Geopolitics

Taiwan's courtship with India-II
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Issue Book Excerpt: Rising India | Date : 07 Dec , 2010

Major Advantages: First, given the importance of China in Indian foreign policy, Indian policy makers, foreign policy analysts and think tanks must understand Beijing well. This is particularly so when India does not have China-experts worth the name. The best way to improve this situation is to interact with the Taiwanese scholars who are considered to be among the best China-watchers in the world.

Also read: Taiwan’s courtship with India-I

Of course, over the last few years, Taiwan and India have made some headway in educational exchanges.Other than their contacts with a number of leading Indian universities, Taiwan’s research institutes and think tanks have expanded their presence in India. Indian think tanks and bodies like the Institute for Defence and Analyses Studies, the Observer Research Foundation, the Confederation of Indian Industries, the India International Center, the Center for Policy Research and the National Institute of Advanced Studies, among others, have exchange programmes with their counterparts in Taiwan. However, these interactions, welcome no doubt, need to be much more intensified to assume meaningful dimensions.

China has always sought to marginalize India as a “South Asian power” and block its ambition of playing a major role in the Asia-Pacific”¦

Secondly, there can be mutually beneficial exchanges of information between the intelligence agencies and militaries of India and Taiwan on a range of issues such as terrorism, cyber-hacking, navigation security and sea-piracy. Similar exchanges take place between the Taiwanese agencies and their counterparts in the U.S., South Korea and Japan, to name a few. Even if one treats the interactions between Taiwan and the U.S. as unique and quite complex, the fact that Tokyo and Seoul share strategic information with Taipei is interesting in the sense that they have much more at stake than New Delhi in maintaining friendly relations with Beijing, considering their quantum of trade with and investments in mainland China, let alone their geopolitical links. Beijing may not like such interactions, but then the overall national interests of a country in cultivating relations with another must not be made hostage to the Beijing-factor. The point is if Japan and South Korea can do it, why not India?

Thirdly, there is tremendous scope for economic and technological cooperation between India and Taiwan, which is not making much progress because of New Delhi’s slowness in the conclusion of bilateral agreements on investment protection and avoidance of double-taxation. A country which is trying hard to reduce the overwhelming dependence of its economy on agriculture, India has a lot to learn from the Taiwanese phenomenon of its small and medium sized industries accounting for 98 percent of all business in the country, 80 percent of all business employment, and 25 percent of all direct export value. India could attract Taiwan to its software industry, particularly when Indian software giants are looking for alternate markets for collaboration following the recession in the Silicon Valley.

By transferring nuclear weapons, missiles and other equipment to Islamabad, it (China) has skillfully transformed the India-China nuclear debate into an India-Pakistan contest.

This is all the more so since many thinking Taiwanese are now having second thoughts about their growing investments in mainland China. With unemployment hitting 4.92 percent in 2001 in Taiwan, highest in the country’s history, and the stock market losing 50 percent its value, President Chen Shui-bian has been forced to loosen the restriction of 50 million dollars cap on individual Taiwanese investments and lift the ban on the country’s high-tech manufacturers from building semi-conductor plants in the Chinese mainland. Chen has also allowed mainland capital to enter Taiwan’s troubled property and stock markets.

However, in the process, a growing number of the Taiwanese doing business in the communist China have become, as has been mentioned in the beginning of this essay, potential hostages of Beijing in future. There is now a clear possibility of mainland communists “buying” parts of Taiwan or its corporate world. There is also the fear that the Taiwanese products could lose technological edge and innovation in the long run if their businessmen continue to engage in low-added value production activities in the mainland because of the cheap labour and establishment costs there.

Also read: Indo-French Partnership to Friendship

The point is that since technological innovation is the key component to long-term sustained growth in this age of competitive globalisation, Taiwanese businessmen deepening their ties with communist China, which is weak at innovation, will be suicidal after some years. The solution lies in establishing strategic R&D alliances with global innovation centres. And here, the prospect of collaboration between Taiwanese hardware and Indian software could be extremely promising.

Taiwan can extend its economic space and cope with population ageing by taking advantage of Indias relatively young manpower through outsourcing and off-shoring many activities.

