2014 - Why Taiwan's Protestors Stuck it Out

April 10, 2014
The Asia Society's "ChinaFile"

 The Asia Society ChinaFile



Why Taiwan’s Protestors Stuck It Out




 Some might say, “a half-million Taiwanese can’t be wrong.” That’s how many islanders descended upon their capital city, Taipei, on March 30 to shout their support for the several thousand students who have occupied the nation’s legislature for the past two weeks in a so-far successful bid to derail Taiwan’s sweeping new Trade in Services Agreement (TiSA) with China.

 By Wednesday morning, April 9, three weeks into the occupation, the student occupiers believe they have made their point. They announced they would evacuate the building at 6:00 pm on Thursday. During the preceding weekend, they had wrenched a pledge from the parliament’s speaker, Wang Jin-pyng, that the legislature would enact stiff oversight laws before allowing the TiSA to be debated on the floor. It was a deal that made Taiwan’s President Ma Ying-jeou livid. The TiSA is a good part of his legacy and he is adamant that it not be undermined—least of all by his most formidable rival in his own political party. “Wang has sold out the Party,” said the President’s allies in the chamber. But, as Speaker Wang muttered with a wry smile, “does anyone have a better idea?”

 All day Wednesday, hundreds of students commenced a major clean-up in the parliament building. They stuffed hundreds of garbage bags with three weeks of drink bottles, styrofoam lunch boxes, broad yellow banners, newspapers, and accumulated trash. During the three-week occupation, the Speaker’s gavel went missing, to the alarm of the organizers. It was rediscovered Tuesday night, and plans were made for a formal “transfer” of the gavel back to Speaker Wang.

A student protester checks his cellphone during an ongoing occupation of Parliament over a trade pact with China, in Taipei today.

 But relinquishing control of the Parliament chambers is not likely to return sweetness and light to Taiwan’s politics. The Justice Minister avers that the law will not “turn a blind eye” to the ringleaders. They face up to seven years in jail, Taipei papers report. The organizers counter that, should President Ma renege on Speaker Wang’s pledge, “you won’t just see another 500,000 demonstrators…” Rear-guard demonstrators have already announced plans to camp-out in front of the Legislature indefinitely to ensure the government keeps its part of the bargain.


The TiSA is Taiwan’s final legislation designed to cement the island’s economic integration with mainland China. Once enacted, it will open virtually all of Taiwan’s economy (except agriculture) to China and to an attendant influx of Chinese investors, big, medium, small, and very small. The TiSA is hailed by many as a stepping-stone to a “lasting peace” in the Taiwan Strait. But, judging from the demonstrations and a number of opinion polls, many more see the TiSA as a stepping-stone to unification.


Taiwan’s politics revolve around the island’s relationship with mainland China. The ruling Chinese Nationalist Party (Kuomintang), as its name implies, sees Taiwan’s future in China. The opposition Democratic Progressive Party (DPP) and a number of smaller parties do not. The Nationalists were democratically elected, in part because they promised that improved economic ties with China would yield prosperity, in part because Beijing had a history of inflicting dire punishment on businesses that supported the DPP, and in part because the Bush and Obama administrations let it be known that, as one Obama administration put it in an interview with The Financial Times, the DPP “left us with distinct doubts about whether [it] is both willing and able to continue the stability in cross-Strait relations the region has enjoyed in recent years.”


Unfortunately, the Nationalists’ “closer economic partnership” with China has not brought Taiwan the promised wealth—growth in Taiwan’s foreign trade and GDP have dropped, and salaries have gone down to 1998 levels, since a 2010 Taiwan-China trade deal. More curiously, Washington’s infatuation with Beijing has cooled. The idea that America’s twelfth-largest trading partner might be absorbed by China is not as welcome as it once was.


Until the recent unpleasantness, however, Taiwanese seemed resigned to just such a fate.


