Is a China-Taiwan Peace Deal in the Cards?

In 1995 and 1996, as China fired ballistic missiles across the Taiwan Strait, U.S. analysts joked that Beijing’s military capabilities were so limited that an invasion would require a "million-man swim." An ambitious military modernization program has greatly improved Chinese military capabilities since then, but an even more remarkable shift has taken place in political relations with Taiwan over the last year.

Since Ma Ying-jeou’s inauguration as president of Taiwan in May 2008, mainland China and Taiwan have established direct shipping, air transport, and postal links; opened Taiwan to mainland tourists; and increased financial cooperation. The two sides are now negotiating a far-reaching economic cooperation agreement. This new atmosphere has greatly reduced the chances of a cross-strait confrontation that might draw the United States and China into a military conflict. Indeed, China and Taiwan recently announced plans for 100 swimmers to swim five miles from the Chinese city of Xiamen to the Taiwan-controlled island of Jinmen. The offshore islands — once a Cold War flashpoint — have become a symbol of the dramatic improvement in cross-strait relations.

Leaders on both sides have expressed interest in consolidating the improved relationship by negotiating a peace agreement. The recent warming trend suggests that it is now worth thinking seriously about how a peace agreement might work and what implications it might have for the United States.

To start: Realistically, at what point could a peace agreement bridge the divide between Beijing and Taipei?

Despite improved relations, political conditions are not ripe for a permanent resolution of Taiwan’s status. China still regards Taiwan as part of its territory and seeks unification, preferably achieved through peaceful means (though Beijing has refused to renounce the use of force). Taiwan’s constitution retains formal links to mainland China, but the island enjoys de facto sovereignty and some political forces seek total independence.

Public opinion polls in Taiwan show that 75 to 80 percent of people on the island favor preservation of the status quo, at least for now. Beijing appears to have recognized this reality; President Hu Jintao’s "eight points" speech at the end of 2008 implicitly acknowledged that an extended period of time would be needed before unification could be achieved. For now, China aims to deter Taiwanese independence while creating conditions of "peaceful development" via strengthened cross-strait economic, political, and social ties.

Although a permanent resolution of Taiwan’s status remains a long-term proposition, an interim peace agreement — trading a Taiwanese commitment not to move toward independence for a Chinese commitment not to use force — seems increasingly possible. Taiwan’s leaders have been interested in such an agreement for several years. Both presidential candidates called for negotiation of a peace agreement during the 2008 campaign. Beijing first endorsed the idea in 2005, and Chinese leaders have incorporated the call to "end the state of hostilities and negotiate a peace agreement" in their major statements on Taiwan since 2007.

This spring, Taiwan’s Ma announced that he would not negotiate a peace agreement during his first term, but might pursue negotiations if elected to a second term in March 2012 (thereby guaranteeing that a peace agreement will be a major issue in Taiwan’s next presidential election).  This leaves a window of opportunity for negotiations before Hu steps down from his formal leadership positions that October. Even if the two sides are unable to reach a deal then, Hu may seek to consolidate his political legacy by establishing principles that would guide future negotiations with Taiwan.

Although formal negotiations are not on the immediate horizon, both sides have conducted internal research on what a cross-strait peace agreement might look like and have begun to discuss the issue in cross-strait academic meetings.

What political and policy factors might negotiators discuss?

Skeptics might argue that an agreement would merely paper over fundamental differences and be abandoned quickly if circumstances changed.  Elections could bring to power pro-independence Taiwanese leaders who see the compromises underpinning a peace agreement as illegitimate.  Or the military balance could tip so much that future Chinese leaders come to view an agreement as an intolerable obstacle to unification.  These are serious issues, but a properly crafted peace agreement can be effective and durable.

Both sides can take steps to enhance the credibility of their commitment to a peace agreement.  The Ma administration could consult closely with opposition leaders while negotiating, and ask the legislature to pass enabling laws or use a referendum to ratify the deal.  These steps would help legitimate the agreement. China, too, has incentives to be generous in negotiations to increase public support for a deal in Taiwan and to make it hard for future Taiwanese leaders — regardless of political orientation — to walk away from an agreement.

Beijing, in turn, could signal its long-term commitment by explicitly staking its international reputation on adherence to a peace agreement, by adopting robust military confidence-building measures (CBMs) that demonstrate its commitment to peaceful resolution, and by adapting its military training and modernization programs in ways that reduce its ability to successfully invade Taiwan.  For example, China could consciously refrain from developing the amphibious sealift capability needed for an invasion.

A peace agreement that generates concrete and lasting benefits for both sides would be more durable.  A stable political relationship would support deeper economic integration and generate significant economic gains for actors on both sides.  A peace agreement could produce greater certainty about the security environment and include CBMs that reduce military threats.  Moreover, the political, economic, and security benefits flowing from an agreement would likely increase over time, expanding political support and potentially allowing even deeper cooperation.

Identity is a critical issue in cross-strait relations, with Beijing insisting that people on Taiwan are Chinese and Taiwan independence advocates arguing for their distinct and separate identity.  A peace agreement might help address this issue through the exchange of "identity goods," measures that allow one side the chance to influence the other side’s perception of national identity. Expanded media, educational, and people-to-people exchanges could give Beijing a chance to persuade people on Taiwan about the benefits of unification, and allow Taiwan a chance to press for greater openness and political changes in China that would make unification more attractive.

Overcoming the obstacles to an agreement will require leaders in both countries to invest significant political capital. But such direct involvement will also make an agreement more likely to last. A leader who opens himself to domestic criticism by making the difficult compromises necessary to reach a peace agreement will want the deal to succeed. Both leaders would have a strong personal stake in the agreement, particularly if it is viewed as a key part of their legacy.

And what about the role of the United States in any agreement? America has a strong interest in good cross-strait relations, but it should not seek to play the role of mediator.

An active role in negotiations would be a major departure from long-standing U.S. policy and is unlikely to be welcomed by China and Taiwan. Mediation efforts would violate U.S. assurances to Taiwan, would be controversial in terms of U.S. domestic politics, and could result in the two sides blaming the United States for the failure of negotiations or the shortcomings of an agreement. Washington would be best served by supporting constructive cross-strait dialogue rather than taking an active role in negotiations.

The United States will naturally be deeply concerned about the effectiveness of military CBMs, the likely durability of an agreement, and the military situation if an agreement broke down. And a cross-strait peace agreement raises challenging policy questions in the United States. Would an agreement make eventual unification more likely?  If so, is Washington comfortable with that outcome?   Would a peace agreement allow deeper U.S.-China cooperation by addressing the most contentious issue in bilateral relations, or will China’s rise exacerbate existing tensions even if Taiwan is no longer a major concern? Would America’s allies regard an agreement favorably, or would they grow suspicious that growing Chinese power would make the United States less willing to honor its commitments?

A China-Taiwan peace agreement is not imminent, but both sides have already begun to position themselves for negotiations. Significant progress toward an agreement would force Washington to address difficult questions that U.S. policymakers have often preferred to ignore or defer.  Both sides have already begun to press Washington for its views, and U.S. policymakers need to consider how to respond.