TAIWAN

SHOW OF INDEPENDENCE: An activist holds up ’s national flag during a Chinese official’s visit to on June 26.REUTERS/PICHI CHUANG is using the as its main agent to thwart Taiwanese independence and incorporate the island of 23 million into the . How ’s shadowy agency is working to absorb Taiwan

BY YIMOU LEE AND FAITH HUNG

SPECIAL REPORT 1 CHINA’S SHADOWY AGENCY TAIWAN

TAIPEI / , NOVEMBER 27, 2014

ver since a civil war split the two sides more than 60 years ago, China Ehas viewed Taiwan as a renegade province that needs to be absorbed into the mainland. To that end, the legion of Taiwanese businessmen working in China is a beachhead. In June, hundreds of those business- men gathered in a hotel ballroom in the southern Chinese city of . They were there to toast the new head of a local Taiwan merchants’ association. They sipped baijiu liquor and ate seafood as a troupe performed a traditional lion dance for good luck. An honored guest, senior official Li Jiafan, stood to deliver con- gratulations and a message. “I urge our Taiwanese friends to contin- KEEPING ALERT: Annual military drills in Taiwan are aimed at repelling an attack from China. ue to work hard in your fields to contribute REUTERS/PICHI CHUANG to the realisation of the as soon as possible,” said Li, using a national- ist slogan President has popula- The Chinese dream is also on visits to the mainland. rised. “The Chinese dream is also the dream the dream of the people on both INFLUENCING POLITICS of the people on both sides of the Taiwan sides of the – our Strait – our dream of reunification.” Through the United Front and other Li, who ended his speech to beating dream of reunification. Chinese state bodies like the Taiwan drums and loud applause, is a department Li Jiafan Affairs Office, which is responsible for im- chief in the Shenzhen arm of the United A department chief in the Shenzhen arm of the plementing policies toward Taiwan on is- Front Work Department, an organ of the United Front Work Department sues including trade and transport, Beijing Communist Party’s Central Committee. has also tried to influence politics on the is- Its mission: to spread China’s influence by , for instance, includes the num- land, in part by helping mobilise Taiwanese ultimately gaining control over a range of ber of Taiwanese living in the province, the businessmen on the mainland. groups not affiliated with the party and that number of businesses they run as well as an Many of them are heading back home are often outside the mainland. entry on background checks that have been this weekend to vote in mayoral elections United Front documents reviewed by conducted on the Taiwanese community in that are being viewed as a barometer of sup- Reuters, including annual reports, instruc- the province, an entrepreneurial hub near port for Taiwan’s ruling Nationalist Party, or tional handbooks and internal newslet- . (KMT), which favours closer ters, as well as interviews with Chinese The United Front hasn’t confined itself ties with China than does the pro-indepen- and Taiwanese officials reveal the extent to the mainland. It is targeting academics, dence Democratic Progressive Party (DPP). to which the agency is engaged in a con- students, war veterans, doctors and local A large number of those businessmen, who certed campaign to thwart any move to- leaders in Taiwan in an attempt to soften a senior KMT source said will largely vote ward greater independence by Taiwan and opposition to the Communist Party and for the party, will be flying on deeply dis- ultimately swallow up the self-ruled island ultimately build support for unification. counted airfares being offered by Chinese of 23 million. The 2013 work report, reviewed by Reuters, and Taiwanese airline companies. The United Front’s 2013 annual includes details of a program to bring “The goal is simple – peaceful unifica- work report for the Chinese province of Taiwanese students and military veterans tion,” said a person with ties to the Chinese

