Chinese Regime Holds Out Economic Carrots to Taiwanese, but the Gifts Invite Skepticism

March 1, 2018 Updated: March 6, 2018

Amid the continuing military standoff and tensions across the Taiwan Strait, the People’s Republic of China (PRC) has announced a whopping list of new economic benefits designed to lure Taiwanese businesses and individuals to come to the mainland. The Taiwanese government and some observers warn that the new “gift package” from the Chinese regime, which continues to threaten the island nation militarily, may serve a sinister design.

The announcement unveiled by China’s Taiwan Affairs Office on Feb. 28 contained 31 items across 29 government agencies that supposedly would give even more economic benefits for Taiwanese who do business or live in mainland China.

The move is said to be consistent with the Chinese regime’s official policy to “deepen cross-strait economic and cultural exchanges and cooperation” affirmed during the Chinese Communist Party’s 19th Party Congress last year, according to the statement.

At a glance, the “gift package” appears impressive in its promises, which would welcome Taiwanese individuals and businesses to invest and engage with China’s most restricted industries, such as energy, infrastructure, finance, and entertainment—industries that are usually off-limits to foreign investors and foreigners.

Taiwanese companies would also be able to participate in the Chinese regime’s projects designed to stimulate economic growth, such as the “Made in China 2025” initiative, while taking advantage of lower taxes and more backing from the state.

Other items would make it easier for Taiwanese to study, work, and do business in China. Taiwanese doctors and some finance professionals, for example, can now use a fast-track process to convert their licenses and practice in China.

In the entertainment industry, Taiwanese films and television dramas are promised that approval for screening in the lucrative mainland market will come more easily. The benefit only speeds up but does not remove the approval process, which means the content will still be subjugated to China’s sophisticated censorship mechanism.

Skepticism Runs High

Taiwan’s Mainland Affairs Council said the measures are an attempt by China to fulfill its goal of reuniting with the island nation. It also said that the announced measures are not legally binding and that Taiwan will watch to see how China’s state agencies actually fulfill these promises.

Observers also say that the Chinese move is consistent with Beijing’s “soft-hard” approach to cross-Strait relations. The Xi administration is using both carrots and sticks to work toward its ultimate political objective of subordinating Taiwan under the PRC, said Russell Hsiao, executive director of the Washington, D.C.-based think tank Global Taiwan Institute.

Since Taiwan’s Tsai Ing-wen took office almost two years ago, the Chinese regime has continued to suppress Taiwan’s international presence and engagements with other nations. In response, the Tsai administration has introduced what it has termed the “New Southbound Policy,” a set of Taiwanese initiatives designed to enhance exchanges with Southeast Asia, South Asia, and Oceania.

“By enticing Taiwanese businesses to invest more in China, Beijing is trying to lure away investments that may otherwise be incentivized to go into the targeted markets under the New Southbound Policy,” said Hsiao.

The regime has also unleashed numerous threats against Tsai’s government, which is ruled by Taiwan’s Democratic Progressive Party (DPP), which favors maintaining Taiwan’s independent status quo separated from the mainland. China’s military has continued its massive buildup and aggressive posture toward Taiwan, with the recent activation of a controversial commercial air route running up the Taiwan Strait as a prominent example.

Taiwan’s opposition party, the Kuomintang (KMT), has been seen as more in favor of reunification with China, a position that it tends to downplay during electoral campaigns, as the majority of Taiwanese voters reject the prospect of living under the authoritarian rule of the Chinese regime.

The KMT has consistently argued that Taiwan risks Beijing’s wrath due to failure by the DPP and the Tsai administration to embrace the “1992 Consensus,” an alleged understanding between the KMT and the PRC that both sides acknowledge there is “one China,” though with different interpretations of what “one China” means.

KMT politicians have repeatedly blamed Tsai’s government for the perceived reduction in mainland Chinese tourists, and have consistently warned that by giving the Chinese regime a cold shoulder, the Tsai administration risks damaging Taiwan’s economic ties with China and could invite retaliation against Taiwanese businesses and individuals in China.

The latest “gift package” from China, however, would seem to indicate that the Chinese regime leadership has, at least on the surface, taken a soft-line and a sugar-coated approach in response to Taiwan’s defiance.

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