United States Relations with China and Taiwan

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[The following statement was presented to the United States and China Economic and Security Review Commission, Washington, D.C., September 15, 2005.]

The overriding objective related to the subject of this hearing has been to advance U.S. national interests in our relations with Taiwan and with the People's Republic of China (P.R.C.)

Six Months of Cross-Strait Activity

Although political dialogue between "unofficial" high-level government representatives of Taipei and Beijing has been frozen since 1999, there have been noteworthy cross-Strait developments over the past year. Trade is lopsided in favor of Taiwan, which has a $51 billion surplus with China. It is in part driven by Taiwan's direct investment in the mainland. China's imports of nearly $65 billion worth of Taiwan goods accounted for 11.5 percent of all Chinese imports in 2004. The mainland is not doing too badly in its efforts to access Taiwan's market, with its exports increasing 170 percent since 2001, from $5 billion to about $13.6 billion. In addition, rapid Taiwan investment in China's service sector is helping provide support for Taiwan manufacturers in the Peoples Republic of China. While realizing the foreign direct investment (FDI) levels fell a bit in 2004 (to $3.1 billion), both sides seem confident that the overall levels will remain positive, especially as Taiwan increases value-added investments in the P.R.C.

Economic integration implies opportunities for more extensive human exchanges. Beijing and Taipei used what they called the Macau model negotiations in Macau between private P.R.C. and Taiwan organizations with low-level government involvement to agree to temporarily lift a ban on direct flights across the Taiwan Strait for the duration of the Lunar New Year in 2005. The Lunar New Year charter flights, which first occurred in 2003 but which were absent in 2004, facilitated the reunion of friends and families on both sides of the Strait. It set the tone for much of what was to follow. The volume of people crossing the Strait is impressive: according to P.R.C. statistics, nearly 3.7 million Taiwan citizens visited the mainland in 2004, and credible estimates indicate that as many as 900,000 Taiwan people out of a total of 23 million actually reside in the P.R.C. Cross-Strait Political Contacts

As Commission members are aware, there have been significant developments in cross-Strait exchanges.

* Following a week of visits to his birthplace of Xian and the burial place of China's great nationalist leader Sun Yat-sen, opposition leader Lien Chan met with P.R.C. leaders in Beijing on 29 April. This was truly an historic meeting, the first since the 1949 split between the leaders of the Communist and Nationalist parties.

* People's First Party Chairman James Soong followed with his own trip to Beijing two weeks after Lien. Soong asserted in a May 11, 2005, speech at Beijing's Qinghua University that independence was not an option for Taiwan's future, a comment that many of Taiwan President Chen Shui-bian's staunchest supporters criticized. Soong met P.R.C. President Hu Jintao and other P.R.C. leaders in Beijing on May 12 and passed the message that Chen Shui-bian was willing to engage in dialogue with Beijing using a flexible formulation about what constituted "one China."

We view these exchanges favorably and have urged Chinese on both sides of the Strait to realize the greater potential that exists for increasing contact and integration, in keeping with global trends. A vital piece is missing, however. Despite productive visits by opposition leaders, Beijing has not yet developed a sustained dialogue with the elected representatives of the Taiwan people.

The lack of such dialogue is detrimental. For example, in March 2005, after more than five years of deliberation among government officials about some form of formal legislation regarding China's policy toward Taiwan, China's State Council submitted anti-secession legislation to the National People's Congress. …