Changing parameters

Three particular developments have made stability in the Taiwan Strait seem much more precarious today than two decades ago. Firstly, the PRC under Xi Jin­ping’s leadership has gained considerable political, economic, technological and military power. Because the balance of power has shifted in China’s favour, the U.S. no longer enjoys the unchallenged status of being the superior military power in the region.⁷ With medium-range and anti-ship missiles, for exam­ple, China has significantly expanded its capabilities to deny access to the region or to restrict freedom of operation in it (anti-access/area denial or A2/AD). According to American media reports, Pentagon simu­lations of a Taiwan conflict also show that the U.S. now cannot be sure of its superiority.⁸

Secondly, the population of Taiwan is increasingly emphasising its own identity as distinct from main­land China. According to a regularly conducted sur­vey in Taiwan, the proportion of people who identify themselves as Taiwanese has trended upward, while fewer and fewer respondents claim both Taiwanese and Chinese identity.⁹ In a US survey in late 2019, 66% of respondents described themselves as Taiwanese, compared to 28% who considered themselves to be both Chinese and Taiwanese.¹⁰ In the same poll, an overwhelming majority (83%) of young people aged between 18 and 29 stated that they felt exclusively Taiwanese. Thus, the proportion of those favouring more political or other forms of dissociation from the PRC is increasing, a trend from which Beijing could conclude that the prospects for peaceful unification with Taiwan are dwindling.

Thirdly, the relationship between the U.S. and China can increasingly be characterised as a great power conflict in which both sides, driven by mutual mistrust, compete for power and status. Taiwan is of great importance in this geopolitical struggle for supremacy. It is strategically located as part of the first island chain (see Map 2, p. 8). Taiwan also plays a key role in the technology rivalry between the U.S. and China, as it is the world leader in semiconductor manufacturing. For the two great powers, Taiwan is also an object of the systemic conflict between liberal democracy and authoritarianism. Against this back­ground, Taiwan’s democratic system is undoubtedly a thorn in Beijing’s side, as it offers a counter-model to its own system. The U.S. and China therefore in­creasingly see Taiwan as a crucial building block in their competition for dominance and in their systemic competition.

Chinese calculus and the risk of military conflict

The growing presence of Chinese aircraft and ships in areas around Taiwan increases the risk of unintended incidents that could escalate militarily. However, as­sess­ments differ as to whether China might deliberately choose military action to bring Taiwan under its control. Officially, China favours peaceful unification, but does not rule out the use of military means in prin­ciple.¹¹ A speech by President Xi Jinping in 2019 has been seen as an indication of the willingness to act militarily. Xi defined unification with Taiwan as a “core interest,” the realisation of which should not be passed on from generation to generation.¹² At the same time, however, he repeatedly referred to China’s desire for peaceful unification. Some observers believe that in this speech, the 69-year-old Xi declared his will to realise unification under his leadership as a political legacy – because his successor will belong to a younger generation. A possible window for this would be Xi’s very likely third term in office from 2022 to 2027.

However, in recent speeches, Xi has not reiterated the need to avoid passing on the Taiwan issue to future generations. In his speech on the 100th anni­versary of the founding of the Communist Party in July 2021, for example, he described reunification as the Party’s “historic mission and unshakeable com­mit­ment” and again expressed the desire for a peace­ful process.¹³ He thus indicated that the Party’s legiti­macy also depends on whether it can resolve the Taiwan issue. When this could be expected to occur, however, cannot be deduced from Xi’s statements.

Moreover, there are a number of reasons why China may decide against using military means to force unification.¹⁴ For one, Xi has formulated an ambitious domestic agenda for his country for the next few years. A military confrontation would jeop­ardise these plans because China would not only have to reckon with punitive economic measures being imposed on it by the West, but also with a possible military intervention by the U.S. and its unforesee­able consequences. As long as Beijing hopes to achieve unification peacefully (“winning without fighting”), it is unlikely that the Chinese leadership will decide to annex Taiwan. However, a military conflict cannot be categorically ruled out, because Beijing could also conclude that success is guaranteed and that the price for such action would be acceptable. Further develop­ments in the Russia’s war against Ukraine could also influence China’s considerations. However, it is too early to predict what lessons China’s leadership and military will draw from the Russian invasion.

China’s attrition tactics

For the time being, the PRC is trying to put pressure on Taiwan’s government and population and to wear them down through so-called grey zone activities. These include disinformation campaigns, cyber­attacks, military sabre-rattling and “exercises” in the immediate vicinity, as well as efforts to isolate Taiwan internationally. This is Beijing’s way of saying that it would not accept any formal independence of Tai­wan. Moreover, Beijing’s attrition tactics are also designed to make the island’s population realise that, given the balance of power, unification is inevitable and that resistance is therefore futile.

The frequent flights by Chinese aircraft through Taiwan’s ADIZ are a great burden on the Taiwanese military, as the latter must be on constant alert to respond to intercept. Through disinformation and other domestic political measures, China is trying to divide Taiwanese society as well as weaken their general confidence and trust in their government. Such activities, through which China influences the will and mind-set of the population, together amount to what Taiwan calls “cognitive warfare.”¹⁵ However, the Chinese leadership also provides economic and financial incentives for entrepreneurs, executives, engineers and students from Taiwan in order to bind them to the Chinese mainland. In this way, China wants to attract supporters from the Taiwanese econo­my¹⁶ and increase dependencies. At the same time, this approach also has the effect of undermining Taiwan’s industrial base by luring away talent.

Taiwan’s resilience

However, China’s threats and attempts at intimida­tion in recent years have rather tended to strengthen Taiwan’s resolve to defend its own democratic rights and freedoms. Taiwan’s resilience and stamina is rooted in the country’s non-negotiable democratic identity, which is based on liberal norms and values. Its democratic transition since the late 1980s has proved sustainable. From Taiwan’s perspective, there­fore, the successful status quo cannot be changed simply by decree.

Taiwan’s foreign relations are an essential part of the national effort to secure the island’s de facto in­dependence. Taipei’s political, economic and social ties with foreign actors enable the island to visibly demonstrate its independence and gain more inter­national recognition. Moreover, Taiwan seeks to pro­mote a positive reputation abroad by voluntarily complying with international treaties and norms, even though it cannot itself be a signatory state. Tai­wan’s economic performance, its capacity for tech­nological innovation and its embeddedness in the international division of labour are also fundamental to the preservation of its independence. Crucially, Taiwan’s companies occupy hubs and nodes in global supply chains, while its skills and manufacturing capacities have become indispensable to the global semiconductor industry.

The international community and the Taiwan question

In order to support Taiwan in its existence as a demo­cratic state and to reduce the risk of military action being taken by Beijing, it is important from an exter­nal perspective to strengthen relations with Taipei in all areas – economy, politics, society, science and culture. And even if a one-China policy is adhered to in principle, there is still room for manoeuvre. Doing so requires not only ingenuity and creativity, but also the political will to endure Beijing’s reactions – mainly consisting of economic pressure and punitive measures.

The vast majority of members of the international community, in establishing diplomatic relations with the PRC, have committed themselves in one form or another to a one-China policy. This rules out any diplomatic and formal recognition of Taiwan. How­ever, almost all of these countries maintain informal relations with the island and have quasi-embassies there. Moreover, a growing number of Western coun­tries, as well as Japan, Australia and New Zealand, are increasingly vocal in their support for maintaining peace and stability in the Taiwan Strait and reject any attempt to change the status quo unilaterally against the will of the other side.

The authors of this study systematically analyse and compare how countries that Germany and Europe consider important partners have shaped their relations with Taiwan over the years. They look at the U.S., Japan, Singapore, South Korea, Australia, India and Europe, with a focus on the EU as well as France, Germany and the United Kingdom.

The comparative country analyses are intended to reveal what leeway other countries utilise to strength­en relations with Taiwan, thus contributing to stability in the Taiwan Strait and counteracting China’s grow­ing superiority.

Historical context

The Republic of China (ROC) was a founding member of the United Nations (UN) in 1945 and also had a permanent seat on the UN Security Council. After the ruling nationalist KMT was defeated by the com­mu­nists in the civil war on the Chinese mainland in 1949, the government withdrew its remaining troops to the island of Taiwan and from there represented the ROC’s claims to the entire Chinese territory.² It also continued to represent China in the UN and the Security Council. The island itself had been annexed by the Chinese Empire in 1683 as part of the coastal province of Fujian. When Japan won the 1894–95 war against China, Taiwan became a Japanese colony under the Treaty of Shimonoseki in 1895 and re­mained so until 1945. After the end of World War II in the Pacific, Taiwan was returned along with some smaller offshore islands such as Jinmen (Kinmen) and Matsu (both occupied by Japan) as well as Penghu to the ROC, which was ruled by the KMT at the time (see Map 1, p. 6). After retreating to the island in 1949, the KMT took sole rule and established a mili­tary dictatorship. Martial law was in force until 1987.

With the visits of U.S. Secretary of State Henry Kissinger in 1971 and U.S. President Richard Nixon in 1972 to the PRC, and the eventual establishment of diplomatic relations (which did not actually material­ise until 1979) between Beijing and Washington ini­tiated by these visits, the diplomatic status of the ROC in the international community changed permanently. In 1971, the PRC became a member of the UN in ac­cord­ance with UN General Assembly Resolution 2758 and, as China’s sole representative, it also took over the ROC’s seat on the Security Council.³ The ROC/Tai­wan was also excluded from all UN sub-organisations. At that time, many Western countries came to recog­nise the PRC diplomatically and followed – in differ­ent variants – a one-China policy, as the United States had also acknowledged in the 1972 Shanghai Communiqué. According to this, the Chinese on both sides of the Taiwan Strait took the position that there was only one China, and that Taiwan was part of it.⁴

In some regional organisations, Taiwan had to accept another name instead of “ROC” in order to con­tinue to be represented. When the Asian Devel­opment Bank (ADB) was founded in 1966, the ROC initially represented all of China, and was able to remain a member of the bank under the name “Tai­pei, China” after the PRC joined in 1986. In 1991, Taiwan became a member of the Asia-Pacific Eco­nomic Cooperation (APEC) under the name “Chinese Taipei.”⁵ APEC had been founded two years prior, and Taiwan acceded at the same time as the PRC and Hong Kong (the latter then still a British colony).⁶ However, the ROC/Taiwan never gained access to any of the other official regional formats such as the ASEAN Regional Forum (ARF, founded in 1994). At best, the island is represented in associated informal (Track 2) forums.

Although the ROC was also a founding member of the International Monetary Fund (IMF) in 1945 under the name “China,” it lost its seat to the PRC in 1980.⁷ The same happened with respect to the ROC’s mem­ber­ship in the World Bank. The only exception has been the World Trade Organisation (WTO), which the island joined shortly after the PRC on 1 January 2002, as the “Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei).”⁸

Taiwan’s foreign policy: institutions and actors

In organisational terms, the foreign policy of the ROC/Taiwan largely corresponds to that of other states with a presidential system. The president sets the gen­eral direction and priorities, while foreign representa­tion is the responsibility of the Ministry of Foreign Affairs. This also applies to the quasi-representations maintained by the country in 60 of the world’s states (including most EU member states) that do not have official relations with Taiwan.⁹ These unofficial em­bassies operate under the name of either “Economic and Cultural Office” or “Taipei Representative Office.” Specialised ministries of the ROC, such as for the econo­my, culture or other sectors, also play a foreign policy role.

Two dedicated institutions were created to plan and coordinate relations between the two sides of the Taiwan Strait. In Taiwan, there is the Mainland Affairs Council (MAC)¹⁰ while its counterpart in the PRC is the Taiwan Affairs Office (TAO), both of which have the status of ministries.

Two institutions were created specifically to coordinate relations between Beijing and Taipei.

In Taiwan, the Inter-Agency Mainland Affairs Com­mittee was first created in 1988, when the PRC first allowed Taiwanese to visit their relatives on the main­land. The Committee was finally formalised as an independent government institution (the MAC) in 1991. It is responsible not only for the PRC, but also for Hong Kong and Macao, as well as Inner Mongolia and Tibet. According to its constitution, the ROC also continues to formally lay claim to all of China in the tradition of pre-war China. While there were direct meetings held between the heads of the MAC and the TAO during the second term of then Taiwanese President Ma Ying-jeou (2012–2016), the official line remains that the PRC and Taiwan do not negotiate with each other. Therefore, direct contacts and nego­tiations between the two sides are usually the respon­sibility of representatives of two other unofficial organisations established for this purpose. On the Taiwanese side, this is the Straits Exchange Foundation (SEF) and on the mainland it is the Association for Relations Across the Taiwan Straits (ARATS).

It is not actually the task of the ROC’s foreign ministry to conduct and oversee relations with the mainland. Nevertheless, it keeps a close eye on Beijing’s attempts to limit Taiwan’s international presence. Since 2009, the ministry has published an ongoing list of cases in which it sees Taiwan’s sover­eignty as being violated by other states or international organisations and associations – mostly as a result of pressure from the PRC.¹¹

Development cooperation is also part of the remit of the ROC’s Ministry of Foreign Affairs. In 2009, it published its first white paper on Taiwan’s development aid,¹² and reports on international cooperation and development are now released by the ministry at irregular intervals.¹³ Development projects are mainly implemented by the International Cooperation and Development Fund (TaiwanICDF or the ICDF),¹⁴ on behalf of the Ministry of Foreign Affairs, and they extend not only to Taiwan’s diplomatic partners, all of which are developing countries (with the one excep­tion of the Holy See), but also to other countries. The focus here is on topics in the fields of the envi­ron­ment, agriculture, health, education, as well as information and communication technology. The ICDF also cooperates with international organisations and non-governmental organisations (NGOs).

Because Taiwan is diplomatically recognised by only a few states and has been excluded from almost all international organisations, NGOs play an impor­tant complementary role in the country’s foreign policy and many of them are financially supported by the ROC government. They often represent Taiwan’s only opportunity to participate in international events, such as the Conference of Parties (COP) of the UN Frame­work Convention on Climate Change (UNFCCC). As early as 2000, the Ministry of Foreign Affairs set up a separate commission for these activities, which has been operating as the Department for NGO Inter­national Affairs since 2012.¹⁵

International representation and diplomatic recognition

The number of states maintaining diplomatic rela­tions with the ROC has shrunk dramatically over the decades. From 2000 to 2008, the elected president of Taiwan was a member of the DPP, which advocates for Taiwan’s independence according to the party’s statute. During these years, the PRC actively tried to motivate Taiwan’s diplomatic allies to switch their official recognition in favour of Beijing. In this period of “chequebook diplomacy,” both sides used devel­opment aid as an instrument to gain or maintain diplo­matic recognition. The PRC also engaged more sys­tematically in blocking Taiwan’s access to inter­national organisations, and it accused President Chen Shui-bian of unilaterally and incrementally changing Taiwan’s status by dissolving the National Unification Council, introducing new passports, renaming public buildings and taking other steps towards “Taiwanisation.”¹⁶ Between 1993 and 2006, the ROC tried every year to improve its status at the UN, either directly or through its remaining diplomatic partners, but the issue never even made it onto the agenda. In 2007, still under Chen Shui-bian’s presidency, his government requested the country to be admitted as a full member of the UN under the name “Taiwan.” The UN Secretary-General at the time, Ban Ki-moon, categori­cally rejected this attempt.¹⁷ On the day of the fol­low­ing year’s presidential election, the Taiwanese people were also to decide by referendum on Taiwan’s rep­resentation in the UN. The two rival parties, the DPP and the KMT, each formulated their own questions and put them to a vote. However, both referendums failed to reach the necessary quorum.

When the KMT won both the parliamentary and presidential elections in 2008, a period of rapproche­ment between the adversaries on both sides of the Taiwan Strait began. The new Taiwanese president Ma Ying-jeou called for a “diplomatic truce” in 2010, and although Beijing never officially responded to this proposal, Taiwan did not lose any of its remaining 23 diplomatic allies for the next eight years.¹⁸ Taiwan also refrained from making direct attempts to be recog­nised by the UN and instead focused on demand­ing “meaningful participation” in specialised UN agen­cies. This approach was at least partially success­ful. Starting in 2009, the PRC allowed Taipei to par­ticipate as an observer in the World Health Assembly (WHA) for several years. Since 2013, Taiwanese repre­sentatives have also been allowed by Beijing to parti­cipate in the International Civil Aviation Organization (ICAO) Assembly, which comes together every three years. However, a separate invitation had to be issued for each of these events.¹⁹ Other international organisations in which Taiwan still seeks at least observer status but has so far been unsuccessful include Interpol and the UNFCCC.

Since 2016, Beijing’s attitude towards Taipei has hardened and the island is losing allies.