SPECIAL REPORT 2 CHINA’S SHADOWY AGENCY TAIWAN

MAYORAL RACE: Campaigning for Taiwan’s municipal elections on Nov. 29 . REUTERS/PICHI CHUANG

leadership in Beijing. Soft power, not residents and which China’s leaders have Nations, and China has refused to rule out armed force, is the strategy. “To attack the proposed as a model for Taiwan. Reuters the use of force to gain control of the island. heart is the best. To attack a [walled] city reported in July that United Front opera- Since the KMT won the presidential is the worst,” the source said, quoting Sun tions in Hong Kong had shifted from the election in 2008, cross-Strait ties have been Tzu’s “Art of War.” backroom courting of academics and busi- warmer than ever. More than 20 trade Questions sent by fax to the Beijing office nessmen to the streets, where new groups deals, including the establishment of the of the United Front Work Department were of pro-Beijing agitators were attempting to first direct flights between Taiwan and not answered. The Chinese government’s silence critics of China. the mainland, have been inked. No trade referred Reuters to a “What the United Front is doing to agreements were signed under the previous statement on its website saying it does not Taiwan now is the same as what it has been DPP-led administration. Earlier this year, comment on elections on “the island.” doing in Hong Kong since the 1980s – a Chinese and Taiwanese officials held their What’s happening in Taiwan is part of a quiet, slow but extensive penetration,” said first official meeting since 1949. broader effort by Beijing to bolster its con- Sonny Lo, a professor at the Hong Kong Taiwan’s economy has become increas- trol over restive territories on its periphery. Institute of Education and author of a book ingly intertwined with China’s. About 40 The United Front has long been active in on China’s covert control of the city. percent of Taiwan’s exports are to China Hong Kong, which is ruled under the “one Unlike Hong Kong, Taiwan is a ful- and some key sectors like technology country, two systems” model that enshrines ly democratic entity. It has an army but have much of their manufacturing on the a wide range of personal freedoms for its does not have membership in the United Text continues on page 5

SPECIAL REPORT 3 CHINA’S SHADOWY AGENCY TAIWAN

Taiwan-China trade Since 2008, China-friendly President Ying-jeou has signed a series of landmark trade and economic agreements with Beijing, but both sides have showed little desire for political dialogue.

Taiwan’s exports to Taiwan’s imports from Mainland China

$10 billion

Jan. 2008 Sept. 2014 $6.0 bln $6.7 bln 7.5

August $4.1 bln 5.0

$2.8 bln

2.5

0 2008 2009 2010 2011 2012 2013 2014 March April June January January April March Opposition Taiwan and Taiwan, China Senior army President Ma Taiwan holds Protesters block candidate China sign sign landmark officer wins second first live fire cross-Strait Ma Ying-jeou banking MOU, free trade pact, detained on term. drills in five services trade is elected which allows dubbed the suspicion of years, aŒer agreement, president. August both sides’ banks Economic spying for China and President Ma which they say July to conditionally Cooperation China. Taiwan sign warns of China's would allow Taiwan and China invest in each Framework investment rising military China too much agree to set up other. Agreement protection deal investment. sway over the permanent (ECFA), to cut economy. and ink June offices. tariffs on about clearing Taiwan and June 800 products. November agreement, China sign a Chinese and China, Taiwan allowing cross-Strait Taiwanese sign agreement Taiwanese to services trade officials hold first for first direct trade RMB on pact under government-to- flights, shipping the island. ECFA. government and postal links. meeting since 1949.

Data includes re-imports and re-exports. Sources: Reuters; Taiwan’s Bureau of Foreign Trade; Central Election Commission, Mainland Affairs Council

