Chinese Economic Coercion Against Taiwan: a Tricky Weapon To

THE ARTS This PDF document was made available from www.rand.org as CHILD POLICY a public service of the RAND Corporation. CIVIL JUSTICE EDUCATION Jump down to document ENERGY AND ENVIRONMENT 6 HEALTH AND HEALTH CARE INTERNATIONAL AFFAIRS The RAND Corporation is a nonprofit research NATIONAL SECURITY organization providing objective analysis and POPULATION AND AGING PUBLIC SAFETY effective solutions that address the challenges facing SCIENCE AND TECHNOLOGY the public and private sectors around the world. SUBSTANCE ABUSE TERRORISM AND HOMELAND SECURITY TRANSPORTATION AND Support RAND INFRASTRUCTURE Purchase this document WORKFORCE AND WORKPLACE Browse Books & Publications Make a charitable contribution For More Information Visit RAND at www.rand.org Explore RAND National Defense Research Institute View document details Limited Electronic Distribution Rights This document and trademark(s) contained herein are protected by law as indicated in a notice appearing later in this work. This electronic representation of RAND intellectual property is provided for non-commercial use only. Permission is required from RAND to reproduce, or reuse in another form, any of our research documents. This product is part of the RAND Corporation monograph series. RAND monographs present major research findings that address the challenges facing the public and private sectors. All RAND monographs undergo rigorous peer review to ensure high standards for research quality and objectivity. Chinese Economic Coercion Against Taiwan A Tricky Weapon to Use Murray Scot Tanner Prepared for the Office of the Secretary of Defense Approved for public release; distribution unlimited The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted in the RAND National Defense Research Institute, a federally funded research and development center sponsored by the OSD, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community under Contract DASW01-01-C-0004. Cover Illustration by Tim Lee, Care of theiSpot.com Library of Congress Cataloging-in-Publication Data Tanner, Murray Scot. Chinese economic coercion against Taiwan : a tricky weapon to use / Murray Scot Tanner. p. cm. Includes bibliographical references. ISBN 978-0-8330-3969-9 (pbk. : alk. paper) 1. China—Foreign economic relations—Taiwan. 2. China—Foreign relations— Taiwan. 3. Taiwan—Foreign economic relations—China. 4. Taiwan—Foreign relations—China. I. Title. HF1604.T36 2006 337.5105124'9—dc22 2006033995 The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. R® is a registered trademark. Cover Design by Eileen Delson La Russo © Copyright 2007 RAND Corporation All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from RAND. Published 2007 by the RAND Corporation 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1200 South Hayes Street, Arlington, VA 22202-5050 4570 Fifth Avenue, Suite 600, Pittsburgh, PA 15213-2665 RAND URL: http://www.rand.org/ To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Email: [email protected] Preface This monograph analyzes the political impact of the rapidly growing economic relationship between the People’s Republic of China (PRC) and Taiwan and evaluates the prospects for Beijing to exploit that expanding economic relationship to employ economic coercion against Taiwan. It also identifies China’s goals for applying economic pressure against Taiwan. To establish a framework for evaluating China’s relative success or failure in using economic coercion against Taiwan, this work draws upon the conclusions of the large and empirically rich body of studies of economic diplomacy that have focused on economic coercion and trade sanctions. In examining Taiwan’s response to the rising cross-strait economic relationship, the study analyzes Taipei’s two decade–long effort to strike a difficult balance between two goals: • limiting excessive dependence on mainland China that could be exploited for political pressure • taking advantage of China’s explosive economic development to improve Taiwan’s eroding economic competitive position. A large portion of this monograph is devoted to evaluating the cross-strait economic relationship and Taiwan’s potential economic vulnerability to Chinese efforts to cut off or disrupt key aspects of that relationship. But this document also extensively analyzes the challenges that China has faced in its efforts to convert this raw, potential economic influence into effective political leverage. This work closes with an overall evaluation of the cross-strait relationship and Taiwan’s vulnerability to a variety of scenarios for economic pressure—some of which Beijing has actually attempted in recent years, and some of which are as yet only hypothetical or threatened. It also briefly discusses the potential impact of cross- strait economic diplomacy on U.S. policy interests in the Taiwan Strait. As such, this monograph should be of interest to policymakers, analysts, and others interested in U.S. policy toward Asia. This research was conducted within the Intelligence Policy Center of the RAND National Defense Research Institute, a federally funded research and development iii iv Chinese Economic Coercion Against Taiwan: A Tricky Weapon to Use center sponsored by the Office of the Secretary of Defense, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community. For more information on RAND’s Intelligence Policy Center, contact the Direc- tor, John Parachini. He can be reached by email at [email protected]; by phone at 703-413-1100, extension 5579; or by mail at the RAND Corporation, 1200 South Hayes Street, Arlington, Virginia 22202-5050. More information about RAND is available at www.rand.org. Contents Preface ................................................................................................. iii Figures ................................................................................................. ix Tables .................................................................................................. xi Summary .............................................................................................xiii Acknowledgments ................................................................................. xvii Abbreviations ........................................................................................ xix CHAPTER ONE Introduction ........................................................................................... 1 Potential for Economic Coercion .................................................................... 1 Purpose of This Study ................................................................................. 5 Organization of This Monograph .................................................................... 8 CHAPTER TWO Economic Coercion: Factors Affecting Success and Failure .................................11 Defining Economic Coercion/Economic Pressure ...............................................11 Mainland Chinese Economic Pressure: Serving Many Political Goals.........................13 Forcing Policy Change .............................................................................13 Destabilizing, Subverting, or Creating Domestic Pressure on the Target Regime..........14 International Signaling.............................................................................15 Domestic Political Symbolism.....................................................................15 Punishment and Eroding Military Power........................................................16 Likely Scenarios for Chinese Economic Coercion Against Taiwan .............................16 Export Sanctions....................................................................................17 Import Sanctions....................................................................................17 Financial and Investment Sanctions ..............................................................17 Selective Harassment or Intimidation of Taiwan Businesspeople.............................17 Economic Disruption, Damage, and Sabotage..................................................18 Deliberate Slowing or Withholding of Business ................................................19 Efforts to Hasten the “Marginalization” or “Hollowing Out” of Taiwan’s Economy ......19 Factors Affecting Success and Failure of Economic Coercion Against Taiwan ...............19 v vi Chinese Economic Coercion Against Taiwan: A Tricky Weapon to Use Economic Factors That Help Determine Success or Failure .................................... 20 Levels of Economic Pain and Disruption ....................................................... 20 Political Factors That Help Determine Success or Failure ...................................... 22 China and Taiwan’s Bitter Historical Relationship ...........................................

Load more