Background and Overview

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A Brief History of Modern China and Taiwan

After several centuries of relative Taiwanese autonomy, if uncertain sovereign status vis-à-vis China (a subject of continuing debate between China, Taiwan, and international scholars), Japan acquired the island as a colony in 1895 following the conclusion of the Sino-Japanese War. With the fall of China's Qing Dynasty in 1911, China was thrown into political and social turmoil as the end of centuries of dynastic rule left China in a politically fragmented semi-colonial state.

In this era, two main political-military groups with opposing ideologies competed to shape the future of modern China. The Nationalist Party (KMT) arose as the legacy of the Republic of China (ROC), which succeeded the Qing Dynasty but eventually succumbed to warlordism. The KMT envisioned China as a constitutional republic following Western models of government. The Chinese Communist Party (CCP), formed in 1921, sought a Chinese-styled Communist revolution and a future socialist China upholding the principals of Marxism-Leninism (and eventually Maoism).

The two groups, superficially working together, successfully unified China from the warlords in 1928 but quickly plummeted into open violent conflict. Despite a brief period of cooperation against the occupying Japanese Army during the 1930s, fighting between the KMT and CCP continued throughout the Second World War. On December 1, 1943, the heads of state from China, the United States, and Great Britain jointly signed the "Cairo Declaration" stipulating that: "all the territories Japan has seized from China, such as Manchuria, Taiwan and the Penghu Islands, shall be restored to China."

After the Japanese surrender in 1945, the United States, which had favored the KMT during the surrender negotiations, attempted to broker a truce between the KMT and the CCP. However, subsequent CCP-KMT disagreements and cease-fire violations resulted in U.S. abandonment of mediation efforts on January 29, 1947, and the withdrawal of the U.S. mission. The United States suspended military aid to the KMT but continued its program of economic assistance. On October 1, 1949, Mao Zedong, the chairman of the CCP, announced the establishment of the People's Republic of China (PRC) in Beijing while Chiang Kai-Shek, generalissimo of the KMT, withdrew to Taiwan, bringing two million KMT troops and supporters with him. His army proclaimed Taipei the temporary capital of the Republic of China.

In early 1950, as the CCP completed its consolidation of power over the mainland, the PRC began amassing troops opposite Taiwan while the KMT in Taiwan plotted its own cross-Strait attack. However, after the Korean War broke out in June of that year, the United States dispatched its Seventh Fleet to patrol the Taiwan Strait to prevent hostilities, and there was renewed cooperation between the United States and the KMT. On December 2, 1954, the United States and the ROC signed the Mutual Defense Treaty where the United States pledged support for Taiwan in the case of an attack by the PRC. Through these actions by the United States, the stalemate across the Taiwan Strait was solidified. Small-scale hostilities across the Strait continued throughout the 1950s over a string of islands (Quemoy (Kinmen) and Matsu) off the coast of China, but the situation eventually settled into one of the Cold War's most enduring and sensitive stand-offs.

After 1949, and throughout much of the Cold War, Taiwan enjoyed substantial international recognition as the Republic of China, especially due to the U.S.-led anti-communist campaign, and the mainland's own isolationist and ideological posture. However, in 1971, the PRC garnered enough votes in the UN General Assembly to expel Taiwan as the Republic of China, and to admit the PRC as the representative of China to the UN. In 1972, on a historic trip by U.S. President Nixon to China, the United States reestablished contact with the PRC and signed the first U.S.-Sino Joint Communiqué. This document, called the Shanghai Communiqué, formed the first formal written statement in which the United States and China expressed their views on the Taiwan question.

In the Shanghai Communiqué, China reaffirmed its position that the government of the PRC is the sole legal government of China; Taiwan is a province of China; and the liberation of Taiwan is China's internal affair in which no other country has the right to interfere. The United States acknowledged that all Chinese on both sides of the Taiwan Strait maintain there is but one China and that Taiwan is part of that China. In addition, the United States asserted its interest in a peaceful settlement of the Taiwan question by the Chinese themselves.

Throughout the 1970s, increasing numbers of nations followed a formula of establishing formal diplomatic relations with the PRC while maintaining an unofficial relationship with the ROC without acknowledging statehood. In 1979, the United States formally established diplomatic relations with the PRC during a visit to Washington by PRC President Deng Xiaoping. The January 1, 1979 communiqué establishing formal relations further outlined respective perspectives on Taiwan, and set forth the limits to U.S. engagement with the island, including abrogation of the bilateral defense treaty, withdrawal of U.S. forces stationed on Taiwan, and withdrawal of formal diplomatic recognition. Shortly thereafter, the U.S. Congress provided the outlines of an unofficial U.S. relationship with the island, and reaffirmed the U.S. commitment to Taiwan's security by passing the Taiwan Relations Act (TRA).

Tensions with Beijing over the possibility of U.S. sales of fighter jets to Taiwan early in the Reagan administration culminated in the signing of a third communiqué on August 17, 1982. The question of U.S. arms sales to Taiwan had remained unsettled in the course of negotiations between the two countries on establishing diplomatic relations. The 1982 communiqué sought to resolve this issue so that it would not stand in the way of the further development of U.S.-China relations. The United States asserted that it did not seek to carry out a long-term policy of arms sales to Taiwan and affirmed that future arms sales to the island would not exceed, either in qualitative or in quantitative terms, the level of those supplied in the years since the normalization of diplomatic ties between the U.S. and China. Furthermore, the U.S. declared its intention to reduce gradually its sales of arms to Taiwan, "leading over a period of time to a final resolution."

