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continues 426

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between The China factor: impact and response in the eventual annexation of the island. Therefore, the 1992 Consensus can at best attain a temporary equilibrium: In the twenty-first century, China has also expanded its presence in Central Asia, remin­ iscent of the 'Great Game' of the region in the nineteenth century, creating a trilateral com­ petition with Russia and the US. The Central Asian states, penetrated by the great powers, have sought to establish local rules for foreign power involvement so as to fend off undesired external pressures (Cooley 2012). For Taiwan, this lesson is illuminative in that China's influ­ ence on Taiwan, to some extent, depends on the response of the civil society, as clearly shown by the anti-Services Trade Agreement and Sunflower Movement. The civic groups demanded that an overarching law regulating the cross-Strait agreements be enacted before the Legislative Yuan could resume the review of the STA, and the Legislative Yuan accepted this advocacy. Since then, and as of this writing, the bill for regulating the cross-Strait agreements has been in the legislative process. This case shows that the civic movement is capable of disrupting the CCP-KMT cooperation agenda. Rapid growth, together with resource hunger and diplomatic motivations, drove China to also expand its economic presence in Latin America and Africa (Taylor 2007;Jenkins et al. 2008; Rotberg 2008), raising the spectre of neo-colonialism (Kleine-Ahlbrandt and Small 2008;Alden and Hughes 2009; Yan and Sautman 2010;Beeson 2013). Furthermore, the alleged 'mercantilist approach' (Wein et al. 2014) of Chinese multinational companies, such as the low price strategy ofHuawei and ZTE's telecommunications products, was complicated by national security con­ cerns, particularly in the US, Canada, Australia and Taiwan (Rogers and Ruppersberger 2012; The American Interest 2012; Shan 2014). China's rise also reignited interest in the soft power debate (Glaser and Murphy 2009; Halper 2010; Shambaugh 2013). China has set up more than four hundred 'Confucius Institutes' around the world in what is seen as an effort to develop soft power. In the eyes of the Chinese decision makers, the Confucius Institutes are meant to facilitate learning of the Chinese language and culture, and some scholars see China's soft power policy as a 'defensive' rather than an 'offen­ sive' undertaking (Glaser and Murphy 2009).Yet, Sahlins (2015) contends that these seemingly innocuous arrangements conceal a hidden agenda of promoting political influence; others also see them as inevitably inimical to academic freedom, and in several cases western partners have terminated cooperation with the institutes for this reason (Link 2014;Hughes 2014). Confucius Institutes in Southeast Asia similarly promote China's diplomatic interests, but curiously, claims of academic interference rarely emerge from that region (Hsiao and Yang 2014). In recent years, China appears to have been rather assertive in its external behaviour. From the realist perspective, the rise of China will inevitably lead other countries to take defensive measures against it. This has implications for Taiwan both in its bilateral and multilateral rela­ tionship with China. The rapprochement between Beijing and the KMT government has cast doubt on Taiwan's willingness to defend its sovereignty in the eyes of some US policy advisers. Some have even called for Washington to re-evaluate its security commitment to Taiwan, and there has been debate as to whether Taiwan should be sacrificed for more cordial US-China relations (Ross 2006; Gilley 2010; Glaser 201 l;Tucker and Glaser 2011). Understandably, talk of 'abandoning Taiwan' has only exacerbated the fears of'Hong-Kongization' that have emerged in Taiwanese public opinion (Kaeding 2014).

China impact: new research themes China's rise and its impact on Taiwan have brought about a transformation of research interest in cross-Strait studies. The KMT-CCP rapprochement has initiated an interest in

429 Jieh-Min Wu the cross-Strait foru1ns (Beckershoff 2014), party co111petition and strategic readjustment (Schubert 2012), and cross-Strait government-business networks (Wu 2016). As the China factor heavily affected the local n1ass n1edia, studies of the changes in n1edia behaviour have also emerged (Chang 2013; Hsu 2014; I(a\vakanll 2015).As Hong l(ong and Taiwan are sini­ ultaneously \Veathering the hurricane of the China factor, an interest in co111parative research has also appeared (Yuen 2014;Wu 2014). Moreover, scholars have begun to present preliniin­ ary studies on the anti-STA-Sunfio,ver Move111ent (Chen 2014; Fell and Kaeding 2014; Bo 2015;Wu 2015). Finally, there is a trend ofbringing'China factor variables' into the survey research regarding national identity and electoral politics. Wu (2005) proposed a 'bread versus love' inetaphor to describe the attitudinal change in national identity under the influence of Chinese econonlic attraction. In recent years, the China factor has penetrated Tai\van's electoral politics to the extent that it has con1plicated the role of the conventionally defined 'national identity cleavage'. Several studies found that voters with a favourable attitude towards n1ore open cross-Strait trade tended to support KMT candidates (Chen et al. 2009), and those who supported the '1992 Consensus' tended to support Ma Ying-jeou in the 2012 presidential election (Tang 2013).The China factor variables are likely replacing the function of'national identity' variables in a variety of contexts (Wu and Liao 2015). China's econonllc expenditure is, however, a v-,rorld\vide pheno111enon, and the influence of so111edegree of the 'China factor' is 110\V ubiquitous in international relations. What, then, is so special about the Sino-Taiwanese econonllc interaction? The uniqueness of the cross-Strait case lies in a constellation of conditions that \vill be analysed below.