Fourthly, there are demographic complementarities between India and Taiwan. The latter has been experiencing below replacement rate fertility levels of around 1.6 (and declining) for many years. Average life expectancy is 77 years and increasing. The elderly will make up 20 percent of the total population of Taiwan by 2020, and this will imply an increase in median age and a reduction in working age persons to the total population ratio.  In contrast, India is in a demographic gift phase, with rising working age to total population ratio till 2045. Even after that, its ratio will decline quite slowly, and the ratio will remain higher than for Taiwan.

Taiwan can extend its economic space and cope with population ageing by taking advantage of India’s relatively young manpower through outsourcing and off-shoring many activities. These may range from routine Business Process Outsourcing (BPO) types to those involving such activities as research, and design. Many MNCs, including those from China, are basing their research and design centres in India. Taiwan’s participation in selected areas of research and design could provide win-win opportunities. It is said in this context how a portion of Taiwan’s pension assets, which are projected to be US$150 billion by 2015, can be invested in India to obtain high returns. These in turn can assist in achieving financial security for the aged in Taiwan.

Strange comparison of Taiwan with Kashmir

Whichever angle one may look from, India can have an active relationship with Taiwan to promote its national interests. There is, of course, a theory running in the Indian Foreign Office that New Delhi cannot behave normally with Taipei, since by doing so China could retaliate by fishing in the troubled waters of Kashmir. Nothing can be more bizarre than this comparison of Kashmir with Taiwan.

“¦Beijing covertly (with the help of the intelligence services of Pakistan and North Korea) funded Nepals Maoist rebellion, which is inimical to Indian interests.

Kashmir has been an inalienable component of Indian civilisation from time immemorial. Kashmir’s de facto and de jure status is coterminous with that of India. However, this is not the case with Taiwan. No regime in China’s thousands years of history had ever any effective control over Taiwan. In fact, until 1895, when China “ceded” (claimed to cede) Formosa (ancient name of Taiwan) to Japan in perpetuity, no Chinese family from the mainland was allowed to migrate to Taiwan. More interestingly, when Japan relinquished its sovereignty over Taiwan (after her defeat in the World War II) under the San Francisco Peace Treaty of 1951, it just relinquished its sovereignty over Taiwan without transferring it back to China.

As Taiwan’s Vice President Annette Lu argues (this writer had interviewed her in 2001), “the real key to territorial relationship between Taiwan and China can be found in the San Francisco Treaty of 1951. The Treaty’s purpose was for the victorious Allies to deal with the unresolved issues left over from the World War II. Japan agreed to relinquish sovereignty over Taiwan and the Pescadore islands, but the question of which entity would control Taiwan was left unanswered. The status of Taiwan was intentionally left out of the Treaty, because the Korean War had broken out a year before and the Communist China was blamed for goading North Korea into invading the South.

Accordingly, the US President Harry Truman declared that the legal status of Taiwan has yet to be determined. Under the San Francisco Treaty, Japan was censured for having been one of the parties that instigated World War II and was thus forced to hand over Taiwan. But handing Taiwan over to Communist China would have amounted to rewarding an instigator of yet another war (Korean War). In short, the eruption of the Korean War was followed by a hot debate over the status of Taiwan, prompting Truman to declare Taiwan’s legal status unsettled”.

“¦tremendous scope for economic and technological cooperation between India and Taiwan, which is not making much progress because of New Delhis slowness in the conclusion”¦

It is against this background that Lu says that given the regularity of elections these days in Taiwan, the Taiwanese people have democratically asserted that theirs is virtually an independent and sovereign state. Incidentally the present DPP government has taken some significant policy decisions to do away with the concept of “One-China”. From the Indian point of view, the change in Taiwan’s attitude towards Tibet may be quite interesting. It may be noted that under the KMT rule, there was no difference between Beijing and Taipei as far as the position on Tibet and Inner Mongolia was concerned. After all, the KMT, which claimed to represent the real government of the Chinese people, shared with the Communist rulers in Beijing the same hard-line stance on foreign and defence policies.

So much so that the government at Taipei had Special Commissions on Tibet and Mongolia and the Interior Ministry had separate sections dealing with them. Tibetans and Mongolians coming to Taiwan were treated as if they were citizens of the country and the Interior Ministry handled their visits. Therefore when His Holiness Dalai Lama visited Taiwan in March 1997, he was just treated as a religious leader, and the nitty-gritty of his trip, namely the travel documents and living arrangements, was looked after by the Interior Ministry.

