Wednesday, April 30, 2008

The Chinese are coming

Taiwan mixed about prospect of more tourists from China

By Jonathan Adams
International Herald Tribune, Tuesday, April 29, 2008

PULI, Taiwan: At his hotel here, a short drive from scenic Sun Moon Lake in central Taiwan, Chang Tse-yen is eagerly anticipating a mainland Chinese tourist boom.

The Cheng Pao Hotel is already a popular stop for Chinese tour groups, and stands to profit if, as hoped, Taipei and Beijing conclude an agreement this summer to admit many more mainland tourists to Taiwan.

Currently, Chang said, occupancy averages 60 to 70 percent. But if the agreement goes through, he expects close to 100 percent, and he may hire as many as 18 more employees to deal with the increased guest load.

"I think every hotel around this area above a certain quality will be full," Chang said. "This is very good. If we get more guests, we get more money."

For Chang and other businesspeople here, the prospect of a mainland tourist invasion has raised hopes of a windfall. Some argue it could even influence political attitudes on the mainland in Taiwan's favor. China's Communist government continues to insist that self-ruled Taiwan is a renegade province, separated by civil war, and has not ruled out force to block formal independence.

But skeptics say only a few privileged businesses would benefit, and that the island's scenic spots could be spoiled by greedy developers and a tourist stampede.

Long off-limits to mainland Chinese, Taiwan is now popular among mainland tourists for its scenery, preservation of Chinese tradition and for historical sites associated with the former Kuomintang strongman Chiang Kai-shek.

Chinese tourists were first officially admitted to Taiwan in 2002. But visits are capped at 1,000 a day, and tourists must travel to the island via third locations because of restrictions on direct cross-strait flights.

But if Ma Ying-jeou, the president-elect, has his way, that will change.

Ma, who takes office on May 20, has promised to reach an agreement on more Chinese tourists and weekend cross-strait charter flights by early July, expanding to weekday charters by the end of the year and regularly scheduled flights by summer 2009. All this is part of his election pledge to stimulate the island's laggard economy with closer cross-strait economic ties.

Under the plan, the cap would be tripled to 3,000 Chinese tourists a day, or more than 1 million per year. Last year, 320,169 mainlanders visited Taiwan, only 81,900 of whom officially came as tourists, according to Taiwan's Mainland Affairs Council. The rest were listed as business travelers or "others."

In a few years, Ma hopes, the cap could rise to 10,000 tourist visits per day. Tourist revenues will have benefits throughout the economy, he says, especially helping lower- and middle-income Taiwanese in the service sector.

Financial analysts are also touting the advantages. In February, the investment bank CLSA estimated that if 1 million Chinese tourists visit Taiwan each year they will spend $1.3 billion, and help boost GDP by up to 1.4 percent of 2007 levels.

There is also optimism that Taiwan's democratic ways will rub off on visiting Chinese. Lin Chong-Pin, president of the private Foundation on Cross-Strait and International Studies in Taipei, says that increased tourism could accelerate political liberalization on the mainland.

"The most impressive thing they will observe is freedom," Lin said of the mainlanders. "This will sow the seeds of democracy. They'll ask, 'If people in Taiwan can vote, why can't we?' This type of question will be asked more and more in China."

Not everyone has such a rosy view. Some point out that the economic benefits will not be spread around, because Chinese tend to travel to Taiwan in regimented tour groups that only stop at contracted businesses.

"They're coming to Taiwan through travel agencies that arrange their schedules, including food, hotel and where they visit," said Canleon Kadafatu, a representative of the Thao aborigines, most of whom live on Sun Moon Lake's eastern shore. "The guide isn't allowed to take tourists to places without a contract. They say business is booming, but actually it's not for everyone."

Sun Moon Lake, one of Chiang Kai-shek's favorite getaways, is a key attraction for mainland tourists, along with the Alishan mountain resort area farther south, and sites in the capital such as Taipei 101 - until recently the tallest building in the world.

"For mainland tourists, Sun Moon Lake is a dream place," said Chang, the manager of the Cheng Pao Hotel. "You have to visit once in your life."