However, since Tsai Ing-wen’s victory in the presidential election and the DPP’s return to power in 2016, the PRC has toughened its approach to Taiwan considerably. Despite strong international support for Taiwan’s functional participation in international organisations that do not require statehood, Beijing has again been consistently blocking any move in this direction.²⁰ Since 2017, Taipei has not been invited to the WHA or the ICAO. Even the outbreak of the COVID-19 pandemic did not change Beijing’s uncom­promising stance. Taiwan was denied access to the WHO or the WHA, as Beijing feared that any con­cession on international cooperation could be inter­preted as recognition of Taiwan’s statehood.

Taiwan’s diplomatic allies have diminished in number since Tsai Ing-wen took office. In July 2021, Taiwan had official relations with only 15 states, mostly in Central America and the South Pacific.²¹ In Europe, its only remaining ally in this regard is the Holy See, which is therefore of particular importance.

Maintaining diplomatic relations with at least some states is not only important for Taiwan’s self-esteem and dignity. These relations also provide oppor­tunities for participation, albeit limited, in international affairs, as well as for state visits and travel by senior politicians who are barred from visiting other states.²² Such official trips have also typically been used for stopovers (to “refuel”) and unofficial meetings, especially in the U.S.²³ Moreover, in the past Taiwan stood a better chance of being invited to international meetings if they were hosted in one of the states with which it had diplomatic relations.

Foreign policy: principles and priorities

Since the beginning of its democratisation process in the 1980s, Taiwan has gone through various phases in its foreign policy, each of which has been strongly influenced by whoever held the presidency at the given time. Lee Teng-hui (KMT), the first democratically-elected president of the ROC,²⁴ pursued a flexible foreign policy with the primary aim of improving the ROC’s international standing, even if this required making some concessions in terms of its name. His successor Chen Shui-bian (DPP, 2000–2008) pursued a zero-sum diplomacy – also as a reaction to Beijing’s mistrust and refusal to talk –, which not only his political opponents at home, but also Western observ­ers dubbed “scorched earth diplomacy.” Thus, this also put considerable strain on Taiwan’s relations with the United States, as Washington saw Chen’s policy as unnecessarily provoking the PRC.

The KMT’s Ma Ying-jeou (president from 2008 to 2016) then returned to the pragmatic and flexible stance that had prevailed during Lee’s reign, referred to as “viable diplomacy.”²⁵ The emphasis of this was on consolidating the remaining diplomatic relations based on a “diplomatic truce,” improving relations with other states (especially with the United States and Japan), enabling Taiwan’s functional participation in international organisations (including through NGOs), revitalising Taiwan’s economy using bilateral and regional free trade agreements (FTAs) such as the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP) and, finally, deploying cultural diplomacy as an expression of Taiwanese soft power.²⁶ After the turbulent period under Chen Shui-bian, this pragmatic approach was able to bring back to normal and stabilise relations with the United States in particular. As far as inter­national leeway was concerned, the results were mixed, as explained above: the few successes achieved re­mained dependent on the goodwill of the PRC, because Beijing did not want to set any precedents that would have endured beyond another change of government in Taipei.

President Tsai Ing-wen, who has been in office since 2016, continued the direction and principles of the previous government, but set her own priorities. In contrast to Ma Ying-jeou’s government, the suc­ceed­ing DPP government could not count on an accom­modating attitude from Beijing, although Tsai expressed commitment to stability in the Taiwan Strait. She at least managed to convince Washington that there would be no surprises to fear from her, as had been the case under Chen Shui-bian.²⁷

A central feature of foreign policy under Tsai, which also played a role under Ma, is that Taiwan consciously and voluntarily adheres to internationally agreed stand­ards and complies with international treaties, even if it has no prospect of formally signing these agreements. Taiwan acts as if it were a member of the main international organisations and tries to contrib­ute to achieving or implementing their goals.²⁸ In this way, Taiwan presents itself as a responsible actor in the international community and as an ex­emplary democracy. This approach applies to the observance of human rights, the fight against climate change and the achievement of the UN’s Sustainable Development Goals (SDGs).²⁹ In terms of development co­opera­tion, Taiwan follows OECD standards.³⁰ Under the Tsai government, Taiwan has consciously used its “warm power” to counter the diplomatic instruments of the PRC. Meanwhile, Beijing’s arsenal has come to be called “sharp power” by some Western analysts because the Chinese leadership exerts economic pres­sure, uses systematic disinformation and aggressive “wolf-warrior” diplomacy, among other methods.³¹

Taiwan’s “as if” behaviour plays out in an interesting manner in the disputes in the East and South China Seas. Taiwan’s maritime claims are historically congruent with those of the PRC³² and it has upheld them, including under Tsai Ing-wen’s presidency. How­ever, Taiwan’s government refers to principles of the UN Convention on the Law of the Sea and advo­cates guaranteeing freedom of navigation and over­flight rights.³³ Taiwan was also prepared to participate in the negotiations in The Hague on the South China Sea, but was denied the opportunity to do so. For this reason alone, Taiwan rejected the Permanent Court of Arbitration’s ruling.³⁴

Under Tsai’s government, Taiwan re-launched a cam­paign in 2017 to upgrade its status at the UN³⁵ based on three demands: improved access of Taiwan­ese people to the UN system; an end to discrimination against Taiwanese citizens when entering UN build­ings³⁶; and, finally, the inclusion of Taiwan in meet­ings, mechanisms and activities in the SDG context. In substance, this campaign represents nothing new, and it is no surprise that so far it has been as fruitless as similar previous attempts.

With its “New Southbound Policy,” Taiwan wants to reduce its dependence on the PRC.

One initiative that Taiwan revived under a new name after Tsai Ing-wen took office in 2016 is the “New Southbound Policy” (NSP) – such a “Go South” policy had also existed under Presidents Lee and Chen.³⁷ The NSP is designed to intensify relations with the countries of South and Southeast Asia, as well as with Australia and New Zealand, and thus reduce the one-sided economic dependence on the PRC. Originally, the focus was on the 10 ASEAN states and India. With the expansion of its geographical scope, Taiwan is establishing an explicit link between the NSP and the Indo-Pacific concepts of the United States, Japan and other states, and subscribes to the strategy of a “free and open Indo-Pacific.”³⁸ The NSP comprises the following four dimensions: economic and trade collaboration; talent exchange; resource sharing; and regional connectivity. During Ma’s presi­dency, the focus had been on rapprochement with the PRC – 23 bilateral agreements had been nego­tiated during the two terms of Ma’s KMT govern­ment. Taiwan’s economic integration with the main­land had increased during that period, and so had its dependence on the PRC. The NSP, on the other hand, focuses on diversification.

Conclusion

The official and informal room for manoeuvre in Taiwan’s foreign policy remains massively restricted by the PRC: even during the phase of rapprochement between the two sides during Ma Ying-jeou’s two terms in office, Beijing was careful not to set a prec­edent from which Taiwan’s right to permanent par­tici­pation in international organisations – even if only as an observer – could later be derived. Admis­sion to international organisations or regional FTAs such as the RCEP or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will be next to impossible for Taiwan to push through against Beijing’s resistance. This has not been changed by the fact that support from other countries has become louder and more coherent, as expressed in the Summit Communiqué of the G7 countries in 2021. Beijing has expanded and sharpened the tools with which it exerts pressure not only on Taiwan itself, but also on international organisations, other states and companies.

In order not to lose the domestic support of its own electorate, any government in Taiwan, whether led by the KMT or the DPP, must strike a balance between rap­prochement with mainland China on the one hand and the defence of Taiwan’s sovereignty and dignity on the other. Taiwan’s foreign policy must, if pos­sible, avoid steps that could be perceived by the PRC or the United States as unilaterally challenging the status quo, which is in any case constantly changing. Finally, Taipei must be careful not to allow itself to be instrumentalised by third parties, for example in the disputes in the South China Sea.

Below the threshold of formal diplomatic relations, Taiwan is trying to systematically and wisely use any available room for manoeuvre. However, the country remains dependent on the extent to which its respec­tive partners are prepared to allow and support this. Cru­cially, Taiwan has a lot to offer including eco­nomic strengths, such as in the production of semi­conductors, internationally compliant behaviour, normative, cultural and social soft power, as well as ample experience in dealing with China’s foreign policy instruments, especially cyberattacks, disinfor­ma­tion, military threats, and both economic pres­sures and incentives. All of this makes Taiwan an attractive partner even for those who are not diplo­matically connected to it.

Taiwan in the global economy

Despite its relatively small population (23.6 million) and the country’s diplomatic fringe position, Tai­wan’s global economic weight should not be under­estimated. With a gross domestic product (GDP) of US$668.5 billion, Taiwan ranked 21st among the world’s economies in 2020 and was the sixth largest in Asia after China, Japan, India, Korea and Indo­nesia. With a per capita income of US$28,306 (2020), Taiwan is the fourth wealthiest country in Asia, after Singapore, Japan and Korea.¹

Even by Asian standards, Taiwan’s economy is extremely stable macroeconomically. As in the Asian crisis (1997/98) and the global financial market crisis (2008/09), Taiwan proved to be extraordinarily crisis-resistant in the 2020 pandemic crisis. Although Tai­wan was geographically not far from the source of infection, China, it was able to avoid major outbreaks of infection for a long time² and also benefited from the rising global demand for electronic components and office and consumer electronics. Taiwan showed an estimated real GDP growth of 3.1% in 2020. This was the first time since China’s Tiananmen crisis year of 1989 that its economic output grew faster than that of the People’s Republic. Meanwhile, the un­employment rate remained at 3.9% in 2020, with inflation unchanged at 0%. The public budget deficit and public debt rose to 4.7% and 35.6%, respectively. At the same time, with a current account surplus of 9.6% of GDP, foreign exchange reserves increased to a record US$541 billion, making Taiwan the world’s sixth-largest foreign exchange reserve holder after China, Japan, Switzerland, Russia and India.³

An exceptionally high share of Taiwan’s value added, namely 36%, is accounted for by the manufacturing sector.⁴ As an industrial manufacturing loca­tion, Taiwan is very broadly positioned in terms of industrial sectors and has a medium-sized economic structure. A few large companies such as Foxconn, Pegatron, Taiwan Semiconductor Manufacturing Com­pany (TSMC), MediaTec and Formosa Petrochemical stand in contrast to numerous small and medium-sized enterprises, which give the Taiwanese economy its recognised high dynamism and flexibility. While the industrial focus is on electronics, information and communications, Taiwan also has considerable capac­ity in traditional industrial sectors. These include machinery and vehicle manufacturing, chemicals, plas­tics, steel, pharmaceuticals, textiles, apparel and food processing.

Taiwan’s particular competitive strengths lie in con­tract manufacturing for multinational industrial groups. Taiwanese companies are attractive as con­tractors not only because of their cost advantages, not least due to the fact that production is often relocated to the mainland and abroad, but also because of their ability to adapt manufacturing processes quickly and flexibly to customer wishes, market requirements and technological change. Taiwan’s industrial breadth, cooperative economic environment and international networking are an advantage here.

Through production and supply chains, Taiwan is deeply embedded in the regional division of labour of “Factory Asia”. In relation to domestic value added, the share of exports and imports in 2020 amounted to 94.4% in value terms, and the share of foreign direct investment (stocks) to 52%.⁵ Even though this entails political dependencies and vulnerabilities for Taiwan, China is by far the most important trading partner (exports 24.6%, imports 20.3%) and investment loca­tion (55%) for the country (see Figures 1 and 2). This may seem paradoxical in view of the political an­tago­nisms, but it is not surprising given the economic complementarity and geographical-cultural proximity of the two economies. The relocation of labour- and resource-intensive manufacturing processes to main­land China has been a bottom-up entrepreneurial process throughout. The immediate cost savings and, above all, the prospect of enormous profits in the course of expanding mainland production proved to be irresistible investment incentives.

Although direct shipping and air connections were still prohibited until 2008 and the government in Taipei constantly tried to steer Taiwanese foreign investment to Southeast Asia with subsidies, Taiwan’s businesses invested primarily on the mainland. At the end of 2020, Taiwan’s mainland investment amounted to US$192.4 billion, representing 55% of its total foreign investment. However, Taiwan’s current in­vest­ment in China has been declining since 2015, both in absolute terms and relatively when compared to its other outward investments.⁶ A similar trend can be seen in Taiwan’s foreign trade. To be sure, the country’s trade with China has continued to grow in absolute terms over the past decade. But China’s share in Taiwan’s exports has stagnated below 30% since 2010 and in imports at around 20% of the total value since 2015.

The flip side of the economic inter­connectedness with the mainland is the island’s greater political dependence on the People’s Republic.

The downside of the profitable economic inte­gration with the mainland is the island’s increased political dependence on the People’s Republic and greater vulnerability to it. Although a diversification trend started around 2015, the volume of Taiwan’s foreign trade with the U.S. (export 11.7%, import 12.7%), Japan (export 6.6%, import 16%), the Asso­ciation of Southeast Asian Nations (ASEAN) (export 17.6%, import 12.6%) and the European Union (EU) (export 12.7%, import 10.8%) still remains significantly lower than cross-strait trade (see Figures 1 and 2).

As an investor in Taiwan’s economy, the People’s Republic of China (PRC) continues to play a minor role due to Taiwanese restrictions. Among foreign investors, the EU (25.7%), the U.S. (13.1%) and Japan (12.4%) dominate (see Figure 2).

New challenges for Taiwan’s economic policy

The state has always played a leading role in Taiwan’s development into an advanced industrial country. Thus, in the post-war years, the state and state-owned enterprises initially dominated production and for­eign trade. But as early as the 1960s, the direction shifted to a market-based, outward-oriented industrial policy with a focus on rule-based sectoral innovation and investment promotion. Its most important instru­ments were and are the broad promotion of domestic STEM faculties and courses of study, the establishment of state research projects in prospective indus­trial sectors, the establishment and operation of well-functioning industrial and technology parks, and the active recruitment of direct investment and Chinese-born engineers from abroad. Sometimes the state itself acted as an entrepreneur, for example when the medium-sized domestic industry did not engage itself due to a lack of capital or insufficient willingness to conduct research and to take risks⁷ For example, in microelectronics and aircraft construction, economically successful companies have emerged from the spin-off of former state research institutions.⁸

Despite all the development successes in industry and the economy, Taiwan faces structural problems and challenges. According to President Tsai Ing-wen, Taiwan’s development is limited by the five shortages of land, water, energy, labour and talent. After the turn of the millennium, not only did the wage-inten­sive textile, garment and metal processing companies turn their backs on Taiwan, but also many high value-added businesses. For example, around 80% of Taiwanese companies’ production in the field of information and communication technologies (ICT) now takes place on the Chinese mainland.⁹ In the Pearl River Delta and the Greater Shanghai Area, research and production ecosystems have emerged that are equal, if not superior, to those in Taiwan. In addition to cost advantages, direct presence in the Chinese market and massive industrial policy sup­port from various Chinese bodies, the innovative and dynamic industrial environment now also speaks in favour of the mainland.

Taiwan’s economy has managed to maintain its unusually high industrial share of domestic value added through cost adjustments, productivity im­prove­ments and operational flexibility. However, only rudimentary efforts have been made to develop new industries.¹⁰ The hesitant industrial structural change also has problematic macroeconomic consequences. In the first two decades of the 21^st century, wages stagnated and gross fixed capital formation was sub­dued. As a result, overall economic growth remained weak, unlike in South Korea, for example. Meanwhile, the gap in the distribution of income and wealth widened.

Strategic positioning in the semiconductor industry

One area in which Taiwan is excelling in global com­petition is microelectronics. Taiwan holds a key posi­tion in the production of semiconductors, the basic material and technological driver of the digital age. In 2020, Taiwanese companies accounted for 20.1% of global sales in chip design, 77.3% in chip manu­facturing, and 57.7% in chip packaging and testing. Taiwan­ese companies are among the global market leaders, including MediaTec in chip design, TSMC and United Microelectronics Corporation (UMC) in chip manufacturing, Globalwafers in wafer manu­facturing (the silicon substrate used in chip production) and Advanced Semiconductor Engineering (ASE) in chip packaging and testing.¹¹ Electronic components are by far the country’s most important export product (see Figure 3) and China, the ASEAN coun­tries, Japan and Korea are their biggest buyers.

The success of Taiwan’s semiconductor industry is based on a number of factors. They include the gen­erally good local conditions for industrial production in the country, the long-lasting brain drain of Chi­nese-born engineers trained in the U.S. from Silicon Valley, the demand pull of Taiwanese and Chinese semiconductor consuming industries, as well as long-term planning and intensive industrial policy sup­port.¹²

TSMC’s industry dominance is impressive. As a contract manufacturer for semiconductor companies without their own manufacturing facilities (”fabless”), the company introduced specialisation in chip manu­facturing as an entrepreneurial innovation at the end of the 1980s. In the meantime, this business model of contract manufacturing (“foundry”) has largely pre­vailed over integrated semiconductor production. In 2020, TSMC held 55% of the global market in chip contract manufacturing and became the 11th largest company in the world by market capitalisation. TSMC is also an innovation leader, as it was the first to start commercial semiconductor production with a struc­ture width of 5 nanometres.¹³ The company currently intends to expand its technological lead. To this end, it plans to invest a massive US$100 billion by 2024 to build up semiconductor production with structure widths of 3 and 2 nanometres. Together with the Mas­sachusetts Institute of Technology (MIT), 1-nanometre technology is to be developed.¹⁴

The Taiwanese corporation TSMC is almost unrivalled in the global semiconductor industry.

