, IHT, 22 March 1996, p. 12). Mainland-born Taiwanese and their families constitute around 15 per cent of the population. There are about 350,000 aborigines, who, until recently, were known as ‘mountain people’: 400 years of often violent Chinese immigration had pushed them up into the hills (The Economist, 30 March 1996, p. 67). Martial law was lifted in 1987.

‘The American Institute in Taiwan administers Washington’s unofficial ties with Taipei’ (FEER, 30 October 2003, p. 22).

[In] the Shanghai Communiqué of 1972 the United States said it ‘acknowledges that all Chinese on both sides of the Taiwan Strait maintain there is but one China and that Taiwan is a part of China’. The US government does not challenge that position.

(FEER, 23 October 2003, p. 61)

No president of Taiwan was to be allowed a visa to enter the United States after 1979. Thereafter the United States had only ‘cultural, commercial and other unofficial relations with the people of Taiwan’. Beijing had taken Taiwan’s seat in the United Nations in 1971. According to Steven Erlanger (IHT, 13 March 1996, p. 4), the defence treaty the United States had with Taiwan was abrogated after President Nixon visited China in 1972 and recognized China, accepting that it and not Taiwan was the government of a single China. But in return the United States was promised that reunification with Taiwan would take place peacefully. The Taiwan Relations Act of 1979 asserted the United States’ right to help Taiwan defend itself, considering ‘any effort to determine the future of Taiwan by other than peaceful means, including boycotts or embargoes, a threat to the peace and security of the Western Pacific area and of grave concern to the United States’.

According to The Economist (25 May 1996), in 1979 the United States recognized the ‘government of the People’s Republic of China as the sole legal government of China’. But the United States did not accept that Taiwan was ‘part of China’; it merely ‘acknowledged’ that China thought so (p. 79). The United States abrogated its 1954 defence treaty with Taiwan but in April 1979 Congress passed the Taiwan Relations Act, one of the aims of which was ‘to resist any resort to force or other forms of coercion that would jeopardise the security or the social and economic system of Taiwan’. The act also committed the United States to supply ‘arms of a defensive character’ to Taiwan (p. 80).

In February 1972 President Richard Nixon … signed the Shanghai Communiqué: ‘The United States acknowledges that all Chinese on either side of the Taiwan Strait maintain there is but one China and that Taiwan is a part of China’ … Taiwan was only ruled in a very desultory manner by the Chinese from 1683 to 1895. For most people in Taiwan this was simply colonialism, no different from what came before – the Spanish (which ruled for seventeen years), the Dutch (thirty-eight years) – and after that, when the Japanese ruled from 1895 to 1946.

(Jonathan Power, IHT, 18 March 2004, p. 6)

‘In January 1979 China established formal diplomatic relations with the United States’ (IHT, 17 September 2005, p. 7).

China claims sovereignty (as does Taiwan) over the Diaoyu Islands (known as the Senkaku Islands in Japan). Japan administered the islands from 1895 until its defeat in 1945. The United States handed them over to Japan in 1972.

A chronology of events

7 August 1994. Negotiators from China and Taiwan reach agreement on a number of issues, such as fishing disputes and the possible repatriation of aircraft hi-jackers and illegal immigrants. (The approval of both governments is needed.)

22 May 1995. China vehemently protests about the USA’s decision to allow the president of Taiwan a visa for a private visit. (Thereafter China threatened Taiwan on a number of occasions and in various ways, e.g. by holding nearby military exercises for eleven days in August 1995, especially warning against any attempt to declare independence or moves in that direction.)

6 January 1996. The USA issues transit visas to the vice president of Taiwan to enable his plane to refuel on 11 and 16 January 1996.

8–25 March 1996. China conducts missile tests near the coast of Taiwan 8–15 March and holds nearby naval and air exercises 12–25 March. The USA sends extra warships into the area. On 14 March China said that it did not intend to invade Taiwan. On 20 March the USA announced its approval of the sale of new weapons to Taiwan, including surface-to-air missiles.

