The Australia-China Chamber of Commerce and Industry of New South Wales

Newsletter No. 23

10 July 2000





The Island's Chequered History

Beginning of the One-China-Two-Chinas Question

Changes in the 1990s

More Complications Follow

8 Propositions and 5 Nos

Toward a Better Understanding of the Issues







The focus for this Newsletter is the Taiwan Issue.  Many Australians are perplexed by recent cross-strait developments, and, on the basis of recent media reports, many others are equally perplexed.  Since early this year, the issue occupied a considerable amount of attention in both Beijing and Taipei.  Its continuation elevates concerns about trade and investment, as well as regional security.  We direct our attention mainly at the sources of perplexity.








The original settlers in Taiwan (more than 12,000 years ago) were part of the Malayo-Polynesian group of people who are now referred to by anthropologists as Austronesians.  Migration from the Chinese mainland began around 500 A.D.

Though the original name, Formosa, was given by the Portuguese, Dutch traders were the first Europeans to claim the island in 1624 and used it as a base for trade with Japan and the China coast.  Two years later, the Spanish established a settlement on the northwest coast and remained until 1642 when they were driven out by the Dutch.

Following the Manchu invasion of the Chinese Empire, which brought an end to the Ming Dynasty, substantial migration occurred mainly from Fujian Province and Guangdong Province.  In 1664, Zheng Chen Gong, known in the West as Koxinga, retreated from the mainland with Ming loyalists, expelled the Dutch and occupied the island.

After attempts to retake the mainland failed, Koxinga's followers submitted to the Qing Dynasty in 1683.  Migration from the mainland increased during the 18th and 19th centuries and ethnic Chinese soon outnumbered the aboriginal population.  Taiwan was initially a prefecture, then divided into a north and south prefecture and became a province in 1887.  In 1895, a weakened Imperial China ceded Taiwan to Japan in the Treaty of Shimonoseki following the first Sino-Japanese war.

During its 50-year rule, Japan went to considerable length in developing Taiwan's economy, mainly in agriculture, food processing and the extractive industries.  Efforts were also made during the period for a "Japanisation" of the island, including compulsory Japanese education and forcing residents of Taiwan to adopt Japanese names.

At the end of World War II in 1945, Taiwan and the Penghu Archipelago reverted to Chinese rule under the Cairo Declaration.  During the immediate post-war period, Chinese Nationalist People's Party (which is spelled as Kuomintang according to the Wade-Giles system of Chinese romanisation and generally abbreviated as KMT) administration on Taiwan was considered to be repressive and corrupt, leading to local discontent.

Anti-mainlander violence flared on 28 February 1947, prompted by an incident in which a cigarette seller was injured and a passer-by was killed by Nationalist authorities.  Rioting followed and thousands of Taiwanese were killed by Nationalist troops. This is referred to as the "2-28 Incident".

When China's civil war ended in 1949, about two million refugees, consisting mainly of KMT officials, military and business supporters, fled to the island that was then occupied by about 5.7 million "native Taiwanese".  The People's Republic of China was founded on 1 October 1949.  Shortly after that, the Beijing government informed the United Nations that the KMT authorities had "lost all basis, both de jure and de facto, to represent the Chinese people," and therefore had no right to represent China.

In December 1949, Chiang Kai-shek established a "provisional" KMT capital in Taipei, but on 5 January 1950, President Truman issued a statement saying that the U.S. and other Allied countries recognised China's exercise of sovereignty over Taiwan Island in the four years since 1945.

With the outbreak of the Korean War in June 1950, the U.S. government allocated military forces to support the KMT against a possible invasion from the mainland.  As is generally recognised, Truman believed at the time that the invasion by North Korean forces across the 38th parallel was a precursor to other planned invasions in both Asia and Europe.  The status of the People's Republic of China was declared "uncertain" at least until its role in these "planned invasions" could be deduced.

The only Allied power to establish diplomatic recognition of the Beijing government between October 1949 and June 1950 was the U.K.  The Scandinavian countries and Switzerland also recognised the new regime, but they were not considered among the "powers".