By virtue of its market power and technology lead­ership in the field of high-performance processors, TSMC’s position in the global semiconductor industry is unique. In effect, it faces only limited competition in the newer product generations. The immense invest­ment required for research, development and production set-up is an effective barrier to market entry. As a first mover and temporary monopolist in the early product life cycles of semiconductors, TSMC can impose high sales prices and skim off lucrative pioneer rents. The indispensability of the latest gen­eration of semiconductors in applications such as artificial intelligence, high-speed computing, cloud servers, 5G communication systems, autonomous driv­ing or military drones gives TSMC’s corporate policy a geopolitical dimension, so to speak. The quasi-monopoly existence of technologically leading semiconductor production facilities in Taiwan is not only of strategic importance for global industrial value chains, but also for foreign and security policy. An act of war by China directed against Taiwan would endanger the supply of the mainland with this par­ticu­larly critical input. Metaphorically speaking, Tai­wan has a “silicon shield”.¹⁵

From a Taiwanese perspective, it is favourable that TSMC’s commercial interest and Taiwan’s foreign policy interest are currently quite congruent in the effort to defend the island’s central position as a globally leading location for semiconductor production and thus to underline Taiwan’s strategic value as part of the United States’ technological sphere of influence. It is crucial that TSMC maintains its com­petitive advantage with its own pilot production of the latest chip generations in Taiwan. Once manu­facturing facilities are established in foreign markets such as the U.S., Japan and possibly Europe, TSMC could even expand its world-leading market position.

Although TSMC has to perform a certain balancing act between Beijing and Washington, the company is clearly positioning itself on the United States’ side. Certainly, TSMC is pursuing commercial interests in the People’s Republic, by far the most important sales market for semiconductors of all: more than 50% of the world’s annual semiconductor production is con­sumed for industrial processing in China.¹⁶ TSMC has announced plans to expand and modernise its older-generation manufacturing facility in Nanjing. More important for TSMC, however, remains its connection to the U.S. The company generates two-thirds of its sales with U.S. companies, is highly dependent on industrial supplies from the U.S. (as well as Japan, Korea and Europe), and works closely with U.S. research institutions in research and development. It was therefore inevitable for TSMC to comply with the export control measures imposed by the Trump administration in May 2020 and to stop supplying semiconductors to the Chinese telecommunications company Huawei, at the time the company’s second most important customer after Apple. TSMC also pledged to invest US$12 billion to build a 5-nano­metre production facility in Arizona. However, since production costs in the U.S. are about 20% higher than in Taiwan, TSMC was able to negotiate compensatory subsidies with the United States.¹⁷

TSMC’s problems and concerns with China are simi­lar to those of the U.S. The company has to repeatedly defend itself against Chinese patent in­fringe­ments and industrial espionage and is exposed to the constant poaching of its engineers. Meanwhile, China’s industrial policy aims to develop a globally leading semiconductor industry across the entire value chain and to cover the domestic market from domestic production in the medium term. To this end, Chinese companies receive exorbitant subsidies for research, development and production.¹⁸ In con­trast, Taiwan’s government is trying to prevent the migration of industrial competencies to China by imposing investment restrictions and, more recently, recruitment bans.¹⁹ From a Taiwanese perspective, it must seem helpful that in December 2020 the U.S. government also imposed export control measures on the Chinese company Semiconductor Manufacturing International Corporation (SMIC), TSMC’s most im­portant Chinese competitor.²⁰ Without importing the plant, equipment and materials required for tech­no­logically advanced semiconductor production, SMIC will only be able to manufacture the less lucrative older-generation semiconductors for the time being.²¹ In this respect, Taiwan’s semiconductor industry benefits from the United States’ confrontational trade policy towards China.

Taiwan’s defensive foreign economic policy

Taiwan’s deep integration into the international division of labour, the prominent role of Taiwanese companies in regional value chains, and the island’s openness to imports and direct investments clearly illustrate how necessary and important a foreign economic and trade policy that is suitable for the island is. In view of Taiwan’s sovereignty, which is contested by Beijing, the trade policy orientation is inevitably defensive. The focus is not on expanding export opportunities and thus increasing income, employment and growth. Rather, in the course of the globally increasing number of trade policy agree­ments, the aim is to avoid or at least limit discrimination, because the liberalisations agreed in bilateral and regional free trade agreements (FTA) do not apply to third countries. Countries like Taiwan, which are not party to the agreements, are excluded from the benefits and are not allowed to participate in the further development of trade rules. Taiwan’s com­panies and the production and supply chains they manage must, however, remain able to connect when new standards are set elsewhere, such as for customs clearance, rules of origin, investment and sustain­ability. Goods and services “Made in Taiwan” must maintain their price competitiveness if they are not sub­ject to tariff liberalisation agreed elsewhere.

In this sense, the general policy requirement for Taiwan’s foreign economic policy to work towards diversification of its own sales and investment mar­kets is also to be understood as defensive. There is great concern that Taiwan’s resistance to China’s annexation efforts could be broken if its economic dependence on the mainland and thus its political vulnerability vis-à-vis the People’s Republic become overwhelming.

Beyond the economic motives, Taiwan’s trade policy inevitably also has a political component. Every trade policy agreement with a third country, and every membership of Taiwan in multilateral organisations symbolises the country’s state sovereignty and thus has a foreign policy value in itself. Nevertheless, the institutional responsibility for trade policy lies with the Ministry of Economic Affairs.

Against the backdrop of these extreme conditions, Taiwan’s trade policy pursues ambitious goals at the multilateral, unilateral and bilateral levels.

Conclusion

Despite its small size, Taiwan is a formidable player in world trade and the global economy, especially in the field of electronic components. Due to its tech­nologically leading production facilities and globally dominant market position, the TSMC group has stra­tegic relevance not only in supplying global value chains, but also for foreign and security policy. On the other hand, Taiwan has become subject to eco­nomical extortion and vulnerabilities in the course of its integration into mainland industrial production. The foreign economic diversification move towards Southeast Asia and India from the mid-2010s onwards has not noticeably reduced Taiwan’s economic de­pend­ence on China. At the same time, in view of the growing number of free trade and investment agree­ments worldwide, Taiwan’s foreign economic policy faces the difficult task of limiting the discrimination that works against the country and keeping up with new trade policy regulations. It is true that Taiwan has been more successful diplomatically at the for­eign trade level than in other areas, given its member­ships in the Asian Development Bank (ADB), APEC and WTO. However, the country’s efforts to reach bilateral and regional trade and investment agreements remain piecemeal.

Political and social relations between the U.S. and Taiwan

When the U.S. moved towards normalising its rela­tions with the People’s Republic of China (PRC) in 1972, the Nixon administration announced in a joint communiqué that it recognised the position of “all Chinese on either side of the Taiwan Strait”, that there was “but one China” and that “Taiwan is a part of China”.¹ In the communiqué, the U.S. also stated its interest in a peaceful resolution of the Taiwan ques­tion “by the Chinese themselves.” The second joint communiqué of the U.S. and the People’s Republic in 1979 established bilateral diplomatic relations, there­by sealing the end of formal relations with Taiwan. Washington thus recognised “the Government of the People’s Republic of China as the sole legal Government of China.”²

Shortly before a third U.S.-Chinese communiqué was published in 1982, U.S. President Ronald Reagan gave Taiwanese President Chiang Ching-kuo some assurances – albeit behind closed doors – to which subsequent U.S. administrations have felt committed to this day. In this context, Washington³ promised Taiwan, among other things, that the U.S. would neither seek a mediating role between Beijing and Taipei nor press Taiwan to negotiate with the People’s Republic. Another item on the list of assurances concerned the United States’ position on the island’s sovereignty. However, this was ambiguous and remains so to this day.

The Taiwan Relations Act (TRA) of 1979 established the legal and political-institutional framework for un­official relations. It set out the creation of the Ameri­can Institute in Taiwan (AIT), which represents the interests of the U.S. in Taiwan as a non-governmen­tal/non-profit organisation⁴ rather than a regular embassy. Despite this legal construct as a non-profit organisation, the AIT assumes quasi-governmental tasks, for example in the consular area. It is financed from the budget of the U.S. Department of State. While the staff of the AIT is mainly recruited from the U.S. State Department and other U.S. government agencies, the employees do not have diplomatic status. Thus, the AIT is not headed by an ambassador, but by a director. Currently, Sandra Oudkirk, a diplo­mat at the U.S. State Department, holds this position.

The TRA also contains the legal basis for Taiwan’s representation of interests in the U.S. Operating under the name Taipei Economic and Cultural Rep­resentative Office (TECRO) since the early 1990s, it maintains 12 branches in the U.S. The representation’s staff also do not have the official status as diplomats, but they do enjoy privileges similar to those of diplomats.⁵

Political dialogue between the two sides is complicated by a lack of formal government relations. Only since the early 1990s has the U.S. allowed high-rank­ing representatives of the administration to visit Tai­wan, provided they represent “economic and tech­nical” ministries or agencies. Carla Hills, as the Trade Representative under the administration of President George H. W. Bush, was the first American cabinet member in 1992 to visit Taiwan since Washington severed diplomatic relations. Until 2014, only five other visits by U.S. representatives at this level were recorded by the Congressional Research Service.⁶ It was not until 2020, during Donald Trump’s presidency, that the U.S. again sent a cabinet member – Health Secretary Alex M. Azar II – to the island. When Azar met Taiwan’s President Tsai Ing-wen, it was considered the highest-level bilateral meeting “in decades”.⁷

Visits by high-ranking U.S. representatives to Taiwan continue to be the exception rather than the rule.

However, no U.S. president, secretary of state or secretary of defence has visited Taiwan since 1979, although it was reported in the (social) media that U.S. Secretary of State Mike Pompeo had considered such a step. As a matter of policy, senior State Depart­ment and Defence Department officials as well as high-ranking military officers refrained from travel­ing to Taiwan until the early 2000s.⁸ This policy seems to have changed in recent years, however. The Taiwan Travel Act, which came into effect in March 2018, is a congressional call for government contacts “at all levels” among other things.⁹ According to reports, Taiwan subsequently received officials from both the U.S. State Department and the Pentagon, as well as a two-star general from the Indo-Pacific Com­mand.¹⁰ Some observers commented that these were by no means precedents and that there had been high-level trips before. Nevertheless, such visits still seem to be the exception rather than the rule.

Far-reaching restrictions also apply when Taiwanese political representatives visit the U.S. In the course of its internal Taiwan Policy Review, the Clin­ton ad­ministration in 1994¹¹ stipulated, among other things, that Taiwan’s political leadership – the presi­dent, vice-president or prime minister – were only allowed to enter the U.S. for short-term transits.¹² Nevertheless, these transits are used for political talks, for example with members of the U.S. Congress.

Executive regulations on government contacts in Washington specify, among other things, the build­ings in which U.S. and Taiwanese envoys are allowed to meet. A few days before leaving office, Secretary of State Pompeo made headlines in January 2021 when he announced that he would lift all existing restric­tions.¹³

The Biden administration, however, apparently has not carried out this far-reaching decision. Antony Blinken affirmed at his Senate hearing that as the new Secretary of State he wanted to create “more space for contact”.¹⁴ However, the U.S. State Department later announced that new guidelines would merely liberalise existing rules without providing details.¹⁵ Still, Biden’s invitation of Taiwan’s top representative in the U.S. to his inauguration cer­emony in January 2021 was of symbolic significance, as no incoming U.S. president had taken such a step since diplomatic relations had been severed.

Another important aspect of U.S. policy towards Taipei is its support for Taiwan in international orga­nisations and forums. Following the aforementioned Taiwan Policy Review, Washington has backed Tai­wan’s membership in those international organisations that do not require statehood. In cases where full membership is not formally possible, the U.S. is working to ensure that Taiwan can make its voice heard in other ways, for example as an observer.¹⁶ The Biden administration has declared its support for this goal, and has also called on the World Health Organisation to restore Taiwan’s observer status in its general assembly, the World Health Assembly.

Security and defence relations

Successive U.S. administrations and bipartisan major­ities in Congress have vehemently emphasised Ameri­can interest in Taiwan’s security, to a far greater extent than in many other U.S. security partnerships. With reference to “strategic ambiguity”,¹⁷ it is often pointed out that the U.S. is not committed to whether and if so, how it would come to Taiwan’s aid in the event of a military attack. However, at least in terms of the “how”, such ambiguity also characterises for­mal alliances in which the U.S. is a member such as NATO. The Taiwan Relations Act stipulates that the U.S. will supply Taiwan with “defensive” armaments and at the same time maintain its own military capa­bilities to counter a possible attack on Taiwan.¹⁸

Until the Taiwan crisis in 1995/96, security and defence relations between the U.S. and Taiwan were based almost exclusively on American arms sales. The U.S. has also treated Taiwan as a major non-NATO ally since 2003. This status implies privileges that facilitate arms cooperation.¹⁹ In fiscal years 2016 to 2020, the U.S. sold approximately US$16.7 billion worth of arms to Taiwan under its Foreign Military Sales programme, although the figures fluctuated significantly from year to year.²⁰ In fiscal year 2020, Taiwan was actually Washington’s largest arms buyer, with purchases amounting to US$11.8 billion. From 2017 to 2021, the Trump and Biden administrations requested from Congress the sale to Taiwan of weapons systems such as F-16 fighter aircraft, Abrams battle tanks, and Harpoon missile systems for coastal defence and artillery.²¹

From the perspective of the U.S., the Taiwan crisis in the mid-1990s demonstrated not only its own deterrent capability vis-à-vis China, but it also made clear that the sale of weapons systems to Taiwan alone was not sufficient to guarantee the island’s defence capability.²² Therefore, Taipei and Washington have since expanded and intensified their ex­changes beyond arms sales. For example, American educational programmes have been made accessible to Taiwanese military personnel, and the two sides have engaged in joint assessments of Taiwan’s mili­tary capabilities while also establishing bilateral dialogue formats.²³

U.S. military observers have regularly participated in Taiwanese military exercises for some time,²⁴ but joint manoeuvres have not taken place for a while, at least officially. In November 2020, however, local Taiwanese media reported the presence of Special Forces from the U.S. Army as well as the U.S. Marines for joint exercises in Taiwan.²⁵ Apparently, exercises also took place the following year, with the Wall Street Journal reporting about two dozen U.S. Special Forces in Taiwan in October 2021.²⁶ Joint manoeuvres may also have been held in earlier years.²⁷ The shift from a silent presence of a few military advisors in connec­tion with U.S. arms sales to a more active U.S. role in training Taiwanese naval forces seems to have been initiated by the Trump administration.²⁸

In its October 2020 report that draws on conversations with former U.S. government officials, the Task Force on U.S. Policy Toward Taiwan established by the Center for Strategic and International Studies (CSIS) lists a total of nine dialogue formats that take place regularly. Participants from the U.S. in these meetings include senior officials, officials and military leaders from the Departments of State and Defense and the National Security Council.²⁹

There is a debate in Washington on whether the U.S. should be more explicit in its defence of Taiwan.

The U.S. administration is extremely cautious about publicising information on these dialogue for­mats. For instance, no such mention is made on the website of either the State Department or the Depart­ment of Defense. Moreover, the U.S. and Taiwan do not hold regular dialogues at the political level, un­like the “two-plus-two” talks between the U.S. and Japan, and the U.S. and South Korea.

In the U.S., the debate has recently intensified on whether and how security and defence relations with Taiwan can be further developed. At the core of this is the question about whether Washington should abandon its “strategic ambiguity” regarding its secu­rity commitments to Taipei and instead commit itself much more explicitly to the island’s defence.

The background to these discussions includes the widespread perception in Washington that the mili­tary balance of power in Asia is shifting in favour of China. Taiwan’s military advantages based on its tech­nological edge and its geographical isolation as an island are shrinking. In addition, China has been in­vesting for years in so-called anti-access/area-denial capabilities such as ballistic missiles and cruise mis­siles. These capabilities make it particularly difficult for the U.S. to come to Taiwan’s aid in the event of a conflict.

