Agents of Taiwan-China Unification

Agents of Taiwan-China Unification?
The Political Roles of Taiwanese Business People in the

Process of Cross-Strait Integration
Author(s): Shu Keng and Gunter Schubert
Source: Asian Survey, Vol. 50, No. 2 (March/April 2010), pp. 287-310
Published by: University of California Press
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SHU KENG AND GUNTER SCHUBERT
Agents of Taiwan-China Unification?

The Political Roles of Taiwanese Business People
in the Process of Cross-Strait Integration
A B S T R AC T
The political roles of Taiwanese business people (taishang) in cross-strait relations

have been increasingly noteworthy under Hu Jintaos policy of counting on the
Taiwanese people. But contrary to widely accepted allegations, this paper argues
that attempts by China to use Taiwanese business people as a means to gain political
leverage over Taiwan will probably not pan out as a successful strategy.
K E Y W O R D S : China, Taiwan, cross-strait integration, taishang
INTRODUCTION
Growing socioeconomic interaction and political antagonism make todays

cross-Taiwan Strait relations a very interesting case for an analysis of the
nexus between economic and political integration. This relevance received a
boost in the wake of Taiwans latest presidential elections in March 2008 and
the change of government to the Kuomintang (Nationalist Party, KMT).
The new administration of President Ma Ying-jeou is firmly dedicated to the
promotion of increased interaction and economic integration across the
Taiwan Strait, in the hope that this will lead to political rapprochement and,
eventually, a peace agreement between Taipei and Beijing.1 So far, however,
Shu Keng is Associate Professor at the School of Public Economics and Administration, Shanghai
University of Finance and Economics, China. Gunter Schubert is Chair Professor of Greater
China Studies at the Institute of Asian and Oriental Studies and Director of the European Research
Center on Contemporary Taiwan (ERCCT), University of Tuebingen, Germany. This article emanates from a three-year research project on the political attitudes and social integration of Taiwanese
business people in mainland China, sponsored by the Chiang Ching-kuo Foundation for International Scholarly Exchange. Emails: <skeng0731@gmail.com>, <gunter.schubert@uni-tuebingen.de>.
1. See, for example, The Boao Forum, One Small Step for Cross-Strait Dialogue, Zhongguo
Shibao [China Times], Editorial, April 8, 2008; President-elect Ma Calls for Diplomatic Truce
Asian Survey, Vol. 50, Number 2, pp. 287310. ISSN 0004-4687, electronic ISSN 1533-838X. 2010
by the Regents of the University of California. All rights reserved. Please direct all requests for permission to photocopy or reproduce article content through the University of California Presss Rights
and Permissions website, http://www.ucpressjournals.com/reprintInfo.asp. DOI: AS.2010.50.2.287.
287
AS5002_02_Keng-Schubert.indd 287
5/4/10 9:43 AM

288 asian sur v ey 5 0 : 2
current cross-strait relations must1still be characterized as political separation with economic integration.2 According to most public opinion surveys
conducted over the past decade, some 80% of all Taiwanese support, at least
for the time being, the so-called cross-strait status quo: ongoing political
separation across the Taiwan Strait. Those who support immediate unification amount to no more than 2%, on average.3
At the same time, trilateral relations between Taiwan, the United States,
and the Peoples Republic of China (PRC) have remained rather stable over
the years and were not, despite recurrent rumblings, seriously jeopardized by
the pro-identity politics and nationalist agenda pursued by the second administration of former Taiwan President Chen Shui-bian (200408).4 After
the latest elections for the Legislative Yuan and the presidency in January
and March 2008, which brought the pro-unification pan-blue camp back
to power, it is safe to say that (barring electoral reverses) for the foreseeable
future, Taiwans China policy will remain stable and deviate little from the
status quo. As a consequence, the strongest impact on relations is likely to
stem from the dynamics of ongoing economic and social integration across
the Taiwan Strait.5 In the long run, as generally expected, integration will
with China, China Post, May 11, 2008; Ma Hopes for a Peace Deal While Hes in Office, Taipei
Times, October 19, 2008.
2. See Wu Yu-Shan, Kangheng huo Hucong: Liangan Guanxi Xinquan [Balancing or bandwagoning: A new interpretation of cross-strait relations] (Taipei: Zhengzhong, 1997), pp. 15469; Suisheng
Zhao, Economic Interdependence and Political Divergence: A Background Analysis of the Taiwan
Strait Crisis, in Across the Taiwan Strait: Mainland China, Taiwan, and the 19951996 Crisis, ed.
Suisheng Zhao (New York: Routledge, 1999), pp. 2140; Gnter Schucher, Peace by Means of
Rapprochement? On the Impact of Social Integration in Shaping Cross-Strait Relations, in Perspectives
on Cross-Strait Relations: Views from Europe, eds. Gnter Schucher and Margot Schller (Hamburg:
Institute of Asian Studies, 2005), pp. 11343.
3. The figures for those who support immediate unification, however, have risen slightly over
the years and stood at 7.7% at the end of 2007. See the survey data regularly published by National
Chengchi Universitys Election Study Center, <http://esc.nccu.edu.tw/newchinese/data/tonduID.
htm> or by the governments Mainland Affairs Council, <http://www.mac.gov.tw/english/index1-e.
htm>; see also Teh-Yu Huang and I-Chou Liu, Contending Identities in Taiwan: Implications for
Cross-Strait Relations, Asian Survey 44:4 (July/August 2004), pp. 56889.
4. Steven M. Goldstein and Randall Schriver, An Uncertain Relationship: The United States,
Taiwan, and the Taiwan Relations Act, China Quarterly 165 (2001), pp. 14772; Donald S. Zagoria,
ed., Breaking the China-Taiwan Impasse (Westport, Conn.: Praeger, 2003); Mathieu Duchtel, Taiwan: The Security Policy of the Chen Government since 2000, China Perspectives 64 (March-April
2006), pp. 4557; and Philip Yang, Doubly Dualistic Dilemma: U.S. Strategies toward China and
Taiwan, International Relations of the Asia-Pacific 6:2 (2006), pp. 20925.
5. See Yung Wei, From Multi-System Nations to Linkage Communities: A New Conceptual
Scheme for the Integration of Divided Nations, Issues and Studies 33:10 (October 1997), pp. 119;
5/4/10 9:43 AM