The psychic transformation in Taiwan in just a few weeks has been stunning. At the beginning of March, Taiwan was in despair and resigned to a fate of eventual unification with China. At the end of February, Taiwan’s elites had been sobered by University of Chicago Professor John Mearsheimer’s pessimistic essay “Say Goodbye to Taiwan” that had received much press play on the island. The gist of it was: “China­big; Taiwan­small. America retreating; China advancing,” and Taiwan—like ancient Melos, wedged between Athens and Sparta during the Peloponnesian Wars of 2,400 years ago—should wave goodbye to its de facto independence, much less any hope of gaining it de jure.


Thus was the mood in Taipei when I arrived there on March 13 at the invitation of the World Taiwanese Congress (WTC), an annual convention of Overseas Taiwanese community leaders from thirty-two different countries. I’m afraid I wasn’t much comfort. My remarks at the WTC session, which took place the weekend before the student-occupation, focused on Taiwan’s future as a de facto “special administrative region” of China alongside Hong Kong and Macao. To my surprise, my pessimism made it to the front pages of Taiwan’s largest newspapers for three days in a row—largely because few outside Taiwan had ever cast doubt on the ramifications of Taiwan’s absorption by China.


Now that the occupation is in its third week, I remain puzzled by its endurance. In a broad global context, the most unusual thing about the Taiwanese protesters, by far, is their conspicuous lack of “desperation” in any conventional sense of the term. Taiwan’s per capita GDP is roughly five times that of the Ukraine (which faces a similar challenge from a large and aggressive neighbor), nominal unemployment is lower than it has been since the mid-2000s (although incomes are lower than they’ve been since 1999), and it maintains a modest trade surplus. The island’s Gini coefficient, a metric economists use to measure economic inequality and the correspondent risk of social unrest, is the second-lowest in East Asia. And the protesters’ grievances with the government’s China policy are superficially economic in nature. Taiwanese have an acute awareness of the fragility of their relative prosperity and well-being, and they are fighting to preserve it from what looks like a dubious scheme to chip away at their standards of living for the benefit of a few banking tycoons seeking to make profits in China’s cash-rich financial sector.


As citizens of an independent democratic nation of 24 million lacking an internationally sanctioned stamp of sovereignty, Taiwanese are highly aware of what often fuzzy-seeming notions like “independence” mean in a practical, reality-based sense. They may lack a representative in the United Nations or a formal embassy in Washington, D.C., but they recognize that their status as America’s eleventh-largest trading partner—Ukraine ranks seventieth—is one of their greatest hedges against becoming China’s Crimea. They see their economy on the verge of being absorbed by China’s, and like Ukrainian voters, most of Taiwan’s voters think their country is already far too entwined with a giant neighbor. Huge popular sentiment in Taiwan supports the demonstrators and opposes China unificationists.


Today’s Taiwanese are far more aware of the lack of support they have in Washington than Ukrainians are. I confess amazement at the creativity of their maneuvers to avoid being overwhelmed by China.


And the TiSA is certain to overwhelm Taiwan. It is not comparable to any of the existing free trade agreements Taiwan has with Singapore and New Zealand which were negotiated explicitly within the legal framework of the World Trade Organization (WTO) (including access to third party arbitration and dispute resolution mechanisms) under Taiwan’s official WTO title of “Special Customs Area of Taiwan, Penghu, Kinmen and Matsu.” Instead, the TiSA text is between the “Taiwan side” and the “mainland side” of “one China.”


Nor will the TiSA benefit Taiwan’s services exports. Taiwan literally is a “nation of shopkeepers.” 2.4 million of its 6 million workers are employed in Taiwan’s one million shops and services—with many working two or more jobs and/or running two or more small businesses. Taiwan’s domestic services sector is diffuse and varied; local retail, printing, e-commerce, logistics, mass transport, real estate, taxis, beauty salons, even undertakers, are in vibrant and dynamic competition. China’s services sector is far more centralized, and is restricted by government regulation and licensing. In general, Taiwanese businesses already have far more access to China’s services sectors than any other foreign investors. Of course, Taiwanese investors in China do not have the same protections from arbitrary law enforcement, regulations, and contract disputes as investors from other countries which have embassies in mainland China.


