China’s 31 Preferential Policies for Taiwan: An Opportunity, Not a Threat

China’s strategy is a blessing in disguise, pushing the government and all political forces to do better in order to offer the Taiwanese people a viable alternative to the ‘Chinese promise.’

On Feb. 28, China’s Taiwan Affairs Office (TAO) announced a set of 31 new preferential policies (31PP) to attract more Taiwanese to China by granting them equal treatment with their Chinese “compatriots.” Of these, 12 measures are concerned with facilitating market access and competition for Taiwanese enterprises in China. In future, Taiwanese will be allowed to invest in state-owned enterprises and to participate in public biddings and innovation programs (like the “Made in China 2025” strategy). Chinese institutions are to offer Taiwan’s security firms and banks their cooperation to strengthen the latter’s market position in China and enable them to offer more services.

Similarly, 19 measures offer new opportunities for highly educated Taiwanese to study, initiate startups or join the Chinese labor market in areas which have been difficult to enter in the past. For instance, Taiwanese are promised to get better access to China’s cultural industries, while restrictions on Taiwanese capital investment and technical participation in Chinese film-making will be relaxed. High-skilled professionals and technical personnel from 134 listed professions have been invited to work in China, with all administrative restrictions annulled, and Taiwanese patents brought to China will be protected by Chinese law.

Moreover, Taiwanese scholars and universities can participate in China’s manifold grant programs for research funding and are eligible for the same state subsides as their Chinese counterparts.

All in all, this is a determined and comprehensive effort to open up to Taiwan, with the implicit objective to attract as many Taiwanese as possible to invest, make a career and lead a life in China.

Reactions in Taiwan have been as expected: Anxious voices from the media and political camps called on the government to come up with adequate responses to this “gift package,” and Premier William Lai has quickly found himself in a crossfire of political demands to react swiftly and promptly to this new Chinese challenge to Taiwan’s well-being and long-term survival.

No question, the 31PP-strategy is China’s latest attempt to lure Taiwan fully into its economic orbit. But are these policy measures really so scary? I would argue they are not, but should rather be seen in a positive light concerning Taiwan’s future. Why would I say so?

China’s initiative is a confession of defeat concerning its political approach to Taiwan since the change of government there in mid-2016.

To begin with, China’s initiative is a confession of defeat concerning its political approach to Taiwan since the change of government there in mid-2016. Almost two years of concentrated efforts to force the Tsai Ing-wen government to recognize the so-called “1992 consensus” have failed. Although Taiwan faces a rough international environment, with countries and companies being hard pressed by Beijing to ignore the island republic and drop any nomenclature that would suggest acknowledgement of Taiwanese sovereignty, the Tsai government has stood firm to defend its rejection of Beijing’s “one China” principle. It has paid a price for this, of course, as its international participation has been visibly restricted by Beijing’s intervention.

In the end, however, not so much has changed since the Ma Ying-Jeou era. The “international space” that Ma claimed to have gained for Taiwan due to his “pro-integrationist” China policies was a chimera, rather than substantial. Below the surface of so-called warm relations between the two sides and a number of showcases for more international participation, like in the World Health Assembly, Taiwan has been even harder pressed by the Chinese government to play ball in the global arena. Foreign governments looked the other way when Taiwan’s diplomats tried to deepen bilateral relations: China warned them that any issue concerning Taiwan would be solved between the two sides without the need for third-party forces to interfere to any extent. Many governments in Europe were all too happy to turn the other away. In fact, Taiwan’s precarious international space rather shrank during the Ma era because of his approach to China!

Today, outside of officiality and under conditions of increasing Chinese influence-peddling around the world, foreign governments and parliamentarians signal sympathy and give support to Taiwan, something that Beijing’s leadership cannot be happy about.

After the change of government in Taiwan in 2016, Chinese leaders quickly lost confidence in the Kuomintang’s (KMT) future usefulness to bring about unification. They were forced to accept that the former ruling party had lost its credentials among the Taiwan populace, with no hope of a comeback anytime soon. Two options emerged from this: First, fully in line with “traditional” United Front tactics, strengthening (mostly by financial assistance and business deals for its leaders) hard-line “unification forces” — the China Unification Promotion Party (CUPP), the New Party and other splinter groups — which have some potential to destabilize Taiwanese society through provocative actions and underground activities. Second, and much more promising, “comprehensively opening-up” to Taiwan in order to foster market-induced economic and social integration across the Taiwan Strait. Simply put, the defeat of China’s “official strategy” has paved the way for a more encompassing and systematic outreach to the Taiwanese people.

“Comprehensively opening up” targets Taiwanese who want to make a career and look for business opportunities in China. Given the difficult situation at home, with low salaries for university graduates, limited career perspectives for white-collar workers and professionals, and a small domestic market offering little profit for new companies, it can be assumed that many Taiwanese have now been made an offer they can hardly refuse. This is, no question, a huge challenge for Taiwan’s government.

It is, however, an opportunity as well.

Incentivizing technological and industrial innovation, public debt restructuring, investment in education and social care are some of the keywords which point to the necessity of a comprehensive reform strategy aiming to keep the best and brightest at home and ensure Taiwan’s economic and social well-being.

China’s 31PP-strategy certainly has a political underpinning, but its core significance is economic: It forces Taiwan into a fierce competition for investment and human capital that it must face not only because of the “China threat” but because of the forces of globalization, of which China is just one manifestation. The threat of the 31PP-strategy is nothing more or less than a struggle with the forces of globalization which have pushed the island republic to modernize across the board. Incentivizing technological and industrial innovation, public debt restructuring, investment in education and social care are some of the keywords which point to the necessity of a comprehensive reform strategy aiming to keep the best and brightest at home and ensure Taiwan’s economic and social well-being. China’s 31PP-strategy therefore is a blessing in disguise: It pushes the government and all political forces to do better in order to offer the Taiwanese people a viable alternative to the “Chinese promise.”

For that reason, an attitude of anxiety or even anger is certainly the wrong answer to China’s rational behavior to “incorporate” Taiwan. All other things being equal, Taiwan must take up the challenge and cultivate a spirit of competition, self-confidence and optimism. It must take China’s “comprehensively opening-up” as a catalyst for determined economic and social reform in Taiwan proper. Even if it could never match China’s economic clout and attraction, it would then still be able to play a powerful part in an integrated regional economy and add a number of “soft components” that would convince many Taiwanese to stay, most notably its democratic system and high quality of life.

Being afraid or angry of China is useless. Turning anxiety into action to make Taiwan fit for the future is the order of the day.

This article was originally published in Taiwan Insight and is reproduced with permission. Top photo: William Lai official Facebook page.