K E N G A N D S C H U B E R T / TA I WA N - C H I N A B U S I N E S S 2 8 9
probably alter the state of separation, though how and in what direction is
anyones guess.6
Given Taiwans growing trade dependence on the Chinese mainland and
the attractiveness of Chinas enormous market for Taiwanese entrepreneurs
and investors, the PRC government is often purported to use business to
steer politics (yishang weizheng) or to use economics to promote unification
(yijing cutong). That is, the PRC is said to seek political leverage over Taiwan
by making full use of the mainlands economic clout.7 Taiwan in turn since
the mid-1990s has promoted policy initiatives of going south (nanxiang
zhengce) and patience over haste (jieji yongren), in an effort to dampen the
effects of economics on politics.8 Over the years, it seems, Beijing and Taipei
have failed to recognize the important consequences of ongoing cross-strait
interaction for the relative political strength of the two sides. In light of this
constellation, it can be assumed that Chinas leaders indeed have been and are
counting on the one million Taiwanese compatriots (taibao, Taiwanese who
settle in China) and particularly the Taiwanese business people (taishang,
Christopher M. Dent, Being Pulled into Chinas Orbit? Navigating Taiwans Foreign Economic
Policy, ibid., 37:5 (May 2001), pp. 134; Chien-Min Chao, Will Economic Integration between
Mainland China and Taiwan Lead to a Congenial Political Culture? Asian Survey 43:2 (2003),
pp. 280304.
6. For a detailed overview of the different opinions on future cross-strait integration, see Shu
Keng, Understanding the Political Consequences of People-to-People Relations across the Taiwan
Strait: Toward an Analytical Framework, Chinese History and Society, no. 32 (June 2007), pp. 6380.
7. This assumption has been repeatedly discussed since the early 1990s. See, e.g., Emerson
M. S. Niou, Peter. C. Ordeshook, and Guofu Tan, Taiwanese Investment in Mainland China as a
Policy Tool, Issues and Studies 28:8 (1992), pp. 1431; Yu-Shan Wu, Mainland Chinas Economic
Policy toward Taiwan: Economic Need or Unification Scheme? ibid., 30:9 (1994), pp. 2949; TseKang Leng, A Political Analysis of Taiwans Economic Dependence on Mainland China, ibid., 34:8
(1998), pp. 13254; Gang Lin et al., Cross-Strait Economic Ties: Agent of Change, or a Trojan Horse?
Asia Program Special Report, no. 118 (Princeton, N. J.: Woodrow Wilson Center, 2003), pp. 118;
Tun-jen Cheng, China-Taiwan Economic Linkage: Between Insulation and Superconductivity, in
Dangerous Strait: The U.S.-Taiwan-China Crisis, ed. Nancy B. Tucker (New York: Columbia University Press, 2005), pp. 93130; Steve Chan, The Politics of Economic Exchange: Carrots and
Sticks in Taiwan-China-U.S. Relations, Issues and Studies 42:2 (2006), pp. 122.
8. The going south policy was officially announced in 1993 in an effort by the KMT government to divert Taiwanese investments from China to Southeast Asia. The later patience over haste
policy of 1996 was advocated by then-President Lee Teng-hui to slow down the capital flow from
Taiwan to China and capped Taiwanese investment on the mainland to, at one point, 40% of a
companys total assets. For detailed overviews, see Lijun Sheng, China and Taiwan: Cross-strait Relations under Chen Sui-bian (New York: Zed Books, 2002); Richard C. Bush, Untying the Knot: Making Peace in the Taiwan Strait (Washington, D.C.: Brookings Institution, 2005); Murray Scott Tanner, Chinese Economic Coercion against Taiwan: A Tricky Weapon to Use (Santa Monica: RAND,
2007).
5/4/10 9:43 AM

those who operate factories and companies, or more generally, do business in

China) as key actors for their political agenda concerning Taiwan. But are the
taishang really an asset for the PRC as it pursues its goal of national
unification?
In this paper, we start from a typology of four different possible political
roles of the taishang in cross-strait relations, namely, taishang as Chinas hostages, taishang as Chinas agents, taishang as Taiwans buffer, and taishang as
Taiwans lobbyists. We will then demonstrate that the taishangs political
significance for both governments is limited at best, for reasons related to the
political economy of cross-strait relations, the logic of Taiwans political system, and the state of mind of Taiwanese business people.9 Our article starts,
however, with a brief outline of the PRC governments Taiwan policy during
the Jiang Zemin and Hu Jintao eras, in order to provide a more detailed
explanation of its current rationale and how it addresses the taishang.
TA R G E T I N G TA I WA N S P E O P L E : C H I N A S TA I WA N P O L I C Y
I N T H E H U J I N TAO E R A
The official beginning of the Hu Jintao era was marked by the Sixteenth
Party Congress of the Chinese Communist Party (CCP), held in October
2002. Nonetheless, it was not until after the Fourth Plenum of the CCPs
Sixteenth Central Committee in September 2004 that Hu began to assert
full control over the development of Chinas policy toward Taiwan.10 Since
the latter event, the practical effects of his new thinking on cross-strait
relations have gradually become apparent.11 Taiwans political observers often
9. The qualitative data used in this article stem from comprehensive field work conducted in
the Pearl River Delta and the Shanghai-Kunshan metropolitan area between 2004 to 2008. All in
all, we interviewed some 150 Taiwanese business people and company managers, members of their
families, and high-ranking officials of the local Taiwan Affairs Offices. Some of our interviewing
transcripts are available for downloading at <http://tai-shang.nccu.edu.tw>. The survey data quoted
here mainly come from the Election Study Center of Taiwans National Chengchi University, available at <http://esc.nccu.edu.tw/newchinese/data/attitude.htm>.
10. Hu Maneuvering to Prevent Jiangs Comeback, Taipei Times, October 4, 2004, <http://
www.taipeitimes.com/News/editorials/archives/2004/10/04/ 2003205528>, accessed October 1, 2008.
See also Edward Friedman, Chinas Changing Taiwan Policy, American Journal of Chinese Studies
14:2 (October 2007), pp. 11934.
11. The term new thinking draws from comments of Chinese scholars and commentators we
have interviewed at various occasions. See also Eric Teo Chu Cheow, President Hus Visit to the
U.S.: The Taiwan Stake (Japanese Institute of Global Communications, 2006), <http://www.glocom.org/debates/20060421_cheow_president/index.html>, accessed October 1, 2008. For other
5/4/10 9:43 AM

call Hus Taiwan policy a two-handed strategy (liangshou celue),12 generally

described by the expression keep the firm hand sufficiently firm, and the
soft hand sufficiently soft.13
It is quite clear that the firm hand aspects of this policy (e.g., the 2005
Anti-Secession Law) are defensive: they only aim at stabilizing the current
situation. Greater challenges for Taiwan are posed by the soft hand aspects
of Chinas current Taiwan policy. Compared to the Jiang administration,
President Hu Jintao and his team are more sophisticated and discriminating
in applying such policies and have thereby evaded drawing a tough response
from Taiwan.
Hus new strategy emerged from the limits of Jiang Zemins Taiwan policy,
which can be divided into two periods. These were set apart by the special
state-to-state dispute (liangguolun shijian) triggered by former Taiwan President Lee Teng-hui in mid-1999. In the earlier period, Jiangs policy could be
characterized by harsh verbal attacks and military threats (wengong wuhe),
while in the later period, more emphasis was placed on great-power relations (daguo guanxi). These in effect applied indirect pressure by pushing
the U.S. to restrain Taiwan.14 In assessing the utility of this approach, its
defects were not hard to spot: although China could effectively deter Taiwan
from pursuing independence, Beijing came no closer to its ultimate goal of
unification. Instead, its military-backed pressure increased the divide across
the Taiwan Strait, especially with a ruling Democratic Peoples Party (DPP)
administration in Taipei that legitimized its drive for independence by pointing to the dangerous exposure of Taiwans people to a deeply hostile China.
comments on Hu Jingtaos talks on cross-strait relations, see <http://news.xinhuanet.com/taiwan/
2005-03/06/content_2656026.htm>, accessed October 1, 2008; also <http://www.zhongguotongcuhui.org.cn/06tybbs/next050512.htm>, accessed October 1, 2008. Other China watchers also
follow this terminology, see e.g., Weifeng Guo and Jianmin Zhou, eds., Hu Jintao yu liangan guanxi
xinsiwei [Hu Jintao and the new thinking on cross-strait relations] (Hong Kong: Zhongguo Pinglun
[China Review], 2005); Chong-Pin Lin, More Carrot Than Stick: Beijings Emerging Taiwan
Policy, China Security 4:1 (Winter 2008).
12. See, e.g., Dont Be Deceived by Hus Tactics, Taipei Times, November 27, 2006, <http://
www.taipeitimes.com/News/editorials/archives/2006/11/27/2003338138>, accessed October 1, 2008.
13. See, e.g., Chong-Pin Lin, Chinas New Taiwan Policy in Hus Era, Zhongguo Shibao [China
Times], March 1, 2005, <http://news.chinatimes.com/Chinatimes/newslist/newslist-content/
0,3546,110514+112005030800328,00.html>, accessed October 1, 2008. However, the author qualified
his stance later in Chong-Pin Lin, More Carrot Than Stick, pp. 127.
14. Shu Keng, Jingmao jiaoliu de zhengzhi yingxiang [Political consequences of cross-strait
economic transactions], Zhongguo Dalu Yanjiu Jiaoxue Tongxun [Newsletter on Research and Teaching in China Study] 71 (November 2005), pp. 24.
5/4/10 9:43 AM

