CHAPTER 4 - CHINA'S U.S. POLICY: TO AVOID A HEAD-ON COLLISION

Summary

Taiwan in China's Overall Development Strategy

To understand why Beijing felt so slighted by Lee Teng-hui's United States visit in 1995, we should first of all examine the importance of the Taiwan issue in China's overall development strategy.

In my view, China's basic overall development strategy since 1978 has been to build a booming coastal economy in the south first, i.e. Shenzhen, Xiamen and other special economic zones in the south. This southern coastal economy would be positioned to obtain foreign capital and high-technology from the world market, while at the same time its influence would extend inward to other coastal regions in the north as well as middle and far-flung regions to bring about a nation-wide, mutually supplementary and wave-like economic development. The purpose of this would be to build strong, comprehensive and well co-ordinated industrial, scientific and agricultural bases for China's sustained development into the next century.

In order to extend outward, China needs a strong “small triangle” made up of the southern coastal economy as well as Hong Kong and Taiwan. Developments in Hong Kong and Taiwan will make or break China's future development. Initially they will serve as two pillars in the “small triangle”. And, post-reunification, they will form a bigger “nucleus” which will greatly boost China's economy and status in the world.

In a talk on 23 October 1993, Chinese President Jiang Zemin called for the reunification of Taiwan's economy and the mainland's “solid industrial technologies”, saying that if Taiwan joined hands with the P.R.C., “none in the world could bully us”. By the end of 1995, the combined foreign currency savings of Taiwan, China and Hong Kong topped US$210 billion, overtaking Japan as the largest. The combined amount of foreign trade registered by Taiwan, Hong Kong and China in 1996 totalled US$890 billion, coming in third after the United States and Germany, with aggregate exports and imports reaching US$450 billion and US$440 billion respectively, both at the third-highest levels.