The Chifley government in Australia had intended to do so, but lost the election in December of 1949.  The Menzies government showed some interest in establishing diplomatic relations after the Geneva Conference on Indochina, but the U. S. discouraged it.








The Taipei government retained a seat in the United Nations until 1971.  During that period, it was officially known as the Republic of China, which was the designation of the mainland government when it was under KMT control.  Unofficially it was referred to in the West as "Nationalist China" and the People's Republic of China was called "Red China" or "Communist China".  This suggests that the West retained an unofficial view of "two Chinas", but this was out of synch with the Chinese view.

The Taiwan Chinese View

The KMT in Taiwan established a National Assembly consisting of representatives of mainland provinces, and claimed to be the sole legitimate government of all of China.  The representatives of mainland provinces were those who were elected in the 1947-48 period and held their seats "indefinitely".

The duties of the National Assembly were to choose the president and to amend the constitution.  The principal lawmaking body is the Legislative Yuan and was formed in the late 1940s in parallel with the National Assembly.  The KMT authorities also established a provincial government for Taiwan, consisting of a governor, vice governors and administrative units.  Municipal governments existed for Taipei and Kaoshiung.

This lasted for more than 40 years, thus continuing after the United Nations General Assembly adopted Resolution 2758 at its 26th session in October 1971, which expelled the representatives of the Taiwan authorities and restored the seat and all the lawful rights of the government of the People's Republic of China in the United Nations.

Why did the Taiwanese persist in the view that they represented all of China? The simplest answer is that neither of the key elements in the KMT-imposed rule over the Taiwanese could be easily removed without questioning the legitimacy of that rule. A government-in exile was one of those elements. This perpetuated the hostilities with the mainland and gave rise to the second element, namely, the role of the KMT in defending the island.

The Mainland View

Since 1949, the Beijing government has been consistent in stating that the Central People's Government of the PRC replaced the government of the Republic of China to become the only legal government of the whole of China, including Taiwan and the Penghu Archipelago.

Moreover, the Beijing government underscored the One-China Principle as followed by the Taiwan government. In October 1958, when the People's Liberation Army was engaged in the battle to bombard Kinmen Island (near the mainland coast), Chairman Mao Zedong declared to the Taiwan authorities, "There is only one China, not two, in the world. You agree with us on this point, as indicated in your leaders' proclamations."

In January 1979, the Standing Committee of the National People's Congress issued a "Message to Taiwan Compatriots", pointing out that "the Taiwan authorities have always stood firm on the One-China position and opposed the independence of Taiwan. This is our common stand and our basis for co-operation."

This consistency nevertheless had a few anomalies. Despite the fact that foreign trade between Taiwan and the mainland did not exist, and could not exist since Taiwan was part of China, the Beijing authorities granted tariff concessions to goods made in Taiwan. Nations that established diplomatic relations with the People's Government of China agreed to handle their relations with Taiwan within the One-China framework, but that framework did not provide a way to do so.








In June 1990 the Council of Grand Justices in Taiwan mandated the retirement, effective December 1991 of all remaining, "indefinitely appointed" members of the National Assembly and other bodies. In that same year, the authorities on Taiwan abandoned their claim of governing mainland China, stating that they do not "dispute the fact that the PRC controls mainland China”.

Other changes in the Taiwan government occurred at the same time, and are relevant to recent events. The second National Assembly, elected in 1991, was composed of 325 members. The majority was elected directly; 100 were chosen from party slates in proportion to the popular vote. This National Assembly amended the constitution in 1994, paving the way for the direct election of the president and vice president that was held in March 1996.

The third National Assembly, also elected in March 1996, comprised 334 members serving 4-year terms. The National Assembly's powers now are to amend the constitution, recall or impeach the president and the vice president, and ratify certain senior-level presidential appointments.

As the same time that the National Assembly took action in 1994 to allow for the popular election of the President, the Legislative Yuan passed legislation to allow for the direct election of the governor of Taiwan Province and the mayors of Taipei and Kaohsiung Municipalities. In a move to streamline the administration, the position of elected governor and many other elements of the Taiwan Provincial Government were eliminated at the end of 1998.