Consequently, the U.S. sees itself increasingly on the defensive and assumes that sooner or later China will use its enhanced military strength to create facts in Taiwan. Doubts are mounting about the United States’ ability to deter China from an attack on Tai­wan, which could conceivably take the form of a naval or air blockade, targeted air strikes or even an invasion of the island by the People’s Liberation Army.³⁰ In the spring of 2021, for example, the then commander of the U.S. Indo-Pacific Command attracted some attention when he stated before the U.S. Con­gress that China could attempt a military unification with Taiwan within six years.³¹

In October 2021, U.S. President Biden caused con­fusion inside and outside the U.S. by publicly sug­gest­ing that the U.S. had an explicit alliance commitment to defend Taiwan against attack.³² So far, however, it does not look as if the U.S. under the Biden admin­istration intends to fundamentally alter the open, ambiguous nature of the security and defence rela­tionship.³³

Biden’s spokesperson “clarified” the president’s statements to the effect that the fundamentals and direction of U.S. Taiwan policy, including the Taiwan Relations Act, have not changed. Instead, the Biden administration, like its predecessor, is focusing on strengthening Washington’s deterrence against Bei­jing by investing specifically in military capabilities and focusing geographically on the Indo-Pacific region.

U.S. economic interests vis-à-vis Taiwan

Taiwan is an important market for U.S. manufactur­ing and agricultural producers. With US$31 billion in U.S. exports and US$54 billion in U.S. imports, Taiwan was the 13th largest trading partner for the U.S. in 2019.³⁴ Moreover, Taiwan has essential eco­nomic and technological importance for the U.S., as Taiwanese firms are market leaders in microelectronics.³⁵ Nevertheless, economic and trade relations have long been considered a rather neglected area in U.S.-Taiwan relations.

From the U.S. perspective, Taiwan, as a high-tech country, plays a prominent role in the global struggle for technological leadership, especially with China. Taiwanese companies, above all the Taiwan Semiconductor Manufacturing Corporation (TSMC), are world leaders in the production of semiconductors and microchips. The fragility of the supply chains for these products has recently been felt by car manufacturers in the U.S. and beyond.³⁶ In addition, Taiwanese companies like TSMC are pioneers in the produc­tion of particularly advanced chips and processors. These are indispensable for future technologies such as artificial intelligence, 5G quantum computers and autonomous systems, all of which are also of enor­mous military relevance.

TSMC’s largest customers include both U.S. companies (such as Apple) and Chinese companies (such as Huawei). In May 2020, the Trump administration imposed export controls, forcing TSMC to stop sup­plying chips to Huawei. Against a backdrop of politi­cal pressure and economic incentives, TSMC announced as early as May 2020 that it would build a new chip factory in Arizona and invest around US$12 billion in it for the period 2021-2029.³⁷ The Trump administration celebrated this as an important step “to move critical technology supply chains back to the U.S.”.³⁸

President Biden has also expressed a desire to in­crease the U.S.’s manufacturing capacity in order to reduce vulnerabilities and dependencies in critical chip manufacturing supply chains.³⁹ To this end, substantial public funds are to be made available for the expansion of domestic infrastructure.

In the U.S., there is a growing number of voices that want to deepen and formalise economic and trade relations with Taiwan.

In the U.S., voices in support of greater and more formal economic and trade relations with Taiwan as a whole have recently been growing. As early as 1994, Washington and Taipei concluded an agreement (Trade and Investment Framework Agreement, TIFA) with the primary aim of creating a framework for regular consultations on economic and trade policy issues. However, discussions on concluding a bilateral trade agreement did not make progress for years because of bilateral disputes over Taiwanese import restrictions on agricultural products such as beef and pork. Recently, U.S. Congress has increased domestic political pressure to reach a comprehensive agreement with Taiwan. Proponents in particular justify their position by pointing to the America’s growing economic and technological rivalry with China.⁴⁰

The Biden administration has indicated that it would support a deepening of trade relations with Taiwan. In June 2021, trade talks were held under TIFA for the first time since 2016.⁴¹ These had been suspended by the Trump administration. However, the question remained open as to whether negotiations on a formal trade agreement were to be initiated, and if so, with what level of ambition. Against the backdrop of resumed talks, U.S. Trade Representative Katherine Tai explained that there were still hurdles from the U.S. perspective, including access restric­tions to the Taiwanese market for American beef and other agricultural products.⁴²

Social and scientific exchange

The U.S. has not only worked to strengthen Taiwan’s international networking within the framework of unofficial relations, but has also promoted social and scientific exchanges between the U.S., Taiwan and other states. A key instrument in this regard is the Global Cooperation and Training Framework (GCTF),⁴³ which was established in June 2015 through a memo­randum of understanding between the AIT and TECRO. In March 2019, Japan was added as a partner country. Promoting the GCTF as a forum for tackling global problems, the three partners organise expert work­shops in this context on topics as diverse as com­bat­ing digital piracy and protecting the world’s oceans.⁴⁴

The 148 twinning agreements between cities in the U.S. and Taiwan are also intended to promote social exchange. Since 2012, the Taiwanese have benefited from the Visa Waiver Programme, which allows them to enter the U.S. without a visa. According to the latest information from the U.S. Department of State in 2018, Taiwan was also the seventh largest country of origin for international students in the U.S. This exchange is supported by the Fulbright Program and the International Leadership Program.⁴⁵

In December 2020, AIT and TECRO signed a memorandum of understanding to promote educational cooperation. Among other things, it is intended to encourage more U.S. students to learn Chinese in Taiwan.⁴⁶ A few days later, the two representations also sealed an agreement to facilitate an exchange between scientists and experts from the two countries,⁴⁷ which also contains provisions on the mutual protection of intellectual property.

Conclusion

The intensifying political, security and economic rivalry with China and the dismantlement of demo­cratic institutions in Hong Kong have amplified voices in the U.S. calling for a fundamental rethink of rela­tions with Taiwan. So far, however, there are no signs that Washington is abandoning the course of the last few decades. The traditional principles of U.S. Taiwan policy still apply, namely keeping relations unofficial, avoiding a clear position on Taiwan’s sovereignty and calling for a peaceful solution. In line with this, the U.S. has merely taken some visible but small steps to deepen relations.

Restrictions on personal contacts at the political level, at the level of senior officials and between the military have been eased. Nevertheless, these contacts continue to take place mostly confidentiality. There are still no regular and institutionalised dialogue for­mats at the political level, all the more so in the par­ticularly sensitive areas of foreign and defence policy.

Despite calls from Congress and from think tank representatives focused on security policy, both the Trump and Biden administrations refused to commit more clearly to the military protection of Taiwan against a Chinese attack. Decisionmakers in Washington continue to be aware of how important the Tai­wan issue is in the context of relations with China and of the military risks that a confrontation in the Taiwan Strait poses for the U.S. Therefore, the U.S. administration is unlikely to trigger a new Taiwan crisis by taking a unilateral step that would endanger the status quo. The question rather is whether Chi­na’s increased self-confidence could tempt the lead­er­ship in Beijing to try to create facts vis-à-vis Taiwan.

Reassessing Taiwan’s significance

Three factors have contributed to the reassessment of Taiwan’s importance: first, threat perceptions vis-à-vis the PRC have grown in Japan. The military regional balance is shifting in China’s favour and Beijing is show­ing an uncompromising posture both internally and externally. With its military and paramilitary presence, the People’s Republic is putting pressure not only on Taiwan but also on Japan – especially in the area around the Senkaku/Diaoyu Islands, con­trolled by Tokyo but claimed by the PRC (and also by Taiwan), about 170 kilometres⁷ from Taiwan (see Map 1, p. 6). Mistrust has grown between the great powers, namely the U.S. and China, thereby increasing the risk of military escalation.

From Japan’s point of view, a military confrontation over Taiwan can therefore no longer be ruled out. The Russian invasion of Ukraine in February 2022 triggered renewed discussions about this risk. In such a scenario, Japan would be directly affected – both because of its geographical proximity and be­cause of the U.S. military bases on the island of Okinawa, which would be crucial for potential American opera­tions. In Japan, the view thus prevails that a military contingency over Taiwan will quickly spill over to involve the country directly.⁸

The Japanese public increasingly perceives a strong bond with Taiwan.

Secondly, the Japanese public increasingly feels a strong social bond with Taiwan. Generous and largely private donations from Taiwan after the triple dis­aster in Japan in March 2011 have left a lasting feel­ing of gratitude on the part of the Japanese. The aid amounted to around 20 billion yen (about €200 mil­lion) – the largest contribution from abroad follow­ing the U.S.⁹ At the same time, awareness of shared values such as democracy and human rights has heightened. Taiwan’s status as a pluralistic, mature democracy stands in marked contrast to Beijing’s authoritarian and repressive system.

Thirdly, especially since the start of the COVID-19 crisis in Japan, Taiwan’s importance as a technology partner has been highlighted. The increased global demand for semiconductors and the resulting supply shortfalls have underlined the prominent position of TSMC, the world’s leading chip producer. TSMC also supplies Japanese corporations.¹⁰ At the same time, the technological rivalry between the U.S. and China is intensifying. Tokyo, therefore, sees the need to draw on Taiwan more extensively as a technology partner.¹¹

Political relations

After 1972, Tokyo and Taipei developed various quasi-diplomatic as well as informal political channels for exchange. Furthermore, Taiwan’s democratisation in the 1990s gave relations a boost. Because of the rela­tively positive assessment of the Japanese colonial period in Taiwan, historical disputes rarely dominate the bilateral agenda. The biggest point of contention – the territorial dispute over the Senkaku/Diaoyu Islands – was defused in 2013 with a fisheries agreement.

Security policy relations

In terms of security, Taiwan is important for Japan not only due to its geographical proximity, but also because of its location along important maritime trade routes. As early as 1978, the head of the Japa­nese Defence Agency at the time Kanemaru Shin emphasised that Taiwan’s security was important for Japan.³⁰ To date, there has been no direct exchange between the armed forces of the two countries.³¹ However, Tokyo has been sending a retired two-star general to its de facto embassy since 2003.³²

For a long time, the military superiority of the U.S. over China has been regarded in Japan as a guar­antee of stability in the Taiwan Strait, and the Taiwan crisis of 1995–96 did not fundamentally change that view.³³ As mentioned above, however, Tokyo’s con­cerns over China’s military build-up and modernisation have grown in recent years.

Japan is deliberately vague on whether and to what extent it would participate in a military conflict over Taiwan alongside the U.S.

Tokyo’s policy towards Taiwan has been characterised by “strategic ambiguity” since 1997 – with cer­tain parallels to U.S. policy: Japan deliberately refrains from specifying whether and to what extent it would participate in a military conflict over Taiwan along­side the U.S. Through this ambiguity, Tokyo seeks to support the maintenance of Taiwan’s status quo and contribute to deterrence vis-à-vis the PRC. In 1997, Tokyo expanded the possible role of its defence forces within the U.S.-Japan alliance to include “rear-area support”, i.e. logistical support in “situations in areas around Japan”.³⁴ Theoretically, this provision is appli­cable to a crisis involving Taiwan.³⁵ Japan’s 2015 secu­rity laws could also apply in the event of a Taiwan conflict. According to these, Tokyo is allowed to par­ticipate in combat operations alongside the U.S. if the situation is classified as an immediate threat to Japan. Such a political decision would be easy to justify due to Taiwan’s proximity.³⁶

The joint statement by Suga and Biden in April 2021 underlines Japan’s “strategic ambiguity” in that it emphasises stability in the Taiwan Strait as a com­mon goal of the allies. The proposal for the Taiwan reference apparently came from Biden; Suga went along with it despite initial concerns about China’s reaction.³⁷ Subsequently, Tokyo lobbied for inclusion of similar language on Taiwan in the May 2021 sum­mit declaration with the EU and in the June 2021 G7 final declaration, for example. However, the Japanese government has kept silent on whether it is pursuing military planning for contingencies around Taiwan either on its own or jointly in the alliance following the Suga-Biden statement.

Economic relations

Japan and Taiwan are important economic partners for one another. With a bilateral trade volume of around US$68.8 billion in 2020, Japan was Taiwan’s third largest trading partner after the PRC and the U.S.³⁸ In terms of Taiwan’s imports, Japan even ranks second after the PRC, with more than half of those imports consisting of chemical products, electronic components and machinery.³⁹

Conversely, Taiwan was Japan’s fourth largest trading partner in 2020, after the PRC, the U.S. and only just behind South Korea.⁴⁰ The neighbouring island state thus accounted for about 5.6% of Japan’s foreign trade.⁴¹ At around 43%, the largest sectoral share of Japanese imports from Taiwan is electronic components, especially semiconductors.

Japan is the fourth largest source of foreign investment in Taiwan after the Netherlands, the British Overseas Territories in the Caribbean, and the U.S.⁴² In cumulative terms, Japanese capital contributions amount to US$23.5 billion, representing 12.4% of foreign investment holdings in Taiwan.⁴³ On the other hand, Taiwanese investments in Japan total US$9.6 billion.⁴⁴ The comprehensive investment agreement of 2011, which covers all key protection standards for investors that are common among industrialised countries and which also prohibits discrimination (national treatment, most-favoured-nation treatment), likely had a positive effect on both sides.⁴⁵ Overall, Japan and Taiwan complement one another economically. Companies from both sides work closely together in the IT and electronics sectors. Taiwan’s semiconductor industry is dependent on Japanese companies, which supply machines and chemical components for manufacturing, for exam­ple. In view of the increased international demand for semiconductors, a number of Japanese suppliers have invested in Taiwan. For instance, Shin-Etsu Chemical announced in October 2020 that it would participate in building a new photoresist pro­duction facility in Taiwan.⁴⁶

Japan is courting Taiwan to invest in its semiconductor manufacturing industry and in research in this area.

Conversely, Tokyo is also courting Taiwan to invest­ment in its semiconductor manufacturing in­dustry as well as related technological research. Japan seeks to improve its competitiveness in key digital technologies such as semiconductor production and to ensure security in supply chains. At the end of May 2021, TSMC announced that it will establish a centre for research and development in Ibaraki, north of Tokyo, with the participation of Japanese companies. The Japanese government will cover about half of the project cost of about 37 billion yen (about €276 mil­lion).⁴⁷ In October 2021, TSMC also revealed plans to build a semiconductor plant in Japan, with the in­volve­ment of Sony Corporation. According to media reports, the Japanese government will subsidise about half of the total cost of 800 billion yen (about €6 bil­lion).⁴⁸ Taiwanese companies, in turn, hope to defend their technological advantage internationally by in­vest­ing in Japan or cooperating with companies there.

The quasi-embassies of Japan and Taiwan have hosted the Japan-Taiwan Economic and Trade Con­ference annually since 1976 to discuss bilateral eco­nomic issues. Discussions on a bilateral free trade agreement (FTA) have been on hold since Taipei banned the import of food from five prefectures in the wake of the Japanese triple disaster in 2011 due to possible radiation exposure.⁴⁹ Although Taiwan lifted the import restrictions in February 2022, it remains to be seen whether such discussions will be taken up again.⁵⁰ In Japan, the utility of an FTA is questioned, given the already low bilateral tariff level and the existing bilateral investment agreement.⁵¹

A more important step, however, could be Taiwan’s accession to the multilateral Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in which Japan is considered the de facto leader.⁵² In September 2021, Taipei applied to join this trade bloc following membership application by the PRC.⁵³ The Japanese government has repeatedly signalled its support for Taiwan in this endeavour, provided the accession criteria are met.⁵⁴ However, Tokyo fears that in the event of admission, the PRC may increase pressure on Taiwan.⁵⁵

Culture and civil society

Taiwan and Japan share close bilateral relations in areas of culture, civil society and education. For instance, mutual societal perceptions of the other country are generally positive.⁵⁶ Since 2005, Taiwanese visitors to Japan have been exempt from visa re­quirements for stays of up to 90 days, thus benefiting people-to-people exchanges.⁵⁷ In 2011, Japan con­cluded an open skies agreement with Taiwan, result­ing in the establishment of new bilateral flight routes.⁵⁸

Mutual tourism flourished until the COVID-19 pan­demic. In 2019, more than 2 million Japanese tourists visited Taiwan for the first time, making up the sec­ond largest group of foreign visitors that year after the PRC.⁵⁹ Conversely, nearly 4.9 million Taiwanese travelled to Japan in 2019 – the third largest group of visitors from abroad.⁶⁰

There are also lively exchanges between schools and universities on both sides. Centres for Japanese studies at Taiwanese universities, such as at National Taiwan University, receive financial support from the de facto Japanese embassy.⁶¹ In 2019, more than 10,000 Japanese students were enrolled at Taiwanese universities – a fivefold increase from 10 years ear­lier.⁶² Young people in Taiwan are also showing inter­est in Japan, as evidenced by the rising number of applications for working holiday visas in Japan. For instance, in 2019, Japan doubled the number of such visas that it issues for Taiwanese applicants from 5,000 to 10,000 per year.⁶³

At the local level, there is also a network of partner­ships between cities or prefectures of the two sides. A total of 99 such partnerships exist, 77 of which have been established in the last 10 years alone.⁶⁴ These links help to promote exchanges between mayors of the two sides, which is of political signifi­cance, especially because Taiwanese local politicians subsequently often pursue careers in national politics.⁶⁵

Conclusion

On a political, economic and civil society level, Japan-Taiwan relations are overall developing positively. Japanese debates testify to a growing political aware­ness of the role and importance of Taiwan. Never­theless, Tokyo maintains the appearance of having a one-China policy.

