mainland China

China and Taiwan

by Fred E. Foldvary, Senior Editor

After World War II, there was a civil war in China between the Nationalists and the Communists. When the Communists took control of the mainland in 1949, the Nationalists, led by Chiang Kai-shek went to Taiwan, where they established the Republic of China. Both the Nationalists and the officials of the People's Republic of China (PRC) considered themselves the legitimate governments for all of China.

The Nationalists implemented land reform and a tax on land value, the policy that the earlier revolutionary leader Sun Yat-sen espoused. During the next 50 years, Taiwan developed from a poor province to a modern prosperous economy with one of the most equal distributions of income in the world. Mainland China implemented reforms in the late 1970s which leased land to farmers who could then be free to market their crops. China has gradually moved towards a market economy, but the government in Beijing has maintained tight controls on speech and religion. Taiwan moved towards democracy, while the People's Republic stayed under the rule of the Communist Party.

Most countries of the world have diplomatic relations with the government in Beijing, which also has the China seat in the United Nations. Taiwan is able to trade with other countries, but is hampered by the lack of full diplomatic relations. In July 1999, Taiwan's president Lee Teng-hui indicated that Taiwan and China should have state-to-state relations, infuriating the chiefs of government in Beijing. Lee then said Taiwan's policy remains eventual reunification.

The government officials in Taiwan seek parity with those in Beijing, equal governmental status. Parity would be a compromise between full Taiwanese independence and domination by the government in Beijing. But how can there be parity between the two governments and still have "one China"?

The governments in Taipei, capital of Taiwan, and in Beijing could form a Confederation of China (COF) whose members are Taiwan and the rest of China. Diplomatic relations and representation in international organizations would be handled by the Confederation, which would also issue passports. Taiwan and the PRC would each have full domestic self-governance.

Confederation would preserve the economy and democracy in Taiwan, while fully integrating the Taiwanese into the international political arena via the COF. While the chiefs of government in Beijing would prefer unification under their rule, they may accept a confederacy as a better alternative to a declaration of independence by Taiwan and a war not just with Taiwan but also with the United States.

The confederation would ideally be a free-trade union, with no tariffs and arbitrary restrictions on trade between Taiwan and the PRC. The Confederate assembly would have equal representation from Taiwan and the PRC. Taiwan, like Hong Kong, would continue to have its own currency, but unlike Hong Kong, the Beijing government would not have any control over Taiwan other than what is mutually agreed to under the Confederation, and Taiwan would retain its independent defense forces.

A Chinese Confederacy would in one way resolve the policy problem for the USA, since the diplomatic relations would now be with a Confederate government that envelopes both mainland China and Taiwan. But the problem of defending Taiwan would remain, since the PRC could still invade Taiwan to obtain full control, despite any treaty or confederate agreement. Taiwan should therefore still be able to have its own independent trade and retain military relationships with other countries under the COF.

Eventually, we can hope that the People's Republic of China will be a genuine people's democracy where the citizens elect the government and where there is full freedom of expression and religion. When that day comes, then all the provinces of China might become self-governing under a confederation, with separate military forces no longer needed.

We can also hope that the people of China also become wise enough to implement the economic policy sought by their revolutionary leader, Sun Yat-sen. Influenced both by Henry George and by the experience in the German colony of Kiaochow, Sun sought to use land rent for public revenues, a policy that has already been partially implemented in China, Taiwan, and Hong Kong.

With full democracy, civil liberties, and economic freedom, there would be no reason to keep China divided. But ideally China would be unified with a largely decentralized governance so that the many nationalities and cultures within China can be equally free to live happy lives.

-- Fred Foldvary      

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Copyright 1999 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.