However, with the DPP assuming office in 2000, the above policy has lost its sheen. The Special Commission on Tibet and Mongolia has been abolished. The divisions on them in the Interior Ministry exist now on paper only. As a result, when the Dalai Lama made his second trip to Taiwan in April 2001, he was virtually given the treatment of a Head of State. His entire visit, during which he met President Chen and former President Lee Teng-Hui of the KMT, was handled by Taiwan’s Foreign Ministry.

Also read: It is time to wake up to Chinese incusions

The point that emerges from all this is very simple. That is the fact that Taiwan is going to exist with its own system and features, at least much longer than what the Chinese would like us to believe. The KMT may believe in the One-China principle, but party leaders like Joanna Lei (Kuomintang legislator and a prominent theorist in the party’s younger generation) are on record as having said that the path of pragmatism is to maintain the status quo with China, that is, “have increased economic integration with the mainland but absolute preservation of participatory democracy in Taiwan must thrive”.

In fact, some Taiwanese intellectuals and business executives are also studying the concept of a Chinese commonwealth, modeled after the British commonwealth, as a way of integrating Taiwan economically while overcoming its political and diplomatic isolation. This being the case, it does not make sense why a power like India cannot have a healthy relationship with Taiwan, even within the constraints of the lack of diplomatic relations, when the rest of the world is managing that. It is time, therefore, India stopped seeing Taiwan through the prism of China.

Conclusion

It is well known that China has always sought to marginalize India as a “South Asian power” and block its ambition of playing a major role in the Asia-Pacific, not to speak of the world at large. By fanning the India-Pakistan conflict, it has contained India within the subcontinent. By transferring nuclear weapons, missiles and other equipment to Islamabad, it has skillfully transformed the India-China nuclear debate into an India-Pakistan contest. Additionally, Beijing covertly (with the help of the intelligence services of Pakistan and North Korea) funded Nepal’s Maoist rebellion, which is inimical to Indian interests. It is not exactly a happy development for India that the Maoists now effectively rule Nepal and threaten to “liberate” the so-called Nepalese areas, including Darjeeling and parts of Himachal Pradesh, Uttaranchal and Sikkim, “under illegal possession of India.”

China is leaving no stone unturned to encircle India with enough pressure-points so that it does not exercise its legitimate influence outside the subcontinent”¦

Beijing intends to create a new surrogate in Bangladesh; it has already signed a defense pact with Bangladesh without making the contents public. China is about to enter the crucial Indian Ocean (from India’s point of view) in a big way:as can be seen by the manner of its marking its presence in Myanmar’s Coco Island on the one hand and Pakistan’s Gwadar port in the volatile Baloochistan province on the other. China is leaving no stone unturned to encircle India with enough pressure-points so that it does not exercise its legitimate influence outside the subcontinent, not to speak of the world at large.

Viewed thus, finding a supporter in Taiwan in the Asia-Pacific region, the region which is going to determine the contour of 21st century world politics and which is the focus of India’s “Look-East policy”, is a big plus for Indian strategic policy in the world. But then, there is a limit beyond which India may find it difficult to go in this courtship. And ironically, China, again, happens to be the limiting factor, though in a different way. China, undoubtedly, is India’s principal strategic competitor in the world; but of late, the economic interactions between the two have grown manifold.

The annual trade between the two countries has reached the 20 billion dollar mark. In contrast, the annual Indo-Taiwan trade is worth about 3 billion dollars (although this figure has more than doubled; the figure was only 1.2 billion dollars in 2002). All told, Taiwan’s investments in India are only about 114 million dollars, whereas its investments in China are around 200 billion dollars. Even in Vietnam, Taiwan’s investments amount to 15 billion dollars, not to speak of countries like Indonesia where the figure is 10 billion dollars.

That means, in order to create a strong constituency in India, Taiwan has to invest much more in India than what it is at the moment. If Asean countries, Japan and the US are sympathetic towards Taiwan, it is essentially due to the fact that they have vested interests, considering their economic and technological links with the island nation. And it is precisely these links that need to be strengthened when one talks of the Indo-Taiwan courtship. In fact, the fate of the courtship is dependent on these links. And in developing them, it is Taiwan that needs to do a little more work than what is the case at present.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Prakash Nanda

is a journalist and editorial consultant for Indian Defence Review. He is also the author of “Rediscovering Asia: Evolution of India’s Look-East Policy.”

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