Taiwan:
A Bargaining Chip in the U.S.—China Poker Game

Apr 30, 1996

The recent firing of Chinese missiles into the Strait of Taiwan came as a reminder that the imperialist era is still marked by the threat of war. Many open or latent secondary conflicts are dragging on all over the world. Countries in Africa and other continents are sinking into interminable civil wars. And many areas of tensions, as in the case of Taiwan and China, could under certain circumstances become the cause of major or even worldwide confrontations.

Of course, officially all that was involved when China fired the missiles was a large-scale naval maneuver. And the media did not bother to mention that there is quite a difference in scale between the systematic bombardment in the 1950s of the Taiwanese island of Quemoy, as opposed to the training missiles that China recently fired into the waters of the Strait of Taiwan. Nevertheless, the timing of these maneuvers was obviously a deliberate calculation by the Beijing leaders.

The first major Chinese naval maneuver came last summer, at a time when the Taiwan regime was moving to boost its position internationally and reassert its independence. It officially applied for a new seat in the United Nations. The Taiwanese president made a semi-official visit to the United States. And he signed new arms supply contracts with the major powers, particularly the U.S.

The second major Chinese maneuver came in March. This corresponded to the Taiwanese presidential election campaign. The two main candidates, Lee Teng-hui, the incumbent president and leader of the ruling Kuomintang, and Peng Ming-min, supported by the Democratic Progressive Party, were trying to score points in their election speeches by referring to the island’s national sovereignty.

In both cases, the leaders in Beijing made it clear they were using the training missiles to mark their disapproval of political developments on the islands and to provide a reminder that China does not accept Taiwan’s independent existence any more today than it did at the time of its separation in 1949, or during the Cold War.

And, as during the Cold War, American imperialism intervened once more. It did so in a measured way, of course. The U.S. kept its fleet well away from the scene of the operations in order not to risk a major incident if a missile was fired accidentally. But it intervened all the same.

A Retreat for Imperialism’s Protégés.

Taiwan is a small island with a surface area of 30,000 square kilometers located 200 kilometers from the southern coast of China. Since 1949, it has been home to a regime formed from the debris of the old state machinery of Chiang Kai-shek and his party, the Kuomintang, who had been driven out of power in China by Mao Tse-tung’s troops. Backed by American imperialism, this regime has constantly claimed to be the sole representative of all China. In the name of this myth, American diplomacy gave the Taiwan government China’s seat at the United Nations, and even had it sitting alongside the major powers on the Security Council.

In fact, since 1895 Taiwan had led a completely separate existence from continental China. After the emperor of Japan bought it from the emperor of China in 1895, the Japanese made it into a kind of granary. Taking advantage of the island’s climatic conditions and its fertile land, Japan developed modern agriculture significantly ahead of anything that existed in continental China.

When the Japanese empire collapsed in 1945, the island was reincorporated into China, where Chiang Kai-shek was still in power. The American chiefs of staff made it a major military base, giving it a strategic role for its forces in South East Asia. Then, when the advance of Mao Tse-tung’s troops threatened northern China, the U.S. equipped and trained the 57 divisions of the Kuomintang in Taiwan. These troops were then sent to China to try to stop Mao Tse-tung’s advance—in vain, as it turned out.

At first, the island’s population greeted the departure of the Japanese colonizers with relief. But the Japanese were replaced by the arbitrary rule, corruption and brutality of the Kuomintang military and police machinery. At all levels, from top-ranking officers down to ordinary soldiers, they were concerned only with filling their pockets at the expense of the population. Almost as soon as they arrived, the new masters undertook to expropriate everything which attracted their lust for wealth. From being a Japanese colony, Taiwan became the private colony of the Kuomintang. And the population certainly did not gain anything from this change.

In China the Kuomintang’s corruption had caused the collapse of the economy. In Taiwan it brought the return of famine and epidemics, which had not existed on Taiwan for a long time. In China, this corruption was pushing whole layers of the population over to Mao Tse-tung’s side. In Taiwan, where Mao Tse-tung had hardly any support, it ended up driving the island’s population to revolt. On February 27, 1947, one repressive action too many on the part of the Kuomintang police led to an explosion of anger. The population of Taipei took to the streets to demand that the democratic guarantees contained in the constitution which Chiang-Kai-shek had officially promulgated in China (without applying them there either) be applied to Taiwan. For two weeks the insurgents’ militias kept the Kuomintang’s thugs at bay while they waited for Chiang Kai-shek to answer their demands. The answer came on March 9, in the form of a mass landing of fresh Kuomintang troops from Chiang Kai-shek’s China, who for a week carried out non-stop executions, shooting anyone in their path.