But many vendors at the lake seem blase about the coming influx. One reason is that Chinese tour groups tend to stay at cheaper hotels in Puli and other nearby cities, rather than by the lake itself, which is more expensive.

Others worry about the environmental impact.

"As tourists increase, so will pollution," said Tseng Kuo-chi, director of the Sun Moon Lake National Scenic Area Administration. "We'll have to take steps to protect the lake's scenery and ecology."

That will not be easy. With some 140 tour boats already crowding the 827-hectare, or 3-square-mile, lake, it is not clear how many more it can accommodate. New hotel and cable car construction has already marred the natural scenery with a jumbled skyline. The lake has 2,190 rooms now, and will add 400 more in the next two years, Tseng said.

"If so many hotels are built by the lake, it will spoil the environment," said Tim Hsu, a volunteer interpreter and guide with the scenic area administration.

Then there is the culture clash. Taiwanese businesses will have to adapt further to mainlanders' preferences. For example, Tseng said, unlike Taiwanese and Japanese tourists, most mainland tour groups do not care much about gourmet food.

"For them, quantity is more important than quality," he said. "They really know how to eat."

Fortunately, Taiwan already has five years of experience dealing with mainland tourists. In Puli, Chang said his hotel puts mainland Chinese on separate floors from other guests, to avoid "problems." At mealtimes, Japanese and mainland Chinese are seated in separate dining areas.

"They don't like each other," said Chang, citing historical and cultural differences.

He said guests from sophisticated cities like Beijing and Shanghai are usually hassle-free; it is the more provincial mainlanders who need extra care.

"Some use their own chopsticks to pick up the food at the Western-style buffet," said Chang, adding that hotel staff patiently explain the function of serving utensils when partaking of common dishes.

Staff at the lakeside Lalu Hotel, the most expensive in Taiwan, are not expecting a dramatic change in their own business, because most mainland tour groups have tight accommodation budgets. But the hotel is looking forward to fewer cancellations by wealthy Chinese running into visa problems.

Meanwhile, Lalu's assistant general manager, Dennis Morinaga, suggested that Taiwan try to balance the economic opportunities with environmental protection. He compared Sun Moon Lake to his native Hawaii, saying resort areas like Waikiki Beach offered a cautionary tale of overdevelopment.

"You want to stay back, and keep the calm and serenity, but can you survive?" Morinaga asked. "Or do you want to bill yourself as a major tourist location with the world's biggest market - 1.3 billion people?

"I think Taiwan does need" development, he said, "but the thing is to control it. How much is the right amount? No one knows. But everyone wants a share of the market."

Original site

Monday, April 28, 2008

Missile malarkey

Missile talk more symbolism than substance

by Jonathan Adams
Far East Economic Review, April 16, 2008

Taipei — A rumor that recently made the rounds here was that China may withdraw half of its missiles aimed at Taiwan before Ma Ying-jeou’s May 20 inauguration, as a goodwill gesture to the incoming administration. President-elect Ma himself has mentioned the missiles repeatedly, saying that a condition for cross-Strait peace talks is that Beijing must first withdraw them.

That seems at first glance like raising a deliberately high bar, possibly with the aim of ensuring that peace talks—which would be highly controversial in Taiwan—never happen at all. After all, it’s hard to imagine Beijing removing what it sees as a major part of its deterrent against Taiwan independence.

But according to analysts I spoke to last week, the whole missile issue is misleading. If the much-hyped coming cross-Strait detente doesn’t break down before then, we can expect a lot of symbolism, but little substance, in negotiations over the missiles.

First, the numbers. According to the Taiwan government’s latest count, Beijing has 1,400 tactical ballistic missiles pointed at Taiwan from the southern Chinese coast, as well as cruise missiles. That’s up from just about 200 missiles when pro-independence Chen Shui-bian took office in 2000.

Security expert and former Taiwan defense official Lin Chong-Pin explains that the missiles’ purpose is fourfold. The first is psychological: they are what he calls a “dangling sword over independence advocates in Taiwan.” China itself has insisted the missiles are aimed only at diehard separatists, not the vast majority of peace-loving Taiwan “compatriots.”