SPECIAL REPORT 4 CHINA’S SHADOWY AGENCY TAIWAN

mainland. The world’s biggest electronic components maker, Foxconn Technology Party Power Structure Group, which assembles Apple Inc’s Party Chief and President: iPhones, has many of its plants in China. Xi Jinping Taiwan presidential spokesperson Ma Weikuo said Taiwanese heading home to Seven-member Politburo standing committee Described as the of China vote were exercising their right as citizens. “It is normal that Taiwanese businessmen living in Hong Kong, , mainland China, Europe, and other parts of the world want to return to Taiwan to vote,” Political she said. Bureau 25 members PRIZED HONOUR The United Front’s annual work reports and handbooks provide a window into the agency’s methods. It has at least 100 offices in Zhejiang. The 2013 work report said 30,000 Taiwanese businesspeople and their Central Committee families were living in the province and 6,800 Taiwanese enterprises had operations there at the end of 2012. United Front officials reported creat- ing a more friendly business environ- Government Central Military Central Secretariat United Front Discipline ment by helping to smooth investment People’s Commission Work Inspection Department problems and resolve legal disputes for Republic of China Commission resident Taiwanese. In the Zhejiang city People’s of Ningbo, one United Front office said it Liberation spent 110,000 yuan (about $18,000) to buy Army life and traffic accident insurance for 137 Taiwanese businessmen. Responsible for managing the party's relations outside its direct influence, in the Under a “three must visit” system in effect business community and civil organizations, both inside and outside China. across the mainland, United Front officials Source: Reuters are instructed to visit Taiwanese business- people and their families during traditional holidays, when a family member is ill and when someone is facing economic troubles. (CPPCC), which serves as an advisor to violation of Taiwanese law that bars citi- “They help with our business as well as the government. It is a prized honour for zens from taking positions in state or party little problems in daily life such as car acci- businessmen whose livelihoods are directly bodies in China. It is, however, legal to be dents, illness and schooling for kids,” said a dependent on the mainland. The position an honorary, non-voting CPPCC mem- Taiwanese man surnamed Lin, who works affords access to government officials and ber. The Association of Taiwan Investment in the property sector in Changsha, the a form of protection in a country that lacks Enterprises on the Mainland (ATIEM), capital of Province. an independent judicial system. which lists some 130 Taiwanese business One enticement China has dangled in “There will be a force that helps pro- associations across China as members, met front of the Taiwanese business commu- tect your business on the mainland,” said with Taiwanese President Ma Ying-jeou in nity residing on the mainland, is provincial Lin. “They won’t make trouble if you are a December 2012 to try changing that. and municipal membership in the Chinese CPPCC member.” Their bid to persuade him to allow People’s Political Consultative Conference Holding CPPCC membership is a Taiwanese citizens to become full-fledged

SPECIAL REPORT 5 CHINA’S SHADOWY AGENCY TAIWAN

CPPCC members ultimately failed. Taiwan’s an- nounced that same month that Taiwanese could not sit on the CPPCC. Earlier in 2012, Taiwan’s National Security Bureau had handed a list of 169 Taiwanese suspected of being CPPCC members to the island’s Mainland Affairs Council, which implements policy toward China on a wide array of issues including business, shipping and travel. The council whittled the list down to 32. Ultimately, no one was punished after Taiwanese authori- ties determined those named were all ei- ther honorary CPPCC members or weren’t holders of a Taiwanese .