According to certain estimates, more than 20,000 people perished in this bloodbath. The American authorities could easily have stepped in. But they were content to turn a blind eye, despite the fact that, in their despair, the insurgents had asked for arbitration in the conflict. A few U.S. journalists reported these facts in their dispatches. But they were censored without further explanation. An occasional paragraph gave Taipei’s official version, referring to "communist bandits" who had been brought to order by the Kuomintang. In any event, no news was allowed to filter through which might in any way tarnish the "democratic" image which President Truman was trying to give to his old ally, Chiang Kai-shek.

In 1949, with Chiang Kai-shek’s defeat obvious for everyone, the American navy provided protection for Chiang to take refuge in Taiwan with a whole section of his state apparatus. Chiang brought not only powerful weaponry but also enormous booty, including almost all the currency and precious metal reserves which had been in China’s banks. If there were any "bandits" in Taiwan, they were the looters and torturers of the Kuomintang. The only reason these routed bandits were not pursued by Mao Tse-tung’s victorious forces was the protection given to these bandits by America’s "great democracy."

An Artificial Creation of the Cold War

The Cold War had indeed already begun. As early as 1947, Truman had announced the so-called "containment" policy. He declared the U.S. would no longer tolerate the Soviet Union expanding its sphere of influence. In China, however, Mao Tse- tung was already on the road to power, and the U.S. could do little about it. The so-called Soviet sphere was enlarged to include China. Besides Berlin, the two most burning areas of tension were to be Korea and Viet Nam, both of which bordered on China.

And yet in its early days Mao’s regime took great pains to please the Chinese bourgeoisie and remain on good terms with the imperialist bourgeoisie. As a British business publication, the Far Eastern Economic Review, noted in January 1950: "Neither bankers nor merchants have any reason to complain, private commerce is healthy and profits are high." But this regime had come to power without the consent of imperialism—worse, in fact, against its will. Mao’s regime had inflicted a humiliating defeat on the Kuomintang troops with which the American leaders had invested so many hopes and weapons. Moreover, it had taken power on the basis of a mobilization of the peasantry, giving it the means to adopt a certain independence from imperialism.

The main beneficiary of the United States’ "containment" policy in its various forms was the caricature state which had been created in Taiwan. American imperialism made this gangster regime the standard-bearer in the struggle of "democracies" against "totalitarian communism." From then on, for two decades, the leaders of an island whose population represented less than a sixtieth of continental China were the only people authorized to speak in the name of China in international bodies. The mere fact that the American leaders supported this hypocrisy was enough to make people forget how ridiculous it was. At the same time, Chiang Kai-Shek and his successors were able to maintain, without fear of ridicule, the pretence that their regime was the only legitimate government of China—since this was what the leaders of the dominant imperialist power said...

To retain this strategic bridgehead close to China, Washington was very generous with its subsidies. In addition to its own military bases on the island, it provided funds to maintain an ultra-modern army and transform the string of small mountainous islands surrounding it into impregnable underground fortresses. But it did much more than this. Until the 1960s, the U.S. largely financed the development of the local bourgeoisie and as well as most of Taiwan’s trade deficit. In addition to American military aid, the U.S. injected billions in direct subsidies. Later came the hard currency spin-offs from the Viet Nam War. Throughout that conflict, Taiwan served as a permanent rear base for American troops, a spare parts workshop for its equipment and the main source of food supplies—all of which justified generously calculated payments.

An Area of Severe Tension in the Cold War

The Korean War broke out in June 1950, and the Chinese participated on the North Korean side. This gave American imperialism an excuse to impose a political and economic embargo on Mao’s China which was to last more than twenty years. For these two decades, the biggest country in the world was thus completely ignored, deprived of any right of expression and any representation on the international political and diplomatic stage. Its economy was throttled by the sudden interruption of all trade relations with the rest of the world. Its exchanges with the Soviet Union during the first decade and the meager flow of trade through Hong Kong and Macao could in no way compensate for this cut-off.

This total embargo, which allowed the Taiwan regime, sheltered by U.S. authority, to declare itself the sole legitimate representative of China, led the regime in China to assert its legitimate rights over the territory of Taiwan and to treat its leaders as usurpers and mercenaries of imperialism—which is what they were.

Once the Korean War was over, and until American imperialism threw itself into the Viet Nam adventure, Taiwan was the only point of contact between the Chinese regime and imperialism. It was therefore the only point where the Chinese regime could directly pressure the U.S., to try to obtain at least a softening, if not a reversal of the U.S. attitude. China was looking for an opening to negotiate a political settlement both of the regional situation and of Sino-American relations.