Of course, this raises the question of how Chinese missiles will distinguish between friend and foe as they tear through the sky above the Strait.

The separatist-seeking missiles have other uses, says Mr. Lin. They’re a bargaining chip in cross-Strait negotiations, like the ones Mr. Ma could start with Beijing. Third, they’re an investment—if peace comes to the Strait they can be resold to other countries.

Finally, there’s another, tactical purpose: to halt the advance of incoming U.S. aircraft carrier groups that would presumably rush to Taiwan’s aid in a crisis. Mr. Lin cites Chinese military strategists on how the increasingly accurate and longer-range missiles could fly over the island and create a “wall of fire” east of Taiwan to force carrier groups to withdraw.

Fortunately, such scenarios are extremely unlikely. In the next few years, it’s the missiles’ role as a bargaining chip that could be the most important.

Mr. Lin says Mr. Ma’s demand that China withdraw its missiles before peace talks can begin was just an opening negotiating position. The missile issue is not necessarily that big an obstacle, he said. “Ma had good reason to up the ante—you never start at a low point, you start as high as you can go,” said Mr. Lin. “I don’t think the high demand by Ma will be an obstacle to Beijing and Taipei talking.”

One key is that Mr. Ma is talking about “withdrawing” missiles, not dismantling them. As Taiwan’s defense minister has emphasized, the missiles are on mobile launch vehicles that can easily be moved. Even if they were rolled inland, they could be moved back in a crisis. A "withdrawal" would therefore be mostly symbolic, with China displaying a less aggressive military posture and winning public-relations points in the process.

Still, there’s another hurdle. Chu Shulong, of Beijing’s Tsinghua University, says he thinks Beijing will likely raise the issue of U.S. arms sales to the island if Mr. Ma pushes for a missile rollback.

"The mainland side will link Ma’s demand for a withdrawal of missiles targeted at Taiwan to Taiwan's purchase of arms,” said Mr. Chu. Beijing could demand, for example, that Taiwan halt at least some arms purchases in return for a partial missile pullback.

The U.S. is now Taiwan’s sole supplier of major weapons systems. There are four major U.S. systems currently in the pipeline: advanced Patriot missile defense batteries, sub-hunting and patrol aircraft, submarines, and F-16 fighter jets. Taiwan has agreed to buy the sub-hunting planes, and Ma supports the F-16s purchase (Washington is currently mulling Taiwan's request for the planes.)

Mr. Ma doesn’t seem likely to use the F-16s as a bargaining chip—he’s said himself that they’re more urgent than the submarine purchase. Analysts agree. "Ma’s military advisers will tell him we clearly need F-16s to maintain our qualitative edge over the PRC,” said Mr. Lin in Taipei. As China’s military buildup accelerates, qualitative air superiority is one of Taiwan’s few remaining advantages.

But Mr. Ma is noncommittal on the submarines, which are more controversial in Taiwan because many believe they’re too expensive. Here, there could be an opening for a symbolic agreement with Beijing. Steve Tsang, head of Oxford University’s Taiwan Studies Program, described one possibility.

"If it happens, the linking of the withdrawal of missiles and arms sales [by the U.S. to Taiwan] will be a much more imaginative formula,” said Mr. Tsang. "Both will be purely symbolic. Taiwan will give up purchases of certain weapon systems from the U.S. that Taiwan can’t afford anyway. And China’s withdrawal of missiles from coastal regions means pulling them back a few hundred miles. It doesn't mean they’ll be destroyed. Whether they're located in Fujian or Sichuan makes very little difference—they can be moved back to Fujian in a matter of days.”

Of course, Mr. Tsang and others note that even if the two sides reach that or a similar agreement, it would only get them to the negotiating table. “Real negotiations for a peace treaty will prove to be much more difficult,” said Mr. Tsang.

So difficult, in fact, that most observers see a peace deal as pie in the sky. Political peace talks will likely be postponed, as China and Taiwan instead focus on practical economic issues. And if Mr. Ma decides, for whatever reason, to avoid peace talks altogether, the missiles are a convenient excuse.

