Diplomatic enclave: Changing relations

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Taiwan’s new focus provides opportunity for consolidating economic ties

US President Donald Trump had jolted the Chinese leadership by accepting a congratulatory phone call from Taiwan President Tsai Ing-wen and inviting her to visit Washington. China, which considers Taiwan as a breakaway province, protested at this significant shift in US policy. Trump later made amends in what was described as “extremely cordial” phone conversation with Chinese President Xi Jinping by endorsing the ‘One China’ policy. But Beijing had obtained prior assurances from the Americans that Trump would not speak of Taiwan during the phone call before the Chinese leader agreed to speak to him. The US does not recognise Taiwan but maintains “unofficial ties” with Taipeh.

India follows a similar approach regarding Taiwan. New Delhi does not recognise Taiwan as a separate country but has “cultural and trade” ties with Taipeh. India is not the only country to have unofficial ties with Taiwan, which has a thriving economy, well-integrated globally. Many countries deal with Taiwan as a separate country but do not recognise it as a sovereign state. Even China has strong economic ties with Taiwan; Taiwanese companies have been major investors in China since it opened up to foreign investment. Taiwan is a favoured tourist destination for mainland Chinese travelers. But China insists that any country that has diplomatic relations with Beijing must cut off official relations with Taiwan.

Indian leaders had friendly relations with Chinese leader Chiang Kai-shek till his Nationalist government was ousted by the Communists and fled to the island of Taiwan. But after India recognised the People’s Republic of China in 1950, it cut off ties with Taiwan. The US continued to back Chiang Kai-shek, a World War ll ally till US-China relations warmed up in the 1970s and Washington recognised China and cut off diplomatic relations with Taiwan.

In the 1990s, after the collapse of the Soviet Union and the economic reforms in India, the PV Narasimha Rao government made the first moves to establishing commercial ties with Taiwan. In 1995, Taiwan set up the Taipei Economic and Cultural Center in Delhi. The India-Taipei Association was established in Taipei about the same time to promote non-official contacts between India and Taiwan. However, successive Indian governments have been circumspect in openly promoting relations with Taiwan in deference to China’s sensitivities. But in the past two decades trade and commercial ties with Taiwan have grown steadily. Bilateral trade went up to US $7 billion in 2014, and over 90 Taiwanese companies have invested in steel, telecom and IT sector in India. Following the growing trade ties, India and Taiwan signed a Double Taxation Avoidance Agreement and the Customs Cooperation Agreement in 2011. They have also signed an air services agreement and an MOU on agricultural cooperation. There are currently over 1000 Indian students studying in Taiwan.

In January 2016, when Tsai Ing-wen of the Democratic Progressive Party was elected as President, she initiated the Southbound Policy that envisaged building closer ties with ASEAN and South Asia, placing ties with India as one of the top priorities. Prime Minister Narendra Modi had elevated the Look East policy into a new invigorated Act East policy in 2014, but government has been slow in responding to the Taiwanese interest in India. It had, however, invited the Taiwanese Trade Representative to Prime Minister Modi’s swearing-in ceremony. It also set up the India-Taiwan Parliamentarians Forum last year; the political level contact has raised eyebrows in Beijing at that time. In 2016, Taiwan’s former Foreign Minister Tien Hung-mao had visited Delhi to attend the External Affairs Ministry backed Raisina Dialogue. However, in recent years India has dropped public reaffirmation of the one China policy, which states that Tibet and Taiwan are part of China.

The first significant political interaction between the two countries was the recent visit of a group of women Parliamentarians to India. Beijing immediately lodged a protest, calling on India to deal “prudently” with Taiwan-related issues and understand and respect China’s core concerns” on the One China policy, it said. Chinese media lashed out with warnings over the dalliance with Taiwan and the Global Times, known for its hardline comments on India, said that India was “playing with fire” at a time when President Trump had backed off from challenging Beijing over the Taiwan issue. The External Affairs Ministry has sought to play down the issue by saying that the women legislators were a part of an informal group of academics and business persons.

Beijing has been wary of the new government of Tsai Ing-wen, which reversed the deferential policy towards China that the previous government had followed and has adopted a more determined posture in building on its ties around the world. Taiwan is a major investor in Asian countries and is looking for new investment destinations. Taiwan’s new southward focus provides the opportunity for consolidating economic ties.

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