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J. Piasecki: Two Chinas in One Bank: Was Taiwan’s bid for an AIIB membership bound to fail?

Nothing sparks controversies in Taiwan like the island’s relations with its bigger cousin – China. The “Sunflower Movement,” which flooded the streets of Taipei with thousands of young individuals, who protested the way the Cross Strait Service Trade Agreement was handled, is the most telling recent example. Taiwan’s intention to join the China-led Asian Infrastructure Investment Bank has not gone unnoticed by those most suspicious of Beijing among the Taiwanese, but the protests of roughly 30 people seem like a puddle in comparison to the wave of events that took place in March and April of 2014. Perhaps, this time the legislature was sparred a blockade, because of Taipei’s failure to participate in the project. But the question that really matters is: was Taiwan bound to fail and can it still potentially join the club?

At first glance, it may seem like China intended to exclude its neighbor from across the strait from the very beginning. As Taiwan’s President, Ma Ying-Jeou, put it, “there would be some issues such as the requirement of statehood for membership.” After all, statehood will most likely be a prerequisite for membership, and none of the 37 “prospective founding members” (and counting) has diplomatic relations with Taiwan. Not that it really matters, since the architect and the main investor of the new financial institution calls the shots. It is then up to Beijing, and Beijing only, to decide whether or not there is enough room for 2 Chinas in its recent enterprise. However, there may still be a spot for Taiwan, even if the walls of the new development bank can only accommodate one China. But that would require Taiwan to use a name alternative to the official R.O.C. And that is exactly the “other issue” President Ma might have had in mind.

Taiwan joined the WTO as “the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.” It participates in APEC (Asia Pacific Economic Cooperation) under the name “Chinese Taipei.” For many Taiwanese it is not just semantics, but a matter of national dignity. The first alternative name seems a bit longish and complicated, but it may be easier to swallow, because of its politically neutral and geographically oriented nature. However, President Ma reaffirmed that “Chinese Taipei” is an acceptable name. Ma’s statement has already been met with the Democratic Progressive Party’s (DPP) criticism.  The problem is, that “Chinese Taipei” is a poor translation of 中華台北 (Zhonghua Taipei), where 中華 should refer to the Chinese culture, not the Chinese state (中國 – Zhongguo). Therefore, the name “Chinese Taipei” is considered offensive by an increasing number of politically inclined young Taiwanese, who are close to the views represented by Doris Yeh, the leader of the popular metal band Chthonic, which openly promotes Taiwan’s independence.

Choosing a proper name is also a matter of national dignity for the Taiwanese political elite. Lawmakers from the opposition DPP have condemned the KMT government for submitting its letter of intent to join the AIIB on plain paper, instead of the letterhead stationery (in order to circumvent the name controversy). Another thing they found to be “a complete denigration of the nation” was the omission of the Minister of Finance’s official title in the document. Finally, the DPP Chairperson and the island’s most-likely next President, Tsai Ing-wen, described the government’s decision to submit the application through the Taiwan Affairs Office, as degrading. In effect, Taiwan’s bid for an AIIB membership has already been politicized, even before the actual negotiations have even started. It could mean that procedural and semantic issues may overshadow the pros and cons of Taiwan’s potential participation in the debate, which is to take place within less than a year prior to the upcoming general elections. But what is it that Taiwan wants to gain anyway from becoming a stakeholder of this Beijing-led financial institution?

In order to answer that question, one needs to understand Beijing’s motivations and how they might affect the R.O.C. Beijing claims the AIIB is an initiative of an economic nature, whereas Washington sees it as a geopolitical initiative, aimed against the US-led Bretton Woods system. Both perspectives have their merits, and both of them are important from Taiwan’s point of view.

Źródło: Wikimedia Commons

Źródło: Wikimedia Commons

First of all, there is a purely economic dimension that needs to be taken under consideration. As argued by Eric Chiou of the National Ciao Tung University, “AIIB should be viewed as a part of China’s grand strategy of ‘One Belt, One Road,’ in which China intends to revitalize two ancient commercial routes toward Europe by restoring a Silk Road economic belt and a maritime Silk Road.” The Asian Infrastructure Investment Bank is supposed to fill in the gaps in infrastructure in underdeveloped countries and regions, which will constitute an integral part of Xi Jinping’s ambitious plan and facilitate trade. More trade between Europe and China means more business for Taiwan, given the scope of Taiwan’s investment in the Mainland China. According to the European Economic and Trade Office in Taiwan, 30% of China’s trade with the EU was generated by Taiwanese companies operating in the mainland. Hence, it is natural that Taipei is interested in partaking in a project that would benefit its own economy. But there is also a political price to be paid.

Taiwan’s security interests rely on the United States’ guarantees, and the validity of those guarantees depends on the position of the U.S. in the Asia-Pacific region. The AIIB may not be a direct threat in this regard, but as demonstrated by Washington’s criticism of Britain’s decision to join China’s new club, the United States expect loyalty from their allies. And given Taiwan’s geopolitical situation, it does not want to be considered a black sheep in the US-led herd. That is why Taipei’s decision to wait until the last minute before the deadline for application (31 March) may be considered a safe play. The UK has already taken the first reprimand, which blazed the trail for other Western countries and encouraged them to apply. Shortly afterwards, Taiwan followed suit, and was spared any troubling comments, as the US stated that it respected this decision. But what about Taiwan’s motivations?

President Ma’s statement that Taiwan “should actively take part instead of staying on the sidelines” is key to understanding Taipei’s rationale. International isolation is what Taiwan has been struggling to overcome ever since it was abandoned by most of its diplomatic allies throughout the 1970’s. The bid for an AIIB membership is to be considered part of this effort. Ma believes it will facilitate Taiwan’s endeavors to be included in regional economic integration.

And finally, a successful admission to China’s new financial club would be an argument that the Sino-Taiwanese rapprochement, initiated by the current administration, soon after Ma took office in 2008, is the way to go, because it has won more international space for Taiwan. Beijing is well aware of this and it may affect its decision whether or not to let the island join the new club. After all, the general election in Taiwan will be held in early 2016 and any sign, which could be regarded as Chinese bullying, will spell trouble for the ruling, China-friendly KMT.

Taiwan’s bid for a membership in the Asian Infrastructure Investment Bank might not have been a failure from the start, even if it is too small for two Chinas.

Jakub Piasecki – Visiting Fellow at the Ministry of Foreign Affairs of Taiwan. 2009-2012 worked as a Press Officer and Policy Advisor on China in the European Parliament Languages: English and Chinese

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J. Piasecki: Two Chinas in One Bank: Was Taiwan’s bid for an AIIB membership bound to fail? Reviewed by on 13 kwietnia 2015 .

Nothing sparks controversies in Taiwan like the island’s relations with its bigger cousin – China. The “Sunflower Movement,” which flooded the streets of Taipei with thousands of young individuals, who protested the way the Cross Strait Service Trade Agreement was handled, is the most telling recent example. Taiwan’s intention to join the China-led Asian Infrastructure

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