FAR-REACHING DEALS Taiwanese working on the mainland have actively lobbied for increased trade ties with PRESIDENTIAL CHAT: Taiwan’s President Ma Ying-jeou (L) speaks to the ruling KMT’s candidate for China. ATIEM, the business lobby, lists Taipei mayor, Sean Lien. REUTERS/MINSHEN LIN some of Taiwan’s largest companies as mem- bers on its website. Several of the group’s founding members urged the Taiwanese Community Affairs Council, which handles He didn’t cite specific examples. government to sign far-reaching deals with matters related to citizens living overseas, Mainland Affairs Council spokesperson China, arguing it would boost Taiwanese told a parliamentary committee that the Mei-hung said United Front activity business on the mainland. They held meet- United Front was stepping up work among shouldn’t be interpreted in an “overly nega- ings with Taiwan’s Mainland Affairs Council Taiwanese business leaders and younger tive way.” to help lay the groundwork, a senior member Taiwanese on the mainland and abroad. “China has some political intentions,” of the organization told Reuters. “They are drawing the Taiwanese who she said. “But Taiwan has its own advan- Their efforts were rewarded when are more receptive to China over to their tages in terms of systems, core values and Taiwan signed trade deals in 2008 that for side, exerting pressure on Taiwan’s govern- soft power. All of these, we hope, will im- the first time allowed direct flights, ship- ment and affecting its mainland policies,” pact China exchanges.” ping and mail links with the mainland. Alexander Huang, a former vice chairman of A MAGIC TOOL ATIEM hasn’t always been on the win- Taiwan’s Mainland Affairs Council, which is ning side. In March, students occupied the responsible for ties with China, told Reuters. The ruling KMT dismisses charges from the Taiwan legislature in a bid to block passage opposition DPP that it is benefitting from of a deal that would have allowed for freer REUTERS TV United Front activity. Kuei Hung-cheng, trade with China. The protests, dubbed the the KMT’s director of China affairs, ac- Sunflower Movement, fed off fears the pact knowledged the close relationship between would give China greater sway over Taiwan. Taiwanese businessmen on the mainland The protest ended when parliament agreed and the Chinese authorities, but said that to suspend a review of the bill. did not mean Beijing held sway over the ATIEM did not respond to questions party. “The KMT will not be influenced sent by email. or controlled by the Chinese Communist Some Taiwanese officials warn against Party. That is not possible,” he said. United Front encroachment. In late See the video: http://reut.rs/1xK6NeM The United Front is a legacy of the September, the head of Taiwan’s Overseas earliest days of Leninist communist

SPECIAL REPORT 6 CHINA’S SHADOWY AGENCY TAIWAN

revolutionary theory. China’s version of What the United Front is that in Communist China is strictly pro- the United Front, dubbed a “magic tool” doing to Taiwan now is the same hibited: democratic electoral politics. on the agency’s own website, helped the as what is has been doing in Hong Taiwanese businessmen based in Communist Party become established on Shenzhen and Shanghai told Reuters they the mainland and ultimately prevail in a Kong since the 1980s – a quiet, have been encouraged by United Front offi- civil war that forced Chiang Kai-shek’s slow but extensive penetration. cials to head home to vote in past elections. Kuomintang (KMT) to retreat to Taiwan This year, the stakes are high for Beijing. in 1949. The United Front has as its pri- Sonny Lo The Democratic Progressive Party champi- mary goal the promotion of “motherland Author and professor at ons independence. The ruling KMT gov- unification” and blocking of “secession.” Hong Kong Institute of Education ernment backs a status quo position of “no A 2007 handbook for United Front unification, no independence, no war.” workers in Beijing instructs cadres to “unite Election airlifts helped the KMT to vic- neutral forces in order to divide and attack tory in 2008 and 2012. Close to a quarter enemies.” It also directs them to “make million Taiwanese residents on the main- friends extensively and deeply with repre- land headed home to vote in the 2012 sentatives from all sectors” in Taiwan and presidential election, according to a senior abroad to “form a mighty troop of patriots.” member of the ruling party who estimates A senior Taiwanese defence official, who there are about one million Taiwanese did not want to be named, referred to the working and living in China. As many as United Front’s tactics as a “war.” The ulti- 80 percent voted for KMT leader Ma, who mate goal was “to overturn the Republic won a second term promising closer ties of China,” he said, using Taiwan’s official with Beijing, the official said, citing an in- name. ternal survey. The front’s activities haven’t been con- This year, the airlift may not be enough fined to harnessing China-friendly forces. to turn the tide in the most important may- The southern Taiwanese city of , WHITE WOLF: Pro-China politician An-lo, oral run-off – in Taipei. Final opinion polls which is a bastion of the pro-independence who once served 10 years in a U.S. prison on drug published by Taiwan’s leading media out- DPP, has been singled out. One group in trafficking charges, is known as the “White Wolf” lets showed the KMT’s candidate trailing the city that has gotten special treatment in Taiwan. REUTERS/PICHI CHUANG. an independent by 11.5 to 18 points. A vic- is doctors, who have been invited on trips tory for the independent would mark the to the mainland, according to a 2011 work first time in 16 years that the KMT has not report from an organ associated with the China as a fugitive from the law in Taiwan ruled the capital. United Front. but ultimately was never tried. He also But Beijing isn’t giving up. More than a The visits had “successfully enhanced spent ten years behind bars in the U.S. on dozen airlines, including state-owned Air identification with the motherland among drug-smuggling charges. China and Taiwan’s largest carrier China some pro-green Taiwanese,” the Taiwan Sitting in his office in Taipei dressed in Airlines, have agreed to provide discounted Democratic Self-Government League, a a white jacket and black shirt, Chang says flights from the mainland to Taiwan at the nominally independent political group that he and his party have regular contact with end of November, according to a notice sent is permitted to operate by the Communist Beijing’s Taiwan Affairs Office and he has to members by ATIEM. The Beijing-based Party, wrote in its report. Green is the color “friends in the United Front.” The Chinese organization lists the Chinese minister in associated with the opposition DPP. government, he says, has provided all-ex- charge of the Taiwan Affairs Office as an Some politicians in Taiwan unabashedly penses paid trips for members of his party honorary chairman on its website. favor unification. Among them is Chang to the mainland. “Getting carrots from A senior official at Taiwan’s China An-lo, the head of a pro-unification party. China is better than getting sticks,” he says. Airlines told Reuters that “with tickets sell- Known as the White Wolf, Chang was ing at 50 percent off, airlines will incur loss- UNSPOKEN CONSENT once a leader in a triad group, a traditional es.” But the carrier would nevertheless “100 Chinese criminal syndicate, called the The United Front and the Taiwan Affairs percent meet the demand from Taiwanese . He lived for a decade in Office are also deeply involved in an activity businessmen.”