Increased democratisation and a less complex system of government in Taiwan stemmed from several sources. Internally, the anachronistic views displayed by Chiang Kai-shek began to change when his son, Chiang Ching-kuo took over as president in the 1980s, and the pace of change picked up after martial law was lifted in 1987. When Lee Teng-hui succeeded Chiang Ching-kuo as president on 13 January 1988 the conditions were set for the changes mentioned above.

Externally, China's "open door" policy attracted many nations away from Taiwan, as diplomatic recognition of the People's Republic of China required breaking off diplomatic relations with Taiwan. Thus, Taiwan became increasingly isolated. For example, when an outbreak of serious viral disease struck Taiwan's children, the World Health Organisation, under PRC pressure, provided no assistance.

Economic relations between Taiwan and the mainland nevertheless flourished. Following the sharp drop in foreign direct investment into mainland China after the Tiananmen Square incident, the Beijing authorities solicited and obtained substantial investment from Taiwan. Co-operation increased together with greater economic interdependency, but the One-China Principle continued to dominate relations between the People's Republic of China and all other nations.








Before the 1986 elections in Taiwan, many "non-partisans" grouped together to create Taiwan's first new political party, the Democratic Progressive Party (DPP). Despite the official ban on forming new political parties, Taiwan authorities did not prohibit the DPP from operating, and in the 1986 elections DPP and independent candidates captured more than 20 per cent of the vote.

The DPP membership is made up largely of "native Taiwanese”. Its platform includes outspoken positions on some of the most sensitive issues in Taiwan politics. For example, the DPP maintains that Taiwan is an entity separate from mainland China, in contrast to the KMT position that Taiwan and the mainland, though currently divided, are both part of "one China."

In sharp contrast to the tenets of both KMT and mainland policy, a number of ranking DPP officials openly advocate independence for Taiwan. The recent downplaying of Taiwan independence by the DPP, as a party, led to the formation by hard-line advocates of a new political party called the Taiwan Independence Party in December 1996.

Perhaps as a response to these changing views within Taiwan, Lee Teng-hui softened the pronouncement of the One-China Principle and used phrases such as "two governments", "two reciprocal political entities", "independent sovereignty" for Taiwan and "state-to-state" negotiations. Some observers viewed this as a means for acquiring greater status in cross-straits negotiations.

Taiwan was different from Hong Kong and Macao in its relative stature. Although Taiwan was never classified as a separate nation by the rest of the world, the Taiwan government was treated as a national government from 1949 to 1973. This seemed to deserve special recognition.

If Lee Teng-hui's intentions were to preserve KMT influence, they failed in May of this year when Chen Shui-bian, the DPP candidate was inaugurated as president, thus ending 50 years of rule by the KMT. Presumably, to many Taiwanese, and perhaps to others as well, Lee Teng-hui was not fully convincing in departing from the traditional One-China Principle. Additionally, the renovation within the KMT left it severely divided, thus making it easier for the DPP to gain more control. All this occurred despite increasingly stronger statements from the mainland.








On 1 May 1995, President Jiang Zemin put forward eight propositions on the development of relations between the two sides of the Taiwan Straits. The fundamental proposition stated: "Adhering to the One-China Principle is the basis and prerequisite for peaceful reunification."

The propositions asserted that the state of hostility between the two sides of the Straits had not formally ended. In order to safeguard China's sovereignty and territorial integrity and realise the reunification of the two sides of the Straits, the Chinese government expressed the right to resort to any necessary means.

Jiang Zemin's statement also attempted to take political reality into account and "out of consideration for the Taiwan authorities' request for the negotiations to be held on an equal footing", suggested that negotiations should be held between the Chinese Communist Party (CCP) and the Chinese KMT on a reciprocal basis. It nevertheless gave the appearance of talks between central authorities and provincial authorities, and this was not acceptable to non-KMT voters.

