Select Committee on Foreign Affairs Tenth Report


175. It is beyond the scope of this inquiry to consider Taiwan in detail. However, the importance of Taiwan to the Chinese government, as well as the importance of Taiwan as an economy, make it necessary to examine briefly the United Kingdom's relationship with Taiwan.

176. Taiwan has a large economy—by one estimate the 20th largest in the world[421], and growing fast—and is a significant trading partner of the United Kingdom—exports to Taiwan were £867.6m in 1999[422]—as well as being the source of considerable foreign investment, with the 170 Taiwanese companies operating in the United Kingdom employing 15,000 people.[423] However, the United Kingdom does not recognise Taiwan as a state: according to the FCO "we thus do not have diplomatic relations or any formal dealings with the authorities in Taiwan."[424] The official British position was set out in a 1972 agreement with China, under which the United Kingdom "acknowledged the position of the government of the PRC that Taiwan was a province of the PRC and recognised the PRC Government as the sole legal Government of China."[425] This position is different from that of France and Germany which "agree with" rather than "acknowledge" China's definition of "one-China."[426] During our visit to China, Chinese politicians expressed to us their satisfaction with the British Government's Taiwan policy.

177. The FCO informed us that, in its relations with Taiwan, the United Kingdom must "bear in mind Chinese sensitivities in order to ensure that unnecessary damage to [the relationship with China] is avoided."[427] It would not be possible to have diplomatic relations with China and with Taiwan: forced to choose between the two, the United Kingdom has chosen China (population 1.27 billion) over Taiwan (population 20 million). According to Graham Hutchings, "it is regrettable and unsatisfactory that the price of maintaining diplomatic relations with China is a prohibition on official ties with Taipei. However, it is in the UK's interests to pay it."

178. Despite this lack of an official relationship, "Britain nonetheless does have real interests in relation to Taiwan and we maintain an unofficial British Trade and Cultural Office there."[428] According to Hugh Davies, "the position over many years has been that there has been a great deal of pressure on the British Government to allow a degree of expanded contact at a sort of official level with Taiwan in order to help British commercial interests in Taiwan."[429] Ten years ago the United Kingdom began to staff the British Trade and Cultural Office with diplomats on secondment, and "similarly, without going anywhere near moving to sending senior Cabinet Ministers and so on to Taiwan, there has been a trickle of Ministers over many years to Taiwan."[430] These ministerial visits are described by the FCO as "private"[431]—a diplomatic fig leaf, as of course official business is discussed during these visits. Hugh Davies told us that this gradual upgrading of relations "has been acceptable to Beijing within limits."[432] However, the Chinese government is extremely sensitive to any move beyond those limits, as the row over the visit of former Taiwanese president Lee Teng-hui earlier this year showed.[433]

179. Chinese sensitivity over the recognition of Taiwan dates from the civil war: as Mao took over the mainland, the defeated Chinese Nationalist government fled to Taiwan. The communists were prevented from capturing Taiwan by President Truman's decision to send the US Seventh Fleet to the Taiwan Straits following the start of the Korean War. Most countries recognised the Communist government of China following the conclusion of the civil war—the United Kingdom established relations in 1950—but the USA did not reestablish relations with the government of the People's Republic until 1972, and did not formally recognise it until 1979. The existence of a rival authority in Taiwan which claimed to be the legitimate government of the whole of China has always been a source of irritation for the communist leadership in Beijing. The Chinese position is that: "the Government of the People's Republic of China continues to maintain that Taiwan is an inalienable part of China, that it is the sovereign power over Taiwan, and that its ultimate aim is reunification."[434] The Chinese government is vehemently opposed to any suggestion that Taiwan should seek independence. It also protests fiercely whenever any state appears to give support to Taiwan. In February 1998 the Chinese vetoed in the UN Security Council the continuation of the mandate of the UN force in Macedonia, solely because the Macedonian government had recognised Taiwan. The latest example of this came with trenchant Chinese criticism on 29 September of US plans to sell $1.3 billion worth of arms to Taiwan.[435] So far, this criticism does not appear to have been associated with any action on China's part.

180. The Chinese authorities also appear to view the development of democracy in Taiwan as a threat, both because of the unpredictability of the outcome of elections, and because of the danger which the Taiwanese model represents to communist rule on the mainland. Dr Tsang informed us that "China's policy towards Taiwan can best be summed up as one of exercising maximum flexibility within a rigid framework...[of maintaining]...the sovereignty and the supremacy of the Communist Party in Chinese leaders all stress that once the Taiwanese have accepted the 'one China principle' everything else would be open to negotiation."[436] Behind the confrontational rhetoric, Taiwan and China have developed a strong commercial relationship. The Foreign Secretary told us that "China is neuralgic with anything that suggests that Taiwan is an independent state but it has been extremely tolerant and, indeed, co-operating in the commercial activities of Taiwan. Taiwan is, after all, one of the major investors in mainland China."[437] Taiwanese investment in the mainland amounts to $40 billion,[438] and there is substantial trade, growing at around 30 per cent a year.[439] This trade is likely to grow even more rapidly once both Taiwan and China join the WTO (Taiwan as a "customs territory").[440] We found in Chongqing that one of the priorities for the municipal government was to improve the commercial environment for Taiwanese investors.

