In a significant move, Chinese President Hu Jintao in his opening speech at the 17th National Party Congress, called for a peace agreement with Taiwan, while insisting independence for the island would not be tolerated.
His softer stance in contrast to the sharp warning last month over Taiwan’s attempt to join the UN came as a surprise to some analysts.
Unfortunately Hu’s peace overtures was immediately dismissed by Taiwan who says “it lack any significance”. With the re-appointment of Chen Shui-bian as the chairman of Taiwan’s ruling party, the Democratic Progressive Party (DPP), a move likely to give him greater control over the presidential election campaign, it is likely that cross-strait relations will remain tense in the run-up to the Beijing Olympics in 2008.
In a speech to mark Taiwan's national day on 10th October, President Chen Shui-bian insisted that the island would go ahead with a referendum next March to join the United Nations. The move is opposed by both Beijing and Washington. Besides such political ploy to test Beijing’s patience, Taiwan also for the first time put on a grand display of military muscle, including showcasing two locally developed missiles at its National day parade. The military parade, proposed by President Chen Shui-bian, is the first to be held in 16 years. 'The display of military equipment is a kind of effective deterrent so the Chinese communists will be aware that Taiwan is tough,' said Chen cabinet’s Defence Minister Lee Tien-yu.
With Chen’s increasing hardline control and influence over the party, Taiwan's ruling party presidential nominee Frank Hsieh has to throw his full weight behind a contentious referendum. This is a shift from his previous stance. 'My main worry is that the newspaper headlines around the world on March 23 next year would read: Taiwan fails in UN referendum bid. If that happens, what's next for Taiwan?' Mr Hsieh said. 'The international community may think Taiwan does not want to become a country if we fail to pass the referendum,' he said. 'If that happens, winning the presidency would mean a lot less.' Mr Hsieh also challenged KMT presidential candidate Ma Ying-jeou to an open debate on the issue of the referendum on Taiwan’s UN bid, followed by an opinion poll to gauge public support.
Beijing has continued to show restraint over Chen’s provocation as it is perhaps more confident that it is in a better position militarily to prevent Taiwan from making any moves towards independence. Beijingis planning a more achievable military strategy towards Taipei along with the increased capabilities of the People's Liberation Army. China would pursue a 'punishing bombardment' of Taiwan rather than a full-scale amphibious invasion, wrote Strategic Forecasting (Stratfor), a US-based commercial intelligence firm. A barrage of ballistic and cruise missiles, air strikes and naval gunfire would obliterate Taipei's ability to coordinate a defence in less than a week, or even in 24 hours.
'While it is ever-important for Beijing to appear politically firm on all things Taiwan, talk of sacrificing the (2008) Olympics is not idle banter in China. The ultimate goal of such a strategy would be a return to the status quo, rather than reunification,' wrote Stratfor. Dr Adam Segal, a senior fellow with the US-based Council for Foreign Relations, agrees. 'I think the strategy is still primarily political, to prevent a further slide to independence, and possibly to force Taipei to negotiate'.
Even the US Air Force has second thoughts about fighting China. In September 2007, the commander of US forces in Japan made the frank admission that China's air defences were 'difficult, if not impossible' for US F-15 and F-16 fighter jets to penetrate. Lieutenant-General Bruce Wright said: 'For the first time in history, we are seeing another nation, in this case China, with newer fighters than we have. We know that it continues to invest at a level that is unprecedented. 'We need to be watchful of Chinese military capabilities,' he added.
While cross-strait tensions are likely to remain tense, China continues to improve its relations with its other neighbours.
China and Japan started the 10th round of talks on the East China Sea issues at Beijing's Diaoyutai State Guesthouse. Director of Chinese Foreign Ministry's Department of Asian Affairs Hu Zhengyue attended the talks as top Chinese negotiator. The Japanese delegation is represented by Kenichiro Sasae, head of the Foreign Ministry's Asian and Oceanian Affairs Bureau, and Harufumi Mochizuki, director-general of Japan's Natural Resources and Energy Agency.
Chinese Foreign Ministry spokesperson Jiang Yu said last month that China will in accordance with the agreement reached by the leaders of the two countries, continue to push forward the momentum of consultation with a pragmatic attitude. "We hope Japan would make joint effort with China," She said.
Prime Minister Yasuo Fukuda, who replaced the conservative Abe last month, is known for his conciliatory views towards China and Japan is also set to welcome President Hu Jintao from China to Japan" sometime early next year but challenges over this territorial issue remains abound. "On the development of the East China Sea there's a considerable gulf to be filled between the two nations," Tomohiko Taniguchi, the deputy press secretary of Japan's foreign ministry, told reporters. "The Japanese government has repeatedly requested that a high-level political decision be made on the Chinese side about the way in which the East China Sea gas field should be developed jointly between China and Japan."
Continuing with its widening and deepening economic engagement with Southeast Asia, China has recently approved the establishment of a special export zone in the southern island province of Hainan in a bid to boost trade especially with Southeast Asia. The Yangpu Bonded Port Area will enjoy tax breaks and other preferential policies similar to three zones in Shanghai, Tianjin and Dalian. Fifty billion yuan will be spent on construction and the area will host industries with a total output value of 100 billion yuan, generating 12 billion yuan in taxes annually by 2012. The port is expected to become a logistics hub as well as an export centre for petrochemicals especially those that are extracted from Southeast Asia, Hainan’s vice province governor Jiang Sixian said at a press conference. "It's conducive to faster economic growth of Hainan and the whole region," Jiang was quoted as saying.
This port would capitalize on the fact that China and ASEAN are seeking to establish a free trade area by 2010. Since July 2005, China, Brunei, Malaysia, Indonesia, Myanmar, Singapore and Thailand have cut tariffs on more than 7,000 items in compliance with the Trade in Goods Agreement of a Framework Agreement for Overall Economic Cooperation between China and the ten ASEAN member states. By 2010, China and Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, will impose zero tariffs on most products, while China and the four newer ASEAN members of Cambodia, the Laos, Myanmar and Vietnam will do the same in 2015.
Vietnam remains the skeptic in the ASEAN group about China’s rising influence in the region. The Vietnam Communist Party's top decision-making body, the politburo, will meet in advance of a full plenum of the party's central executive committee this month and a new session of the National Assembly, Vietnam's legislature, is expected to begin on 22 Oct 2007. These gatherings will assess how Vietnam needs to react to decisions made at the upcoming Chinese Communist Party Congress in Beijing as Hanoi is worried a resurgence of hardline nationalists at the party congress in Beijing and greater Chinse assertion on the islands in the South China Sea claimed by Beijing and Hanoi. (16 October 2007)
Hu springs Taiwan surprise (Straits Times, 16 October 2007)
Viet party leaders to discuss how to deal with China (Straits Times, 13 October 2007)
Japan says gap remains with China on claims to East China Sea (Channelnewsasia, 13 October 2007)
Hsieh has come out to back Taiwan's planned UN plebsicite (Straits Times, 13 October 2007)
China approves export zone in Hainan to boost trade with SE Asia (Channelnewsasia, 12 October 2007)
Chen to resume leadership of Taiwan's ruling party (Straits Times, 12 October 2007)
China approves new free-trade harbor area to boost trade with ASEAN (People’s Daily, 11 October 2007)
China, Japan start fresh talks on East China Sea (People’s Daily, 11 October 2007)
Taiwanto showcase its top weaponry in military parade (Straits Times, 9 October 2007)-----