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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

THE NATIONS

TAIWAN
Eye of the Storm
At the height of tensions,
Taipei and Beijing show restraint

By Susan Berfield
and Alejandro Reyes / Taipei


BY 7 A.M., FISHERMEN in Makung have unloaded their overnight catch and are selling it quayside to early-rising shoppers. Boatmen are loading their vessels with crushed ice from the harbor warehouse. Other ships are ready to set sail from the port, the main city on Penghu island (the Pescadores), 150 km northwest of Kaohsiung and 200 km east of China's coast.

It could have been any early morning on any day. The surprise was that the island was going about business as usual last week, at the height of the crisis in the Taiwan Strait. As part of its campaign to deter independence-minded voters and candidates ahead of Taiwan's first-ever direct presidential elections March 23, the Chinese People's Liberation Army had carried out live-ammunition war games just 70 km from Penghu March 12 to 20. The week before, it had conducted missile tests in two areas off Taiwan.

In Penghu, however, no one seemed spooked. Down the street from the fishmarket, four navy patrol boats were setting off, their guns covered. "We are not afraid," said Wu Tang, 52, as he held a live baby shark by the tailfin. "There isn't going to be any fighting. We Chinese are not like that." It's a common refrain among Penghu folk. On century-old ramparts of Hsitai Fortress on Hsiyu Hsiang, an adjacent islet, taxi driver Wang Ji-cheng looks out to sea and said, "Chinese people do not strike at Chinese people."

They do sometimes threaten, though. Beijing began a third military exercise in the Strait on March 19, this one centered on mainland-controlled Pingtan island; it is the closest yet to Taiwan territory. Taiwan military officials said that the week-long drills, involving the Chinese army, navy and air force, were meant to simulate an amphibious landing on Penghu, home to a key Taiwan naval base. The war games are scheduled to run beyond the elections. If President Lee Teng-hui wins, as expected, the PLA will probably stage maneuvers right up to his May 20 inauguration.

Through the gunsmoke, however, there were signs that Taipei, Beijing and Washington were looking for ways to end the face-off without losing face. Taiwan's Foreign Minister Fredrick Chien warned on March 19 that "Taiwan will make no concession under duress." But he also hinted that after the election Lee might curtail the high-profile trips abroad that had so angered Beijing. And Taiwan's head of mainland affairs, Chang King-yuh, said that both sides should return "to a relationship of peace, mutual interaction and mutual benefit."

China wasn't exactly talking peace last week, but promised it wasn't hawking war either. Top Chinese generals publicly and privately assured anxious U.S. and Asian officials that despite intensifying their military maneuvers in the Strait, they were not planning to attack Taiwan. Nor are the island's $25-billion worth of investments on the mainland in danger, according to An Min of China's Ministry of Foreign Trade and Economic Cooperation.

Beijing's Foreign Ministry spokesman Shen Guofang warned Washington to refrain from "brazen" acts such as its decision to station two carrier battle groups in the waters off Taiwan. But then he said the government hoped a just-agreed-upon April 21 meeting at The Hague between U.S. Secretary of State Warren Christopher and Chinese Foreign Minister Qian Qichen "would remove misunderstandings between us." In another promising development, Wang Zhaoguo, director of Beijing's Taiwan Affairs Office, told a Taiwan businessman in Beijing last week that China would accept the result of Taiwan's election regardless of who won. That led to hopes that the two sides could resume high-level unofficial talks suspended last year.

Campaigner Lee Teng-hui was not toning down his rhetoric, though. On a visit to Penghu island, Lee continued to chide China's leaders for their crude missile diplomacy. "They see freedom and democracy and they are scared to death," the 73-year-old Lee told a rally. Back in Taipei, two other candidates, independents Chen Li-an and Lin Yang-kang, reproached Lee for his policy of seeking explicit international recognition for Taiwan. The fourth, Peng Ming-min of the Democratic Progressive Party, criticized the president for not asserting Taiwan's de facto independence. Beijing has long vowed to invade Taiwan if it does so.

Though Penghu's fishermen seemed steely in the line of fire, elsewhere nervousness was evident. Last weekend, some residents of small islands in the Matsu chain voluntarily evacuated their homes. In the hills just outside downtown Taipei, workmen were refurbishing bomb shelters that would house the municipal government in case of attack. Taiwan residents were instructed to fashion their basements into refuges, and schools held emergency drills.

The economic toll was also mounting. The bourse is down 17% since last June, when tensions flared following China's first missile tests. That has prompted the government to spend $1.8 billion to prop up the jittery stock market, and pledge another $5.5 billion if necessary. Over the past nine months, the Central Bank has drawn up to $15 billion from Taiwan's $100-billion foreign exchange reserves to stabilize the currency. If China's intimidation tactics persist, says Schive Chi, a vice-chairman of Taiwan's key economic planning agency, meeting the forecasted 6% growth rate for 1996 would be "tough."

So far, though, business ties across the Strait seem only slightly frayed by the political tension. Two-way trade neared $21 billion last year, an increase of more than 25% over 1994. Taiwan's investments in the mainland have continued to grow during the past two months, though at a slower rate than in 1995. "In the long run, if the tension continues it will affect the economies of both sides," says Schive.

Mainland officials are alert to this. "We will cling to the principle of separating political clashes from economic links," said China's An Min last week. In cross-strait calculations, business interests could be a key factor pushing both sides toward compromise.


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