181. Recently, however, relations have become more strained. Dr Hughes told us that " the early 1990s, they were able to be a bit more pragmatic in their approach to Taiwan and accept some kind of upgrading of relations; but those things are perhaps becoming more difficult as there is more pressure on the leadership from groups like students, and particularly from the military...who do not want to see Taiwan moving further away."[441] Professor Yahuda told us that "One cannot rule out the possibility that nationalistic passions may reach a point where [China's] leaders may feel they have been provoked by what might have been said on the Taiwan side...I think one cannot rule out the possibility of use of force, not necessarily in the form of a direct invasion but in a whole variety of ways."[442] James Harding told us that: "the concern with Taiwan following the return of Hong Kong was [that], having presided over the return of Hong Kong, [President Jiang Zemin] immediately raised expectations that Taiwan would follow and return to the motherland quickly and that is going to be very difficult."[443] The Chinese official view on Taiwan was reiterated in its Defence White Paper of 16 October, which described the situation in relation to Taiwan as "complicated and grim." However, the White Paper did not add new conditions for the use of force against Taiwan.[444]

182. There is a tendency in China to regard Hong Kong and Taiwan in the same light. The Foreign Secretary told us that "We should perhaps remember that the basis of the Hong Kong handover of one country two systems was a formulation originally developed for Taiwan, not for Hong Kong."[445] However, in many ways the situation is quite different, both practically in terms of Taiwan's capacity to defend itself, and morally, as Taiwan now has a fully democratic political system, while as we discuss above,[446] Hong Kong does not. China also had the stick of colonialism with which to beat the United Kingdom government, while no such charge can be made against the Taiwanese government, where the last two presidents have been native-born Taiwanese.[447]

183. Reunification is not an immediate prospect. As Dr Tsang pointed out, "most western assessments [dismiss] the capabilities of the PLA as inadequate to invade Taiwan."[448] The Chinese government can of course use methods short of a full-scale invasion to exert influence over Taiwan, ranging from verbal threats, to military exercises, to missile launches.[449] Beijing sought to influence the outcome of the Taiwanese presidential elections of March 2000 by stating that "indefinite refusal to negotiate" on reunification would be a pretext for military action against Taiwan.[450] The election of President Chen Shui-bian, the leader of the formerly pro-independence Democratic Party, demonstrated that the Taiwanese people were not inclined to heed China's threats.

United Kingdom role

184. It is clear that a conflict, or even an escalation of tension, between China and Taiwan would be contrary to British interests, commercially and politically. The United Kingdom's strong and growing trade and investment relationships with China and Taiwan would be at the very least disrupted, and confidence in the economies of the whole of east Asia would probably be harmed. Given the strength of the Taiwan lobby on Capitol Hill, a confrontation between China and Taiwan would draw in the USA, further complicating the position from the British point of view.

185. Our witnesses were clear that the United Kingdom could not hope to play a mediating role between the mainland and Taiwan. Hugh Davies told us that China "regard[s] the Taiwan issue as an internal matter between them and the Taiwan people. They would not want an honest broker, certainly from the United Kingdom."[451] However, this does not mean that the United Kingdom has no role to play. Our witnesses made some recommendations in this regard.

186. First, the United Kingdom could make clear to China what our stance would be in the event of a confrontation—which on past experience, is likely to be a confrontation initiated by the mainland. Dr Hughes told us that "the United States apparently did make it very clear to [China], in private meetings during the recent presidential election in Taiwan, that there would be very serious measures taken [in the event of China launching military action against Taiwan]; but I do not think there is any clarity about other states and what sort of attitude they have, apart from perhaps going along with the United States."[452] Professor Yahuda told us that "it would make a difference if firm opposition to [the use of force] was seen as something not just involving America and perhaps Japan. The Chinese leaders would be further constrained if they knew the use of force would affect China's relations with the whole of the western world in a very severe way."[453] Graham Hutchings emphasised the importance of the fact that Taiwan is now a democracy: "In its relationship with Beijing it should be made clear that Britain would regard that as a fundamental set-back in its relations with China broadly conceived were democracy to be threatened, undermined in any way, by Chinese belligerence."[454]

187. Of course, the United Kingdom Government may frequently stress these points in private. We do not know if they do. Statements in public tend to be fairly unexceptionable. The FCO informed us that "we are strongly opposed to any use of military force and urge both sides to engage in constructive dialogue on the issue."[455] The Foreign Secretary made clear that the Government repeats this line to China on every possible opportunity.[456] There is no indication of what the consequences of military action would be. We recommend that, if the Chinese government issues further threats to Taiwan, the United Kingdom should make clear to the Chinese government the political and economic costs of military action, in a public statement, preferably but not necessarily in concert with our European partners.

