Does Economic Integration across the Taiwan Strait Make Military Conflict Less Likely?

Article excerpt

Deepening economic ties across the Taiwan Strait are widely believed by analysts and scholars to be a stabilizing force in cross-Strait political relations. Yet within the broader international relations literature, the relationship between economic interdependence and military conflict continues to be controversial. This article examines the impact of growing cross-Strait economic links on the likelihood of cross-Strait military conflict within the context of this broader literature. A description of three separate causal mechanisms--identified in the existing literature--through which economic ties could promote peace is followed by a discussion of how broadly these processes are operating in the Taiwan Strait case. Although the article does not rule out the possibility that economic integration across the Strait makes a military confrontation less likely, it shows that the evidence in support of such a proposition is ambiguous.

Keywords: China, Taiwan, economic interdependence, trade, conflict

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Deepening economic ties across the Taiwan Strait are widely believed by analysts and scholars to be a stabilizing force in cross-Strait political relations, at least on the margins. (1) The logic behind this view is straightforward. By raising the costs of military conflict, economic exchange potentially encourages restraint in Beijing and Taipei. (2) Over the longer term, increased contacts generated by growing economic linkages may also lay an "important foundation for political community" across the Taiwan Strait. (3) Official US policy is to encourage cross-Strait economic integration for these reasons. (4)

Within the broader international relations literature, however, the relationship between economic integration and military conflict continues to be a hotly debated topic, and liberal arguments that trade promotes peace remain controversial. A growing body of recent scholarship advances the debate by considering more closely the precise causal processes through which commerce could influence the propensity for military conflict between states. This focus on microfoundations has important implications for studies that are trying to ascertain whether economic integration will facilitate peace across the Taiwan Strait. Knowing that economic ties tend, on balance, to have a pacific effect is of only limited use when considering a particular case, since it is certain that sometimes economic ties fail to have such an effect: the outbreak of World War I, despite extensive trade ties among the major European powers at the time, is an obvious example. Without a clear specification of the causal mechanisms linking economic interdependence to a reduced likelihood of military violence, it is simply difficult to know whether or not the relationship across the Taiwan Strait resembles failures, like pre--World War I Europe, in that regard.

Existing studies in the international relations literature have derived at least three broad causal mechanisms through which growing bilateral economic ties can generate a reduced probability of military conflict between states. First, economic ties can act as a constraint on state behavior; the increased costs of military conflict in the presence of economic integration deter states from settling disputes using military force or engaging in provocative behavior that might invite military retaliation. Second, economic ties can, over time, change the goals that states pursue, so that they are less in conflict with the goals of other states; as such, the underlying hostilities that are at the root of military conflict can be reduced as economic integration deepens. Finally, economic integration can make it easier for states to signal their true level of resolve, thereby reducing the dangerous uncertainties that can lead to war in crisis situations. These three causal mechanisms are not mutually exclusive; rather, it may be that economic interdependence promotes peace through multiple channels. …