Taiwan’s Chen singals tighter policy toward China

By Alice Hung

TAIPEI (Reuters) – Taiwan President Chen Shui-bian signaled
a tightening stance toward China on Sunday as he warned his
people of investment risks in the mainland and growing military
ambition by the island’s political foe.

Defying expectations that he would take a more conciliatory
approach to mend ties, Chen said the government would assume
the role of a gatekeeper to guard Taiwan’s economic security.

“Cross-Strait economic and trade policies seek to fulfill
not the financial interests of any individual or corporate,”
Chen said in his New Year address. “Instead, Taiwan’s
sustainable developments is the greatest interest of our
pursuit.”

“Therefore, ‘proactive management and effective
liberalisation’ represents the new mindset and course of action
for our future cross-Strait economic and trade policies,” Chen
said in the presidential office.

Previously, Chen’s administration upheld a policy of
“proactive liberalisation and effective management” in favor of
economic opening.

Chen’s approval rating has dived to a record low after his
party’s crushing defeat in the December local elections, in
part because of a poor administrative record during his five
years in office, especially on ties with China.

Beijing and Taipei have been diplomatic and military rivals
since their split at the end of the Chinese civil war in 1949.
Beijing sees the island as part of Chinese territory and has
pledged to bring it back into the fold, by force if necessary.

Despite often testy ties, trade, investment and tourism
have blossomed since the late 1980s. Taiwan businessmen who
have poured up to $100 billion in China have called for
permanent direct links, which analysts say are essential for
the island to remain economically competitive.

“Whilst Taiwan would never close itself off to the world,
we shall also not ‘lock in’ our economic lifeline and all our
bargaining chips in China,” Chen said.

Analysts said Chen’s comments were likely to pour cold
water on the financial markets, which have been betting on
closer economic and trade links across the narrow Taiwan
Strait.

“(The speech) indicates mainland policy will be tightening
and more conservative,” said Li Fang-kuo, an analyst at SinoPac
Securities. “It will have a negative impact on the stock
market.”

CARROT AND STICK

Underscoring China’s threat, Chen said the People
Liberation Army (PLA) has deployed 784 ballistic missiles
targetted at the island and set up a three-stage war plan
against Taiwan.

The PLA aims to establish contingency-response combat
capabilities by 2007, build up combat capabilities for
large-scale military engagement by 2010 and to ensure victory
in a decisive battle by 2015, Chen said.

“In the so-called ‘carrot and stick’ strategy China has
employed against Taiwan, the ‘soft tactic’ is a mere deception,
but the “hard tactic” is real,” Chen said.

“It has unceasingly pursued its ambition to annex Taiwan.”

Chen, who advocates a separate Taiwan identity, repeated a
timetable to have a new constitution for Taiwan before his
second — and final — term ends in 2008 and stressed the
island’s future would be decided by its 23 million people
alone.

In a move sure to anger Beijing, Chen said the island could
hold a referendum on the new constitution by 2007 if conditions
become mature. Beijing sees Chen’s constitutional
re-engineering project as a provocative step toward formal
statehood.

In his New Year’s Eve speech, Chinese President Hu Jintao
vowed China would not tolerate Taiwan independence.