Thus, from the end of the Korean War up to the mid-sixties, the Taiwanese islands closest to the Chinese coast—Quemoy, Matsu and Tachen—were the target of intermittent but regular bombardments. On two occasions this led to acute crises which raised fears of a new war in South East Asia between China and American imperialism. In retrospect, it now seems clear that both sides were determined to prevent the hostilities from going beyond certain limits.

The first crisis began in September 1954 with a systematic bombardment of Quemoy and Matsu by Chinese coastal artillery. The U.S. responded with heated declarations. But at the same time the U.S. made it clear that it was not going to be drawn into a military adventure for such futile reasons. This is what was underlined by the November 1954 mutual assistance treaty signed by the United States and Taiwan. The treaty clearly stated that, in the event of a Chinese attack on the islands, Taiwan would not undertake any military reprisals without the prior agreement of the U.S.

Two months later, Beijing stepped up the pressure another notch by landing troops on Tachen, the island furthest from Taiwan. Once again President Eisenhower shied away, declaring that Tachen was "not vital for Taiwan’s defense." At the same time Eisenhower demanded a go-ahead from Congress for an immediate military response if landings occurred on other islands.

For two months, the crisis was at its height, along with speculation over whether there would be a new Chinese attack and whether the U.S. would respond. Beijing relaxed the atmosphere in April. Taking advantage of the non-aligned countries’ conference in Bandung, the Chinese representative Chou En-lai declared that the Chinese people "did not want to go to war with the United States" and that Beijing was "prepared to negotiate with the U.S. over détente in South East Asia, particularly in the Taiwan region." The U.S. responded immediately, declaring that it was ready to negotiate the conditions for a cease-fire and suggested a summit in Geneva. A few weeks later, the bombardment of Quemoy was suspended. However, the Geneva Conference did not take place. American diplomacy made its usual U-turn by demanding that the Taiwan leaders should be present as legitimate representatives of China. This scuttled the conference.

In the two years which followed, China made a series of overtures to the Taiwan regime. Chinese Prime Minister Chou En-lai went so far as to state that "any peaceful solution to the problem of Taiwan must include the return of General Chiang Kai-shek to the continent to occupy a position higher than that of a minister." Taiwan did not even bother to reply.

In December 1957, the U.S. used a new agreement on military cooperation with Taiwan to get the go-ahead to install missiles with Matador nuclear warheads on the islands. These missiles were to be aimed only at Chinese targets. At the same time, the U.S. blocked any discussion in the U.N. about admitting China as a member. In the meantime, the world situation had grown tense again. The year 1956 had been marked by the rout of the French expeditionary force in Indochina, and then by the Suez crisis. The following year had seen an ostensible rapprochement between China and the Soviet Union. Imperialism marked the occasion by hardening its attitude.

And this hardening led to the second crisis in the Strait of Taiwan. On August 22, 1958, the Chinese resumed continuous bombardment of Quemoy. A few days later, the U.S. increased its military supplies to Taiwan and sent the Seventh Fleet to the strait. Meanwhile Chiang Kai-shek mobilized troops massively on the island and sent an ultimatum to China, threatening to bomb Chinese coastal installations. Once again, there was talk of a possible war and the Western press spoke of the "yellow peril." But having adopted a deliberately warlike position, American diplomacy then became conciliatory. Secretary of State John Foster Dulles declared that if the bombardment stopped, the U.S. could envisage a complete withdrawal of its troops from the Taiwanese islands near the Chinese coasts. A few days later, in the course of a speech, he declared that he no longer believed in Chiang Kai-shek’s ability to regain his place in China. The history books do not say what Chiang’s reaction was to this affront. But imperialism’s mercenaries quickly get used to the humiliations inflicted on them by their masters.

However symbolic they were, these declarations were probably all that Beijing could hope to obtain at that stage. Clearly the United States showed that it did not intend to support its local mercenary to the point of committing itself to an escalating conflict with China. Less than two weeks later the crisis ended. Continuous bombardment had lasted forty-four days.

The Consequences of Détente

China distanced itself from the Soviet Union from 1960 onward. But it was the prolonged involvement of American troops in the Viet Nam War which finally led to imperialism’s change of policy toward China. In January 1968, the Viet Cong carried out the Tet offensive. Guerrilla units managed to seize whole districts in around fifty towns occupied by the American armed forces, albeit sometimes only for a few hours. But this convinced the imperialist leaders that they could not win. In the face of the ever-widening rebellions in American cities and a U.S. population, increasingly unwilling to accept this protracted war, the American leaders sought to find a way out which would not lead to other losses in the region. The U.S. now needed the backing of and cooperation from the main regional power, China.

