"China Finds It Difficult to Increase Pressure on Taiwan... Economic Impact if Cross-Strait Relations Deteriorate"

Citizens of Taipei cheering for President Tsai Ing-wen's successful re-election.

[Asia Economy Taipei (Taiwan) = Special Correspondent Sunmi Park] There is a growing expectation that China will find it difficult to increase pressure on Taiwan after the re-election of pro-independence Taiwanese President Tsai Ing-wen. The anticipation is that cross-strait relations will no longer deteriorate further.

On the 12th, immediately after the Taiwanese presidential election, Tan Yaonan, Chairman of the Taiwan Cross-Strait Policy Association, told this publication, "Since China has confirmed Taiwan's determination to protect its sovereignty through this election, it will not be able to pressure Taiwan more aggressively for unification." Chairman Tan is an expert on cross-strait relations who graduated from National Taiwan University and the University of Pittsburgh in the U.S., and has served as a senior partner at Baker & McKenzie and a visiting researcher at the Brookings Institution. He has been the chairman of the Taiwan Cross-Strait Policy Association since 2016.

Chairman Tan's outlook differs from the forecasts made after the election results. President Tsai Ing-wen mentioned Taiwan's determination to protect its sovereignty immediately after her victory, while the Chinese government emphasized adherence to the "One China" principle through the Ministry of Foreign Affairs and the Taiwan Affairs Office of the State Council. He believes the election results are unlikely to lead to a sharp cooling of cross-strait relations. He said, "Since the election results have clearly conveyed to the world that the determination to protect sovereignty is not just President Tsai's personal view but the stance of all of Taiwan, the Chinese government will not be able to respond harshly toward Taiwan unless Taiwan takes concrete steps to pursue independence first."

Chairman Tan pointed out the importance of President Tsai mentioning the eight characters "peace, equality, democracy, dialogue" when speaking about sovereignty protection after her election. He explained, "President Tsai sent a strong message to China that Taiwan's position is to protect democracy and freedom and that differences should be narrowed peacefully on an equal footing," adding, "Especially leaving room for dialogue suggests that Taiwan will not abruptly change its attitude toward China."

He continued, "President Tsai wants to protect the people's freedom and determination to safeguard sovereignty, but she is not trying to take radical or extreme measures to legally declare Taiwan's independence from China," emphasizing, "Taiwan also wants to negotiate and have dialogue with China. Since Taiwan wants to avoid conflict and maintain the status quo, it is more likely that constructive dialogue with China will be pursued during President Tsai's term."

However, he pointed out, "Before engaging in dialogue with China on sovereignty issues, it is an important task to unify the divided opinions within Taiwan." He also said, "It will not be easy for Taiwan and China to find a starting point for dialogue, but even without direct meetings, they should begin by exploring areas where both sides can change their views and communicate meaningfully," adding, "Since Taiwan has conveyed its determination to protect sovereignty, instead of pressuring China, it is necessary to pass the ball and wait first."

A shopping mall and department store cluster located near the Taipei City Government.

Although President Tsai Ing-wen, who succeeded in her re-election, expressed willingness for dialogue in her victory speech, it is interpreted that it will not be easy for both sides to actually sit at the negotiation table.

The reason why attention must be paid to cross-strait relations after President Tsai's victory is that the future trajectory of relations between the two sides is directly linked not only to the U.S.-China relationship but also to Taiwan's economy.

Chairman Tan predicted, "If China chooses to pressure President Tsai and the Democratic Progressive Party, which assert sovereignty through more radical and extreme means, Taiwan's economy, which depends on China, will become even weaker." However, he noted, "Chinese President Xi Jinping emphasized that 'compatriots on both sides of the strait are family bound by fate and brothers with blood ties stronger than water,'" and added, "Since he has pledged to help the Taiwanese compatriot economy, he is unlikely to adopt such methods."

◆"It's okay if Chinese people don't come to Taiwan"=There is an assessment that Taiwanese people chose sovereignty protection over the economy in this election.

A 33-year-old employee met near Breeze Department Store close to Taipei City Hall after the election said, "In the past, people prioritized the economy because they were busy making a living, but now that Taiwan's economy is stable, many people think of sovereignty protection first." He said, "Since President Tsai took office in 2016, fewer Chinese people have been able to come to Taiwan, but it doesn't matter. The gap left by China can be filled by tourists from Korea, Japan, and Southeast Asia."

Last year, Taiwan's economy enjoyed a special boom due to export orders surging amid the U.S.-China trade war. Thanks to this, investment by Taiwanese companies was promoted, and the government actively invested in public sector infrastructure in line with the mood, resulting in stronger-than-expected growth. Fixed asset investment and private investment growth rates recorded 2.95% and 2.25% in 2018, respectively, but surged to 7.58% and 7.36% in 2019, boosting the economic growth rate (estimated 2.54% last year). The unemployment rate is on a downward trend.

Among experts, there is a consensus that if cross-strait relations worsen further, the maximum period Taiwan can endure is about two years. This means Taiwan's economy could face a significant shock.

Wang Jianquan, Deputy Director of the Chung-Hua Institution for Economic Research (CIER), a Taiwanese government think tank, pointed out in an interview that the deterioration of cross-strait relations triggered by the recent Taiwanese presidential election results is the biggest risk factor for Taiwan's economy this year. He analyzed that if relations with China worsen further, the disadvantages will outweigh the benefits. Taiwan's Economic Cooperation Framework Agreement (ECFA), a de facto FTA signed with China in 2010, expires this year, and if it is not extended, Taiwanese companies will be directly hit.

He believes that the economic policy direction of the second Tsai administration will also be geared toward minimizing the side effects caused by the worsening cross-strait relations. He emphasized the possibility of expanding the New Southbound Policy and public infrastructure investment to prepare for the reduction of China's influence.

This content was produced with the assistance of AI translation services.