Based on increased awareness, the Japanese leadership has become more willing to approach Taiwan policy more independently, rather than subordinating it to that of the PRC. When Beijing imposed an import ban on Taiwanese pineapples in March 2021 citing concerns about plant pests, Tokyo showed soli­darity with Taipei by purchasing 10,000 tonnes of the fruit.⁶⁶ Despite its own slow vaccination campaign, Tokyo also supplied about 3.4 million COVID-19 vaccine doses to Taiwan in June and July 2021 after Taipei accused Beijing of blocking a shipment of BioNTech vaccines from Germany.⁶⁷

In Tokyo, there is a wealth of creative ideas for the further development of relations with Taiwan. For example, a newly founded “Taiwan Project Team” of the ruling LDP developed proposals in this regard in June 2021. The project members refer, for example, to the possibility of using music festivals and other cultural events of the armed forces as justification to enable contact between active military personnel of the two sides.⁶⁸ Even under the premise of its one-China policy, Japan thus sees scope for further ex­pand­ing relations with Taiwan.

Introduction

The Republic of Singapore does not recognise Taiwan diplomatically, but perhaps more than any other state in Southeast Asia has for decades built up and main­tained both extensive and intensive relations with subsequent governments in Taipei. This is, first of all, for historical reasons, as relations between the island of Taiwan and the city of Singapore date back at least to the 19th century. During British colonial rule over British Malaya, migrant workers settled in Singapore, mainly from southern China, especially from the provinces of Fujian, Guangdong and Hainan, but also from Taiwan.¹ As a result of these migration move­ments, transnational family networks developed be­tween southern China and Singapore, some of which still exist today. Chinese migration also brought linguistic, religious and cultural practices to Singapore. For example, religious networks developed between Buddhist temples in Taiwan and numerous places across Southeast Asia.²

In the 20th century, Singapore, as part of British Malaya, initially maintained diplomatic relations with the Republic of China (1912–1949), which was ruled by the Kuomintang (KMT) from 1928. When Singapore became independent in 1965, the People’s Action Party (PAP), which still rules today, briefly recognised the Republic of China under Chiang Kai-shek’s leadership. The United Nations’ decision in 1971 which recognised the People’s Republic of China (PRC) as the only legitimate representative of China to the United Nations³ also affected diplomatic relations between Singapore and Taiwan, but did not prevent further rapprochement between the two. On a politi­cal level, anti-communism, among other things, united Taiwan and Singapore during the Cold War era. However, relations were also intensified on an economic and, above all, military level. Trade mis­sions were established as early as 1969, and through the “Exercise Starlight” agreement of 1975, Taiwan became one of the central partners in building up Singapore’s armed forces. The agreement included, inter alia, the training of Singaporean forces at Taiwan­ese military bases and of Singapore Armed Forces (SAF) by Taiwanese military personnel at mili­tary bases in Singapore.⁴ In contrast, Singapore only maintained unofficial relations with the PRC since the 1970s, until it became the last Southeast Asian state to establish official diplomatic relations with the People’s Republic on 3 October 1990.⁵ Even before establishing official relations with the PRC, however, Singapore’s then Prime Minister Lee Kuan Yew had officially advocated a one-China policy, according to which the question of Taiwan’s reunification with the PRC was declared an internal Chinese matter and Taiwan’s independence was flatly rejected.

Political relations

Singapore’s founding father Lee Kuan Yew and his son and current Prime Minister Lee Hsien Loong, the city-state’s main political dynasty, have nurtured extensive political contacts with Taipei. For instance, Lee Kuan Yew travelled to Taiwan several times, as did his son, whose last private visit was in 2004, short­ly before he took office as prime minister. The Lee family’s close personal ties to the KMT can be seen, for example, in the fact that the then Taiwanese Prime Minister Ma Ying-jeou was present at the funer­al services for Lee Kuan Yew in 2015. However, he did not take part in the official state ceremony, but in­stead attended the family’s funeral service as their guest of honour, which was held before the state funeral. Although this anecdote primarily illustrates the intense personal ties between Singapore’s politi­cal elite and the KMT, it is also indicative of some of the challenges Singapore’s diplomats have to crea­tive­ly deal with in their relations between Taiwan and the PRC.

By contrast, relations with the Democratic Progressive Party (DPP), which is currently in power in Taipei, have traditionally been more distant. Singapore has been critical of the DPP’s independence course for years.⁶ The Singaporean ruling party, the PAP, argues that the DPP’s emphasis on Taiwanese statehood and de facto independence is primarily motivated by domestic politics, and proves counterproductive in terms of foreign policy, as it provokes Beijing and thus promotes instability in the region. At the same time, Singapore’s relations with Taiwan have become more difficult. This is mainly due to the increasing economic ties between Singapore and the People’s Republic of China, among other things, through large Singaporean direct investments in the PRC – some of which take place in the context of the Belt and Road Initiative.⁷ It is true that Singapore is economically less dependent on the PRC than many neighbouring countries, including Taiwan, due to its broad-based, global trade relations. Nonetheless, the Singaporean leadership is consistently careful not to snub Beijing.

Nevertheless, Singapore has established close political relations with Taiwan across changing gov­ern­ments in Taipei, without noticeably deviating from its one-China policy. Internationally, Singapore has been “silent”, or rather very “quiet”, about Tai­wan in this context.⁸ For example, there are no offi­cial expressions of support for Taiwan in international organisations, nor are there any official visits to the island by Singaporean government representatives or parliamentarians. Rather, political leaders visit Taiwan privately or only after leaving government service.⁹ Furthermore, bilateral dialogues are also rare. However, employees of the Ministry of Economic Affairs and the Ministry of Defence regularly travel from Taiwan to Singapore for talks – but without any press coverage.¹⁰ Taiwanese representatives are also regularly invited to the Shangri-La Dialogue, one of the most important security policy dialogue forums in the region, because of their function as experts or academics. In addition, government-level meetings between Taiwan and the PRC have repeatedly taken place in the city-state, such as the most recent meet­ing between Xi Jinping and Ma Ying-jeou in 2015.¹¹

Singapore does not recognise Taiwan diplomatically, but has concluded a free trade agreement with the island state.

While Singapore does not recognise Taiwan diplomatically, this has not prevented the city-state from concluding bilateral agreements with Taipei, such as a free trade agreement (FTA) and an agreement on the Exercise Starlight military training programme. Taiwan­ese diplomats in Taiwan’s unofficial representation, the Taipei Representative Office in Singapore, are also granted privileges that are equivalent to formal diplomatic status.¹² In return, they also apply to the staff of Singapore’s representation in Taiwan, the Singapore Trade Office, which was established in 1979. These privileges include the granting of diplo­matic immunity, the use of diplomatic passports, the use of diplomatic privileges at airports and tax exemptions.¹³

There is also cooperation with Taiwan in many areas at the technical level. For example, Taiwan supports Singapore in improving its public transport system.¹⁴ Another area of cooperation is public hous­ing, through which Taiwanese delegations have been able to gain new ideas and learn about best practices in Singapore.¹⁵ Represented by experts and academics, the city-state also participates in the Global Co­operation and Training Framework (GCTF), originally founded by the U.S. and Taiwan when it comes to topics such as industrial espionage and the protection of intellectual property.¹⁶ At the academic level, there is also cooperation with Taiwan in the ASEAN con­text. The Singapore Institute of International Affairs (SIIA) is a member of the ASEAN Institutes of Strate­gic and International Studies (ASEAN ISIS) network. Together with Taiwan’s Institute of International Rela­tions (IIR) at National Chengchi University, the network regularly organises academic dialogues on foreign and security policy issues.¹⁷

Security policy

Singapore’s relations with Taiwan stand out mainly for their intensive military cooperation. For instance, and as mentioned above, Exercise Starlight, a formal annual training programme for Singaporean military personnel on the island, has been in operation since 1975.

Singapore and Taiwan maintain intensive military cooperation.

Taiwan has long been Singapore’s main partner for military training and manoeuvres that are not pos­sible on the city-state’s territory due to its limited land area. For instance, in the 1980s and 1990s, up to 15,000 soldiers took part in Exercise Starlight, and the trainings now also include aspects such as counter-terrorism and dealing with natural disasters. In order to better coordinate joint military training and manoeuvres, delegations from the Taiwanese Ministry of Defence, and in 2014 even the Minister of Defence himself, repeatedly travel to Singapore. However, the Singaporean government has categorically ruled out supporting Taiwan (militarily) in the event of a crisis.

Since the early 2000s, Singapore has also entered into military cooperation with other states such as Australia, Brunei and even the PRC, nonetheless Exer­cise Starlight, with currently about 3,000 Singaporean soldiers participating annually, continues to exist today.²⁸ At the same time, however, Singapore has expanded its military cooperation with the PRC. With­in the framework of the Agreement on Defence Exchanges and Security Cooperation (ADESC), which has existed since 2008 and was expanded in 2019, regular military exercises are held jointly with the People’s Liberation Army (PLA), as are regular dia­logues at the ministerial level and reciprocal naval port visits.²⁹

Economy

Singapore is the only Southeast Asian country and, except for New Zealand, the only country in the Indo-Pacific that has concluded a free trade agreement with Taiwan despite diplomatic non-recognition. This FTA between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (ASTEP) as signed on November 2013 was intended to contribute to the deepening of bilateral economic relations between Taiwan and Singa­pore. The ASTEP aims to liberalise mutual mar­ket access. Tariffs for trade in goods were either abolished directly upon the conclusion of the agree­ment or, with a few exceptions such as agricultural products, gradually reduced to zero within the fol­lowing 15 years. However, it also contains chapters on competition policy, customs procedures, dispute settlement mechanisms, e-trade, intellectual property rights, investment, technical barriers to trade and services.

At the time the agreement was concluded in 2013, Singapore was Taiwan’s fifth largest trading partner and fourth largest export market; for Singapore, in turn, Taiwan was its eighth largest trading partner and tenth largest export market.³⁰ In 2020, 5.4% of all goods exports from Taiwan went to Singapore, and 3% of all Taiwanese goods imports came from Singa­pore. In the same year, 4.9% of all Singaporean prod­ucts were exported to Taiwan, while 8.8% of all products imported into Singapore came from Taiwan. Singapore accounted for 4.3% of all Taiwanese direct investment abroad, while Singaporean direct invest­ment in Taiwan accounted for 4.6%. In terms of vol­ume, Singapore is currently the fifth largest destination for Taiwanese exports after the PRC, Hong Kong, the U.S. and Japan. For Singapore, Taiwan is currently the seventh largest export market after the PRC, Hong Kong, Malaysia, the U.S., Indonesia and Japan. Over­all, however, Singapore faces a clear trade deficit with Taiwan, as the city-state imports significantly more goods from Taiwan (worth more than US$28 billion in 2020) than it exports to it (worth more than US$17 billion in 2020).³¹

The close trade relations between Taiwan and Singapore are not only important economically, but also strategically.

Although both countries have export-oriented economies, competitive relations exist in only a few economic sectors, for example in mechanical engi­neering and artificial intelligence.³² Taiwan mainly exports semiconductors, machinery, electronic goods and agricultural products, while Singapore focuses more on services and the financial sector. Some ob­servers therefore regard these two economies as com­plementary.³³ For Taiwan and Singapore, however, neither prioritise the other as a crucial trading part­ner, as the PRC, Hong Kong and the U.S., among others, are far more important for both in this con­text. In addition to the concrete economic benefits of close trade relations and especially of the ASTEP, strategic aspects are, too, often emphasised.³⁴

From Taiwan’s perspective, the FTA with Singapore in 2013 was extremely important from a strategic point of view, because it enables the island to reduce its high economic dependence on the PRC in the me­dium term through diversification. Taipei also hopes it will be able to conclude further FTAs with other ASEAN states in the near future on the basis of the agreements with New Zealand and Singapore. More­over, Taiwan’s Foreign Minister at the time, David Lin, described the agreement with Singapore as “paving the way” for his country’s later accession to regional FTAs such as the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Part­nership (RCEP), which were then being negotiated.³⁵ For Singapore, which relies on exports, the deal with Taiwan was part of its strategy to expand free trade in the region. Singapore’s government considers bilateral as well as regional free trade agreements as key instruments to achieve this strategic goal.³⁶ More­over, observers argue that despite a separate FTA between Beijing and Singapore, Taiwan is also attrac­tive for Singaporean companies. This is because many Taiwanese companies have specific economic links with mainland China through the Economic Coopera­tion Framework Agreement (ECFA) between Beijing and Taipei, which was made possible by the opening up of sectors such as banking and insurance.³⁷

The conclusion of the agreement in 2013 coincided with the rapprochement between the Kuomintang government in Taipei and the Chinese leadership. There is some evidence to suggest that the PRC, with which Singapore had also previously agreed an FTA, tacitly approved the treaty.³⁸ Strictly speaking, it was not signed by the government: for Taiwan, the repre­sentative of the Taipei Representative Office, Hsieh Fa-dah, and for Singapore, his counterpart Calvin Eu from the Singapore Trade Office, put their signatures on the document. The agreement with Taiwan is also not on Singapore’s official list of FTAs, which is pub­lished by the Ministry of Trade and Industry.³⁹

Cultural and civil society relations

Civil society relations between Singapore and Taiwan are, at least in some subareas, less intensive than the close political, military and economic ties would suggest. For example, very few Singaporeans study in Taiwan. Although there is a scholarship programme set up specifically for this purpose,⁴⁰ by far the major­ity of foreign students who study in Taiwan come from other countries in Southeast Asia, such as Indo­nesia and Vietnam. For many Singaporean students, studying in Taiwan is of little interest, as the uni­versities in their home country are better equipped and much higher placed in the international uni­versity rankings. Moreover, Singaporeans prefer to apply for places at more prestigious universities in the U.S., Australia or the U.K., partly because of their English language skills. In academia, there are never­theless some collaborations between Singaporean and Taiwanese universities, for example in the develop­ment of “smart” technologies.⁴¹ However, academic cooperation with the PRC far outweighs that with Taiwan.⁴²

More significant, however, is the exchange on a cultural level. For decades now, Taiwan has been the centre of the Chinese-language music industry, espe­cially Mandarin pop (“Mandopop”). Chinese-speaking Singaporean musicians therefore regularly frequent recording studios in Taiwan, release their music through Taiwanese record companies and perform on the island. Taiwan’s film industry is also impor­tant for Chinese-language films. Accordingly, Chi­nese-speaking actors from Singapore often stay in Taiwan for film productions. Taiwanese films and series have been marketed in Singapore since the 1970s. But Singaporean film studios, likewise, have a long tradition of producing Chinese-language films and series, which in turn have been distributed in Tai­wan and other states in the region. As demon­strated, the distribution of films and music helps create common cultural markers and references between Taiwan and Singapore.⁴³

Charitable Buddhist organisations such as Tsu Chi, Dharma Drum and Fo Guang Shan, which are head­quartered in Taiwan, have also established branches in Singapore. In addition to their charitable work, these religious organisations also see themselves as contact points for cultural exchanges between Taiwan and its neighbours, and there are several networks between temples in Taiwan and Singapore that have been established over decades.⁴⁴

Before the COVID-19 pandemic, Taiwan was also a popular destination for Singaporean tourists. In 2019, more than 460,000 arrivals from Singapore were regis­tered on the island, with an annual growth rate of 5 to 8 per cent since the 2000s.⁴⁵ A bilateral agree­ment allows both Singaporean and Taiwanese citizens to stay visa-free for up to 30 days in Taiwan and Singapore respectively.

Conclusion

Despite the lack of diplomatic recognition of Taiwan on the part of the city-state, Singaporean-Taiwanese relations are characterised by a large number of diplo­matic contacts and resulting cooperation. Substantial, close relations now exist in a number of policy areas such as trade, defence and culture. This is mainly due to historical reasons. On the one hand, Singapore had to find allies, since it had declared independence from Malaysia in 1965 and had become more vul­ner­able as a result. On the other hand, Taiwan was also forced to look for new partners after it lost its seat in the United Nations in 1971 and was in danger of becoming increasingly isolated. Close personal rela­tions developed between the political elites of Singa­pore and Taiwan, on the basis of which bilateral co­operation was intensified from the end of the 1960s and formalised through agreements such as Exercise Starlight and the ASTEP. Despite growing pressure from Beijing, a departure from this policy has not yet been observed, although Singapore’s economic and defence cooperation with Taiwan has lost material importance over the last two decades in view of the growing number of alternative partners. An impor­tant reason for the unbroken intensity of bilateral relations lies in Singapore’s efforts to assert its sov­ereignty as an ethnically majority Chinese city-state against an increasingly assertive PRC.