23 March 1996. The presidential election in Taiwan (the first by direct popular vote) is won by Lee Teng-hui with 54 per cent of the vote (a figure generally considered to have been boosted by China’s threats). Peng Ming-min, leader of the pro-independence Democratic Progressive Party, is second with 21.1 per cent. The other two candidates (advocating a more conciliatory stance towards China) receive 14.9 per cent and 10 per cent. There is a 76 per cent turnout. (Lee Teng-hui, leader of the Kuomintang or Nationalist Party, was made president in January 1988. In his inauguration speech given on 20 May 1996 he talked of his readiness to make a ‘journey of peace’ to China: ‘I am ready to meet the top leadership of the Chinese communists for a direct exchange of views’.)

Taiwanese are debunking the myth that Chinese people do not care about politics, that they are more interested in making money than practising noisy, Western-style democracy. More than anything else, that is what is rattling Beijing’s communists, who have repeatedly denounced multiparty democracy as unsuited to Chinese culture and Confucian tradition … In an attempt to disrupt the 23 March election, or at least to influence the outcome, China has staged a series of military exercises and missile tests in the waters close to Taiwan.

(Keith Richburg, IHT, 22 March 1996, p. 12)

William Saffire (IHT, 26 March 1996, p. 9) asked what explained China’s behaviour:

Not fear of a Taiwanese declaration of independence. The Chinese on Taiwan know that would provoke war, on terms that would preclude US military help … Nor was the blundering in Beijing primarily caused by a need to instil in the regionalized Chinese army a fervent new national spirit supporting the central regime in Beijing as it secretly plans for the succession to Deng Xiao-ping … The key to the communist leadership’s willingness to appear bellicose, unstable and, worst of all, unsubtle is this: the spectacle of 21 million Chinese freely choosing their leaders is intolerable to China’s established order. Fierce objection must be made lest the billion Chinese under communist political control get democratic ideas.

The former US ambassador to China (1989–91), James Lilley, warns that:

China is now riding the tiger of nationalism, and unless it soon realizes how damaging its actions are to its own interests it may be too late. Communism’s appeal is gone, except among opportunists who have something to gain by manipulating the old system. So the Chinese people need a unifying force to counteract the regional decentralization caused by economic growth. Nationalist xenophobia is filling the vacuum … China is becoming the big man of Asia, and the region will welcome it as a friend. But strident nationalism will set the nation back.

27 November 1996. South Africa announces that it will sever diplomatic relations with Taiwan and establish full diplomatic relations with China by the end of 1997.

14 January 1997. Vice-president and prime minister Lien Chan of Taiwan meets the Pope at the Vatican, the most senior Taiwanese official to do so. The Vatican is one of the thirty remaining states (and the only one in Europe) to maintain diplomatic relations with Taiwan, but not with mainland China.

1 September 1997. China establishes diplomatic relations with St Lucia. This reduces the number of states that recognize Taiwan to thirty (IHT, 1 September 1997, p. 6).

9 September 1997. China severs diplomatic relations with Liberia after the latter recognizes Taiwan (having already recognized China).

1 January 1998. South Africa and China establish formal diplomatic relations at the expense of Taiwan. Twenty-nine countries retain diplomatic links with Taiwan (The Times, 31 December 1997, p. 13). The number of countries remaining is twenty-nine. The most significant in terms of strategic location is Panama and the largest in terms of population is Guatemala (FEER, 30 January 1998, p. 30).

29 January 1998. China resumes diplomatic relations (broken off in 1991) with the Central African Republic. Since the 1970s the number of countries maintaining diplomatic relations with Taiwan has fallen from about a hundred to twenty-eight. ‘Most of the holdouts are poor nations in Central America and Africa’ (IHT, 30 January 1998, p. 5). (In April 1998 Guinea-Bissau reduced the number to twenty-seven: The Economist, 2 May 1998, p. 78.)

22–23 April 1998. The first talks between China and Taiwan since 1995 take place (in Beijing). Agreement is reached to hold further talks.

25 June–3 July 1998. President Clinton visits China. Human rights were discussed. (See entry below.)

14–19 October 1998. The head of Taiwan’s semi-official Straits Exchange Foundation visits China. He meets his mainland counterpart (the head of China’s Association for Relations Across the Taiwan Strait). On 18 October the former met Jiang Zemin. The two heads held their first and only official talks in Singapore in 199...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Contents
• Acknowledgements
• Introduction
• China: a summary
• 1 Politics
• 2 The economy
• Postscript
• Bibliography
• Index