Despite efforts by Washington and Beijing to narrow their differences over Taiwan, the issue remained both sensitive and explosive. Tensions mounted in 1995, following a visit by Taiwan President Lee Teng-hui to attend commencement ceremonies at his alma mater, Cornell University. China objected strongly to the U.S. decision to grant Lee a visa and to what it judged to be an inflammatory speech delivered by Lee. In the summer of that year, the PLA conducted ballistic missile tests and a series of war games to demonstrate its displeasure. In March of the following year, China resumed its ballistic missile firings, this time with target areas in close proximity to Taiwan's two largest ports, Keelung and Kaohsiung. To deter the PRC from taking any military action against Taiwan or its outlying islands and to maintain American credibility throughout the region as the guarantor of East Asian peace and stability, the United States dispatched two carrier battle groups to the area.

The 1995-96 missile crisis had profound consequences for China's military modernization and U.S. defense relations with Taiwan. In the ensuing years, China began to invest heavily in upgrading its military capabilities with a focus on developing the means to use force against Taiwan to compel a political outcome favorable to Chinese interests. The prospect of the erosion of Taiwan's military edge raised alarm bells in Washington and led to the expansion of U.S. defense engagement with Taipei and President Bush's April 2001 approval of a robust arms sales package for Taiwan.

The Current Situation

Since 1978, China has adopted sweeping economic reforms and embraced a market economy, which has contributed to its nine percent average growth rate over the the past 25 years. China's opening to the outside world, culminating in its accession into the World Trade Organization, has made it a significant trade partner for many countries and the leading recipient of foreign direct investment. China's growing economic influence has given rise to concerns about negative impacts on the rest of the world in the case of an economic downturn. Despite growing economic ties across the Strait, many in Taiwan also worry that China will use its considerable leverage to squeeze Taiwan both economically and diplomatically.

With rapid economic development came a loosening of political control and a weakening of the CCP's legitimacy. As the society grew increasingly pluralistic and indifferent to ideologies, the CCP recast its image as the defender of China's national interests and territorial integrity, tying its legitimacy to the protection of China's sovereignty. Yet the surge of nationalism among mainland citizens, fueled by both past humiliations and newfound self-confidence, sometimes limited the options for the leadership in cross-Strait negotiations.

The situation across the Strait remains in a political stalemate, even as economic interaction between Taiwan and China continues to expand rapidly. Although China's emergence as a major regional power may shift the strategic balance in its favor in the future, it is frustrated with its limited influence on what it perceives as Taiwan's creeping independence and concerned with repeated challenges by Taiwan that test its resolve. Some observers worry that China may choose to demonstrate resolve in a fashion that would upset the delicate balance of the Strait.

As China becomes stronger economically and militarily, and becomes a more important regional and global player, Taiwan's qualitative advantage over the mainland in both areas may be jeopardized. In time, perhaps before the end of the decade, the strategic balance may shift in the mainland's favor. China is determined to forestall Taiwanese independence and eventually realize Taiwan's unification with the mainland. Although Chinese leaders emphasize their determination to resolve cross-Strait differences peacefully, Beijing has never renounced the use of force against the island. The cornerstone of China's policy remains the "One China Principle" that the mainland and Taiwan are both part of China and that China's sovereignty and territorial integrity cannot be separated. Beijing's formula for unification was originally the "One Country, Two Systems" model by which Hong Kong returned to Chinese sovereignty.

Meanwhile, the last 30 years have witnessed a pluralization and democratization of Taiwan politics. This has led to a flowering of local culture and, more importantly, a "new Taiwanese" local political identity. The death of Chiang Kai-Shek's son and successor, Chiang Ching-kuo, gave way to the presidency of Lee Teng-hui, the island's first native Taiwanese president. Lee came to champion greater Taiwanese political and cultural identity separate from any connection to China, enunciating in 1999 his preference for a "special state-to-state" relationship between the two sides that infuriated the mainland and resulted in an acceleration of China's military preparations.

Changes on Taiwan were demonstrated most starkly by the 2000 and 2004 presidential elections in which the first non-KMT candidate, Chen Shui-bian, emerged victorious. Chen represents the Democratic Progressive Party (DPP), a political party traditionally made up of native Taiwanese and whose platform prior to 1999 called explicitly for Taiwan independence. Chen has continued and expanded upon Lee Teng-hui's efforts to promote greater cultural and political separation of Taiwan from the mainland. In 2002, Chen declared that there was "one country on each side" of the Taiwan Strait.

A strong U.S. presence in East Asia has played a stabilizing role, and thus far has deterred the use of military force. Nevertheless, current trends threaten the relatively peaceful status quo. U.S.-Taiwan relations were strained in 2003 during President Chen's campaign for re-election, as Chen ignored American expressions of concern about his plans, first to hold the island's first referendum and later to re-write the ROC constitution. Following his razor-thin victory in March 2004, however, the bilateral relationship gradually began to improve. There are still ties that bind, such as the TRA and the concern of many Americans, including the U.S. Congress, for Taiwan's 23 million people. The United States continues to sell arms to Taiwan and the proximity of the Seventh Fleet continues to act as an ambiguous deterrent.

U.S. management of cross-Strait relations now rests on firm opposition to any unilateral action by either side to alter the status quo, which in Washington's definition is the preservation of peace and stability. This dual message means that the U.S. will not countenance the use of force by Beijing, nor will it allow Taiwan to pursue provocative policies that have destabilizing consequences. The U.S. policy of strategic ambiguity thus remains intact. Taiwan cannot assume that the United States will defend it under any and all circumstances, and China cannot rule out the possibility of U.S. involvement should it attack Taiwan.

International Security Program