188. Second, Taiwan has made remarkable progress from a one-party system, where dissent was carefully controlled, to a vigorous democracy. The election of President Chen, the first President not to be a member of the Kuomintang, has confirmed the strength of that democracy. Graham Hutchings told us that the United Kingdom should "affirm what has happened in Taiwan, which is a very extraordinary thing, the move inside ten years towards genuine democracy conducted in a peaceful environment. That should matter, that is in British interests, that is something about which the British Government and the British people can identify."[457] Richard Cobbold and Damon Bristow of RUSI proposed to us that, following the establishment of fully fledged democracy in Taiwan, "Britain could allow more and higher-ranking Taiwanese politicians to visit the country, as Germany which is exceedingly close to China, already does."[458]

189. This was written before the controversy surrounding the visit of former President Lee. The Foreign Secretary explained that "the visa granted to former President Lee was entirely consistent with our policy which is that we will grant visas for private visits or business visits to the United Kingdom but we will not grant visas for political visits to the United Kingdom. It was on that basis that former President Lee obtained a visa in order to attend the graduation...of his daughter."[459] However, it was significant that the visit came shortly after the democratic elections in Taiwan. The FCO wrote to us that "unfortunately during his visit he undertook a number of engagements which the Chinese interpreted as being of a political nature. The Chinese retaliated by cancelling the planned visit to China in July by the Economic Secretary to the Treasury."[460] However, it should be noted that Chinese sanctions in this case were limited and short-lived, resulting in the cancellation of a few visits, and, as far as can be ascertained, nothing more. Therefore, it may be a price worth paying. Other things being equal, the United Kingdom should have closer relations with democracies.

190. The Foreign Secretary told us that "Taiwan is not a state and, therefore, you would not expect the same degree of international acclaim for the election of a president there as you might for a recognised independent state. Nevertheless, we do value the strength and health of democracy within Taiwan, which is very good news indeed...President Chen, since taking office, has been very responsible and very sensible in how he has taken forward his statements in relation to China... Because of that I think he himself would fully understand why the world would not treat his election as if it was the election of a head of state."[461] It is of course not true that it is necessary to be a recognised independent state for democracy to be "acclaimed." Montenegro is not a recognised state, but during the military campaign against Milosevic, the words "President Djukanovic" were never uttered by the Foreign Secretary without him being described as "democratically elected." And as we found during our Kosovo inquiry, the FCO made particular efforts to build close (and publicly close) relations with the government of Montenegro.

191. We are not proposing that the United Kingdom should change its position on the recognition of China and Taiwan: as the example of Montenegro demonstrates, it is not necessary to extend recognition for account to be taken of positive developments. We recommend that the United Kingdom should take account of the remarkable development of Taiwanese democracy by incrementally strengthening relations. This should include enhancing the status of Taiwanese inward visits and the level of outgoing ministerial visits to Taiwan, but not recognition of Taiwan as a state.

421   Ev. p. 219, Appendix 28. Back

422   Ev. p. 121. Back

423   Ev. p. 131. Back

424   Ev. p. 119. Back

425   Ev. p. 119. Back

426   Ev. p. 219, Appendix 28. Back

427   Ev. p. 120. Back

428   Ev. p. 119. Back

429   Q23. Back

430   Q23. Back

431   Ev. p. 121. Back

432   Q21. Back

433   See para. 189. Back

434   Ev. p. 120. Back

435   The Independent, 30 September 2000. Back

436   Ev. p. 155, Appendix 7. Back

437   Q281. Back

438   Financial Times, 8 September 2000. Back

439   The Economist, 21 October 2000. Back

440   See paras. 139ff. Back

441   Q21. Back

442   Q20. Back

443   Q76. Back

444   The Economist, 21 October 2000. Back

445   Q313. Back

446   See paras. 151ff. Back

447   As opposed to mainland Chinese who fled with the nationalists during the civil war. Chiang Kai-shek and then his son, Chiang Ching-kuo, ruled Taiwan until 1988. Back

448   Ev. p. 155, Appendix 7. Back

449   The Chinese government launched missiles across the Taiwan Straits to deter Taiwanese voters from electing Lee Teng-hui in 1996. As was the case earlier this year, the Taiwanese people disregarded the mainland's threats, and elected Lee Teng-hui. Ev. p. 17. However, it is notable that there has been no threat by China to cut off economic links with Taiwan-perhaps an indication of the extent of mutual dependence of the two economies which has developed since 1987 when cross-strait visits and investment were permitted. Back

450   Ev. p. 120. Back

451   Q15. Back

452   Q19. Back

453   Q20. Back

454   Q72. Back

455   Ev. p. 120. Back

456   Q312. Back

457   Q72. Back

458   Ev. p. 219, Appendix 28. Back

459   Q314. Back

460   Ev. p. 123. Back

461   Q311. Back

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