China & Taiwan: Two Nations With A Working Relationship

China and Taiwan

Very encouraging talks between mainland China and Taiwan were held in Nanjing, in mainland China on February 11. The talks were presided by Wang Yu-chi head of Taiwan’s Mainland Affairs Council, and by Zhang Zhijun head of mainland China’s Taiwan Affairs Office.

These were the first high-level meetings of their kind held officially by ministers of both nations since the end of the Chinese civil war in 1949. No official agenda was released for the talks.

Kudos for the People’s Republic of China (PROC)! This attitude of dialogue is very constructive. In fact, this is the only reasonable way to reach agreements and move forward in a harmonic way. Although the conversations were abundant in symbolisms and short in substance, they were an excellent and a very auspicious beginning.

The cross-strait business and social ties have improved since Taiwan’s pro-Beijing President Ma Ying-jeou was elected in 2008. Cross-strait flights began that year, with tourists from the mainland  boosting Taiwan’s economy. During 2013 almost 3 million mainland Chinese visited Taiwan, up from just 300,000 during 2008; currently, there are over 400 weekly flights between China and Taiwan.

Taiwan has invested over US$200 billion in mainland China during the past three decades. Hundreds of companies from Taiwan have been established in mainland China during the same period. Cross-strait trade was US$197 billion during 2013. Thus, the business ties among both jurisdictions are thriving, in excellent health. To the extent of their capacities, both economies complement each other very well.

Beijing has the great opportunity to realize that territorial ambitions are passé. They should never have existed in the first place; and this can be proven strictly on pragmatic grounds, not even having to resort to moral standards. Historically, territorial ambitions are one of the major mistakes of mankind. Territorial ambitions have caused humankind unnecessary costs, like  death, misery and suffering. There have been no long-term winners. Potential gains have been a mirage, a short-lived upside. Losses have been vast and permanent for all sides involved.

Nowadays, territorial domination in the old-fashioned way does not make much sense given that the traditional nationality concept is becoming more dysfunctional by the day. In GLOBALIZATION, my book, I dive into how in many ways, the traditional citizenship concept is outdated and obsolete due to the instantaneousness of modern communications and the globalization of products and services markets.

Mainland China’s aspirations to world prominence are quite legitimate. In many ways, history is on its side, since China has already been a very prosperous and successful nation throughout  many past centuries, except for the most part of the XIX and all XX centuries.  Moreover, China can even aspire to overcome past glories. The new paradigm, however, calls for that winning spirit to be constrained essentially to competitiveness in trade, science, technology, arts, and education. It isn’t a military confrontation. Military hostility is not an acceptable way to behave anymore in the developed world. It never was, alas it regrettably was a tolerated practice. The real contemporary change resides in the fact that military aggression now is openly repudiated by the whole world, and more so by developed countries. In that regard, the developed world has changed a lot, for the better, since the end of WWII.

The past few decades have manifested a new paradigm, with unequivocal results: how great success has been achieved by small nations —from the territorial and population standpoint— that were able to transit from being laggards to leaders in just a couple of decades or so. Relatively newcomer nations like Singapore, New Zealand, Israel, and the Czech Republic, just to name a few, have shown the world the huge importance of effective government management —on a comparative basis— with the rest of the world.

Along the same lines of effective governments are Switzerland, Netherlands, and the Scandinavian countries, among others; these nations have been able to maintain themselves at the top of world’s standards for over a century. Thus, although having big landmass and a large population can be a plus, all nations previously cited have shown the world that the real key to progress lies elsewhere: in well-structured, efficient societies with an effective government, regardless of the size of the country.

Along similar lines, powerful global brands, in a way, increasingly rule the world, with little regard to national borders. Powerful global brands like Apple, Samsung, Bloomberg, Reuters, Nestle, BMW, Boeing, Airbus, just to name a few. China has been very active trying to build powerful global brands. Lenovo is a good example of a promising work in progress. However, China still has a long way to go before it can successfully achieve this demanding objective.

China stands to gain much more with a well-executed cooperation program with Taiwan than through confrontation and hostility. Beijing should overcome primitive temptations and rise to the occasion. China already has a lot going for it with Taiwan. The links and interconnections between them are too powerful, numerous, and deeply rooted. Both nations share a common heritage in history, culture and language.

China has a lot going for it with the rest of the world too. China’s integration to the global trade system has been very rapid and reasonably comprehensive, a true smashing success. Both, China and its counterparts —the rest of the world— have reaped handsome benefits in the process. The integration of China to the global trade system has been a truly Win/Win situation for all parties involved. Nonetheless, despite that smashing success, it’s still a work in progress, an unfinished endeavor. Let’s carry it to new heights of prosperity! Let’s have the wisdom and pragmatism to keep it moving forward, striving for more, for the benefit of China and the rest of the world!

Taiwan presents a golden opportunity for China, to defy its critics, becoming a leader and a highly respected practitioner of the new paradigm of peace and cooperation. Mainland China has the unquestionable leadership of the enormous Chinese world. If China proves its detractors wrong by having an increasingly peaceful and harmonic interaction with Taiwan, China will make substantial progress towards becoming a highly respected and admired global leader. China should aim to be admired and respected, not to be feared. This is the wise path, according to Confucius’s teachings.

Hong Kong and Taiwan, to different degrees but basically for the same reasons, provide Beijing with an unsurpassable opportunity to transit from an autocratic system to a functional, democratic one, more harmonic with the developed world, with the World China is striving to become a part of.

Both, Hong Kong and Taiwan should be perceived as a formidable duo of strengths, not of weaknesses, of mainland China. The opportunity to learn from a couple of societies next door with essentially the same original DNA, yet that have evolved in a far more successful way than mainland China itself is truly a golden one, a true blessing that must be seized, and fully taken advantage of. Furthermore, if the assimilation process of the best socio-economic practices of Hong Kong and Taiwan to mainland China is done appropriately, Beijing can extract humongous gains from that virtuous transition, even possibly contribute with some interesting improvements along the way over the worn-out Western society’s socio-economic model (Read more on: Limitations of Democracy;  Contemporary Political Systems and their Multiple Limitations;  From Hydra to Phoenix: The Transformation of Developing Nations).

Notwithstanding the impressive economic and even social development that China has achieved in the past three decades, China is still very far from being a fully developed country. As previously stated the road to full development from the present stage is in no way guaranteed (State Capitalism and Western Society Series).

What China does —or omits to do— is very important for global harmony and wellbeing. China is already the second largest economy on earth, and in most likelihood in a few years it will be the largest, volume wise.

If Beijing does not behave constructively in its relationship with Taiwan, with a well-orchestrated reconciliation program, it will surely lose a great deal of the excellent socio-economic momentum achieved during the past three decades. In other words, the cost/benefit relationship of not behaving constructively in relation to Taiwan is very onerous for China. Conversely, if the right attitude prevails, as previously stated, there is a myriad of disproportionate benefits that China will continue receive for years to come.

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About Martin Marmolejo

Global Investment Manager | Founder & Managing Director at MMA Global Investment Management | Proud husband and father | Follow me @globalmarmolejo.

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  1. […] of China towards Japan in regard to the disputed sovereignty over the Diaoyu-Senkaku islands, China has recently shown a great dose of prudence and wisdom when dealing with Taiwan. The multi-mentioned Russian/Ukrainian experience should serve as a very useful confirmation of […]

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