Taiwan and the AIIB

The Ma administration’s gambit to have Taiwan join the ranks of several other developed economies who will be applying to join the nascent Chinese-led Asian Infrastructure Investment Bank (AIIB) seems, for the present moment, to have failed, to the applause of a section of the Taiwanese electorate. Though quizzical when compared with the dismal performance of the Kuomintang (KMT) party in the midterm elections last November, the controversial decision, when viewed through the increasing circumscribed international position in which Taiwan finds itself, begins to make a great deal more sense, as do the actions of President Ma himself. Though met with a small and quickly silenced spat of protests, the Ma administration clearly believed that its closed-door process that culminated in the application to become a founding member of the bank would be justified by the economic benefit it would have brought to the island nation.
Perhaps Ma is becoming increasingly afraid that Taiwan will be left out in the cold as its Asian neighbors continue to develop at stable paces, and thus decided to risk the ire of his people to once again position his country in close orbit with China’s economic giant. For, despite some serious concerns lately about the slowing growth rate of the Chinese economy and the risk of a financial collapse on the horizon, the Chinese continue to run up huge surpluses and expand their trade regime to every more remote parts of the the world, and with the AIIB seem to now be challenging the established Bretton Woods international financial order in an attempt to translate their wealth into influence.
This creates quite a dilemma for the Taiwanese government, who heavily depend on the Chinese for trade and investment in both directions. Taiwan has, in recent decades and particularly since the Ma administration’s ascent in 2008, been carefully treading a fine line between skimming the cream off the massive event that is China’s foray into the global economy and maintaining a degree of political self-determination through a close friendship with the United States. As the imperatives of its tightening domestic economy and its falling birthrates become ever more pressing, however, Taiwan has veered closer and closer toward reliance on China to keep its once booming economy afloat.
Like a rocket passing a black hole, however, Taiwan runs the risk of getting sucked into a situation from which it cannot hope to escape, namely China leveraging its economic influence on the Taiwanese economy in order to stage a political takeover that will eventually end in Taiwan’s territorial unification into the People’s Republic of China. It is precisely these prospects which have been rocking the sea of Taiwanese domestic politics. Last year’s controversial Trade Service Agreement with China, which was similarly passed with very little legislative oversight through closed-door consultation, ended in the occupation of the Taiwanese legislature for nearly an entire month and the solid defeat of the ruling party in the subsequent national elections. As Ma’s party takes further steps to deepen Taiwanese reliance on Chinese trade, it is precisely this sort of knee jerk reaction from the Taiwanese population which he is again risking.
Though the attempt to join the AIIB was indubitably a wise move from a purely economic perspective (indeed, there are those who would argue that not joining risks economic suicide), it is hard to see a way in which a continuation of this sort of policy will lead to a continuation of the current status quo, in which Taiwan, though not formally independent, retains a high degree of autonomy with little direction interference from the Chinese. Indeed, one of the most controversial aspects of the Ma administration’s decision was their willingness to file their application through China’s Taiwan Affairs Office (TAO), rather than through its central bank in the fashion required of other nations. China has insisted on Taiwan using the name “Chinese Taipei” whenever it participates in any sort of international organization, a name that President Ma’s opponents in the Democratic Progressive Party insists is demeaning to the nation.
In the aftermath of the rejection to become a founding member of the AIIB, the DPP’s assessment may not be that far off the mark. Despite its attempts in what might be called an appeasement of the PRC’s “One China Policy”, the Ma administration’s application was deemed by the TAO to not have been filed under the appropriate name. This is a serious slight to Taiwan, as it will now be unable to join the institution as a founding member and therefore be unable to participate in the writing of its charter, a process that most definitely will define its role in participating in the bank and therefore circumscribe its political position vis-a-vis other nations in the Asia Pacific. The bank is poised to become a pillar of the Asia Pacific economic region, with speculation that its unstated intention may be to rival the influence of the International Monetary Fund (IMF) or the Asian Development Bank, and Taiwan finds itself in a position of supplication just to have a share of the pie.
It is exactly this outcome which both young, politically active Taiwanese and the DPP were hoping to avoid. The opposition party will most certainly leverage this against the KMT in the upcoming presidential elections in 2016, in which they hope to build on their midterm success to claim the presidency and pursue a different policy with respect to China than the policies the current president has taken. However, despite the early protests of the United States over the development of the AIIB (protests claimed to be on the basis of a lack of proper oversight and regulation), the reality of the Asia Pacific economic situation seems poised to change as China translates much of the wealth it has been accumulating into financial and political power. Despite their obvious reluctance to turn over political power to a country which stated intentions to dismantle their current system of governance and territorial absorb them, the DPP, should they emerge victorious from the 2016 elections, may find their hands tied by situation.

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