figure 1. Public Opinion Survey DataSupport for Unification and Chinese

Identity (19942007)
90.0
80.0
70.0
59.5
60.0
50.0
65.3
55.3
69.8 68.4
60.8
61.8
73.9
72.6
58.9
78.0
77.3
75.7
77.2
77.5
77.8
75.2 76.9
57.3
Hus Era
Jiangs Years
30.0
10.0
64.7 66.5 66.5
51.7
40.0
20.0
68.7
65.6 67.4
26.2
24.9
20.5
15.8
19.2
16.4
16.3
13.5
9.1 10.9
10.7 13.1
9.6
10.3
9.9
7.7 6.3 6.1 7.2 7.3 6.2 6.4 5.5 6.5
8.5
94
.1
95 2
.0
95 6
.1
96 2
.0
96 6
.1
97 2
.0
98 6
.0
98 6
.1
99 2
.0
99 6
.1
00 2
.0
00 6
.1
01 2
.0
01 6
.1
02 2
.0
02 6
.1
03 2
.0
03 6
.1
04 2
.0
04 6
.1
05 2
.0
05 6
.1
06 2
.0
06 6
.1
07 2
.0
07 6
.1
2
0.0
21.4
Quit Unification
Self-acclaimed Chinese
source: Data Archives, Election Study Center, National Chengchi University.
Figure 1 shows two key trends in Taiwanese public opinion during the
Jiang Zemin years (approximately 19952004): the percentage of Taiwanese
who were unwilling to unify with the mainland (i.e., those who did not approve of immediate reunification or of maintaining the status quo while
gradually moving toward reunification in the future) steadily increased. In
contrast, the percentage of those on the island identifying themselves solely
as Chinese exhibited an equally tenacious downward trend. Obviously,
under Jiangs leadership cross-strait relations showed aggravating political
separatism, calling into question his strategy of applying military-backed
political pressure on Taiwan.
At the same time, however, Taiwans factual trade dependence on China
steadily increased (see Figure 2), as did its mainland investments. Therefore,
a modified approach to relations emerged as a logical accompaniment to
these developments. Although the Hu Jintao era has left its mark by the
promulgation of the Anti-Secession Law, this was and is certainly not the cornerstone of Hus Taiwan policy.15 For the current PRC government, the
15. According to information given to us by mainland scholars, the Anti-Secession Law goes
back to estimates from relevant mainland government organizations that the DPP would capture a
majority in Taiwans 2004 year-end legislative elections, and was hastily drafted in an environment
of considerable concern about Taiwanese moves toward independence. Although the DPP eventually did not win a majority in the Legislature, the basic conception of the law had already been
developed and considerable intra-party support was generated for its promulgation. From the
5/4/10 9:43 AM

figure 2. Support for Unification and Economic Interdependence (19952007)

90
80
70
60
50
40
30
20
10
0
61.8
58.9
55.3
15.63
15.91
65.3
15.82
69.8
67.4
64.7
72.6
77.2
77.5
78
76.9
66.5
Jiangs Era
20.73
22.71
Hus Era
27.25
14.62
Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1995
Quit Unification
Trade Dependence (on China)
source: Ibid. to Figure 1.
Anti-Secession Law is only part of a broader Taiwan policy framework, the

last resort if all other means to keep Taiwan within the limits of the oneChina principle have been exhausted.
More important than the Anti-Secession Law in Hu Jintaos approach are
the soft initiatives to push forward cross-strait economic cooperation and
integration. Research on this issue reveals that Taiwanese attitudes toward
the mainland are influenced by two main factors (see Figure 3). The first
represents a combination of two perspectives: the relationship between ones
felt identity and ones position on the unification versus independence
issue. The second factor is economic interest. 16 Both factors seem to be
highly interrelated: Anyone sticking to a pro-independence position tends to
Chinese governments viewpoint, the law would serve to stabilize the current situation (by explicitly
warning Taiwan and the United States not to rattle the cross-strait status quo), satisfy domestic
constituencies (especially hawks in the military), and directly address Taiwans domestic public
opinion and convince it not to support the DPPs dangerous policies. See Laurence Eyton, AntiSecession Law May Backfire in Taiwan, Asia Times, December 25, 2004, <http://www.atimes.com/
atimes/China /FL25Ad02.html>, accessed October 1, 2008.
16. See Yu-Shan Wu, Taiwanese Elections and Cross-Strait Relations, Asian Survey 39:4 (July/
August 1999), pp. 56587; Nai-Teh Wu, Mianbao yu Aiqing: Chutan Taiwan Minzhong Minzu
Rentong de Biandong [Love or bread: A preliminary study of the identity change in Taiwan], Taiwan
Zhengzhi Xuekan [Taiwanese Political Science Review] 9:2 (2005), pp. 539; Shu Keng, Lu-huei Chen,
and Kuan-bo Huang, Sense, Sensitivity, and Sophistication in Shaping the Future of Cross-Strait
Relations, Issues and Studies 42:4 (2006), pp. 2366; Shu Keng, Jiawei Liu, and Luhuei Chen, Dapo
Weichi Xianzhuang de Misi: Taiwan Minzhong Tongdu Jueze zhong Linian yu Wushi de Liangnan
[Between principle and pragmatism: The unification-independence choice of the Taiwanese people
and its reasons], Taiwan Zhengzhi Xuekan [Taiwanese Political Science Review], forthcoming.
5/4/10 9:44 AM

figure 3. The Dualism of Taiwanese Public Opinion on Cross-strait Relations

Economic advantages
Interest Axis
Pro-independence
Pro-unification
Identity Axis
Economic disadvantages
source: Adapted from Figure 1 in Yu-Shan Wu, Taiwanese Elections and Cross-Strait Relations,
Asian Survey 39:4 (July-August 1999), p. 581.
highlight the disadvantages of economic interaction with China.17 At the

same time, those who consider themselves to be losing in economic interaction with China tend to hold a pro-independence stance.18 However, those
who support unification are inclined to see advantages in cross-strait economic cooperation; those who gain economically from it support more
cross-strait integration and, arguably, unification.
This seems to give China some influence on Taiwanese identity: If the
Chinese government offers economic incentives that benefit the Taiwanese,
more people would arguably move toward pro-unification attitudes. Obviously, Taiwanese identity has gradually strengthened over the years: the
portion of those islanders considering themselves to be Taiwanese (43.7%)
or both Chinese and Taiwanese (44.5%) reached a combined total of 88%
by the end of 2007. Such a development, according to the logic inherent in
17. Keng, Chen, and Huang, Sense, Sensitivity, and Sophistication, pp. 4853.
18. Shu Keng and Lu-huei Chen, Liangan Jingmao Hudong yu Taiwan Zhengzhi Bantu
[Cross-strait economic interaction and Taiwans political landscape], Wenti yu Yanjiu [Issues and
Studies] 42:6 (2003), pp. 127.
5/4/10 9:44 AM

