The most intractable problem of China's world – putting North Korea to one side – is Taiwan. Beijing wants it. Taiwan's populace is convicted about what to do. Even among the majority who would just like to leave things as they are, some see formal independence as the answer, but most now see some kind of deal with the Mainland as inevitable. But what kind of deal? And when?
China Eye wants to go out on a limb and hazard a guess as to how the Taiwan logjam might be broken. There is a deal to be done, our view, and it is fair to both sides, requiring both to give up something as well as gain something.
But first let's review the situation. Taiwan has been in effect an independent entity now for more than five decades. From a sovereignty perspective, Taipei is currently beholden to no one. In the 1970s and 1980s, with population of less than 20m people, Taiwan developed a powerful export-based economy of which its people are very proud. From the 1990s through to today, Taiwan has also developed a true democracy that is real, albeit messy. The people of Taiwan choose their leaders through free and direct elections, something that can be said of no other part of the Mainland world. Again, something to be proud of.
With a strong economy and a vibrant political system, Taiwan public opinion started to drift in the mid-1990s towards an independence state of mind. The previous administration in Beijing reacted in 1996 with a tough paternalistic approach, firing unarmed missiles – flying lamp posts, really – into the seas around the island. Taiwan voters reacted to the threats by voting Lee Teng-hui and then the pro-independence DPP, led by Chen Shui-bian, into power.
Then came the return of Hong Kong in 1997 under a the principle of "One Country Two Systems," created in the 1980s by Deng Xiaoping in the hope of also attracting Taiwan back into the fold. Hong Kong didn't have much choice, of course, with the Mainland right there on top of it. Beijing hoped that the example of Hong Kong post-1997 would help Taiwan feel comfortable with the "One Country Two Systems" formula, but it didn't. The depressing saga of former Chief Executive C.H. Tung, his resignation and the choice of successor did not help. Chen Shui-bian, elected in 2000 to the post of Taiwan president, calculated that there was a one-time opportunity left to Taiwan to go for independence, and with the Mainland growing in economic power every day, time was not on Taipei's side. Beijing threatened military action, or at least refused to rule it out, at every juncture, and Chen used that to strengthen support for the independence option. The argument was, and may still be for the DPP hardliners, that ahead of the 2008 Beijing Olympics, it is impossible for the Mainland to take military action against Taiwan, without risking an international boycott.
So Chen pushed the independence line, Beijing blustered, and Washington urged everyone to calm down and just leave things as they were. Jiang Zemin retired in 2003 with Hu Jintao replacing him as Communist Party chief. Then Chen Shui-bian was elected to a second and final four-year term as Taiwan president in December last year.
Time running out
Meanwhile, Taiwan's economy fell on hard times while China's economy continued to boom along. More and more, Taiwan companies moved production to the Mainland, and more and more Taiwan people went to live on the Mainland.
Any politician hopes to get a mention in the history books as the person who changed the course of events. Chen, it would appear, originally hoped that he would make it by leading Taiwan to independence. But the tectonic plates have shifted and independence no longer looks like a feasible option. So if Chen wants to get into the history books, it looks like he has to do a deal with Beijing.
From Hu's perspective, he would prefer the deal Beijing has always wanted – that is, Taiwan recognizes the errors of its ways and agrees to become a part of the People's Republic of China under the "One Country Two Systems" model. The problem is, Taiwan won't accept it. Also, the military option is completely out of the question. So if Hu wants to get into the history books, it looks like he has to do a deal with Taipei.
Here is a possible deal: Taiwan agrees that there is only one China and gives up any possibility of independence. China agrees to leave Taiwan completely alone in all ways for 30 years – a three-decade grace period.
Hong Kong was offered "50 years, no change," so why 30 for Taiwan? Because it's a more real 30 than the 50 offered to Hong Kong. Plus, 50 years is too long from the perspective of Hu selling the deal to his people.
And why would Taiwan accept the deal? Because there is a high degree of confidence that within three decades, the mainland system is going to change fundamentally, to allow for a re-integration of Taiwan on reasonable, perhaps federalist, terms. Ten years? Maybe, hard to to say. Twenty years? Probably, but you never know. Thirty years? Surely.
For Hu, he can sell this on the basis of "unification of the motherland," even if delayed. He would no longer have to spend money on deploying missiles that would never be used, and as a result, the economic benefits of a solution to the Taiwan problem would be immense. A couple of GDP percentage points? Something significant, for sure.
The timing for such a deal? Before Chen's term is up, of course, in 2008. Which is also Olympic Year. What an extraordinary coup for Hu if he can solve the Taiwan problem before the Games begin!
In the lead-up, there will be lots of atmospherics and fireworks, brinkmanship and grandstanding. But China Eye's guess is that a deal somewhat similar to the scenario above could be done.