The U.S. "containment" policy was ended. The period of "détente" began. China was offered a place on the diplomatic stage for the first time. It took part in the endless negotiations that began in Geneva in 1969 over the settlement of the Viet Nam conflict. Two years later the American leaders saw to it that the doors of the U.N. were opened to the Chinese leaders and, at the same time, they threw out the representatives of Taiwan.

The same legal fiction that for two decades had allowed Taiwan to claim to represent China in international bodies was now used against it. The only difference was that imperialism tried to keep the Taiwan card in reserve to pressure its Chinese negotiating partner. American economic and military aid to Taiwan was cut back. But that was the case for all the regimes that depended on American financial aid, since at the time it was looking to cut costs. But the U.S. did continue some aid for Taiwan, just as the nuclear missiles in American bases in Taiwan continued to threaten China. In short, the change in imperialism’s policy did not provide any political solution to the problem of Taiwan; it simply altered the terms of the problem.

This change of policy did make a difference, however, in the area of economic relations. Starting in 1978, the world market began to be opened up to the Chinese economy. To take advantage of this, the Chinese leaders began an economic liberalization aimed at giving an increasing role to profit within a still largely state-controlled economy. To encourage the rapid development of new productive sectors, the Chinese leaders created the celebrated "Special Economic Zones" in which foreign companies were invited to build new factories, contributing their know-how and their hard currency in exchange for ridiculously cheap labor. The first of these zones was established in Szechuan, bordering on the British colony of Hong Kong. The next one was created in Xiamen, just opposite Taiwan.

Naturally, the Taiwan regime did not allow any economic relations between Taiwan and China. In 1983, however, the Taiwanese bourgeoisie began investing massively in China through more or less fictitious companies, whose main offices were usually in Hong Kong or Singapore. But it quickly became clear that these secret and illegal investors included the seven giant financial holding companies that concentrate all the wealth of the Kuomintang in their hands. At the same time, trade with China developed. Since this was not direct trade—which already existed in the flourishing contraband sector, but on too small a scale to satisfy the appetites of the Taiwanese bourgeoisie—Taiwanese companies had to go through Hong Kong. In both cases, economic relations developed rapidly because the Taiwanese bourgeoisie had renewed the family ties and friendships that had been broken in 1949. Also, inside China itself the privileged members of the regime avidly sought contacts outside China, an essential source of precious hard currency.

The year 1987 marked a turning point in the development of these economic relations with China. That year, Taiwan underwent its own liberalization. This was carried out under a new generation of Kuomintang leaders. But it also took place under the pressure of working class agitation, which was becoming increasingly difficult to contain. So a series of reforms were introduced. First, the government ended the state of siege, which had been in force since the 1947 rebellion. Then political parties were formally authorized, provided that they obtained the regime’s approval. With one exception, the only parties actually authorized were formed by Kuomintang factions which chose to break away. Finally, and most importantly, indirect investment in China was legalized. This was followed a year later by indirect trade.

Today, the Taiwanese bourgeoisie controls 10% of all foreign investment in China. Through mixed subsidiaries created with Chinese state companies, it controls 7% of Chinese industrial production. In addition to the holding companies belonging to the Kuomintang, the biggest Taiwanese investors include some of Taiwan’s biggest state-owned companies such as the Chinese Petroleum Corporation and the Taiwan Power Corporation. Whole sectors of Taiwanese industry have effectively already moved to the other side of the strait. The most spectacular example is probably the shoe industry, which manufactures, for example, all the products of major brand names like Reebok, Nike and Payless. In the space of two years, between 1991 and 1993, almost all the production plants in this sector were transferred to the Special Economic Zones in China, in order, of course, to take advantage of low wages in China.

The Problem of Taiwan Today

Since 1971, economic liberalization has led to considerable change. Ties of interdependence and vested interests have been created between the privileged classes on both sides of the Strait of Taiwan. It is not in the interests of either of the regimes to get in the way of these ties, still less to break them. And the imperialist bourgeoisie also has every interest in protecting and encouraging these links. After all, this gives it experienced negotiating partners among the Taiwanese bourgeoisie who can serve as go-betweens for it in the Chinese market.