Figure 3, suggests that China must offer more to the Taiwanese in economic
terms while strengthening its interest-based appeals.19
As a matter of fact, the key component of Hu Jintaos Taiwan policy
since he took over in 2002 is the provision of real or seemingly real economic benefits to the Taiwanese, thereby attempting to influence public
opinion and, consequently, the Taiwan governments approach to the
mainland.20 Even during the Chen Shui-bian era, Hus Taiwan policy included offers such as loans reserved only for taishang, direct charter flights
across the Taiwan Strait, duty-free agricultural imports from Taiwan to
the mainland, more-favorable terms for Taiwanese investment in China,
relaxation of restrictions on Chinese tourism to Taiwan, more personal
contacts in the realm of youth exchange and academic interaction, and
so forth.
The Cross-Strait Economic and Trade Forum (CSETF) jointly organized
by the KMT and CCP figured as a key component in Hus Taiwan policy
when the DPP was in power. The third CSETF, held in Beijing in April
2007, was attended by some 500 business persons and officials from the
CCP and KMT.21 Representatives from the two sides exchanged views on
topics of common concern, including direct flights, education, and tourism.22 The Chinese government announced a package of 13 new policies to
promote economic, trade, and cultural relations with Taiwan, most of
them becoming effective in 2008.23 Under these new policies, Taiwanese
19. Based on survey data of the National Chengchi Universitys Election Study Center, available
at <http://esc.nccu.edu.tw/newchinese/data/tonduID.htm>.
20. The Beijing-Taipei Fruit Fracas, Asia Times, August 26, 2005, <http://www.atimes.com/
atimes/China/GH26Ad02.html>, accessed October 1, 2008; see also Chong-Pin Lin, More Carrot
Than Stick, pp. 27; Cheng-yi Lin, The Rise of China and Taiwans Response: The Anti-Secession
Law as a Case Study, Issues and Studies 43:1 (March 2007), pp. 15988.
21. In April 2005, Lien Chan, in his capacity as KMT chairman, made a historic visit to the
mainland and met with Hu Jintao, CCP general secretary, in Beijing. It marked the first executivelevel talks between the CCP and KMT in 60 years. The two leaders met again in 2006, during the
first cross-strait forum held in Beijing, and in April 2007. On April 1112, 2008, Vincent Siew
(Hsiao Wan-chang), the then vice-president-elect, met Hu Jintao during the Boao Economic Forum
held on Hainan Island in what was heralded as the beginning of a new era of cross-strait talks by the
international media. See, e.g., Chinese President Hints at Improved Ties with Taiwan, International Herald Tribune, April 13, 2008.
22. See Hu, Lien Meet during 3rd Cross-Straits Forum, available at <http://www.china.org.
cn/english/GS-e/209453.htm>, accessed October 1, 2008.
23. Mainland Announces New Policy Package to Promote Cross-Straits Ties, available at
<http://www.china.org.cn/english/China/209707.htm>, accessed October 1, 2008.
5/4/10 9:44 AM

shipping and road transport companies would be permitted to set up

wholly owned companies or joint ventures on the mainland. Additional
points included encouraging direct investment by Taiwanese enterprises in
the construction and operation of ports and road projects on the mainland. Taiwanese students would be welcomed to study in civil aviation
schools, and aircraft maintenance technicians would be invited to work on
the mainland. Moreover, Taiwan's universities could recruit students from
the mainland, and Chinas Ministry of Education would provide assistance
to students willing to study in Taiwan. All of this remained largely rhetorical
because the opposition KMT had to seek acknowledgement by the ruling
DPP, which was more than unlikely at the time. However, it became clear
that the basic principles of Hu Jintaos Taiwan policy were designed to intensify cross-strait economic integration, orin the DPPs interpretation
to increase Taiwans economic dependency on the mainland. It can be safely
assumed that this policy rationale has been reinforced after the KMT victory
in May 2008.
In other words, Hus Taiwan policy combines two key elements: on the
one hand, reducing military threats and refraining from offensive diplomacy
to minimize Taiwanese resentment; on the other, strengthening economic
interdependence to bolster Chinas political leverage. Taiwanese business
people are a primary target of Hus policy. The Chinese government is well
aware that in Taiwan proper, the taishang are suspected of falling prey to the
PRCs strategy to use people to pressure officials, and use business to constrain the government (yimin biguan, yishang weizheng)a phrase that
gained prominence in Taiwan under Chen Shui-bian. The expression referred to the Chinese governments alleged attempts, both through trade and
investment incentives and via political pressure, to use the taishang as agents
of its unification project.24 But to what extent do we have empirical evidence
of such a strategy, and could it work? What other roles may Taiwans business
people assume in order to abet specific political agendas in the cross-strait
theater, and how realistic are these roles?
24. See also Tse-kang Leng, State, Business, an Economic Interaction across the Taiwan Strait,
Issues and Studies 1:11 (November 1995), pp. 4058; Paul J. Bolt, Economic Ties across the Taiwan
Strait: Buying Time for Compromise, ibid., 37:2 (March-April 2001), pp. 80105; Chen-yuan Tung,
Cross-Strait Economic Relations: Chinas Leverage and Taiwans Vulnerability, ibid., 39:3 (September 2003), pp. 13775; Tanner, Chinese Economic Coercion against Taiwan, pp. 3371.
5/4/10 9:44 AM

table 1. A Typology of the Taishangs Political Roles

Chinas leverage
over Taiwan
Passive Role
Taishang as Chinas hostages
Taiwans leverage
over China
Active Role
Taishang as Chinas agents
Taishang as Autonomous Actor

Taishang as Taiwans buffer
Taishang as Taiwans lobbyists
source: By the authors.
A T ypology O f Ta i s h a n g P olitical R oles
In order to discuss the taishangs potential significance for cross-strait relations, we propose a typology that differentiates conceptually among four
different political roles that Taiwanese business people may assumeactively
or passivelydepending on their location or operating base, the Chinese
mainland or Taiwan (see Table 1).25 In two cases it is supposed that these
roles are conducive to Chinas influence over Taiwan, while in the other two
cases they would benefit the Taiwan government:
1. Taishang as Chinas hostages. If China threatens to cut off cross-strait
economic ties, putting taishang business interests and assets in jeopardy
and holding them as economic hostages, they may be used to force the
Taiwan government into line.
2. Taishang as Chinas agents. In order to counter Chinas pressure and to
secure their own economic interests, the taishang actively support and
promote Chinas Taiwan policy, thus acting as Beijings agents.
3. Taishang as Taiwans buffer. If the taishang are recognized by Beijing to be
indispensable for the growth of Chinas export economy, they may become
a political buffer for Taiwan, thus helping the Taiwan government.
4. Taishang as Taiwans lobbyists. If the taishang can effectively use their
own institutional channelsmost notably the Taiwanese Business Associations (TBAs) to influence the Chinese government, they may become
lobbyists for Taiwan.
25. See also Shu Keng and Congsheng Lin, Tucheng Muma? Taishang Shequn de Zhengzhi
Yingxiang Fenxi [Trojan horse? Analysis of the political influences of the Taiwanese business community] in Jingjiquanqiuhua yu Taishang Dalu Touzi [Economic globalization and taishang investment in China], ed. Teh-Sheng Chen (Taipei: Jingdian, 2005), pp. 11148.
5/4/10 9:44 AM

