December 16, 2016 / 4:02 AM / in 10 months

Cox: Taiwan deserves better than Trump's drive-by

TAIPEI (Reuters Breakingviews) - On the third floor of the National Palace Museum in Taiwan, visitors queue for half an hour to see a head of cabbage carved in green and white jadeite. The sculpture, with a locust munching its leaves, is one of thousands of precious artworks that traveled to Taiwan along with Chiang Kai-shek’s retreating Kuomintang army at the end of the Chinese civil war.

Visitors gaze at the Jade Cabbage, one of the most popular exhibits at the National Palace Musem in Taipei, displayed here with a hard rock sculpted like a piece of tender fatty pork January 6, 2005.

The wait is about half as long as it was before the Taiwanese election, a museum guide tells me. Since taking office in May, President Tsai Ing-wen has refused to reaffirm the “One China” policy, effectively a belief that the two countries will one day reunite. Best not to talk about it, however: it has kept relative peace in the region for a generation. In retaliation, Beijing cut the flow of tour groups to the Republic of China, Taiwan’s formal name after Generalissimo Chiang fled with his defeated Kuomintang in 1949 after Mao Zedong and the Chinese Communist Party chased him off the mainland.

The wait to see the stone cabbage may get shorter still, thanks to Donald Trump’s drive-by embrace of what China considers a “renegade province.” In the two weeks since the U.S. president-elect got on the blower with Tsai and upended four decades of careful diplomacy, it looks like this shining example of vibrant democracy in Asia got taken for a ride.

Sure, Taiwan gained a flicker of national pride from Trump’s shout-out. For Tsai, it may have helped shore up her sagging popularity for a moment. But it’s hard to see how this $500 billion-plus economy will benefit from its brief dalliance with America’s Tweeter-in-chief.

Tourism is the quickest and most visible way China can punish Taiwan. In the first few weeks of October, group visits from the mainland, which Beijing can control through state-run travel agencies, fell 71 percent from the same period a year earlier, Reuters reported, prompting the government to pledge nearly $1 billion in loans and other subsidies.

And that was before Trump’s call, which caused a diplomatic rift between the United States and China with Taiwan squarely in the middle. Beijing has blamed Taipei for instigating the conversation, which is partly true. Formal diplomatic relations were severed when Washington recognized Beijing in 1979, and other nations have similarly distanced themselves from Taiwan under pressure from China. Taiwan chafes under this environment, and the phone call was a culmination of Taiwan’s lobbying efforts.

What appears to have induced Trump to take the call is the island’s cause célèbre role with right-wing Republicans. Reince Priebus, who will be chief of staff in Trump’s White House, visited the island several times in recent years. So it’s not totally surprising that Trump decided to send a message to the world that Taiwan is a special friend, a beneficiary of U.S. military security in the region, and Exhibit A that democratic values - including, but not limited to, freedom of speech, religion and protest - can exist in a Chinese cultural context.

But Taiwan wasn’t prepared for the Trump-style tweet-plomacy that followed. Trump’s transition team let that cat out of the bag early, but the real problem was Trump’s use of the social medium. In four short outbursts over two days, Trump used the call as a battering ram against China, linking it with his critical views on Beijing’s trade, currency and military policies. Taiwanese officials, who have been trying not to further upset relations with the mainland since Tsai’s election, didn’t see this coming.

Moreover, Trump doubled down on the controversy by suggesting Taiwan’s sovereignty was effectively up for grabs - a bargaining chip in a bigger negotiation with China. “I don’t know why we have to be bound by a One China policy unless we make a deal with China have to do with other things, including trade,” Trump told Fox News on Sunday.

Taiwan deserves better. The island is a model for the region - and its far larger rival 110 miles across the water. And though its economy has slowed in recent years, its people enjoy an enviable quality of life. Its GDP per capita on a purchasing power parity basis is some $47,000, higher even than in the United Kingdom, France or Canada. It’s an example of what’s possible when democracy and free markets flourish in Asia.

Though it was not perfect, the One China status quo allowed Taiwan to manage its business and security while Beijing could pretend it didn’t matter. The United States was able to do “a lot with and for Taiwan,” writes Richard Bush, senior fellow at the Brookings Institution who once worked at the American Institute of Taiwan, which conducts official business there on behalf of the U.S. government. “As long as we do it behind the facade of unofficial relations, China does not complain.”

But the longer-term negative effects of the call will become apparent in coming months. China can further restrict tourism. It can pry away some of the few remaining countries that still formally recognize Taiwan, such as Panama. As Moody’s recently warned, it can also exert pressure on other nations in the region to restrict trade or commerce with Taipei. Most painful, and not without a cost to its own interests, China can hit Taiwanese capital on the mainland.

For Taiwan’s many successful companies, unimpeded interaction with China remains critical. Hon Hai Precision Industry, better known as Foxconn, employs as many as a million workers in China at its facilities manufacturing products for clients like Apple and Amazon. Taiwan Semiconductor, which sports a $150 billion market capitalization, is building a $3 billion advanced silicon-wafer manufacturing facility in Nanjing. There are also legions of Taiwanese individuals, many of them young, living and working on the mainland.

Trump may not know about these details. He has arguably gotten what he wanted all along: a rise out of China. He might not care much what happens to Taiwan next.

On Twitter twitter.com/rob1cox

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