Cross-Strait relations: improvements and their limits; Xi’s priorities and Taiwan; Taiwan’s priorities and options; Taiwan’s long-term economic dependence on China; The necessity of credible defence and close relations with the US; The role of the US; Conclusion

Relations between China and Taiwan constitute one of the longest-running unsolved international political and security issues inherited from the Cold War. After the United States–China normalisation of 1979 and under the impact of China’s economic reforms, as well as Taiwan’s democratisation and globalisation, Beijing and Taipei have established multiple channels of communication, increased their economic interdependence and people-to-people contacts, and on the whole improved relations. Moreover, since Ma Ying-jeou was elected president of Taiwan in 2008, a genuine detente and even a political rapprochement have taken place across the Taiwan Strait, illustrated by Ma’s meeting in Singapore with Chinese President Xi Jinping in November 2015.

However, China and Taiwan have not been able to address, let alone resolve, their political differences. Although since 2007 it has prioritised the ‘peaceful development of cross-Strait relations’, China does not recognise the statehood of the Republic of China (ROC, Taiwan’s official name, as opposed to the People’s Republic of China), and continues to threaten Taiwan militarily and ask it to reunify on Beijing’s terms of ‘one country, two systems’ – in other words, on the same terms as Hong Kong and Macao. Moreover, Beijing considers the United States’ security guarantees to Taipei, namely those provided by the 1979 Taiwan Relations Act (TRA), as a major obstacle to its objective of reunification. Meanwhile, Taiwan’s democratisation since the late 1980s has consolidated the island’s separate identity, giving birth to pro-independence forces and strengthening its will to preserve the status quo, while normalising relations with Beijing and improving its international status.

Since the mid-1990s, China’s unprecedented economic rise and military modernisation, while boosting its own nationalism, have dramatically changed the strategic equation across the Taiwan Strait. The development of trade and economic relations across the Strait have over time created an increasingly asymmetric relationship between China and Taiwan, with Taiwan becoming more and more dependent in economic terms on China. Due to China’s sharp growth in defence expenditure and rapid military modernisation since 2005, the bilateral military balance has tilted increasingly in favour of the People’s Liberation Army (PLA), forcing the US to reassess its role in securing Taiwan, while narrowing Taipei’s options for the future. In the same year, Beijing adopted an ‘anti-secession law’ that legalised the use of ‘non-peaceful’ means to reunify with Taiwan. Since Xi came to power in 2012, China’s more assertive foreign policy and ambitious security objectives, particularly in the maritime domain, have intensified the pressure on both Taipei and Washington.

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