SHOWDOWN OVER SOVEREIGNTY?

Go to a story about grassroots attitudes toward reunification

Go to an interview with Premier Vincent Siew

Go to a story about new campaign styles

Go to a story about Taipei's Mayor, Chen Shui-bian

EVEN FOR SOMEONE WITH a history of provoking China, the assertion last week by Taiwan President Lee Teng-hui that his island enclave was an "independent and sovereign country" was remarkable for its boldness. Not only were his words inflammatory -- Beijing has long warned that an official declaration of independence was a tripwire for a military attack -- but the timing also seemed jarring. China had been unusually conciliatory in its global diplomatic posture of late, courting its old adversaries the United States, Russia and Japan. Even tensions across the Taiwan Strait appeared to be easing. Many observers were expecting the resumption of a dialogue that China angrily broke off in 1995 after Lee went on a controversial, landmark visit to the U.S.

Yet Lee was baiting Beijing again. "Maybe they want us to say the Republic of China [Taiwan's official name] is a province of China," Lee told the Washington Post and The Times of London. "But 21 million people don't agree." Taiwan officials scrambled to undo the damage, insisting that Lee had been misunderstood and the government's position of seeking reunification had not changed. Premier Vincent Siew Wan-chang -- who just days before the president's comments had offered to send the island's top negotiator to China for talks -- told Asiaweek in an interview (see page 26) that Lee was merely referring to the "political reality" that "the Republic of China [Taiwan's official name] has been a sovereign state since 1912." The ROC ruled all of China until 1949, when Kuomintang forces fled to Taiwan after being defeated by their Communist foes.

Beijing's response was measured and, for now, strictly verbal. Foreign Ministry spokesman Shen Guofang said cross-strait relations had been "gravely compromised" by Lee. "There is only one China and the People's Republic is its only legal representative," Shen said.

Taiwan's dealings with the mainland may seem schizophrenic. But they reflect the pressures, both internal and external, being brought to bear on the prosperous island over its foremost security concern: how, when and even whether it should be reunited with mainland China. If Lee has been more defiant than usual, it may be because he fears being backed into a corner by a new coalition between an old friend and an old foe.

China, trying to get Taiwan to talk reunification, is seeking help from America, Taiwan's chief protector and trading partner. While hosting his Chinese counterpart Jiang Zemin in Washington recently, U.S. President Bill Clinton renewed his country's commitment to "one China" and expressed his wish that cross-strait talks reopen as soon as possible. And with Hong Kong's smooth return to China, Jiang is effectively playing his "one country, two systems" card as a starting point for negotiations with Taiwan. "Our primary concern with the Clinton-Jiang summit and other such high-level exchanges," Siew told Asiaweek "is whether or not our rights and interests are sacrificed."

Officially, the KMT shares Beijing's view that there is only one China. But the gulf between the democratic island, whose citizens voted directly for their president last year, and the authoritarian mainland is wider even than that between Hong Kong and China. Applying "one country, two systems" to Taiwan would be "wishful thinking," says Siew. Instead, Taipei leaders are floating the notion of a loose-knit "federation" -- a model Beijing will not readily accept.

Culturally, too, divisions are deepening. Taiwan's increasingly affluent and well-educated population has a greater degree of physical and psychological separation from the mainland than does Hong Kong. Indeed, some say they feel closer bonds with Japan, which ruled the island during the first half of this century. A generation of Taiwan residents has known nothing but de facto autonomy -- and cannot imagine life under Beijing's rule. An August opinion poll showed a large majority backing the status quo, while only 10% favored immediate independence and 5% swift reunification. Some 82% perceived Beijing to be hostile, the highest such reading since 1995.

Taiwan's growing alienation from the mainland is reflected in the ascendance of political groups that are challenging the aging and scandal-plagued KMT. The opposition Democratic Progressive Party, whose ranks include the populist Taipei mayor Chen Shui-bian, regards Taiwan as independent in fact. It favors a popular vote on a formal declaration. "The KMT has always said that we have economic power and that's enough," said Kaohsiung city councilor Lin Yun-chien, a DPP member. "But it isn't. Just try going abroad with a Taiwan passport. Few [countries] accept it." Some observers consider Chen a frontrunner to replace 74-year-old Lee, who is not expected to run for re-election as president in 2000.

Lee's approach to reunification is characterized by the catch-phrase "no haste, be patient." It is a course that is increasingly frustrating for powerful business interests in Taiwan. They are worried that the island is risking its economic future by not rapidly bonding with the mainland. In October, Evergreen group chairman Chang Yung-fa, one of Taiwan's most influential businessmen, stirred controversy when he called for an end to the government's longstanding ban on direct transport, communications and commercial links with the mainland. Taiwan aspires to become an Asia-Pacific hub for transport, media, communications and technology, but that plan is likely to be thwarted if the island is cut off from China's huge markets.

Exchanges between mainland and island are actually considerable. Air connections are readily available through Macau and Hong Kong. Non-direct trade has reached $15 billion, while Taiwan companies have invested $10.8 billion in China since a ban on indirect investment was lifted in 1991. Since Taipei lifted travel restrictions a decade ago, Taiwan people have made more than 10 million trips to the mainland, while 180,000 journeys have gone in the opposite direction.

Increasingly, China's leaders are offering greater economic cooperation as an incentive to closer ties. Last month, Foreign Minister Qian Qichen called for quick approval of direct mail, shipping and trade connections. And major Beijing newspapers carried stories last week citing the need to speed up business linkage. Meanwhile, a delegation of pro-unification politicians left Taipei for Beijing to meet Jiang Zemin.

With Clinton set to visit China next spring and the Taiwan question likely to top the agenda, Beijing officials seem optimistic that high-level talks with Taipei will begin soon. Without giving details, a Taiwan negotiator said in Beijing last week that he had held "constructive" discussions with a mainland counterpart. "The independence cause has been used by some [Taiwan] politicians as a means to achieve certain political ends," says Yu Keli, deputy chief of China's Institute of Taiwan Studies. "But even these people do not genuinely believe in Taiwan independence." Yu adds that China does not intend to make more concessions to Taiwan beyond its "one country, two systems" plan. That, unlike Hong Kong's version, offers the island control of its own armed forces as well as some foreign-affairs functions.

In fact, there were hints that renewed talks could take up more substantive issues than in the past, when they focused on technical matters such as fishing rights and the repatriation of hijackers. Taipei, Siew told Asiaweek, would "not rule out" discussion of "political" issues, such as "the signing of peace agreements." The next day, spokesman Shen of the Beijing Foreign Ministry urged Taiwan to "hold formal talks as soon as possible to end the state of hostility."

In Taiwan itself, many analysts expect the KMT eventually to form a coalition government with the DPP. Both parties will likely become more centrist, with increasing marginalization of both pro-independence and pro-unification factions. "We will follow the principle of gradualism in exchanges with mainland China," says Wu An-chia, deputy chairman of Taipei's Mainland Affairs Council. "We don't have a timetable for reunification." Officials on both sides may well succeed in easing cross-strait tensions in the near future. But they will have their work cut out if they aim to bridge the formidable differences between mainland and island.

-- With reporting by Alejandro Reyes/Taipei, Anne Naham and David Hsieh/Beijing, and Law Siu-lan/Hong Kong