In the remainder of this article, we will briefly discuss the scope and limits
of each of these roles and their potential impact on the dynamics of crossstrait relations.
1. Taishang as Chinas Hostages: Unfeasible Intimidation
Both the media and China scholars have repeatedly speculated in the past
on the Chinese governments inclination to exert pressure on its Taiwanese
counterpart. One means is to cut off the taishangs economic ties with their
Taiwan bases or suppliers (in both Taiwan and the mainland), thereby deterring Taipei from declaring independence and bringing its officials back
to the negotiating table. Threats based on the application of economic sanctions are real and credible, for the following three reasons. First, the economic linkages between China and Taiwan are asymmetrical: Taiwan is far
more dependent on China than vice versa.26 Second, China has a much
larger economy: its domestic market can easily absorb sudden impacts resulting from economic sanctions. Finally, China is still under authoritarian
rule: domestic resistance caused by economic sanctions, whether political or
social in nature, can be easily handled or suppressed. Seen from this perspective, Taiwan is not only more vulnerable to China than vice versa, but
China has incentives to imposeor threaten to imposeeconomic sanctions against Taiwan.
Closer analysis, however, shows that a strategy of large-scale, state-to-state
economic sanctions against Taiwan via the taishang would be difficult for the
Chinese government to implement, if not practically impossible. Such sanctions would require a high degree of coordination, which is hard to achieve
in the multi-layered Chinese bureaucratic system. Therefore, rather than a
tactical weapon, sanctions should be regarded as a means of last resort, only
to be implemented after a serious deterioration of cross-strait relations.27
26. In 2007, Taiwans direct exports to China and those going to China by way of Hong Kong
accounted for more than 40% of its total exports, while only 10.7% of Chinas imports originated
from Taiwan, <http://big5.china.com.cn/overseas/txt/200612/08/content_7478273.htm> and
<http://www.takungpao.com/news/07/03/29/ZM-713417.htm>.
27. Note that during the most serious crises in the Taiwan Strait in recent yearsnamely in
1995/96 and 1999/2000it was striking how quickly Chinas leaders at the central and provincial
levels stepped in to assure the Taiwanese business community that its mainland investments were
safe. At no time was there any public talk about economic sanctions.
5/4/10 9:44 AM

Even then, it would be very difficult for China to draw the line and start
imposing economic sanctionsi.e., to determine exactly when these sanctions must be applied to deter Taiwan from declaring independence and
promulgating a Taiwanese republic. As a result, Taiwan would have leeway
to pursue a strategy of salami slicing to challenge Chinas bottom line with
a series of minor actions. However, comprehensive economic sanctions are
still very unlikely in the case of a serious cross-strait crisis because that crisis
could be handled more effectively by quick military action. In the case of a
military escalation, Taiwan would probably appeal to the U.S. to lend its
military support to deter China from taking the island. If this support was
given, the bargaining value of economic sanctions would be zero. In sum,
large-scale economic sanctions by China are too devastating for trivial disputes but too feeble under conditions of urgency. For the government in
Taipei, they evoke the impression of a toothless tiger.
At the same time, broad economic sanctions might also be too costly for
China. Cutting trade and investment ties would greatly harm Taiwanese
businesses on the mainland, as well as Taiwanese holdings in mainland and
foreign enterprises. Moreover, the taishang would be left with little confidence that they could recover their investment in the short run; they would
probably curtail or even end their financial operations in China.28 Investors
from other parts of the world might follow suit. This would be detrimental
for the mainland economy becauseaccording to PRC official statistics
some 60% of Chinas gross domestic product (GDP) stems from its international trade. Of Chinas core industrial exports in the information technology (IT) sector, an estimated 70% are produced by foreign-invested
enterprises, 70% of which are Taiwanese.29
In 2003, six of Chinas 20 largest foreign currency-generating export companies were Taiwanese-invested.30 Taiwan is already the second-largest investor
28. Such a scenario is well presented in Addison Craig, Silicon Shield: Taiwans Protection against
Chinese Attack (Irving, Texas: Fusion Press, 2001). We were also told by many of our taishang respondents that leaving the mainland was not so difficult and unimaginable as an option as generally
assumed by experts.
29. This estimate was provided by Prof. Oded Shenkar of Pennsylvania State University in 2005.
See <http://news.pconline.com.cn/hy/0512/734484.html>; and the figures reported in <http://tech.
sina.com.cn/it/20051224/1029801639.shtml>, both accessed October 1, 2008.
30. <http://www.seftb.org/mhypage.exe?HYPAGE=/toprint/03/03_content_01.asp&
weekid=64&idx=8>, accessed October 1, 2008.
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in China after Hong Kong, accounting for roughly 5.2% of Chinas cumulative US$960 billion foreign direct investment (FDI) in 2009.31
Moreover, some 35% of all reported investments on the mainland are in
IT. An ever-increasing portion of Taiwans high-tech production and research
and development (R&D) is being relocated to China. Taiwanese companies
contribute significantly to the training of Chinas engineering elite and hightech designers. Furthermore, Taiwanese venture capitalists play a key role in
pushing Chinas technological development as they make permanent upgrades to its industrial structure.32
Thus, if economic restrictions are put into place against Taiwan, the consequences for Chinas overall development would be rather severe. Moreover,
the central government could face substantial resistance from those provinces
(e.g., Guangdong, Jiangsu, Fujian, and Shanghai) where Taiwanese investment has made a considerable contribution to local economic miracles and
cadre careers. Although this resistance would ultimately be futile if a serious
cross-strait crisis erupted and the central government moved decisively,
its possibility complicates the use of large-scale economic and trade
restrictions.
As a tactical means, China may alternatively take (or threaten) action
against individual Taiwanese business people or companies, i.e., targeting the
taishang with selective sanctions.33 Such measures could be applied either to
guard against inopportune political statements or actions by the taishang,
or to induce them to pressure their government back in Taiwan to ease
31. See the latest statistics released by Chinas Ministry of Commerce, <http://tga.mofcom.gov.
cn/aarticle/d/201003/20100306826049.html>, accessed March 19, 2010.
32. See Douglas B. Fuller, The Cross-Strait Economic Relationships Impact on Development
in Taiwan and China, Asian Survey 48:2 (March-April 2008), pp. 23964. For a similar argument,
see Tun-jen Cheng, Doing Business with China: Taiwans Three Main Concerns, in Cross-Strait
Economic Ties: Agent of Change, or a Trojan Horse? pp. 1218.
33. One common measure, for instance, is to order the custom authorities to check on taishangs
import-export activities or to call the tax authorities suggesting that they have a closer look at a
Taiwanese companys tax record. The most prominent example case for such practice so far is proDPP businessman Xu Wenlong, who is the owner of Chimei Group, one of the worlds largest
manufactures of liquid crystal display (LCD) monitors. He was forced to publicly denounce Taiwan
independence in 2005 and later resigned from his position as chief executive of the company. The
case is cited and carefully interpreted in Tse-Kang Leng, State and Business in the Era of Globalization: The Case of Cross-Strait Linkages in the Computer Industry, China Journal, no. 53 (January
2005), pp. 6379.
5/4/10 9:44 AM