Introduction

When discussing relations between South Korea (offi­cially the Republic of Korea or ROK) and Taiwan (officially the Republic of China or ROC), reference is often made to their shared history: from the experience of Japanese occupation to the anti-communist foreign policy after the Second World War to eco­nomic liberalisation and political democratisation in the 1980s and 1990s. However, the end of the Cold War and especially the normalisation of relations between South Korea and the People’s Republic of China (PRC) in 1992 led to an estrangement between the two countries. Despite the lack of formal diplo­matic relations, however, Seoul and Taipei have successively expanded their economic and cultural exchanges. Gradually, a network of complex, and in large parts highly informal and unofficial relations emerged. From a security perspective, however, Tai­wan remains an extremely sensitive issue for South Korea, and Seoul has so far refused to cooperate with Taipei in the field of security policy in view of its own difficult geopolitical situation and, at least during the rule of liberal governments, the primacy of its North Korea policy.

Political relations

Korea and Taiwan share a historical connection that goes back to before the founding of the Republic of Korea in 1948. The Kuomintang supported the Pro­visional Government of the Republic of Korea when it came into being in 1919¹ and during its subsequent recognition by the Republic of China. During the Cold War, both the ROC on Taiwan and South Korea were important allies of the U.S. Diplomatic relations between the ROC and South Korea, established in August 1948, were based on the principle of anti-com­munism pursued by both. This led to close politi­cal, economic, military and cultural cooperation between the two countries, especially in the 1950s and 1960s.²

South Korea’s foreign policy calculations changed fundamentally, however, against the background of the Nixon Doctrine, the takeover of China’s representation at the United Nations (UN) by the People’s Repub­lic in 1971, and the establishment of diplomatic relations between the U.S. and the PRC on 1 Janu­ary 1979 (which was linked to the breaking off of rela­tions between the U.S. and the ROC). In particular, South Korea moved away from the strictly anti-com­munist orientation of its foreign policy: not only did the first negotiations with North Korea take place in the 1970s but Seoul also gradually expanded its rela­tions with Beijing in the following years. The so-called “Northern Policy” of South Korean President Roh Tae-woo (term 1988–1993) explicitly aimed to improve Seoul’s relationship with North Korea’s closest allies in order to reduce military tensions on the Korean peninsula and diversify Seoul’s foreign (trade) rela­tions.

Security policy relations

South Korea’s foreign policy in East Asia is to a large extent a reflection of its difficult geopolitical situa­tion. Even more than other states in the region, it has to navigate carefully between China and the United States, its own position within the South Korea-U.S. alliance and its bilateral relations with Japan and North Korea. With the North Korean issue at the cen­tre of its foreign policy interest, especially for liberal governments in Seoul, South Korea is keen to main­tain diplomatic equidistance from China and the U.S. – its largest trading partners and the two main external actors involved in the question of peace and security on the Korean peninsula. Therefore, South Korea acts with extreme restraint in sensitive matters such as the Taiwan issue, not least to avoid Chinese punitive measures like in 2017.¹⁴

South Korea is reluctant to deepen security relations with Taiwan, fearing China’s reaction.

For South Korea, the opportunities for a stronger security relationship with Taiwan are subordinated to the dangers that a deterioration of the relationship with the PRC would presumably entail. Even though the newly elected President Yoon Suk-yeol takes a more critical stance towards China and stands for a foreign policy more closely aligned with the U.S., it remains unlikely that South Korea will, in the short term, directly accommodate Taiwan in terms of secu­rity policy or support Taipei’s quest for international recognition more directly than before.¹⁵

At the same time, South Korean decision makers also learned a bitter lesson in 2017 about the vul­ner­ability and risks of being (too) dependent on the Chi­nese economy. Moreover, the intensifying rivalry between China and the U.S. will further increase the constraints on South Korean foreign policy – and it is highly likely that it will become increasingly difficult for Seoul to navigate between the U.S. and China in the future. Also, there is growing inter­national concern about the development of the situation in the Taiwan Strait. Even if the U.S. is not expected to ask South Korea for direct military sup­port in the event of a crisis, an incident in that region would also directly affect South Korea, for example if U.S. troops in South Korea were to integrate or use military bases there.

Economic relations

Educational and Cultural Relations and People-to-People Exchange

Cultural and educational relations between the two sides have intensified considerably in recent years. In this context, Heo and Kim argue that the networks created between South Korea and Taiwan through economic, cultural and educational exchanges have played a key role in the development of bilateral rela­tions.²³ In addition to political progress such as the air transport agreement, the success of South Korean cultural products (such as Hallyu) also contributed significantly to the easing of tensions between the two countries. Against this backdrop, the number of Taiwanese students in the ROK grew from 631 in 2003 to 4,329 in 2018.²⁴ In parallel, the number of recip­rocal tourist visits also increased significantly – from 300,000 in 1992 to more than 2.5 million in 2019.²⁵ According to the Taiwan Tourism Office, the number of Taiwanese tourists in South Korea rose by 71.3% between 2013 and 2017. This makes visitors from Taiwan the third largest group of international tour­ists in South Korea after visitors from China and Japan.²⁶ This is also reflected in a sharp increase in direct flights: while these were non-existent between 1992 and 2004, there are now roughly 10 flights per day between Taipei and important destinations in South Korea. On 1 July 2012, the two countries changed each other’s visa requirements to allow visitors to stay visa-free in the other country for 90 days.

In the academic field, 55 Taiwanese universities have partnership agreements with 92 Korean uni­versities and colleges. National Taiwan University alone has 99 partnership and cooperation agreements with various institutions and departments across 18 South Korean universities.²⁷ In addition, many academic organisations in South Korea and Taiwan have established forums for academic exchange. Ex­am­ples include the Korea Society for Chinese Studies, the Korea-China Education Fund and the Taiwan Culture and Education Fund. Hankuk Uni­versity of Foreign Studies in Seoul opened a research centre for contemporary Taiwan studies in May 2011; meanwhile, similar facilities exist at Anyang Uni­versity and Hallym University.²⁸

Conclusion

Relations between South Korea and Taiwan are com­plex, in large parts highly informal, and yet too im­por­tant for both countries to ignore. Despite tangible progress in mutual relations since 1992, especially in economic exchanges and trade as well as cultural cooperation, neither country has managed to fully exploit the potential of their relationship. The lack of security cooperation is primarily explained by South Korea’s geopolitical dilemma and the primacy of the North Korean issue for (liberal administrations in) Seoul, which makes direct security cooperation with Taiwan unlikely for the time being. To date, South Korea has made the strategic decision that the expect­ed costs of upgrading its relations with Taiwan exceed the potential gains. Against this backdrop, the devel­op­ment of new fields of cooperation in less sensitive areas is possible – but a fundamental departure from the current cautious course is at present not expected.

Australia, the Republic of China (ROC) and Japan

Australia-Taiwan relations have been complicated by their parallel experiences of colonialism and the over­lapping histories of the Republic of China (ROC) and the People’s Republic of China (PRC). Relations be­tween Australia and Taiwan can also be understood as Australia-ROC relations, highlighting the unstable national categories that beset Taiwan’s international relations and its place outside the international system.

From the founding of the Republic of China in 1912 by the Chinese Nationalists or the Kuomingtang (KMT) until the 1940s, Australia was constrained in its for­eign relations by its status as a British dominion. Even after the Balfour Declaration of 1926, which gave the Dominions the legal right to establish independent foreign relations, Australia’s foreign affairs were still largely conducted by Great Britain. Nevertheless, Australia did have a trade commissioner in Shanghai in the 1920s, and the ROC maintained diplomatic representation in Australia throughout that time.¹ The Chinese diaspora in Australia, while diverse, also included organisations supporting the ROC as well as overseas chapters of the KMT.²

The island of Taiwan during this time was a colonial territory of Japan, and Australia regarded its citi­zens as imperial Japanese subjects. Therefore, rela­tions with Taiwan were subsumed under relations with Japan, including during WWII when around 1,000 Taiwanese people in Australia were interned on the basis that they were Japanese.

The bilateral relationship changed after the Second World War. The government of the Republic of China retreated to Taipei – the capital of the island of Tai­wan – in 1949, and the Korean War broke out the fol­lowing year. Relations between Australia and Taiwan were now framed by the Cold War and the ANZUS Defence Treaty signed in 1951 between the U.S., Australia and New Zealand. Both Australia and the ROC belonged to the American alliance system and were committed to resisting communism; never­theless, their bilateral relationship remained rela­tively cool. Australia maintained diplomatic relations with the Republic of China and did not recognise the PRC. However, for most of the 1950s and 1960s it did not have an ambassador-level official in Taipei.

Australia’s One-China Policy

In 1972, in the context of U.S.-PRC rapprochement, the Australian government recognised Beijing and broke off relations with Taipei. The Australia-China communique stated:

“The Australian Government recognises the Government of the People’s Republic of China as the sole legal Government of China, acknowledges the position of the Chinese Government that Taiwan is a province of the People’s Republic of China, and has decided to remove its official representation from Taiwan before 25 January 1973.”³

This established the foundations of a one-China policy, in which Australia does not recognise Taiwan as a state in the international system but remains ambiguous regarding its sovereignty, only going so far as to “acknowledge” Beijing’s position that Taiwan is part of the territory of the PRC. After Australia’s rec­og­nition of the PRC, relations with Taipei remained non-functioning throughout the rest of the 1970s, as Australia began to engage actively with Beijing.

For its part, the PRC in the post-Mao period entered the global system and began remaking its own poli­tics and political economy in the era of “reform and opening-up”. This included Beijing’s relations with Taipei. The 1979 Letter to Taiwan Compatriots, adopt­ed by the Standing Committee of the 5th National People’s Congress, drew a formal line under the Mao period and laid new foundations for Beijing’s Taiwan policy architecture, including the “one country, two systems” formula for the unification of the two sides sought by Beijing and for relations between the KMT and the Chinese Communist Party (CCP).⁴

The U.S. also began revising its Taiwan policy archi­tecture, ending diplomatic recognition of Taiwan and the U.S.-ROC Mutual Defense Treaty in 1979 and enacting the Taiwan Relations Act. The latter served as a model for Australia to re-establish unofficial rela­tions with Taiwan. In 1981, the Australian Commerce and Industry Office (ACIO) was set up in Taipei, assum­ing many of the functions of an embassy, but without formal diplomatic recognition of the host country. In 2012, the ACIO changed its name to the Australian Office.⁵

Since the 1980s, Australia has thus maintained political contacts with Taiwan within the framework of a one-China policy and promoted exchanges in trade, culture and education. However, while there are bilateral government contacts, Australia is cau­tious about any moves that might give the impression that Taiwan is being treated as a sovereign state. The last visit of an Australian prime minister to the island was that of Harold Holt in 1966. The two sides also engage with each other through Track 1.5 or Track 2 think tank dialogues.

Australia’s turn to Asia

Developments in the 1980s pointed to Australia’s change in its international course beyond the re­sponse to the Sino-American rapprochement and its geopolitical consequences. This created a new con­ceptual basis for relations with Taiwan, which were more clearly understood as Australia-Taiwan relations rather than relations with the Republic of China.

Under the simple catchword “reform”, Australia introduced a series of measures during this period aimed at liberalising the domestic economy and strengthening exports. This political economic shift was specifically oriented towards Asia; it affected Australia’s political culture as well as its foreign and trade policy orientation. The country’s identity as a former British colony and military ally of the U.S. receded, and it now sought an economic and cultural place in Asia. This upheaval was motivated by long-term changes in Australia’s international relations. These included Britain’s entry into the European Economic Community (EEC) in 1973 and the end of Britain’s “Imperial Preference” trade policies that had favoured Australia and other former British colonies.

For Australia, it was part of its own reform process to advance relations with Taiwan.

The new policy orientation was expressed in the policy paper “Australia and the Northeast Asian Ascendancy”.⁶ The report recommended that Aus­tralia should orient itself economically towards the fast-growing economies of Asia – especially Japan, but also the “tiger economies” of Taiwan and South Korea. These Asian economies were elevated for Aus­tralia as both policy models of dynamic and deregulated export-oriented economies and were themselves also new key export market targets, offering growing middle classes and consumer cultures for Australian exporters to sustain the nation’s economic prosperity.

This political economic shift in Australia created the parameters for a dual structure in Australia-Tai­wan ties. Trade relations were dynamic and profitable, while diplomatic exchanges were complicated by several factors including Taiwan’s precarious inter­national status, the lack of formal recognition by Can­berra, and relations between Australia, the PRC and the U.S.

Economic relations

In the late 1980s and the 1990s, it was trade relations that dominated Australian policy towards Taiwan and strengthened the bilateral relationship. This was not only in line with Canberra’s national priorities but also reflected the development of a global trade archi­tecture in the post-Cold War era of “globalisation”. Economic relations complemented each other, with Australia supplying mainly raw materials and agri­cultural goods, and Taiwan offering manufactured and industrial goods in the consumer and technology sectors.

From Australia’s point of view, it was part of its own political and economic reform process to ad­vance relations with Taiwan. Taiwan, however, faced different policy imperatives in the context of its deep­ening international isolation. For Taiwan, a functioning trade exchange was a means of maintaining its international space through intergovernmental con­tacts, even in the absence of formal diplomatic rela­tions. It was the start of an approach through the 1990s and 2000s that sought to “Taiwanize” Taiwan’s international relations and avoid competing directly with the PRC as the “Republic of China”. Instead, in the context of Beijing’s efforts to constrain Taiwan’s international space, Taipei tried to find ways to main­tain its existing space and new levers in the inter­national system to expand it.

For these overlapping purposes, Australia and Tai­wan in the 1990s took advantage of the international as well as the regional trade architecture that devel­oped after the Cold War. In 1989, the Asia-Pacific Eco­nomic Cooperation (APEC) was founded under Aus­tralian leadership. For Australia, APEC represented a regional architecture that was premised on free trade, regional investment and economic development, and regional economies were its foundational unit. It included Southeast and Northeast Asian states as well as the U.S. and Canada. For Taiwan, APEC was an oppor­tunity to build regional relations as an economy without formal diplomatic recognition. It joined the forum in 1991 as “Chinese Taipei”, while at the same time the PRC and Hong Kong became separate members.

APEC is trade and investment focused, with activities that emphasise cooperation in intellectual prop­erty, customs and trade regulation equalisation, as well as new economy sectors. It also facilitates inter­governmental cooperation in the fields of technology, health and labour. In this context, APEC organises numerous forums on technical trade issues and, more importantly, an annual economic summit attended by heads of government. Senior corporate or political figures represent the president of Taiwan at these meetings.⁷

In addition to APEC, Australia-Taiwan relations were institutionalised in the 1990s and 2000s through government-to-government memoranda of understand­ing (MoUs). These are focused on technical aspects of trade as well as specific areas of science and cul­tural collaboration. In this way, the bilateral ar­range­ments function within the parameters of Aus­tralia’s one-China policy, while at the same time creating the administrative conditions for relations to function effectively. Two of the MoUs date from 1996: first, an agreement between Taiwan’s Bureau of Com­modity Inspection and Quarantine and Australia’s Quality Assurance Services Pty Limited; and second, a memorandum of understanding between the Taipei Economic and Cultural Office and the Australian Com­merce and Industry Office on the application of competition and fair trade laws. In 2007, there was an exchange of letters, also between the Taiwan Eco­nomic and Cultural Office and the Australian Office in Taipei, on the mutual recognition of equipment covered by the Electromagnetic Energy (EME) Regu­latory Agreement. Other agreements address postal services, investment and industry-specific trade pro­motion. There is a 2001 bilateral agreement between the Taiwan Office in Canberra and the Australian Department of Agriculture, Fisheries and Forestry dedicated to cooperation in agriculture and agri­usiness.

Meanwhile, however, the PRC had become an increasingly important economic partner for Aus­tralia. In 1996, for the first time, the country con­ducted more trade with the People’s Republic than with Taiwan, with the volume in both cases account­ing for about 5 per cent of Australia’s total inter­national trade. Japan had a share of 16 per cent at that time.⁸ By 2017, Australia-Taiwan two-way trade had fallen to only 3 per cent of Australia’s total trade value while trade with China had grown to 28 per cent. The People’s Republic was now Australia’s largest trading partner by far. The 2014 agreement between Beijing and Canberra on a comprehensive strategic partnership and the 2015 China-Australia Free Trade Agreement (ChAFTA) contributed to this development.

Through the late 1990s and 2000s, the growing importance of the PRC to Australian trade marginal­ised Australia-Taiwan relations. As trade with China began to dominate Australian foreign policy, Can­berra became more sensitive to Beijing’s position on the status of Taiwan. As a result, issues of security, defence and diplomacy in Australian-Taiwan relations sometimes operated in tension with the positive trade relationship.

