Similarities and Differences in the International Trade Politics between China and Taiwan - Essay Example

Discuss the Similarities and Differences in the International Trade Politics between China and Taiwan Introduction International trade politics, in the contemporary world, have gained much significance in creating allies between two or more countries, which also reportedly offers a wider scope for capitalist nations to obtain comparative advantages from the global competition. While the literal meaning of international trade refers to the international exchange of goods and services under certain rules and government structured policies in order to regulate the trade flow, inclusion of diplomatic relations within the paradigm has raised its complexities largely and accordingly, the concept of international trade politics has emerged. Correspondingly, international trade politics between two or more nations also project a clearer picture about the political relationships between those nations (Buthe & Milner, 2008). Correspondingly, this essay will focus on discussing the international trade relations persisting between China and Taiwan, with an intention to understand the similarities and dissimilarities between the political positioning and strategies adopted by these nations when dealing with their diplomatic relations. From a critical point of view, the political relations between these two nations can be described in terms of limited communication, rigidities, and instability. Despite of the instability between these two nations, still trade relationships between them blossomed after 2001 when China became a member nation of the World Trade Organization (WTO). Supporters to this trade relation have often argued that it has been mainly due to the stability in trade relationships between these two nations that have led towards the decreasing level of recurrent political friction to a major extent (Roberge & Lee, 2009). Discussion Trading Trends between China and Taiwan China and Taiwan has remained focussed towards maintaining bilateral trade relationships, which has continued between them since long. The result of this trading effort was that both these nations ended up making a trading profit of $102 billion and the records of 2007 subsequently projected China as the largest trading partner of Taiwan (Roberge & Lee, 2009). As an improvisation step, both these nations started making huge investments with an aim of setting up of new industries linking the economic trade affairs of both these nations. The two nations have also made efforts in terms of convincing banks and other investment organizations for investing in the markets of both these nations. Emphasising the potentials of the trade relation, during 2009, China and Taiwan tended towards signing up of an ‘Economic Cooperation Framework Agreement’ with the intention of bringing about ease in the trade related barriers (Roberge & Lee, 2009). To be mentioned in this context, Taiwan is known for its international imports and exports of intermediary electronic parts, such as laptop and notebook components. Taiwan is credited to suffice around 80% of the global requirements of laptops and notebooks, which certainly contributes to the significance of the country as a major trade partner in the international realm. Accordingly, given the geographic location of Taiwan, all its major exports are supplied through Mainland China, its nearest land mass in the East Asian continent. This further contributes to the economic advantage of China, wherein even if both the nations are liberalized, Mainland China keeps a tight control over its investments in Taiwan and vice–versa (Dreyer & et. al., 2010). When considering the international positioning of Taiwan, assumptions have been drawn emphasising that irrespective of its small size, Taiwan will be capable of delivering large gains through its economic integrations with China in the short run. This has facilitated China in negotiating the triangular partnership between European Union (EU), China and Taiwan and creating a direct trade relation with Taiwan. Considering the world political positioning of the EU and China, this particular measure can be illustrated as a diplomatic intention of China to prevent EU’s role in encouraging Taiwan to develop and share its technological as well as other economic wealth within the international markets, and rise as another developing competitor from the East Asian world (Dreyer & et. al., 2010). China’s political and diplomatic intentions in forwarding a helping hand to Taiwan have also been criticised within the global paradigm, which is allegedly guided by China’s intention of gaining a firm control over the industrial sector of Taiwan. Gaining such a control shall offer China with a supervisory role in controlling the trading and production competencies of a major portion of Taiwanese industries, currently functioning in the Chinese markets (Dreyer & et. al., 2010). Economic analysts have also describing the trade practises between China and Taiwan to be the major factor, which contributed towards the lower impact of global recession on Taiwan’s economy and hence, proved beneficial for Taiwan as well. The analysts also predicted about improvements in the economic benefit level of Taiwan in terms of increased trade practises with mainland China (Roberge & Lee, 2009). Similarities in Trade Politics between China and Taiwan As an initiation towards facilitating trade relationships between China and Taiwan, the governments of both the nations came up