cross-strait interaction and allow speedy integration.34 Threatening selected

taishang with sanctions would severely limit their operative leeway on the
mainland and might induce them to push their compatriots and their government to change attitudes and policies. Such agency could be quite powerful in
the case of large Taiwanese companies or conglomerates doing business in
China. Alternatively, China may attempt to attain the same goal by providing
individual taishang with selective incentives and special treatment. For example,
the Chinese government has full control over a couple of attractive goodies,
say tax cuts or export licenses, all of those can be granted discriminately to
foreign investors. As economic animals, the taishang abide by the profit-first
principle and thus may likely be bribed into pro-Chinese action.
Our research, however, shows that these options remain hypothetical.
Most taishang neither believe in their efficacy nor have they been systematic
targets of such measures, for several reasons. Generally speaking, Chinese
officials ability to strongarm support from Taiwanese business people by
such means is directly related to the governments overall capacity to intervene in the mainland economy. In recent years, as this economy has increasingly become marketized and globalized, the central states leverage to reward
or punish individual economic actors for their political beliefs has dwindled.
In addition, after Chinas 2001 accession to the World Trade Organization
(WTO), a more transparent business environment has been coalescing on
the mainland. Any intervention stemming from political motives can hardly
be hidden from international attention; such action would seriously undermine the Chinese claim that they are building up a market economy fueled
purely by economic motives. Any selective treatment of the taishang, be it
sanctions or incentives, would be seen as evidence of Chinese arbitrariness
vis--vis economic actors in general, even if the government searched high
and low for explanations to show that Taiwan is different.
Moreover, any such policy is further complicated by the divergence of
interests between the central and sub-national governments. In practice, a
program of selective rewards or punishments would be delegated to local
governments, but officials in the localities follow their own policy rationale.
To the extent that the central government aids in attracting new foreign
34. For an early argument of this kind, see Teh-sheng Chen, ed., Liangan Zhengjing Hudong:
Zhengce Jiedu yu Yunzuo Fenxi [Political and economic interaction across the Taiwan Strait: Interpreting policies and analyzing operations] (Taipei: Yongye, 1994).
5/4/10 9:44 AM

investment through its incentive policies, local governments will certainly

endorse and follow directives coming down from the center. However, even
the implementation of a strategy of selective rewards must be communicated
to and negotiated with local governments, a time-consuming process in
which full-scale support is not guaranteed. This is all the more true if the
central government intends to punish certain Taiwanese businesses. Local
governments will carefully consider the degree to which Taiwanese investment has penetrated their local economies before they implement any directive from above. If the interests of the central government and the localities
diverge, with the center insisting on sanctions, local governments may pursue a strategy of public accord and private dissension, where they appear to
fall in line with central directives to clamp down, while in fact reassuring
Taiwanese enterprises that they are safe.35
From a Taiwanese perspective, the taishang would certainly have a hard
time if they were singled out for both punishment and privilege. Punishment
is clearly hard enough, but privilege can be the proverbial wolf in sheeps
clothing, as those taishang who speak up for more pro-integration policies
are usually the first to be blamed back home for political opportunism and
selling out Taiwan. Since many of them still have businesses on the island,
they cannot ignore such criticism. Their leeway to act on behalf of the
Chinese governmentor their own economic interestsis hence very small.
Their actions are scrutinized by an attentive Taiwanese public and, as was the
case during the recent eight years of DPP rule, a cautious Taiwanese government. Even if this situation stems from gradual change after the latest presidential elections and the advent of a KMT administration, most taishang
prefer not to reveal their political viewpoints because they are closely monitored by the governments on both sides.
In China, Taiwanese business people usually take an opportunistic attitude toward the mainland authorities and do their best to avoid making any
public political statements on cross-strait relations. They would hardly want
to be identified as Chinas agents, even if many of them do support further
integration and would not, at least rhetorically, rule out unification. The best
35. This was indicated by most local cadres we interviewed in the Pearl River Delta and the
greater Shanghai region. See also John Q. Tian, Government, Business, and the Politics of Interdepen
dence and Conflict across the Taiwan Strait (New York: Palgrave Macmillan, 2006), pp. 12250. The
interest coalition between the taishang and Chinas local governments, and the growing leeway of
Taiwanese business people vis--vis the local cadre bureaucracy, is highlighted by the work of Chun-yi
Lee, When Private Capital Becomes a Security Asset: Challenging Conventional Government/
Business Interaction, East Asia 25 (June 2008), pp. 14565.
5/4/10 9:44 AM

that the Chinese government can thus achieve by implementing a selective

strategy is to keep pro-DPP taishang at bay and create a climate of no politics, all business on the mainland. However, this does very little to help Beijings agenda in Taiwan proper.
To sum up, the taishang can hardly be taken as hostages by the Chinese
government. Large-scale economic sanctions could only be applied as a
measure of last resort in a severe crisis in the Taiwan Strait. A strategy of selective punishments or rewards, for its part, would need to overcome several
tricky obstacles: the danger of eroding international and Taiwanese confidence
in Chinas ability to run a market economy; coordination with sub-national
governments and cadre bureaucracies; ineffectual political organization of
the taishang in Taiwan proper (see below); a Taiwan public widely skeptical
about taishang loyalty to Taiwan; and finally, a voluntary reticence on the
part of most mainland taishang, who wish to be left in peace to earn money
and who thus refrain from any engagement in politics.36
2. Taishang as Chinas Agents: Ineffective Courtship
Alternatively, Taiwanese business people are often thought of as Chinas

agents who, feeling vulnerable to Beijings pressure and eager to sustain their
economic environment, opt for a proactive role vis--vis their own government in Taiwan to bring about more pro-Chinese policies. However, these
taishang are impeded by their lack of strong interest representation. The
reasons for this situation, notwithstanding the fact of existing TBAs in both
Taiwan and China, are threefold. First, Taiwans mainland taishang have
different enterprise backgrounds and economic interests and are dispersed
throughout a huge territory.37 It is thus not easy for them to identify common interests and construct a shared identity, let alone to act in a concerted
manner. Second, in the absence of proper official communication channels
and strong organizations to lobby for their interests in Taiwan proper, most
taishang can only resort to informal settings with politicians or official advisers to voice their concerns. Contrary to the common opinion that such
36. This estimation is supported by most scholars in the field. Besides those sources already
cited, see, e.g., Tze-kang Leng, Dynamics of Taiwan-Mainland China Economic Relations: The
Role of Private Firms, Asian Survey 38:5 (May 1998), pp. 494509; Karen M. Sutter, Business
Dynamics across the Taiwan Strait: The Implications for Cross-Strait Relations, ibid., 42:3 (MayJune 2002), pp. 52240; Chen-yuan Tung, Cross-Strait Economic Relations, pp. 16471.
37. Shu Keng and Lu-huei Chen, Liangan Jingmao Hudong yu Taiwan Zhengzhi Bantu,
pp. 1419.
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informal politics is an asset in the context of Chinese guanxi (useful connections), it has become clear over the years that the lack of more formal structures impedes the taishang from acting as a coherent interest group. At the
same time, efficient advocacy of their policies vis--vis the Taiwan government becomes harder. This is especially true for the majority of Taiwanese
business people from small- and medium-sized enterprises that predominate
on the Chinese market.
In the absence of strong independent business associations in Taiwan that
could influence domestic political discourse, 38 the taishangs only other
means to affect politics is through the ballot box.39 However, the number
who actually return to Taiwan to vote is not large. Let us assume for a moment that the entire calculated increase in passengers to Taiwan in the 10
days before the March 2004 presidential election reflects taishang returning
to vote. The total was still less than 30,000. 40 Because there is no way to
monitor the actual voting behavior of this group, and given an estimated
20%30% difference among the taishang in favor of pan-blue over pan-green
positions, the tilt toward the pro-China camp amounts to 6,000 to 8,000
votes at most. Only in an exceptionally competitive election would this
group have a decisive impact at the polls.41
3. Taishang as Taiwans Buffer: Effective Stabilizer
As has been pointed out, the economic significance of the taishang for the
mainland economy is beyond argument. In the long run, this can perhaps
translate into real political leverage vis--vis the mainland authorities. This is
38. We were astonished how little thought our interviewees had given to the formation of new
business associations in Taiwan to lobby for their interestsor to pushing the existing organizations
there to take more account of their specific situation.
39. Shu Keng and Rui-hwa Lin, Zhidu Huanjing yu Xiehui Xiaoneng: Dalu Taishang de
Gean Yanjiu [Institutional environment and organizational effectiveness: A case study of Taiwanese
business associations in China], Taiwan Zhengzhi Xuekan [Taiwanese Political Science Review], no.
11 (December 2007), pp. 93171.
40. According to our estimates, this increase was no more than 30% over the normal levels of
all cross-strait travelling in that year.
41. See Voters across the Strait Belt out the Blues, Taipei Times, February 24, 2004, <http://
www.taipeitimes.com/News/taiwan/archives/2004/02/24/2003099929>, accessed October 1, 2008.
The same approach was applied to give an estimate of the taishang vote in the latest presidential
election of March 2008, finding that no more than 70,000 votes were cast by returned taishang;
see <http://news.chinatimes.com/2007Cti/2007Cti-Focus/2007Cti-Focus-Content/0,4518,
9703120071+0+0+102551+0,00.html?source=rss>, accessed October 1, 2008.
5/4/10 9:44 AM