Such tensions eased as the relationship between Beijing and Taipei improved at the end of the term of China’s former President Hu Jintao (2003–2013) and especially under the Taiwanese government of Ma Ying-jeou (2008–2016). Trade briefly became the engine of Australia-Taiwan relations again, with each side seeking to open up new fields of economic ex­change according to their respective interests.

The Australian government considered a free trade agreement (FTA) with Taiwan in the mid-2010s – after the successful conclusion of ChAFTA –, which Taipei welcomed. On the Taiwanese side, a new approach was introduced when President Tsai Ing-wen of the Democratic Progressive Party took office in 2016: the New Southbound Policy (NSBP or NSP). This followed on from Taiwan’s earlier efforts, most nota­bly the Lee Teng-hui government’s “Go South” policy in the late 1990s. The NSBP aimed to diversify trade and investment and strengthen Taiwan’s diplomatic presence in the region. It targeted Australia and New Zealand, as well as South and Southeast Asia, and served as a policy framework for a series of bilateral and multilateral arrangements to promote trade, in­vest­ment and cultural exchange. Taiwan’s bilateral and regional relations were thus strengthened with­out conflicting with the partner states’ respective one-China policies.

These policy initiatives addressed long-standing substantive issues in Australia-Taiwan relations and were reminiscent of developments in the late 1990s. On the Australian side, however, the momentum was short-lived. In 2017 and 2018, the People’s Republic directly informed the government in Canberra that it was opposed to a possible FTA between Australia and Taiwan. The background to this was Beijing’s oppo­sition to the new Taiwanese government under Presi­dent Tsai. As a result, Canberra dropped the pro­posal.⁹

In the 2020s, the overall trade profile between Aus­tralia, Taiwan and China appears largely unchanged. The People’s Republic remains Australia’s largest export market, while Taiwan is a significant but rela­tively less important trade partner. Trade between Australia and Taiwan is worth around US$12 billion annually and has exhibited a consistent pattern of complementarity over many years. The main export sectors for Australia are mining and energy from which the primary resources exported include coal, iron ore, natural gas, aluminium and copper. There are also significant exports of agricultural and dairy products to Taiwan, which benefit individual regions in Australia. Taiwan, in turn, supplies Australia with industrial goods such as petroleum products, telecom­munications equipment, bicycles and computers.¹⁰

Relations in security and defence policy

From the mid-1990s onwards, security and defence aspects gained weight in Australian-Taiwanese rela­tions. The PRC triggered a crisis by firing missiles into the waters around Taiwan – first in 1995 when then leader Lee Teng-hui was visiting the U.S., then the following year during Taiwan’s presidential election campaign. In response, Australia reaffirmed its alli­ance with the U.S. and offered political, but not military, support for American naval action around Taiwan.¹¹ At the same time, tensions in the Taiwan Strait increasingly made the Australian government realise that a good relationship with Taipei could come at the expense of relations with the People’s Republic, given the latter’s intractable commitment to its one-China principle.

In the 2000s, Canberra and Beijing also sought to develop the parameters of their relationship from trade and investment into broader issues of security and Australia’s support for China in the international system. In 2003, Chinese President Hu Jintao was invited to address the parliament in Canberra – one day after U.S. President George W. Bush had appeared there. In 2014, Australia and China signed the afore­mentioned Comprehensive Strategic Partnership Agree­ment during a state visit by President Xi Jinping.

Thus, with the changes in Australia-China rela­tions and Beijing’s growing determination to assert its policy goals internationally, the Australia-Taiwan relationship was also changing. The period of focus­ing on promoting trade and investment was coming to an end. Instead, a complex fabric of trade, defence and security concerns emerged, shaped by Australia’s relations with China, the U.S. and other countries in the region.

Canberra’s concern about regional stability in the South Pacific in the face of Taiwan’s “chequebook diplomacy”.

The new configuration was highlighted in 2004 when the then Australian Foreign Minister Alexander Downer made a statement that the ANZUS defence treaty would not necessarily be in effect in the event of a military clash in the Taiwan Strait that brought China and the U.S. into conflict. Even as debate continues over what Australian obligations would arise from ANZUS in the event of a U.S.-China war, Downer’s statement revealed how complicated and contradictory Australian foreign policy had become. For Australia, the future of Taiwan addressed fun­damental questions about the U.S. alliance system and its economic policy orientation towards China.¹² Relations with Taiwan now appeared in light of what became known in Australia as the “China choice” – that is, the question of whether Australia should choose China over the United States.¹³

The debate about Australia’s defence commitments under ANZUS passed quickly, especially as Australia was supporting the U.S. involvement in Afghanistan and Iraq at the time. But it had become clear that spe­cific Australian and Taiwanese foreign policy objec­tives were in tension with one another.

Political relations in the context of national interests in the region

The bilateral political and security relationship is also complicated by competing regional and multilateral interests. In the late 1990s and the 2000s, Australia and Taiwan clashed as they pursued different goals in the Pacific: Canberra sought to promote development and stable governance in the region, while Taipei aimed to maintain or even grow the number of its diplo­matic allies.

Taiwan still has a small number of diplomatic allies around the world. Formal recognition is a fun­damental metric of Taiwan’s state identity, its inter­national space, and tension between Beijing and Taipei. The People’s Republic has at various times actively sought to turn Taiwan’s diplomatic allies, while Taipei has sought to retain the diminishing number of states that recognise it.

In the late 1990s and the 2000s, various Pacific governments switched recognition from China to Taiwan or vice versa. Both Beijing and Taipei used development aid and investment as incentives and sought to influence the domestic politics of Pacific coun­tries in order to gain recognition. Australia, however, was committed to the principle of non-inter­ference in the decisions of Pacific governments. It thus tended to view Taipei’s pursuit of recognition, especially through so-called chequebook diplomacy, as destabilising for Pacific nations during this period. This problem was heightened as Australia’s economic relationship with China grew and Australia-China re­lations expanded into broader parameters of regional security. The absence of a regional security architec­ture or formal diplomatic relations between Australia and Taiwan constrained the capacity of both sides to manage these issues.

A notable example in this context was Papua New Guinea. In 1999, under the former Prime Minister Bill Skate, the country decided to recognise the ROC/Tai­wan in return for soft loans. But only a week later, Skate resigned and his successor Mekere Morauta re­versed the decision. Papua New Guinea is Australia’s geographically closest neighbour, with strong histori­cal links and a major recipient of development assis­tance and therefore Canberra was concerned about political destabilisation on the island. In 2006, an­other attempt by Taipei was made to establish rela­tions with Papua New Guinea in exchange for US$30 million. This triggered a political scandal in Taiwan that claimed several senior government ministers and was part of corruption allegations made against the then President Chen Shui-bian. Since then, Papua New Guinea, while generally supporting Taiwan’s par­ticipation in international organisations, has main­tained and strengthened formal relations with Beijing.¹⁴

In 2004, the government of Prime Minister Serge Vohor of Vanuatu also recognised Taipei, and sought to play Beijing, Taipei and Canberra off against one another in the pursuit of development aid and invest­ment. Beijing responded with aid promises, and a diplo­matic delegation from Canberra travelled to Vanuatu’s capital Port Vila to pressure politicians to reverse the decision. A no confidence motion was passed in the parliament against Vohor, who then resigned as prime minister, and recognition returned to Beijing.¹⁵

Australia’s relations with Solomon Islands, where a low-intensity armed conflict took place in the 2000s, were especially challenging. The island state had already recognised Taiwan in 1983 after becoming independent from the British protectorate at the end of the previous decade. Because of the political tur­moil at the turn of the millennium, the Government of Solomon Islands had difficulties attracting inter­national aid and investment. It sought to extract con­cessional loans from Taipei by threatening to switch recognition to Beijing, thus drawing Taiwan into a deteriorating security situation. In 2003, Australia launched a military intervention with the goal of stabilising security in Solomon Islands, responding in part to circumstances created by the diplomatic com­petition. The situation came to a head when national elections were held in the archipelago in 2006. Various candidates accused either Taipei or Beijing of interfering in the vote so that Solomon Islands would maintain relations with Taipei or switch to Beijing, respectively. The political turmoil led to major riots after the elections, including in the capital Honiara, and the resignation of Prime Minister Snyder Rini.¹⁶

The role of the Pacific in Australian-Taiwanese rela­tions was attenuated in the years from 2008 to 2016, when Taiwan was governed by President Ma Ying-jeou. During this time, Taipei and Beijing implemented a so-called diplomatic truce. Both sides agreed tacitly not to poach diplomatic allies from each other. In prac­tice, this meant that Beijing made no further attempts to change countries’ minds about recognising Taiwan – and vice versa.

However, cross-strait relations broke down after the inauguration of the Democratic Progressive Party government of Tsai Ing-wen in Taiwan in 2016, when Beijing refused to engage with Taipei. This coincided with the start of a period of deterioration in Australia-China relations. In the late 2010s, Australia increasingly resisted Beijing’s attempts to interfere in the country’s domestic politics and took note of its bel­lig­erent diplomatic tone. Canberra made a series of policy decisions; for example, the Chinese company Huawei was excluded from tenders for Australian telecommunications infrastructure and new foreign interference legislation was enacted. Beijing responded with punitive actions against Australia in 2020. These included a range of trade sanctions on agricultural products, seafood and wine. These steps were politi­cally sensitive for Australia, while having a limited economic impact on China.¹⁷

The election of Tsai Ing-wen also meant the end of the diplomatic truce, and as a result Taiwan lost rec­og­nition from five other states, three of which were in Latin America – Panama, El Salvador and the Dominican Republic. In the Pacific, Solomon Islands and Kiribati switched to the People’s Republic in 2019. The period of chequebook diplomacy was over, but Australia was now taking action under the Pacific Step-up, signalling increased engagement in the region. Concerned about China’s growing presence, Canberra spoke out against the switch in the recog­nition policy of Solomon Islands.¹⁸

Against this backdrop, Australia’s zero-sum calculus on relations with China and Taiwan loosened. Given the activities of the PLA Air Force in the Taiwan Strait, Canberra became increasingly aware that Bei­jing’s behaviour towards Taipei was destabilising cross-strait relations and threatening regional security as a whole. These developments came at a time when relations between Australia and the People’s Republic were deteriorating and U.S. relations with both Taiwan and Australia were strengthening.

Cultural and civil society relations

Under its one-China policy, Australia has developed and strengthened its relations with Taiwan in the fields of culture, education and people-to-people exchanges. Australia has a community of Taiwan-born and second- and third-generation Taiwanese-Australians who are concentrated in Brisbane and number in the tens of thousands nationally.¹⁹ Fur­ther­more, Taiwanese tourists, international students and working holiday visa holders going to Australia totalled more than 200,000 per year before the COVID-19 pandemic.²⁰ In 2019, there were also more than 18,000 Taiwanese students enrolled in Australian universities.²¹ In addition, people-to-people links have been fostered by both sides through support of cul­tural and creative engagement in such areas as visual and performing arts. However, social and cultural ties continue to be tested in Australian public institutions that have developed links with China. In 2020, a pub­lic museum in Perth, Western Australia, received a complaint from the consulate of the People’s Repub­lic for displaying a map of China that did not include Taiwan and altered the map in response – and simi­lar incidents are not uncommon.²²

Growing alignment

Today, the parameters of the bilateral and multilateral relations of Australia, Taiwan and the PRC are largely in place. Australia’s one-China policy remains in effect, implying the non-recognition of Taiwan. And while the People’s Republic is Australia’s largest trade partner, the exchange of goods with Taiwan is significant but relatively less important.

However, at a time of growing Sino-American rivalry and diplomatic tensions between China and Australia, these patterns have undergone adjustments. Aspects of regional security and Australia’s relationship with China, the U.S. and the Pacific Island countries make it difficult to just have trade-dominated relations, and the economic and security concerns between Australia and Taiwan are increas­ingly aligning. Trade and investment is developing into a vector for Australia to support Taiwan’s de facto sovereignty and international space. Canberra sees this as a necessary condition for security and stability in the Indo-Pacific region.

This alignment has been signalled by a new diplomatic vocabulary from Australia and higher-level trade promotion. In a series of notable bilateral and multilateral statements, Canberra has identified Tai­wan’s security as a component of the regional order. A new phraseology has developed, including a “free and open Indo-Pacific” and to “underscore the impor­tance of peace and stability in the Taiwan Strait”. Australia has repeatedly called for Taiwan’s partici­pation in international organisations, most notably the World Health Assembly during the COVID-19 pandemic.²³

At the same time, Australia and Taiwan have ad­vanced trade and investment, not only in traditional economic sectors such as mining and energy, but also in the new fields of hydrogen, space, and information and communications technology (ICT). This includes initiatives such as the Hydrogen Trade and Invest­ment Dialogue between the Australian Office – the Australian quasi-embassy in Taipei – and the Taiwan­ese Ministry of Economic Affairs. The format promotes trade and investment in favour of a post-carbon energy transition and action against climate change, while also enabling direct contacts between governments.²⁴

These activities are reminiscent of the bilateral trade and investment promotion that took place during the 1990s within the framework of APEC. At that time, Australia sought to build export-oriented trade relations with the Asian “tiger economies”, while Taiwan hoped to overcome its international isolation through regional trade arrangements. Now, however, Australia’s approach is more closely aligned with Taiwan’s, and bilateral relations include minis­terial meetings as well as trade and investment in new sectors of the economy, thereby promoting eco­nomic exchange and addressing Taiwan’s isolation.

Going forward, these realigned parameters for Australia-Taiwan relations will be tested in new and developing regional trade architectures. Australia joined the Regional Comprehensive Economic Part­nership (RCEP) in 2020, which liberalises trade and economic flows between ASEAN members and coun­tries with which ASEAN countries have FTAs. How­ever, Taiwan is not a member of RCEP. Another impor­tant and larger arrangement is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was finalised in 2018 in the aftermath of the U.S. withdrawal from the Trans-Pacific Partnership (TPP). The CPTPP is made up of 11 economies in the Eastern and Western Pacific, though not the PRC or the United States. Both Beijing and Taipei have submitted applications to join. For the reshaping of the relationship between Australia and Taiwan, these changes in the region’s trade policy architecture are an important test case.

Australia-Taiwan relations cannot be described as normal. Formal normalisation could only be possible if the regional order erodes or collapses altogether, such as in the case of a military crisis in the Taiwan Strait. In the age of strategic competition, however, Canberra and Taipei are increasingly converging in their respective interests and approaches to international issues, while China’s relations with Australia and other countries in the region have become more difficult. As with earlier periods, contingent events may disrupt the current state but the intrinsic param­eters of trade and regional security will continue to anchor Australia-Taiwan relations for the foreseeable future.

Political relations

The first political contacts between China and India date back to 1942, when General Chiang Kai-shek was the first non-European politician to visit Mahatma Gandhi and Jawaharlal Nehru, the leaders of the Indian independence movement that gave rise to the later ruling party, the Indian National Congress (INC).²⁵ After independence in 1947, however, the Indian government focused on relations with the People’s Republic of China (PRC) after 1949. Prime Minister Nehru intended to give Asia more weight in world politics and saw China as an indispensable partner for this. In 1950, India was the first non-communist country to break off diplomatic relations with the Republic of China, i.e. Taiwan.²⁶

In the mid-1950s, India and China continued to draw closer and signed an agreement on Tibet in 1954. From then on, India no longer made any claims to Tibet and agreed with China on the five principles of peaceful coexistence (Panchsheel). In order to end the country’s international isolation, Nehru pushed for China’s participation in the Bandung Conference in 1955, a meeting consisting of 29 Asian and African countries. The culmination of this rapprochement is signified through the slogan “Hindi Chini Bhai Bhai” (Indians and Chinese are brothers), which was meant to symbolise the cordial bond between the two coun­tries. In the late 1950s, however, the unresolved bor­der issue overshadowed the bilateral rapprochement and resulted in a brief border war in 1962. India’s military defeat destroyed Nehru’s hopes for closer cooperation.

Nehru pursued an independent foreign policy, and worked towards keeping India and the newly de-colo­nised countries outside of the Cold War. In 1961, he became one of the key architects of the Non-Aligned Movement founded. However, the break-off of diplo­matic relations with China after the war in 1962 was not followed by a turn towards Taiwan, as India was critical of the island state’s intensive cooperation with the U.S. due to its non-aligned foreign policy. In 1971, the Indian government of Indira Gandhi supported the admission of China into the United Nations Secu­rity Council at the expense of Taiwan.²⁷

Despite its territorial conflicts with China, India advocates a one-China policy. Of note, such conflicts between the two states exist largely in the northeast and northwest of India along the Line of Actual Con­trol (LAC), where it remains unsettled to this day. In the northeast, Beijing claims the Indian state of Arunachal Pradesh as Chinese territory. In the north­west, in the Ladakh/Aksai Chin region, which is part of Kashmir, China, after the violent incidents of the summer of 2020, again regards the LAC of 1959 as binding, but which India has never recognised.²⁸ In view of the intensification of the border conflict with China, debates about a possible Chinese one-India policy,²⁹ which would have accepted India’s territorial claims, now seem fruitless.