Structure and agency: how China exerts influences The tern1 'China factor' has been frequently 111entioned in the literature, but often used in a loose inanner or left undefined, since the rise of China (e.g. Chan 2000; Wu 2005; Dittn1er 2005; Niau 2011).

China factor defined

To forge fro1n this tern1 a rigorous concept, the following definition is proposed: Put into the perspective of international political econo111y, the China factor refers to the process by \vhich the PRC govern111ent utilizes capital and related resources to absorb other countries and 'offshore districts' (ji11gwaidiqu, such as Hong Kong) into its sphere of econotnic influ­ ence, thereby tnaking then1 econo111ically dependent on China in order to further facilitate its political influence. In the context of cross-Strait relations, the PRC governn1ent offers special treat111ent and privileged status to Taisha11g,Taiwanese political figures, and preferred groups, \Vho in turn becon1e the 'local collaborators' for Beijing within Tai\van; n1ore specifically, the Chinese government purchases products and firms in Tai\van and invests in local finns and industries through Chinese capital and TaishaflJ?,or through cross-Strait capital, in order to influence enterprise behaviour, governn1ent decision inaking, n1edia coverage, public opinion and polit­ ical affairs in Tai\van. Cross-Strait capital is a new type of Taisha11,e;2 it refers to the Taiwanese inultinational corpo­ rations that run business across the Strait. This type of capital tnay n1aintain the pretext of being global in origin, but closer exanllnation reveals that 111ost of these MN Cs deploy their pro­ duction solely in China and Tai\van \Vhile their registration as 'holding con1panies' in offshore

430 to

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-- Taiwan's trade dependence on China (incl. HK)

c~:::~)China's (incl. HK) trade dependence on Taiwan

Figure 27.2 Asymmetric trade interdependence between Taiwan and China, 1992-2013

First, regarding the degree of trade concentration, Taiwan's exports to China (including Hong Kong) occupied 24.4 per cent ofTaiwan's total foreign trade in 2000 and expanded to 41.8 per cent in 2010, whereas China's (including Hong Kong) exports to Taiwan comprised 2.7 per cent of China's total foreign trade in 2000 and 2.5 per cent in 2010. Taiwan's trade with China as a percentage of GDP soared from 8.0 per cent in 1992 to 34.9 per cent in 2011, whereas China's ratio with Taiwan remained rather low at 3.2 per cent in 1992, peaking at 4.7 per cent in 2004 and declining to 2.5 per cent in 2011 (see Figure 27.2 above). Contrary to the nee-liberal-institutionalist concept of interdependence, the cross-Strait case constitutes 'asym­ metrical interdependence', which entails heightened vulnerability (on the Taiwanese side) to drastic international economic change. Observed at the corporate level, approximately 30 per cent of the sum total revenues of 'Taiwan's top 300' enterprise groups came from China in 2012.3 Table 27.1 below lists the top 32 such business groups by global revenues, excluding the banking sector.An1ong the top 32, 18 groups earn more than 30 per cent of their global revenues from China and nine collect more revenues fron1 China than from Taiwan. It is noteworthy that some influential conglomerates, such as Want Want Holdings and Ting Hsin International, are not listed in the 'Taiwan Top 300' because their headquarters are not registered in Taiwan, though such enterprises originate in Taiwan and still iden­ tify themselves as Taishang. These companies depend heavily on the Chinese market, have actively played the game of cross-Strait government-business relations and enjoy enormous influence. To sun1lllarize, the asymmetric integration both at the micro and inacro level has created a structure favourable to Beijing's exertion of political pressure on Taipei.