with certain policies and regulations to bind their interests from affecting the national sovereignty. As a sign of support, the Chinese government facilitated the means of direct trade with Taiwan. The Chinese also helped in establishing transportation routes between the two nations. Adding to that, during the 1980, Chinese government took an initiative for a trade mission making a purchase of about $80 million in the Taiwanese commodities industry. In the same year, the Chinese government also signed a ‘Tariff-Free Policy’ (FTA) with Taiwan, which lasted only for one year (Li, n.d.). These efforts made by the Chinese government projects its interest towards attracting Taiwan with the intention of developing trade relationships specifically for gaining interests from the booming Taiwanese industrial sector. Similarly, in 1985, Taiwan signed the “Non-interference Principle of Indirect Exports to the Mainland” treaty with the intention to allow China to perform the Cross-Strait trade practise. However, China maintained a continuous regulation of the trade practises with Taiwan through the introduction of the Harmonized Tariff Schedule (HS) system (Tung, 2004). This tariff schedule contained 22 defined regulatory sections, which aimed towards maintaining a check on the overall imports and exports between these two nations. Through the formulation of such regulatory controls, China has further been criticised by many to project its intentions towards gaining control over the Taiwanese industries. On the contrary, Taiwan being a small competitor in comparison to China was further reported to face intense competition pressures in the international markets. Thus, by developing trade practises and political relations with China, Taiwan government can be observed as projecting its interests towards the financial help as well as the competitive support provided by the Chinese government (Tung, 2004). Besides the above-discussed factors, the similarities in the international trade politics between Taiwan and China has also been categorized in terms of ‘Intra-Industry Trade’ (IIT) index, which principally described the immediate imports and exports of commodities within similar industry of the two nations over a given time frame. This index consisted of a measuring scale between 0 to 100, which projected an increase in the trade ranking between Taiwan and China from being 16 in 1992 to about 30.4 by 1998 (Tung, 2004). This further reveals that the trade intentions considered by both these nations were focused on strengthening its position within the global plethora and gain shared comparative advantages. This particular similarity can be justified with reference to the fact that for being facilitated further in international trading politics, China and Taiwan intentionally loosened their control over foreign exchange. This subsequently resulted in multiple Taiwan entrepreneurs investing into Chinese markets. The cheap labour force and the potential local market of China were the two major factors, which attracted these Taiwan entrepreneurs, which undoubtedly facilitated resource allocation within these two nations but also increased dependency of Taiwanese economy on China (Ministry Of Commerce People’s Republic of China, 1988). As a sign of appreciation, the Chinese government has also discontinued several trade regulations and legal barriers for attracting and sheltering the Taiwan’s investors with the intention to facilitate business investments in Chinese markets. During 1988, the Chinese State Council also reduced the regulations, which were formulated to keep a check over the investments made by Taiwan in mainland China (Ministry Of Commerce People’s Republic of China, 1988). These above-mentioned efforts projected China as a regulatory body controlling the flow of business between Taiwan and the international markets. According to the political strategies adopted by China, government has been encouraging Taiwanese investors to contribute to the mainland in terms of ‘self-owned and joint venture free enterprises’, ‘reimbursement trade practises’, ‘manufacture and assembly type business’, ‘ real estate business’, and multiple more (Ministry Of Commerce People’s Republic of China, 1988). The Chinese government also provided exemptions in terms of tax reduction and subsidy provisions for the Taiwan-invested Enterprises (TIEs) to facilitate Taiwan’s investments in the country (Tung, 2004). The China’s National People’s Congress together with the Chinese Sate Council has also formulated two laws in order to safeguard the interest of Taiwan investments in China, which can further be observed as a major leap taken by China to encourage trade relations with Taiwan (Tung, 2004). Differences in Trade Politics between China and Taiwan Despite of the numerous attempts made by the Chinese government to gain loyalty of Taiwan, the main intention of the Chinese government has long been criticised as emphasised towards absorbing Taiwan as one of its prime industrial hubs for technology product exports. While China’s political stance has been avoiding such conflicts within its national paradigm when focusing on encouraging Taiwanese investors to penetrate the Chinese markets, Taiwan can be observed to have failed in keeping political control within its national periphery and eradicating the risks of conflicts therefore. Such instabilities in the political atmosphere of Taiwan have altogether risked the help expected from China and thus, indirectly risked the entire economic development process of Taiwan (Hunkovic, n.d.). A major section of the Taiwanese population is currently reported to be protesting against the trading deal between Taiwan and China, as they consider it a kind of political trap, which will give the Chinese government much more control over the Taiwanese economy. Hence, it can be asserted that Taiwan’s unclear political stance on its international trade relations with China, fuelled allegations by the opposition claiming the Chinese trade policies an approach to expand its capitalist control on the Taiwanese industry (Ramzy, 2014). Protesting against the trade policies adopted by China and Taiwanese’ government’s approval to the same, the protestors further claimed that lowering these trade barriers will gradually harm Taiwan’s local business and market. The protestors seemed to believe that China is only showing trade related helping concerns with the intention of absorbing Taiwan under favourable circumstances and thus, Taiwanese government should not limit its trade practises only with China and look out for other alternatives as well. This projects the understanding and concern of the Taiwanese people towards saving their integrity and independence from alleged the capitalist control practiced by China (Ramzy, 2014). Moreover, the protestors also fear that allowing the Chinese companies to set up industries in Taiwan will also bring the effective market functionality under major pressure from the Chinese government. Considering the reasons as to the political stance taken by Taiwan irrespective of such risks to its national sovereignty, it can be observed to that its political ideologies related with this particular trade relationship have been highly influenced by its lack of global recognition. Undoubtedly, Taiwan faces greater risks as compared to China, which certainly imposes considerable influences on their different political stance related to the trade relations. Factually, majority of the nations around the world often disregard Taiwan as a potential international market owing to its smaller size, geographic disadvantages and resource scarcity challenges (Australian Government Department of Foreign Affairs and Trade, 2014). Correspondingly, Taiwan’s political stance related to the trade policies can be apparently observed as influenced by its global positioning, making it decide favourably with China’s propositions (Cole, 2014). Conclusion From the discussion conducted above, one can easily conclude the few similarities and dissimilarities identifiable in the political strategies adopted by Taiwan and China to groom their trade relations. While drawing on the similarities and dissimilarities of the political approaches taken by China and Taiwan to build their trade relations, influences caused by the global positioning of the two nations have been quite apparent. In precise, China has already gained the top position in the international trading partners from the East Asia region. On the other hand, Taiwan possesses limited scope in the international paradigm, with only few international partners irrespective of the fact that it has been included in the WTO and has been in alliance with EU. Certainly, where the political intentions of Taiwan has been emphasised towards gaining international accreditation through its alliance with one of the leading economies in the East Asia region, China’s intentions have often been alleged as focused on gaining a capitalist control over Taiwan by promoting such trade relations at an extensive rate. Such allegations and the threats raised in terms of national sovereignty because of the trade relations between China and Taiwan has further led to a division within the political arena of Taiwan. Consequently, political instability and conflicts have been disrupting the smooth development of the country in the current scenario. References Australian Government Department of Foreign Affairs and Trade, (2014). Taiwan brief. Retrieved from https://www.dfat.gov.au/geo/taiwan/taiwan_brief.html Buthe, T. & Milner, H. V. (2008). The Politics of Foreign Direct Investment into Developing Countries: Increasing FDI through International Trade Agreements? American Journal of Political Science, Vol. 52, No. 4, pp. 741–762. Cole, J. M., (2014). Taiwanese occupy legislature over China Pact. Retrieved from http://thediplomat.com/2014/03/taiwanese-occupy-legislature-over-china-pact/ Dreyer, I. & et. al., (2010). Beyond geopolitics – the case for a free trade accord between Europe and Taiwan. Ecipe occasional paper, pp. 3-10. Hunkovic, L. J., (n.d.). Possible futures of a confrontation between China, Taiwan and the United States of America. The Chinese-Taiwanese conflict, pp. 1-5. Li, X., (n.d.). China’s rise to trading superpower. The London school of economics and political science, pp. 25-29. Ministry of Commerce People’s Republic of China, (1988). Regulations of the state council of the peoples republic of china for encouraging Taiwan compatriots to invest in the Mainland. Retrieved from http://english.mofcom.gov.cn/aarticle/lawsdata/chineselaw/200211/20021100053824.html Ramzy, A., (2014). Opponents of China Trade Deal Occupy Taiwan’s Legislature. Retrieved from http://sinosphere.blogs.nytimes.com/2014/03/19/opponents-of-china-trade-deal-occupy-taiwans-legislature/?_php=true&_type=blogs&ref=territorialdisputes&_r=0 Roberge, M. & Lee, y., (2009). China-Taiwan relations. Retrieved from http://www.cfr.org/china/china-taiwan-relations/p9223 Tung, C., (2004). Trade Relations between Taiwan and China. Unisci discussion papers, pp. 1-3. Read More