With its 1991 reforms, India initiated an economic and foreign policy turnaround. The new economic policy opened the domestic market to foreign invest­ment and promoted export production in order to achieve greater integration into the world economy. Meanwhile, in terms of foreign policy, the Look East policy during this period prompted India to turn towards the emerging economies in East and South­east Asia. Thus, due to Taiwan’s economic successes, the country subsequently also became an attractive partner for India.

In the early 1990s, an Indian delegation travelled to Taiwan for the first time. In 1995, the India Taipei Association (ITA) was founded in Taipei and the Taipei Economic and Cultural Center (TECC) in New Delhi.³⁰ Initially, only retired civil servants worked at the Indian mission in Taipei. Since 2003, the Indian Ministry of External Affairs has also sent active civil servants there.³¹ Although it has no official diplomatic status, the ITA in Taiwan also issues Indian visas and passports and thus acts like an embassy.³² In 2010, the two countries agreed on a simplified visa regime. Since then, Taiwan has approved visa-free entry for Indian citizens under certain conditions.³³ In addi­tion, there are repeated calls to further facilitate the issuance of visas for study and work stays in order to expand economic and cultural cooperation.³⁴

The status of Indo-Taiwanese relations depends on domestic political constellations.

Bilateral relations often depend on domestic politi­cal constellations. The Democratic Progressive Party (DPP) government, which held office in Taiwan from 2000 to 2008, welcomed India as a counterweight to China and sought to expand relations between Taipei and New Delhi.³⁵ In India, the Hindu nationalist Bharatiya Janata Party (BJP) government had tested nuclear weapons in 1998 for the first time since 1974, and the country’s Defence Minister Fernandes had declared China “enemy number one”. But after the election victories of the Congress Party in India in 2004 and the KMT in Taiwan in 2008, the common security interest of standing up to China took a back seat. Among other things, the Indian gov­ernment rejected Taipei’s proposal to send the former deputy secretary-general of the National Security Council in Taiwan as a representative to India, as he had pre­viously advocated an Indo-Taiwanese alliance against China.³⁶

After the BJP returned to power in 2014, and the DPP in 2016, they again emphasised the threat from China and intensified the bilateral relationship.³⁷ With its “New Southbound Policy” (NSP) adopted in 2016, Taiwan’s DPP government wanted to expand relations with states in South and Southeast Asia to include Australia and New Zealand, with a focus also on India as a trade and investment partner.³⁸ Pre­viously, the Indian government had launched its Act East policy in 2014, emphasising the importance of East Asia for India’s economic development. Political contacts also intensified in 2016. In April, the Taiwan-India Parliamentary Friendship Association was founded in Taipei, and in December, 22 Indian par­liamentarians launched the India-Taiwan Parliamentary Friendship Forum.³⁹

Tensions between China and Taiwan also affect rela­tions with India. In 2017, Beijing objected to the visit of a delegation of women parliamentarians from Taiwan to New Delhi and asked the Indian government to be more cautious in its Taiwan policy. Under pressure from the Chinese government, airlines, in­clud­ing Air India, had to change the name “Taiwan” to “Chinese Taipei”.⁴⁰

Even though India’s Act East strategy and Taiwan’s NSP complement each other,⁴¹ it should not be over­looked that the rapprochement between New Delhi and Taipei took place at a time when India-China relations were also experiencing an unprecedented upswing. Between 1990 and 2020, India and China made five agreements to stabilise the situation along the disputed borderline. They also cooperated in the BRICS group and often pursued common interests in global governance forums. Economically, China be­came India’s largest bilateral trading partner. More­over, both sides invested politically in expanding their relations. Besides their official meetings, Prime Minister Modi and Chinese President Xi also held two informal summits in 2017 and 2019 to improve their countries’ bilateral relations.

Security policy

Due to its own security problems with China, which have further intensified since the border incidents of 2020, India is extremely reluctant to engage in any form of security cooperation with Taiwan. As a result, contacts between security forces are rare. For exam­ple, the chief of the Indian Air Force visited Taiwan discreetly in 2002, only for his visit to be revealed by media reports.⁴² In 2003, the Institute for Defence Studies and Analysis (IDSA), which is part of the Indian Ministry of Defence, and the Institute of International Relations (IIR) of Chengchi National University in Taiwan organised a conference on foreign policy. In 2006, the DPP government estab­lished the Taiwan-India Cooperation Council, which was seen as a strategic alliance against China. In addi­tion, members of the Taiwanese Ministry of Defence were sent to India to join the TECC.⁴³ Representatives of the Legal Department of the Indian Ministry of External Affairs participated in bilateral negotiations with Taiwan on international terrorism, transnational organised crime and drug trafficking in 2008 and 2009.⁴⁴ In recent years, a number of government-related think tanks in India, such as Observer Research Foundation (ORF), National Maritime Foun­dation and Vivekananda International Foundation (VIF), have entered into agreements with partner insti­tutions in Taiwan and held joint events.

The reports of the Indian Ministry of Defence show only one case of military equipment being exported to Taiwan in the period from 2014 to 2019.⁴⁵ In view of increasing cyberattacks in India and Taiwan attri­buted to China, Indian experts advocate closer coopera­tion between Taipei and New Delhi in this area.⁴⁶

Economy

Economic cooperation has been at the centre of India-Taiwan relations from the beginning. India’s post-1991 reforms opened the domestic market to foreign firms, and the technological successes of Taiwanese companies also put the country at the centre of India’s Look East/Act East policy. Bilateral trade grew more than fivefold between 2000 and 2020, from just over US$1 billion to around US$5.7 billion.⁴⁷

In 2002, Taipei and New Delhi agreed on a Bilateral Investment Promotion and Protection Agreement (BIPA).⁴⁸ A year later, Taiwan’s Ministry of Economic Affairs launched the Scheme for Strengthening Eco­nomic and Trade Relations with India, under which Taiwanese trade delegations travelled to India.⁴⁹ Fur­thermore, in 2011, India and Taiwan signed joint agreements on taxes and tariffs, namely the Double Tax Avoidance Agreement (DTAA) and the Agreement for Mutual Assistance in Customs Matters (CMAA).⁵⁰ Two years later, a Taiwanese and an Indian think tank published a study on a possible free trade agree­ment (FTA) between the two countries. However, nego­tiations on this have not progressed further,⁵¹ partly because Prime Minister Modi’s Indian government is critical of such agreements. India did not conclude a new FTA until the end of 2020 and with­drew from the Regional Comprehensive Economic Partnership (RCEP) at the last minute in November 2019. New Delhi and Taipei did, however, agree on a bilateral investment treaty in 2018.⁵² Nevertheless, this is a rather weak agreement as, among other things, it does not contain an MFN clause. It also lacks guarantees that are often promised in other treaties, such as the requirement of fair and equitable treat­ment.⁵³

For India, Taiwan is attractive as a trading partner because it invests primarily in high technology.

Taiwan is of particular interest to India as a trading partner, as it invests mainly in high-technology areas such as nanotechnology, semiconductors, aerospace, satellite development, biotechnology and agriculture.⁵⁴ Taiwanese technology companies such as Fox­conn and Wistron operate their own plants in India for mobile phone production in the growing Indian market. In 2020, Foxconn agreed with New Delhi to invest around US$5 billion in India, making it the largest electronics producer in the country.⁵⁵

India and Taiwan have also extended their eco­nomic cooperation to small and medium-sized com­panies. In addition, Indian states such as Karnataka, where the high-tech metropolis of Bangalore is located, have signed agreements with Taiwanese com­panies to establish electronics firms.⁵⁶ By the end of 2016, 90 Taiwanese firms had offices in India.⁵⁷ In 2017, the Taiwan External Trade Development Coun­cil (TAITRA) launched an India Center in Taiwan. The following year, a TAITRA office was opened in New Delhi, also known as the Taipei World Trade Center, and an India-Taiwan Trade Forum was held in Taipei. These measures were intended to make Taiwanese investors aware of their opportunities in India.⁵⁸

Economic relations between the two countries have indeed expanded since the early 1990s. How­ever, India is not a preferred production location for Taiwanese companies. For one thing, many foreign companies still complain about problems with infra­structure. In addition, the consequences of the new economic policy of self-reliance, which Prime Minis­ter Modi announced in May 2020, cannot yet be assessed. Among other things, the Indian govern­ment wants to increase the share of local production in order to strengthen the Indian economy in the medium term.

Cultural and civil society relations

Cultural cooperation has become another pillar in bilateral relations. In 2007, India and Taiwan signed their first memorandum of understanding to expand cooperation in the fields of science and culture. In 2010, the two countries agreed to mutually recognise university degrees.⁵⁹ A year later, India’s first Taiwan Education Center (TEC) opened in New Delhi.⁶⁰ The TECs offer Mandarin language courses and events on Chinese culture and history. Taiwanese teachers are financially supported by the Ministry of Education in Taipei.⁶¹ The various initiatives have ensured that academic cooperation has expanded. And while there were only 30 bilateral science projects in 2013, this number rose to 86 in 2019.⁶²

Mandarin language teaching is proving to be par­ticularly useful, as there are repeated complaints that there are comparatively few China experts with Chi­nese language skills in India. After the tensions between India and China in 2020, the number of Tai­wanese teachers in India is more likely to increase. In 2018, 2,398 Indian students were enrolled in Taiwan­ese universities.⁶³ The Taiwanese government also showed a willingness to significantly increase the number of scholarships for Indian students. In 2020, it had already awarded 1,143 such scholarships.⁶⁴

Cultural exchange through visitor programmes, film and dance festivals, and exhibitions is supported by both countries, but is currently at a low level. Tourism could also be increased significantly. In 2019, only about 35,000 Indian tourists travelled to Taiwan.⁶⁵

Outlook

The relationship between India and Taiwan is set relatively narrow limits by both states’ relations with China. India’s relationship with the PRC represents the country’s most important bilateral relationship and is crucial for understanding its foreign policy orientation. However, since the border incidents in Ladakh in the summer of 2020, India’s relations with China have deteriorated significantly. Nevertheless, India will stick to its one-China policy, even as it con­tinues to develop relations with Taiwan. Given the power imbalance between India and China and the uncertain situation in the border region, the decision-makers in New Delhi have little interest in letting the difficulties with China escalate further. After all, China has more options for retaliation at different levels should India push the rapprochement with Taiwan too far from the Chinese perspective. China’s shadow will thus continue to hang over cooperation between India and Taiwan.

Background

Historically, only a few European states had economic or other interests in Taiwan. It was only after the Sec­ond World War that the island truly came to the atten­tion of European nations: firstly, politically, as a place of refuge for Chiang Kai-shek’s government, a military dictatorship that fled Mao’s communists but continued to be supported by the U.S; and secondly, from the 1980s onwards, economically, as one of the four “little tigers” (along with South Korea, Hong Kong and Singapore) that experienced their own eco­nomic miracle. Moreover, during the 30 years after 1949, when the young People’s Republic of China (PRC) largely closed itself off to exchanges with the West, Taiwan made it possible for prospective West­ern European China experts to receive language training and encounter Chinese culture. Until 1971, Taiwan, as the “Republic of China”, occupied China’s seat as a founding member of the United Nations (UN). Nonetheless, Western European governments mostly (and Eastern European communist ones cer­tainly) avoided diplomatically recognising the island despite U.S. pressure.¹

A larger European public has only become aware of the island’s situation since the beginning of the 2000s, i.e. since the PRC has experienced an increase in power that makes a military conflict over Taiwan not seem out of the question. What is more, since the Russian invasion of Ukraine, this danger has become even more apparent to Europeans, too.²

Europe and Taiwan: the big picture

Even though Taiwan, as an export-active “little tiger”, has been integrated into the international trade chains system in many ways since the beginning of its economic boom years, it is only in the last two decades that it has developed its own profile, which is strongly characterised by its orientation towards information and communication technologies (ICT). This is reflected in the relevant trade and investment statistics. Among Taiwan’s economic partners, the U.S., Japan and the PRC rank high, followed by Euro­pean countries.

The European states and Taiwan share the same liberal and democratic values.

As a liberal democracy,³ Taiwan stands on the same foundation of values as European states. Never­theless, Europeans have traditionally been reluctant to take a stand in Taiwan’s conflict with the PRC, espe­cially since the island’s security seems to be guaranteed under the protective umbrella of the U.S. Since the 1970s, European states have professed to respect Beijing’s position that there is only “one China” of which Taiwan is a part. However, they have always emphasised that unification is a matter for the inhab­it­ants on both sides of the Taiwan Strait, and must take place peacefully. At the same time, they avoid gestures that could be interpreted as recognition of Taiwan’s statehood. In particular, they deny themselves any contact at a higher state level, i.e. the head of state and the head of government, the vice-presi­dent as well as the foreign and defence ministers of Taiwan are not allowed to visit EU member states. The same applies accordingly in the opposite direc­tion.⁴

The new unpeaceful behaviour of the PRC now puts Europe in a difficult position: if it clearly op­poses China’s aggressiveness, it risks a conflict with this key economic partner; on the other hand, if it holds back with criticism of Beijing, it becomes untrustworthy in its commitment to liberal and democratic values.

The following presentation focuses on the EU as a whole and on Taiwan’s three most important partners in Europe, namely Germany, France and the U.K. How­ever, the relations of some other European states with Taiwan have aspects that are indicative of Tai­wan’s complicated situation in the world and are therefore briefly considered first:

The Holy See is the only European state that still maintains diplomatic relations with the “Republic of China”. Thus, this European pillar is not only of symbolic value for Taiwan, but also of logistical-stra­tegic importance in commercial and political traffic. The Vatican has been trying to prevent its relationship with Taiwan from disrupting the rapprochement with Beijing that it has sought for decades. For its part, Taiwan did not comment on the continuing quality of its relations with the Vatican after its agree­ments with the PRC in 2019/2020.⁵

The Netherlands is one of the most important recipients of Taiwanese investment, mainly because Philips corporation was involved early on in laying the foundations of Taiwan’s ICT industry (up to and including the founding of the now globally successful Taiwan Semiconductor Manufacturing Company, TSMC), but also because of the tax incentives it offers foreign investors.⁶ Today, the Netherlands does not pursue arms exports to Taiwan (U‑boats) as it did in the 1980s.⁷ The country, along with Sweden, is also a partner with Taiwan in the Global Cooperation and Training Framework (GCTF). This institution, estab­lished in 2015 by the U.S. together with Taiwan and since expanded to include Japan and Australia, inte­grates Taiwan into international development projects of various kinds.⁸

In the case of other EU states, there are demonstrative expressions of sympathy towards Taiwan from time to time, usually in the wake of deteriorating rela­tions with the PRC. The Taiwan visit of a 90-mem­ber Czech delegation led by the Senate President in August 2020 attracted international attention. At the meeting, the Czech Republic’s position as Taiwan’s fourth largest trading partner in Europe played a role, as did the Czech stance on human rights issues in the tradition of Václav Havel; domestic political disputes in Prague over the president’s positive attitude towards China were also a topic. The spokesperson of the Chi­nese Foreign Ministry called the visit a “despicable act”. The Prime Minister of Slovenia backed the Czech Republic with a statement. In addition, the then Ger­man Foreign Minister Heiko Maas said in a joint press conference at the end of Chinese Foreign Minister Wang Yi’s visit to Germany on 1 September 2020 that the respect with which the EU treats its partners is also expected in return, and that threats do not fit in with this.⁹

Another case is that of Lithuania, whose president cancelled his participation in a 17+1 conference with Xi Jinping in February 2021,¹⁰ after cooperation under the Belt and Road Initiative (BRI) proved less fruitful than expected. Lithuania drew sharp criticism from Beijing for this. In response, Lithuania announced its withdrawal from the 17+1 in May 2021, declared that it would exchange representative offices with Taiwan, and described the treatment of the Uyghurs as “geno­cide”. In June 2021, after further criticism from Beijing, the Lithuanian government decided to allow Taiwan representation in Vilnius, not under the name “Taipei representation” but as “Taiwan repre­sentation”, thus deviating from global custom. Beijing reacted not only with strong criticism, but by with­drawing its ambassador from the country and inform­ing Vilnius, no Lithuanian ambassador was welcome in the PRC anymore.¹¹

To Beijing’s chagrin, a 66-member delegation of Taiwanese officials (including two at ministerial rank) visited the Czech Republic, Slovakia and Lithuania in October 2021.¹² Finally, in early December 2021, the People’s Republic banned the import of goods from Lithuania and those from other countries that con­tained components manufactured in Lithuania, as well as the export of Chinese products to Lithuania. The EU foreign ministers declared their solidarity with Lithuania, but without adopting any countermeasures.¹³

The European Union as Taiwan’s partner

Germany as Taiwan’s partner

France as Taiwan’s partner

Great Britain as Taiwan’s partner