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Posted November 4 , 2013

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Trade

What Canada can learn from Taiwan on dealing with China

Engage China in a clear-eyed thoughtful way, and don't put all of our eggs in the one basket - By Brian Lee Crowley Managing Director Macdonald-Laurier Institute

OTTAWA - Virtually every society in the world is struggling to come to terms with the meteoric rise of an increasingly assertive and self-confident China. None, however, has more at stake in getting the relationship right than does Taiwan. What might Canada learn from Taiwan in forging our own China policy?

Taiwan is the coastal island to which Chiang Kai-shek and his Nationalist government fled after losing the civil war to Mao Zedong's Chinese Communist Party (CPC) in 1949. For decades, the world largely regarded Taiwan's as the legitimate government of all China; it occupied, for example, China's seat on the UN Security Council.

With the CPC in uncontested control of the mainland, however, this fiction became more and more threadbare until, during the 1970s, the international community accepted the unavoidable reality of the People's Republic of China (PRC). Recognition was gradually withdrawn from Taipei and transferred to Beijing.

Led by America, the western powers refused, however, to abandon Taiwan. In exchange for the international recognition it craved, the PRC accepted that Taiwan would continue to exist beyond Beijing's control under the so-called One China policy. Both the PRC and Taiwan thus accept that there is only one China, encompassing the mainland and Taiwan, but each interprets the meaning of One China differently.

The nuances are less important than the fact that this fudge has allowed Taiwan to achieve a remarkable degree of freedom and prosperity in the shadow of a potentially belligerent China and in a formal diplomatic vacuum that keeps Taiwan on the margins of most international institutions. Now a vibrant and proud democracy, Taiwan is the world's 20th largest economy, a high-tech powerhouse and an important trading nation (Canada's fourth largest Asian trading partner for example).

How was this achieved with meagre diplomatic tools and in the face of China's simmering hostility and the increasing reluctance of much of the world to alienate the rising dragon?

Go back to the One China policy. The success of this compromise speaks volumes about the PRC. For example, they take the long view of their interests, are willing to be practical on details as long as vital symbols are respected and they will grant indirectly what they could never agree to directly.

It is in China's interests that Taiwan prospers because that prosperity redounds to China's benefit. Taiwan is the single largest investor in China. One Taiwanese company, Foxconn, alone employs over a million mainland Chinese and nearly a hundred flights a day link the two societies as Taiwanese capital and managerial and technical know-how drive much of China's rise. Taiwan is also a useful platform for foreign firms seeking entry to China. As a general rule, partner with a Taiwanese company and you end up in China as a matter of course.

Beijing may hanker after reunification, but understands that forcing it on the unwilling Taiwanese would not only damage China itself, but would spook many other countries anxiously weighing how far they can allow themselves to be drawn into China's embrace.

As far as symbols are concerned, sovereignty is everything to China. Anything that smacks of state-to-state relations between Taiwan and other countries is anathema to Beijing. Ever practical, though, they don't consider trade and economic relations to fall into this category, and so are content to see Taiwan in the WTO and party to multilateral trade talks. Canada can have an embassy in Taipei as long as it is called a trade office and high level Canadian visitors such as finance, trade and agriculture ministers are acceptable, but not foreign ministers.

Even high level political talks between Beijing and Taipei are possible, as long as they are carried out indirectly, such as recent discussions between high Chinese officials and a former Taiwanese vice-president on the margins of a major international summit. Practical business gets done because China can save face.

But with 40 per cent of their trade now carried out with mainland China, Taiwan is increasingly wary of passing the tipping point from healthy relationship-building with China into a vulnerable dependency. Taiwan thus obsessively builds economic and political alliances with other countries, particularly like-minded ones in the west, and Asian neighbours wary of China becoming too powerful to be constrained by the rules of international co-operation.

If Taiwan teaches us anything, it is that we should engage fully with China, but do so in a clear-eyed thoughtful way, not putting all our eggs in the China basket. Subtly cultivating the ambiguity around Taiwan's future is vital to keeping China on its best behaviour and is therefore good for Canada as well as Taiwan. Finally, hardly any country is powerful enough to stand up to China head-to-head, but if we present a united international front and give Beijing face-saving outs the dragon's rise can still be managed successfully. For now.

Brian Lee Crowley (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.

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