Original site

Tuesday, April 15, 2008

The courtship begins

China's 'silent treatment' of Taiwan closer to ending

By Jonathan Adams
The Christian Science Monitor

Taipei, Taiwan, April 14, 2008 - A landmark meeting Saturday between Taiwan's vice president-elect and China's president Hu Jintao has raised hopes for the first cross-strait talks in a decade. But analysts say many pitfalls lie ahead -- and any breakthroughs are likely to be economic, not political.

"It [was] an ice-breaking meeting, not an ice-melting one," said Richard Bush, an expert in cross-strait relations at the Brookings Institution in Washington.

The meeting came just three weeks after the Kuomintang's (KMT) Ma Ying-jeou and running mate Vincent Siew won in a landslide victory on a platform promising cross-strait detente. One question had been whether China would engage Mr. Ma's government.

Now, the answer is a clear "yes." By agreeing to meet Mr. Siew at the annual Boao Forum for Asia on Saturday, Mr. Hu signaled China's willingness to enter into dialogue with Taiwan's new government after eight years of the "silent treatment."

Now begins a delicate diplomatic courtship. When Siew stepped off his plane, a top Chinese official in charge of Taiwan affairs greeted him with open arms, reaching out for a hug. Siew responded stiffly, trying to pull back to a more formal handshake.

That captured the incoming government's ambivalence toward Beijing. They want to establish cordial ties without getting too close. Despite mutual support for better economic relations, the two differ on Taiwan's status. Beijing sees it as a part of Chinese territory awaiting unification; Ma and Siew think of "The Republic of China" (Taiwan's formal name) as a sovereign state.

Still, the meeting signals a start to a more pragmatic chapter in cross-strait relations. "It suggests that there's enough goodwill on both sides to fudge difficult issues, and for the relationship to be put on a more even keel," said Steve Tsang, director of the Taiwan Studies Program at Oxford University.

Analysts expect Ma, who is set to take office May 20, to successfully push through much of his cross-strait economic agenda. That includes direct flights to China, permitting more Chinese tourists, and a relaxation of China-bound investment caps on businesses.

He also wants a return to semiofficial cross-strait talks based on the "1992 consensus." That formula sees both sides recognizing the notion of one China, and agreeing to disagree on what exactly that means.

More ambitious, Ma hopes to reach agreement with Beijing on Taiwan's role in international groups. Here, the devil will be in the details.

"I don't think there are major differences in principle between the KMT and the mainland side, the problem is in technicalities -- names, titles, and format issues," said Chu Shulong, of Beijing's Tsinghua University. "They may not express different ideas now, but they will have differences in the future."

One example: Taiwan's ongoing bid for observer status in the World Health Organization. Beijing could finally allow Taiwan such status next year after Ma has taken power, but only after extensive negotiations on Taiwan's official name and role in the organization.

Ma says he'll take a more flexible approach than his pro-independence predecessor, with a willingness to accept titles such as "Chinese Taipei."

Ma has also floated the possibility of a cross-strait peace deal. But such a deal would likely require a resolution of Taiwan's political status. That appears out of reach as Ma himself has ruled out unification and few Taiwanese support political union.

"I see quite a bit of incentive in the early stages to deal with practical issues, but I don't think we'll see much in the way of reaching a real peace agreement," said Oxford's Tsang. "Both [sides] have other fish to fry."

China's top priorities are managing its domestic economy and improving governance. Ma's focus will be on reviving Taiwan's economy and consolidating his power over a fractured KMT and a pro-independence opposition that's worried he could move too close to China.

"Ma needs to work on the 42 percent of voters who didn't vote for him," said Lin Chong-Pin, a former defense official and now president of the Foundation for International and Cross-strait Studies in Taipei. "Beijing also realizes the difficulty of tackling political issues too soon. So I think [the two sides] will hold back on political issues until a much later date."

The next near-term test will be during Ma's inauguration address. Beijing will be listening closely to how Ma describes Taiwan, and whether he persists in criticism of Beijing for its human rights record and approach to unrest in Tibet.

"We may not expect nice words, but we don't want to listen to negative words," said Tsinghua University's Chu.