SPECIAL REPORT 7 CHINA’S SHADOWY AGENCY TAIWAN

CIVIC LESSONS: Protesters occupied parliament in March to protest a trade pact with China. REUTERS/PICHI CHUANG

China Airlines spokesman Jeffrey Kuo society. As part of an operation called She says she is now considering doing said the company was offering “promotion- “Collecting Stars,” it has targeted military an undergraduate degree on the mainland. al tickets for all flights” because November veterans in Taiwan, inviting them to China was “the low season.” did not re- for visits. In May 2012, retired Taiwanese Additional reporting by Benjamin Kang Lim spond to questions sent by fax and email to and mainland generals who were once in Beijing and John Ruwitch in Shanghai. its Beijing office. sworn enemies met for an invitational golf Editing by Peter Hirschberg, Michael Williams China’s Taiwan Affairs Office said it was tournament in Zhejiang, United Front and Bill Tarrant aware that Taiwanese businessmen wanted documents show. to vote in the elections. ATIEM had nego- Outreach to students takes the form of tiated with airline companies to allow them summer camps, corporate internships and FOR MORE INFORMATION to fly home, it said. discover-your-roots tours to the mainland. Faith Hung He-tai , president of the Taiwan Tsai Ting Yu, a 15-year-old junior high [email protected] Merchant Association in Shenzhen, said school student who joined a trip in 2013 Yimou Lee the Taiwanese business community on the and in 2014, said she attended classes with [email protected] mainland was “China’s best public relations her mainland hosts and visited popular Peter Hirschberg, tool.” tourist sites, including the Great Wall and Asia Investigative Editor “There are 7 to 8 votes in my family,” he the Forbidden City. [email protected] said. “And am I not the one who decides to “Before the trips, I kind of resisted the Bill Tarrant, Enterprise Editor whom those votes go?” idea of China. But through the programs I [email protected] The United Front has also been work- got to know them better and that resistance Michael Williams, Global Enterprise Editor ing to penetrate other layers of Taiwanese gradually disappeared,” said Tsai. [email protected]

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SPECIAL REPORT 8