By contrast, Chinese investors in Taiwan’s services would be functioning in a modern democracy with an established rule of law and contracts.


Many of the TiSA market openings (China would agree to open up its e-commerce, printing, hospitals, construction, transportation, tourism, entertainment, funeral services, and securities businesses to Taiwanese operators) would be restricted to Fujian province or just a few provinces and would be conditional (for example, Taiwanese undertakers would be banned from cremation services in China where ninety-nine percent of all funerals involve cremation; in Taiwan “printing services” involve publication, but Taiwanese printers would be banned from publication services in China). Yet, Taiwan’s market openings for Chinese investors would be for the entire country and are unconditional.


The students who oppose the TiSA also calculate that Taiwan’s ability to penetrate China’s financial services market under the TiSA would be greatly restricted with little prospect of influencing reforms in China’s financial sector. Taiwan’s banking institutions are smaller, diffused, and too competitive among themselves to have any structural impact in China. By contrast, China’s financial institutions are all centrally-controlled and have vastly more capital. The TiSA would afford Chinese banks and institutions up to twenty percent ownership in Taiwanese counterparts and thus effective control. It is impossible for any Taiwanese institution to take effective control over any Chinese counterpart.


Small retail businesses face a similar potential for being swamped. The investment threshold of $200,000 brings with it a theoretical potential of bringing in twenty-one new immigrants from China—three employees and up to six additional family members per worker. In a broad demographic sense, China can absorb unlimited Taiwanese immigration, but Taiwan cannot absorb unlimited Chinese migration. Nor can Taiwan’s retail sector—nearly a million businesses—absorb unlimited competition. Unlike other foreign investors in Taiwan, Chinese investors do not have to renounce Chinese citizenship to be naturalized as Taiwanese voters in Taiwan.


The March 30 protest march is a sign Taiwan’s voters see few, if any, real advantages of TiSA to Taiwan’s overall economy over what Taiwanese businesses already enjoy in China. There are no new investment guarantees, no new arbitration advantages, and no new dispute-settlement mechanisms.


I suspect what most Taiwanese hope is that they will get enough moral support from Washington, Tokyo, Canberra, Ottawa, and Brussels to persuade the ruling Nationalist Party to rethink the TiSA. It is a move they judge will not draw backlash from Beijing.


They may be on the right track. The U.S. State Department seems unusually supportive of Taiwan’s zesty brand of democracy. Asked on March 24 whether the U.S. had “any concerns” about the demonstrations in Taipei, the Department’s official spokesperson read out her prepared response: “Well, we certainly support Taiwan’s vibrant democracy, which allows for this kind of robust political dialogue on a range of issues.”


The ultimate outcome hinges on a clash of personalities. Taiwan’s pro-China president Ma Ying-jeou—himself a courtly mainlander from a distinguished elite family—has threatened the ringleaders with prison, but he cannot arrest them in their parliamentary sanctuary. The threat seems instead to have stiffened the students’ resolve.


Legislative Speaker Wang Jin-pyng—himself an unassuming Taiwanese from a rural island clan—seems content with the student occupation of his chambers.


The Ma-Wang dichotomy is a paradox; the two men are leading figures of the Nationalist Party who hate each other with a white-hot passion—only last autumn, President Ma expelled Speaker Wang from the Party only to have the  judiciary rule it invalid. The rivalry is not a mere clash of personalities. Speaker Wang is now seventy-three years old, and got where he is by being both a loyal Nationalist cadre and a Taiwanese patriot with a sympathetic ear for the Nationalists’ pro-independence opposition.


Ironically, it is the constitutionally-uninfluential Speaker who is at the pivot of the crisis, not the powerful President of the Republic. Never before in Speaker Wang’s very long political career has he confronted a moment of Shakespearean greatness. The student occupation has been “thrust upon him.” His moment has come. I wager he will seize it.



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