certainly true with respect to most sub-national governments that depend on

taishang investments for local development, with economic success being
decisive for cadres performance evaluation. Therefore, recent years have seen
the evolution of a partnership, even a symbiotic relationship, between the
taishang and local officials. From Shenzhen to Dongguan, from Kunshan to
Suzhou, Wuxi, and Shanghai, Taiwanese business people form the cornerstone of coastal Chinas economic success. In that sense, they are an important linkage community that could play a significant role in stabilizing crossstrait relations, especially if they are supported politically back home.
As much as the taishang were regarded with mistrust by the former DPP
administration, which considered them as paving the way for unification and
thus more of a nuisance than an asset in shaping cross-strait relations, this
perspective is changing under the new KMT government, in power since
May 2008. On various occasions, President Ma Ying-jeou has indicated his
desire to work closely with the taishang and to do what he can to facilitate
their mainland operations.42 These statements confirm Mas integration
scheme, which aims at strengthening ties and may pursue the eventual establishment of a common market across the Taiwan Strait. Mas latest policy
achievements affirm this claim.43 It seems at this point that proactive economic interaction and cautious integration, pushed by systematic and complementary policy measures, form the new official paradigm framing
Taiwans mainland approach. This will help the taishang gain political leverage vis--vis China as they become less vulnerable to Chinese pressure and
have a fallback position on their home turf. With this buttress, they may be
more ready to actively influence Chinas Taiwan policy. This would not only
help Taiwan stand firm against China but also would likely drive cross-strait
cooperation and understanding.
The basis of the leverage is, of course, first and foremost economic: the
taishangs large-scale investments, the absorption of Chinese surplus labor into
42. See, e.g., Ma Eases Cross-Strait Economic Rules, Taipei Times, July 16, 2008; Ma Vows
to Continue Opening Market, ibid., July 24, 2008.
43. On June 13, 2008, negotiators on both sides of the Taiwan Strait, in their private capacities
as representatives of two unofficial bodies, the Strait Exchange Foundation (SEF) and the Association for Relations across the Taiwan Strait (ARATS), signed two agreements on weekend cross-strait
flights and on allowing more Chinese tourists to enter Taiwan, taking effect on July 4 and July 18,
respectively. More landmark deals were signed during a five-day visit to Taiwan by ARATS Chairman Chen Yunlin on November 4, 2008, expanding direct transport and communication links
between the mainland and Taiwan. See Cross-strait Charter Flight Deal Inked, Taipei Times, June
16, 2008; Resisting Chinas Charm Offensive, The Economist, November 8, 2008.
5/4/10 9:44 AM

their factories, the knowledge transfer involved in many of their high-tech

undertakings, and the increasing globalization of their business activities.
These have enhanced the value of Taiwanese entrepreneurship in modernizing
the mainland economy. Although an exit from China will not be a first option for the taishang, they hold strong cards at the regional and local levels,
where governments long for taishang investment. Certainly, decisions on the
relocation of factories are mainly determined by economic analyses of costs
and profits. With ever-growing competition for Taiwanese capital between
China and some of its neighborsmost notably, Vietnamas well as among
various Chinese regions, provinces, and cities, the taishangs bargaining potential is significant. Moreover, the Chinese government is eager to diversify
Taiwanese investment to areas where development is most needed. At the
same time, the taishangs increasingly close relationships with local authorities
allow the Taiwanese to build well-functioning interest networks that give
them substantial influence in Chinese local politics.44 In the future, taishang
may take over positions within village, township, and even county administrations in China: this is already being discussed on the mainland.45 With
such a strategy, entire areas could be transformed according to taishang preferences, as is already very much the case in Kunshan County near Shanghai.
Indispensable for Chinas further economic development, backed by a cooperative government in Taiwan, well organized and politically courageous
both at home and on the mainlandthere would be much to hope for the
Taiwan government and much at stake for the Communist leadership in Beijing if such a Taiwanese business community were to rise and act strategically. However, at this point the taishang obviously lack any political agenda
to become a force shaping cross-strait relations. This can be most clearly seen
by the way the TBAs operate on the mainland.
4. Taishang as Taiwans Lobbyists: Unrealistic Expectationsfor the Time Being
As we have pointed out, political caution is paramount for all taishang doing
business in China. However, the rise of TBAs in Chinacompleted in some
sense by the establishment of a Beijing-based National Association of
Taiwan Investment Enterprises on the Mainland (Taiqilian) in April 2007
poses several questions. To what extent can and do TBAs exert influence
44. See Lee Chun-yi, When Private Capital Becomes a Security Asset.
45. Information obtained from local government officials in Dongguan and Kunshan.
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on the Chinese government? Do TBAs provide a channel for the Taiwan

government to influence Chinas cross-strait policy? Could the TBAs even
assume the role of autonomous actors, bridging both sides and contributing
to political dialogue and peace?46
Most of the available yet scant empirical research, including our own,
points at very low degrees of TBA organizational autonomy.47 As a matter of
fact, TBAs are deeply penetrated by local Chinese governments. The local
Taiwan Affairs bureaus (taiban) usually provide them with office space and
administrative personnel. Taiban staff occupy the position of secretarygeneral or vice chairman of TBA; give special treatment to the TBAs president
and other leading figures; and generally speaking, maintain very close relations with the taishang community so that taiban are the first to be informed
if any problem comes up. Through this symbiosis, the TBAs usually define
themselves as transmitters of Taiwans current mainland policy, in order to
avoid any misunderstanding that could jeopardize the taishangs operations.
In that sense, the associations do to some extent help ease potential tensions
in the Taiwan Strait. Yet, on the whole, the TBAs keep a low public profile,
restrict themselves to providing a service platform for their members, and,
most importantly, focus on perpetuating smooth relations between the taishang
and the mainland authorities.48
It has been hypothesized above that after the accession of a new KMT
administration, the mainland TBAs may become more active and aware
of their potential role in the future, in a nod of agreement between the
46. Since 1990, when the first TBA was founded in Beijing, some 100 TBAs have been established at different administrative levels nationwide up to now. With some 20,000 members, these
associations cover roughly one-third of Taiwanese enterprises on the Chinese mainland. See <http://
english.cri.cn/2946/2006/11/15/176@163314.htm>, accessed October 1, 2008.
47. Rui-hwa Lin, Ba Wangluo Daihuilai: Taishang Canyu Taizi Qiye Xiehui zhi Dongli Fenxi
[Bringing the networks back in: Analyzing the motivations of joining Taiwanese business associations] (Masters Thesis, Graduate Institute of East Asian Studies, National Chengchi University,
Taipei, 2004); see also Keng and Lin, Zhidu huanjing yu xiehui xiaoneng. For a more optimistic
stance, see David C. Schak, The Taiwanese Business Association in the Peoples Republic of China,
in Civil Society in Asia, eds. David C. Schak and Wayne Hudson (Burlington, Vt.: Ashgate, 2002),
pp. 14059; and Lee Chun-yi, When Private Capital Becomes a Security Asset: The Changing Pattern and Evolution of the Relationship between Taiwanese Business and Chinese Local Government: Case Studies of the Cities of Tianjin, Kunshan, and Dongguan, American Journal of Chinese
Studies 13:2 (October 2006), pp. 14966.
48. Consequently, TBAs have been rather hesitant in inviting the Taiwanese government to
participate in their activities. At the same time, they received little attention in Taiwan during the
last years as trade relations between Taiwan and China were looked upon with much suspicion by
the DPP government.
5/4/10 9:44 AM

