Politics of The Republic of China - ROC and PRC

ROC and PRC

Despite the differences between Taiwan and mainland China, contact between the two sides of the Taiwan Strait has grown significantly over the past decade. The ROC has continued to relax restrictions on unofficial contacts with the PRC, and cross-Strait interaction has mushroomed. Since 1987, when the ban on travel to mainland China was lifted, Taiwan residents have made more than 10 million trips to mainland China. The ROC Bureau of Foreign Trade estimates that indirect trade with mainland China reached about US$61.639 billion, or 18% of the total trade of the ROC, in 2004. This indirect trade runs heavily in Taiwan's favor, providing another outlet for the island's booming economy. In an attempt to facilitate trade, in 1995 the Executive Yuan approved the construction of an offshore transshipment center at the port of Kaohsiung through which direct shipping with the mainland China would be permitted. In April 1997 the first sanctioned direct cross-Strait shipping began between selected mainland China ports and Kaohsiung for cargo being transshipped through Taiwan.

Beijing has expressed a mixed view of these developments. PRC leaders are pleased at the development of economic ties and exchanges, which they believe helps their cause of reunification. However, the increase in contacts, combined with domestic political liberalization on Taiwan, also has resulted in more open discussion in Taiwan of the future of Taiwan, including the option of independence, to which Beijing is strongly opposed.

The trend in cross-Strait interaction is one of steady growth with, so far, only temporary setbacks due to political factors such as the PRC's reaction Lee Teng-hui's private visit to the U.S. in 1995 and the PRC's reaction his 1999 characterization of relations with mainland China as "state-to-state." Taiwan business representatives have concerns about issues such as safety, corruption, and contract disputes, which have led to increased caution and a search for alternative investment venues but not to pulling out from mainland China altogether. President Chen has yet to revise the previous administration's "no haste, be patient" policy regarding Taiwan-mainland China investment to prevent over-dependence on the PRC. As a result of this policy the ROC has placed restrictions on largescale infrastructure investments on mainland China in 1997. Despite this, billions of dollars have been invested in mainland China by smaller firms.

The development of semiofficial cross-Strait relations has been incremental. Prior to April 1993, when talks were held in Singapore between the heads of two private intermediary organizations – Taiwan's Straits Exchange Foundation (SEF) and the PRC's Association for Relations Across the Taiwan Straits (ARATS) – there had been some lower-level exchanges between the two sides of the Strait. The April 1993 SEF-ARATS talks primarily addressed technical issues relating to cross-Strait interactions. Lower-level talks continued on a fairly regular basis until they were suspended by Beijing in 1995 after President Lee's U.S. visit. Unofficial exchanges resumed in 1997 through informal meetings between personnel of the two sides' unofficial representative organizations. Direct SEF-ARATS contacts resumed in April 1998, and the SEF Chairman visited mainland China in October 1998. A planned visit by ARATS Chairman Wang Daohan to Taiwan in the fall, however, was postponed following statements made by then-President Lee Teng-hui that relations between mainland China and Taiwan should be conducted as "state-to-state" or at least as "special state-to-state relations." Since his 20 May 2000 inauguration, President Chen has called for resuming the cross-Strait dialogue without any preconditions. President Chen has stated that such talks should be conducted on the basis of the "spirit of 1992," a reference to the agreement to hold the 1993 Singapore talks. The PRC, however, has insisted that President Chen must recognize the one China principle before talks can be held.