“Taiwan’s China Dilemma” by Sharyu Shirley Lin

A few weeks after her inauguration, incoming Taiwanese President Tsai Ing-wen of the Democratic Progressive Party said that Taiwan would be re-evaluating its trade links with the Mainland. This was expected after the student-led Sunflower Movement had resisted attempts by the defeated incumbent, Ma Ying-jeou of the Kuomintang, to pass further free trade agreements.

At first glance, this makes sense. The DPP is pro-independence while the KMT still supports the “One China” principle. Thus, one would expect each party’s attitude towards political unification to be correlated with their attitudes towards trade: the KMT would be pro-trade, while the DPP would be anti-trade.

However, the trade policy of each party has been inconsistent. At different points in Taiwan’s democratic history, the KMT and DPP have both supported and rejected closer economic relations with China. Nor is the debate about trade particularly focused on security—President Tsai Ing-wen mentioned that her reticence with trade with China was due to economic—rather than geopolitical or security—concerns.


Academics sometimes call these situations “puzzles”: a situation that runs counter to what our theories would predict. Why would an avowedly pro-independence party support closer economic relations with China? And why would it switch its position only a few years later?

Taiwan’s China Dilemma: Contested Identities and Multiple Interests in Taiwan’s Cross-Strait Economic Policy, Sharyu Shirley Lin (Stanford University Press, June 2016)
Taiwan’s China Dilemma: Contested Identities and Multiple Interests in Taiwan’s Cross-Strait Economic Policy, Sharyu Shirley Lin (Stanford University Press, June 2016)

Professor Sharyu Shirley Lin’s Taiwan’s China Dilemma: Contested Identities and Multiple Interests in Taiwan’s Cross-Strait Economic Policy argues that the missing factor in analysis of Taiwan is its separate identity. However, Lin is not concerned with identity per se, but rather the degree it is contested. When the content of Taiwan’s identity was still contested among its population, politicians were pulled towards extreme policy solutions: either “extensive restriction” or “extensive liberalization” (to borrow Lin’s terms). As Taiwan’s identity solidified, policy positions moved closer to the center between “moderate restriction” and “moderate liberalization”, even as Taiwan’s identity grew more and more separate from a “Chinese” identity.

Over time, Taiwan’s separate institutions and political processes have fostered a growing feeling that Taiwan is indeed “separate”. Both the KMT and DPP agree that the only acceptable outcome of negotiations between Beijing and Taipei is one where Taiwan preserves all of its independent institutions. But this convergence only happened after fifteen years of Taiwanese democracy, and after decades in which the previous dictatorship had suppressed any idea of a “Taiwanese” identity.


Lin separates Taiwan’s democratic history into four periods. The first was the President Lee Tung-Hui administration: the first KMT administration after the implementation of democracy. President Lee pursued a “No Haste” policy towards trade with the Mainland, restricting investment in China.

This was followed by the administration of President Chen Shui-bian, the first from the DPP. Despite running on a pro-independence platform, President Chen pursued closer economic relations with China as a way to bolster a flagging economy, and to reassure Beijing, Washington and his opponents in the KMT about his intentions.

These early periods are similar in that Taiwan’s identity was still contested, as both sides of the political divide argued what it meant to be “Chinese” and “Taiwanese”, and whether being one excluded the other. Lin argues that this contestation restricted the issue of trade to a binary one: either heavily restrict trade, or actively pursue a policy of liberalization.

The third period was the second term of President Chen Shui-bian, where he tried to reintroduce some controls on cross-Strait economic relations, but ultimately failed. This was followed by the fourth period: the administration of KMT President Ma Ying-Jeou, who actively pursued greater trade relations but was ultimately blocked by public pushback. In this period, Taiwanese identity had begun to solidify, meaning that:


consideration of cross-Strait economic policy could focus on balancing the full range of national interests, including growth, stability, equity and security, rather than concentrating primarily on growth, as in the second episode, or on security, as in the first episode. The differences of opinion no longer evolved around choosing between the extreme policies of across-the-board restriction or large-scale liberalization but involved selecting from more moderate options.


Taiwan’s China Dilemma is a warning against pushing a tight correlation between views on political unification and views on economic ties. One surprising conclusion is that a consolidated “separate” Taiwanese identity has eased concerns about trade liberalization. As Lin explains,


Support for the ECFA [a free-trade agreement between Taiwan and China] is no longer associated with being ‘Chinese’ or supporting unification… Instead, discussions of the ECFA have focused on economic interests.


To perhaps paraphrase: as Taiwanese people see themselves as being independent (at least de facto), trade is no longer a scary prospect. After all, signing trade agreements is what states do.

Lin focuses mainly on the relationship between identity and economic relations, but I was also struck by another relationship: how growing public participation led to an increasingly well-defined identity. Taiwan’s new identity is furthermore overriding a common ethnicity with China (however fuzzy “ethnicity” might be as a concept).

There are not many cases where public participation in politics or institutions precedes a separate identity. Normally it’s the other way around: a defined group demands greater political participation (if not outright independence) from some larger entity. That has certainly been the case throughout much of the postwar era. Taiwan, on the other hand, seems to have developed the other way around: public participation first, a defined identity second.

One of the few other cases that comes to mind is Hong Kong. A substantially distinct Hong Kong seems to be a largely post-Handover phenomenon, corresponding with a period of increasing public participation in politics. The similarities between identity development in Hong Kong and Taiwan may be superficial or merely coincidental but seem worthy of further study.

Nicholas Gordon has an MPhil from Oxford in International Relations and a BA from Harvard. He works at a think tank in Hong Kong. His writing has also appeared in The South China Morning Post, The Diplomat, China Daily and Caixin.