Influence mechanisms In principle, China's modi operandi in Taiwan include both direct and indirect approaches. The mode of direct conduct is exemplified by the incident in 1996 when the People's Liberation Army threatened Taiwan with missile launches to deter the historic presidential election (shown as a solid-lined arrow on Figure 27.3). Similarly, when Taiwan was holding its next presidential

432 The Chinafactor: impact and response

Table27.1 Composition of revenues ofTaiwan's top 32 business groups, 2012

Ranking Group Name GlobalRevet1Hes Ratio ofRevet111es Ratio of Reve11ues {NT million) from Taiwan from China and HK (%) (%)

1 Hon Hai Precision Industry Co. 4,149,077 35.2 35.4 2 Formosa Plastics Group 2,176,923 77.4 10.6 3 Quanta Computer Inc. 1,017,545 33.2 35.5 4 Ruentex Financial Group 894,101 48.7 51.1 5 MiTAC Synnex Group 893,879 13.6 23.7 6 Kinpo Group 889,818 33.0 50.4 7 Pegatron Corporation 881,895 50.1 44.7 8 Wistron Corporation 696,079 40.6 39.1 9 BenQ Group 565,344 49.9 15.4 10 Uni-president Group 534,092 50.4 19.9 11 TSMCGroup 515,262 58.3 1.8 12 Far Eastern Group 487,691 70.7 24.4 13 Innolux Corporation 483,610 49.8 42.1 14 ASUSTeK Computer Inc. 448,685 40.4 10.2 15 Acer Inc. 429,511 37.0 5.9 16 Inventec Corporation 412,299 25.5 43.6 17 WPG Holding.; 360,614 46.3 41.6 18 China Steel Corporation 358,537 91.9 1.6 19 Walsin Lihwa 308,810 35.9 36.5 20 Evergreen Group 305,338 59.4 0.1 21 VIA Technologies (HTC) 303,615 64.7 16.1 22 Hotai Motor 288,640 94.2 5.8 23 Yulon Motor 283,736 59.1 37.3 24 Pou Chen Group 277,987 4.6 92.7 25 United Microelectronics 245,434 70.3 10.4 Corporation 26 Lite-On Technology 244,552 22.5 30.9 27 Chunghwa Telecom Group 225,005 98.5 0.4 28 Delta Group 211,211 9.0 33.3 29 ASE Group 206,139 54.1 34.7 30 E United Group 196,234 51.7 47.3 31 Chi Mei Corporation 194,884 56.8 36.6 32 Tatung Company 178,690 56.8 36.6

Soun:e:Compiled from the databank of the China Credit Information Service Ltd election in 2000, Chinese premier Zhu Rongji issued a stern speech on TV, trying to intimidate supporters of the opposition candidate Chen Shui-bian. Both efforts, however, proved futile if not counterproductive. Henceforth, the overall trend of Beijing's strategy has noticeably shifted from direct to indirect action and from military-political threats to economic incentives. The indirect mode of influence has been established through a number of roundabout programmes cultivating government-business relations across the Strait and nurturing locals to act as 'agents' of China. The foundations of such indirect measures lie in prolonged investment in guanxi connections, which will be described in detail below.

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the the sion sion pro-unification pro-unification Jieh-Min Wu of how the PRC has conducted its absorption strategy towards Taiwan under the banner of 'peaceful development' could shed new light on the tantalizing 'China model'.

Notes * The author thanks Liao Ching-hua, Chang Kuei-min, Tripp Odom, and Liao Mei for their research assistance; and Gunter Schubert and Andrew Nathan for revision suggestions. 1 For Beijing, the 1992 Consensus means 'both parties agree on the one China principle'; for the KMT government, it means 'One China, different interpretations'. 2 Conventionally, Taishangrefers to those who run business and reside on the mainland, but the connota­ tion of the term in Taiwan in recent years has changed to include those who operate business simultan­ eously in Taiwan and the mainland or across the Taiwan Strait, as well as those Taishat1gwho "reshore" to Taiwan, such as in the cases ofTsai Eng-ming and the Wei Family; see below. 3 Source: China Credit Information Service Ltd. 4 The law specifies the conditions under which the state can adopt 'non-peaceful means' (i.e. military meas­ ures) against Taiwan. The conditions include that 'the "Taiwan independence" secessionist forces should act under any name or by any means to cause the fact ofTaiwan's secession from China' (Article 8). 5 Monthly Statistical Reports Across the Strait, various issues, published by the Mainland Affairs Council, ROC. 6 Author's interview Ganuary 2015). 7 The two next largest recipients were both from Taiwan - Uni-President China and Tingyi. Tingyi is a holding company of the Ting Hsin International Group owned by the Wei family, who were infam­ ously involved in a series of food safety and cronyism scandals in Taiwan in 2014. 8 Conducted by the China Impact Studies Group (CIS) in April-May 2013. N=l,216; Pearson chi2(8) = 72.9966. Pr = 0.000. The CIS is a research group of the Institute of Sociology, Academia Sinica, of which the author is a member. 9 CIS 2013 Survey, N=l,216; Pearson chi'(8) = 57.8695; Pr= 0.000. 10 2014-2015 CIS survey, conducted in January-February 2014. N = 1,276.

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