Taiwan seems to be using an odd carrot-and-stick strategy in its relations with the mainland. President Ma Ying-jeou has said that the island may be willing to further liberalize investment rules for Taiwan-based companies, especially those in the high-tech sector, that wish to invest in the mainland. It’s not surprising that such liberalization would be under discussion; winning access to the mainland market would be a juicy prize for Taiwan companies at a time when their home market remains stagnant. Ma also said that Beijng needs to remove missiles pointed at the island before any progress can be made in peace negotiations.
At the same time, though, Ma indicated that Taiwan would like to purchase F-16 jet fighters from the US to counter China’s growing air power. This sort of posturing is unhelpful.
At a time of a global economic uncertainty, Taiwan needs all the help it can get, and it’s in Ma’s economic interests to do everything he can to improve trade relations with Beijing – Ma himself said that economic issues are the main concern of Taiwan citizens. Trying to build up a military whose main goal is to defend itself from its most important trading partner is politically and historically understandable, but shortsighted. Rather, he should focus on building stronger trade ties with the mainland to build trust and gradually reduce military tensions. Doing so might anger some Taiwan nationalists, but would not realistically mean giving up on sovereignty claims. The benefits would greatly outweight the costs.
For now, all his carrot-and-stick strategy is succeeding in doing is causing headaches in Washington, and making Taiwan companies lose out on a slice of the mainland market.