And yet, despite all these ties and the billions which circulate back and forth across the strait (albeit often via Hong Kong), there are still no direct relations between the states of the two countries. There are not even any negotiations aimed at normalizing their relations. (There is still no direct channel for sending mail from one country to the other, or any direct means of transport, even if 3.5 million Taiwanese visit China each year... passing through Hong Kong.) As for real negotiations aimed at putting an end to this absurd division, the question hasn’t even been raised. On the one hand, there is a small, overpopulated island of 22 million people; on the other hand there is a giant country with a population sixty times bigger. This division is all the more absurd because Taiwan’s economy has reached the point where it is becoming closely dependent on China’s.

At present, the only form of semi-official relations between the two states is via two "private" associations set up by "volunteers" in the two countries (although these are presided over by top-ranking political dignitaries). These associations maintain permanent relations and deal with day-to-day affairs—a convenient subterfuge which allows the two governments to maintain the pretense that neither recognizes the legitimacy of the other.

In this context, the sabre-rattling of Taiwanese politicians regarding the island’s national sovereignty in the recent presidential election seems like a game of liars’ poker, if not pure political demagogy. But even here, the president Lee Teng-hui was always more cautious, avoiding the use of the word "independence," following up on demagogic statements in his speeches with other, more discreet ones in which he announced his intention to develop existing relations with the "economic authorities" of China. He even did this in the middle of the missile crisis. Meanwhile his main opponent, the Progressive Democratic Party candidate, was more openly in favor of a unilateral declaration of independence for the island. This may also be because he had little chance of being elected.

But in using this language, these politicians probably express the concerns of the Taiwanese privileged classes, who no doubt want to obtain guarantees concerning their fate if China is reunited one day. These privileged classes include, in particular, the old guard of 1949 emigrants, who now represent 10 to 15% of the population, but still occupy many key positions in the state apparatus and the economy. They have reason to fear that old scores could be settled, or simply that they will be ousted from their positions. The leaders of the Kuomintang apparatus, who are said to be looking for a way to privatize the party’s vast property for their own benefit, also are in no hurry to change the situation. Some of them may simply wish to strengthen their position in future negotiations so they can demand at least as favorable an economic status as Beijing agreed to for the multinationals’ subsidiaries operating in Hong Kong when the British colony is reincorporated in China in 1997. They may also demand a special political status which will guarantee that the privileged castes living off the Taiwanese state apparatus will retain a leading position in a reunited China.

In any event, to speak of independence or even autonomy, and thus pretend that the Taiwanese leaders might be in a position to decide what happens, is a mere bluff. These leaders know better than anyone else that the privileged layers on the island need a normalization of relations with China which will put an end to the obstacles and insecurity which are still a handicap to capitalist profits. And they know that they do not have the means to impose their conditions on China.

Of course, Beijing has resorted to a similar bluff when it fired its missiles. It is no coincidence that their "show of force" was limited to inoffensive missiles crashing into the sea. They didn’t even bother to make the symbolic gesture of occupying one of the many uninhabited rocks which are part of the Taiwanese territory. This probably shows that they were particularly careful to avoid jeopardizing the chances of a rapid opening of the negotiations they demand. No doubt the Chinese leaders made more noise in order to show that without a political settlement duly negotiated with them, there can be no normalization of relations between the two countries. But the Chinese leaders are certainly not counting on such military arguments to impose a solution. For one thing, they want this solution to have at least the tacit approval of imperialism. However, the Chinese may also have wanted to respond to the Taiwanese leaders’ gestures of allegiance to the U.S. by reminding them that the political settlement, if it is to be lasting, must be reached first and foremost with Beijing, and that American protection does not mean the Taiwanese regime can impose anything it likes in the negotiations.

The Chinese leaders certainly were justified in underlining this point. For, once again, the United States intervened in a very minor conflict. As in the days of the Cold War, it did so in the name of "democracy," a rather cynical claim given U.S. support for a Taiwanese regime that is no more democratic than continental China. The American leaders made sure that they brought their aircraft carriers close to the area of conflict for the same reasons that they underline from time to time the military aid they give to Taiwan. In a sense, the U.S. is marking its territory and making it clear that while they will not oppose a political settlement with a view to reunification, they intend to oversee this process and impose certain conditions on it. American imperialism continues to protect a certain degree of autonomy for Taiwan in order to have a means to pressure China.

The recent Taiwan crisis is above all a matter of bluff. None of the parties wants to see a military escalation. However, the fact that tension can rise so suddenly and such powerful military resources can be marshalled, even if it is only symbolic for the moment, shows what dangers could exist in a different context. A worsening economic crisis, for example, would raise the stakes quickly, and we might see an unsettled problem, like Taiwan, become a center of tension with a serious risk of armed conflict. The history of the United States’ interventions in this region, the responsibility of the U.S. in preserving the partition of China, help to maintain this source of tension.