governments on both sides and the taishang. However, this would not give
the associations more organizational autonomy: to begin with, such autonomy is non-existent in present-day China. Many of our interviewees whose
companies were TBA members were unenthusiastic about their respective
TBAs ability to influence official policies. Still, TBAs were considered important in resolving specific problems of Taiwanese business people and in
erecting and maintaining informal networks of communication and mutual
assistance. TBAs are certainly significant to small and medium enterprises,
especially in labor intensive industries, which struggle to resolve problems
posed by customs authorities and an ever-changing legal environment.
Nonetheless, the same TBAs are rather irrelevant to large Taiwanese companies with their own access to powerful political decision-makers in their
locality, or to those enterprises in the service sector with solid economic positions that usually do not need a TBA at all.
Given these structural constraints on the taishangs maneuvering space,
they can hardly be conceived of as a mainland based lobby for Taiwan.
TBAs are much better grasped as part of a special manifestation of Chinese
corporatisma fact that reflects both the nature of the Chinese political
system and the present caution of the taishang not to stir things up.49 Nevertheless, the possibility of stronger, more politically aware TBAs in the future
may be sustained as Chinas political system opens up and more leeway is
granted to interest groups. At the same time, the recent amelioration of
Sino-Taiwanese relations might encourage TBAs on the mainland to speak
up more often and perhaps to secure more space for eye-to-eye negotiations
with the Chinese government. In the end, TBAs are not comparable to domestic Chinese interest groups, which are closely monitored by a state that
wants first and foremost to use them for better policy implementation. The
TBAs represent a huge group of business people China needs, and they may
soon enjoy close relations with a KMT government back in Taiwan that
China wants to lure into its orbit by a spirit of cooperation, mutual advantage, and trust. Therefore, they may become important political tools for
Beijings Taiwan policy in the future and lobbying them may pay off. This
also explains why more recently, they have been offered special services and
some privileges, though largely under the table, by Taiwan Affairs Offices at
49. As we learned from our interviews with representatives of the national TBA, it sees its
foremost task in working hand in hand with the Chinese government. There was no clue in all
statements that this organization would attempt to become an interest group for the taishang.
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every level of government. If the taishang gain more organizational autonomy in the future, they may become as much a Taiwan lobby as Chinas
agents, though they would have the power to balance these roles to the benefit of their own interests.
CONCLUSION
In this article, we try to clarify the various political roles that Taiwanese business people may assume in cross-strait relations. Given Hu Jintaos current
policy targeting Taiwanese peoples economic interests and promising them
a rosy future if economic integration is accelerated, we look at how the tai
shang may shape this process, both as subjects and objects of the governments
in Beijing and Taipei. It was argued that even if China tried to exert political
influence or pressure on Taiwan by making use of the taishang, such a strategy would not work. Neither are the taishang able to act autonomously, or
even as lobbyists for Taiwan, at least at this point. At best, they play the role
of a partner of Chinas local governments that may or may not have a positive impact on the cross-strait relationship.
For the KMT administration, the taishang have become an important
component in President Ma Ying-jeous new approach of increased interaction and piecemeal integration between China and Taiwan. It is likely that
their systematic inclusion will not only help to ensure peace in the Taiwan
Strait but also will strengthen Taiwans international space and sovereignty.
This is because in a process of economic and social integration actively
driven by political elites on both sides, the issue of sovereignty should become less controversial. If this hypothesis is plausible, future research should
focus more on what has come to be called linkage communities, of which
the taishang and taibao are important examples.50 With the changes underway in Taiwan's political environment, it will be most interesting to see how
these groups shape the future of Taiwanese identity and the dynamics of
cross-strait relations, and how they can contribute to greater dialogue, exchange, and mutual understanding.
The ongoing process of economic and social integration between China
and Taiwan is discussed with many provisos and worries on the island. If
uncontrolled, the DPP camp warned during the last presidential campaign,
50. Shu Keng, Understanding the Political Consequences of People-to-People Relations across
the Taiwan Strait, pp. 6871.
5/4/10 9:44 AM

integration leads to the hollowing out of the Taiwanese economy by massive

capital transfers to the mainland. At the same time, it was said, Chinese capital would squeeze domestic markets, e.g., in real estate and construction, and
bring about high inflation. Chinese labor migrants, pouring into Taiwan like
the tides of a tsunami, could crowd Taiwanese out of their jobs and expose
Taiwans society to social disorder and harm.51 Although the DPP specter of
China swallowing up Taiwan after a KMT victory did not convince most
Taiwanese who voted for a change in government, a pro-integration policy
cannot simply ignore the dangers of integration for the Taiwanese economy.
The liberalization of cross-strait trade and economic exchange must certainly
be gradual, as has been the case in other parts of the world. At the least, the
experience with gradual de facto integration over the past 20 years does not
give much reason for pessimism: neither has Taiwan been hollowed out by
an investment drain nor has its labor market suffered much.52 However, the
major concern of those in Taiwan who warn against speedy integration is not
linked only to economic considerations. It is also, and maybe most of all, the
fear that integration will endanger Taiwans sovereignty and encourage Chinese military adventurism in the strait.
These dangers exist, but integration may have many positive effects in this
regard, too. The more Taiwanese capital is invested in the mainland, the
more it becomes part and parcel of Chinas growing economy. The easier it
becomes for Taiwanese business people to travel both ways, transfer capital
and goods, relocate profits, and meet their clients and partners as often as
they wish, the greater the possibility that integration will evolve into a winwin game. In this case, the issue of sovereignty and unification will probably
be relegated to backstage. The more taishang and taibao are working and living on the mainland and the better they are integrated into Chinas society,
the more they will shape the Chinese peoples perceptions of Taiwan and the
more they can influence Chinese political discourse on Taiwan. In that sense,
over the past 20 years the taishang may already have done more for Taiwans
sovereignty and future living space in the international community than
have previous Taiwanese governments. Against much established wisdom
among political activists in Taiwan, the taishang and taibao may be the best
guarantors for Taiwans survival that one can imagine.
51. Personal observations made during the March 2008 presidential campaign.
52. This has been convincingly argued recently by Douglas B. Fuller, The Cross-Strait
Economic Relationships Impact.
5/4/10 9:44 AM


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SHU KENG AND GUNTER SCHUBERT