The "five nos" promised by Chen Shui-bian in his inaugural address were: no formal declaration of independence, no changing of Taiwan's official name (the Republic of China to the Republic of Taiwan), no revision of the constitution to establish a "state-to-state" relationship across the Taiwan Strait, no referendum on Taiwan's independence and no abolition of the National Reunification Council. These were, however, conditional upon: "as long as the Chinese Communist Party regime has no intention to use military force against Taiwan".

Although the views expressed by media commentators seem to reflect prior judgments about Taiwan versus the PRC, as much if not more than recent statements, there is nevertheless a growing belief that Chen Shui-bian, in particular, is seeking a means to end the stalemate of "no talks". However, he apparently will not agree to adherence to the One-China Principle prior to such "talks" since part of the reason for the "talks" is to clarify the content of the One-China Principle.








It is important to note that the concept of a state as the "set of institutions that possess the means of legitimate coercion that is exercised over a defined territory and its population" is a Western concept. Allowance is made for sub-national governments, but in all such cases, the national government necessarily has powers defined either by a constitution or by law to exercise specified "legitimate coercion" over the sub-national constituencies.

Thus, to Westerners, the "state" and "nation" are inextricably linked in the sense that one implies the other. The traditional Chinese view differs. A "nation" is more broadly defined in terms of the people and territories those people traditionally occupy, as well as what those people influence. For example, for most of the Chosen Period (Yi Dynasty from 1388 to 1910) the Korean peninsula was considered part of China, in the "tribute" sense, with China as a "big brother". No "legitimate coercion" was exercised and Korea was considered to be independent.

Although Taiwanese are indeed ethnic Chinese, they have become less traditional than most mainlanders in terms of political philosophy. It is not surprising therefore that the Beijing authorities insisted on seeing the Chinese version of Lee Teng-hui's "state-to-state" remarks to be certain what he meant. Unfortunately for the traditional Chinese view, international institutions are defined principally by Western traditions that, as mentioned above, link "state" and "nation".

The ultimate solution to the "Taiwan Issue" will most probably be something between the two "traditions" and it is difficult at this point to predict what that will be. Western commentators are likely to continue getting media coverage in describing the rhetoric as "theological" and "metaphysical". They may also receive some attention in suggesting that China and Taiwan form a commonwealth in a way that is similar to the British Commonwealth. None of that will be constructive, however, since it is irrelevant to the "Taiwan Issue".

The solution to the Taiwan Issue is obviously one that must be worked out between the government in Beijing and the government in Taipei. There is little we can do to assist, but at least we should avoid making it more difficult for them.








"Background Notes: China", August 1999, released by the Bureau of East Asian and Pacific Affairs, U.S. Department of State; available at:

Background Notes: Taiwan", August 1999, released by the Bureau of East Asian and Pacific Affairs, U.S. Department of State; available at:

"History of Constitutional Revisions in the Republic of China", Foreign Policy Institue; available at:

"Taiwan's New President: One If and Five Nos", by Harvey Sicherman, Foreign Policy Institute; available at:

"The One-China Principle and the Taiwan Issue", released by the Taiwan Affairs Office and the Information Office of the State Council, reproduced by New York Times, 21 February 2000.

"China's Threat to Taiwan: Likelihood of Attack Deemed Low", by Craig S. Smith, New York Times, 7 March 2000.

"What Does 'One China' Mean", by Frank Ching, Far Eastern Economic Review, 11 May 2000.

"Banking on China: Taiwan's Evergreen Group Has Lots Riding on Cross-Straits Peace", by Allen T. Cheng, Asiaweek, 12 May 2000.

"Inspired by Korean Peace Talks, Taiwan Makes Overture to China", by Mark Landler, The New York Times, 21 June 2000.

Taiwan Diary #11: Forgetting and Remembering", by Dr Scott Simon, ChinaOnline Commentary, undated.

"Confusing the Nature of War Is Blocking National Reunification", People's Daily, 21 June 2000.

"The Master Stroke of Taiwan's New President", by Ambassador Harvey Feldman, Heritage Foundation; reprinted in ChinaOnline, 26 June 2000.

"The 'One China' Bandwagon's Back in Town", by John Tkacik, ChinaOnline Commentary, 29 June 2000.

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