Taiwan is one great obsession of Chinese foreign policy, its reunification with the mainland being the most publicized national goal in international affairs. While for much of the rest of the world it may seem an issue of international relations, for the government in Beijing it is essentially an internal matter, the province which has yet to be liberated after the civil war.

Lien Chan

Taiwan's Lien Chan was in China this week. Pic: AP.

On Monday, the issue of reunification was again brought up by President Xi Jinping during a meeting with Lien Chan, honorary chairman of Taiwan’s ruling Nationalist Party and former vice-President of the Republic of China (Taiwan).

During the meeting Mr. Xi said that “the new Communist Party ruling collective will continue to push forward the peaceful development of relations between the two sides and advance the cause of peaceful unification”. He also pointed out that Beijing is looking forward to the development of the island, stressing that “safeguarding the interests of our Taiwan compatriots and expanding their well-being is the mainland’s oft-repeated pledge and solemn promise of the new leaders of China’s Communist Party central committee”.

The fact that this was Mr. Xi’s first time meeting with a Taiwanese leader as future President – he is set to replace outgoing President Hu Jintao in March – and that he spoke of reunification in front of the leader of Taiwan’s Nationalist Party may have hit the headlines, but the bottom line underlined by Mr. Xi is hardly new. It actually fits Chinese foreign policy like a glove.

(MORE: China’s Xi affirms goal of unification with Taiwan)

After the end of the Cold War and amid China’s incredible economic boom, Chinese leaders have increasingly advanced their claims over the island through economic integration and have framed an eventual reunification in their “peaceful development” strategy. At the same time, Beijing has never taken the possibility of using force completely off the table, letting it be understood that their political goal is not in question, but that they would rather achieve it through peaceful means than by deploying big guns.

The issue of Taiwan’s reunification goes back all the way to the late 1940s, when the People Liberation Army defeated and drove the Nationalist Party out of the mainland. In 1950, as Chiang Kai-shek took refuge in Taiwan, the American Seventh Fleet positioned itself in the strait which separates Fujian province from the island and effectively blocked the PLA from pursuing reunification. It was a sign of the new global order which was taking shape after World War II. As relations with the Soviets turned bitter, a communist regime in Beijing was not an asset. Having a military ally in Taipei, on the contrary, was a sound policy for keeping a strategic position in the Pacific. Taiwan has since often been called “America’s unsinkable aircraft carrier”.

Beijing and Taipei thus entered the Cold War, and never really extricated themselves from it. Since 1949, when the People’s Republic was founded, China has never stopped longing for the island, which is deemed a “core interest” of the People’s Republic (together with Tibet, Xinjiang, the South China Sea and the Diaoyu/Senkaku Islands), but unification has proved impossible. Even today, the Taiwanese public does not seem to favor it, while the US has kept an effective balance of power in place and has prevented China from forcefully retaking its “last province”.

In 1954, Beijing and Washington signed the Sino-American Mutual Defense Treaty, establishing the Republic of China as part of their collective security system. When the US and China normalized their relations in 1972, American and Chinese leaders issued a joint statement – the so-called Shanghai Communiqué – switching from the “two Chinas policy” to a new line which acknowledged that on this planet there is only one country to go by the name of China. As there was no solution to the underlying issue of reunification, the statement was crafted in a way not to specify if the new China was to be the People’s Republic or Taiwan, leaving enough space for reaching normalization but not effectively ending the stalemate.

The diplomatic recognition of People’s Republic in January 1979 did not solve the problem either. In the U.S.-PRC Joint Communiqué on the Establishment of Diplomatic Relations, the two parts agreed that the government of the People’s Republic of China is the sole legal government of China, that there is only one China and that Taiwan is part of it. Within this context, the people of the United States would only maintain “cultural, commercial, and other unofficial relations with the people of Taiwan.” 

In March of the same year, however, the US Congress enacted the Taiwan Relations Act, according to which the future of Taiwan was to be decided by peaceful means and that any danger posed to the island would be considered by Washington as a grave concern. The TRA provides for the necessity of enabling Taiwan to maintain a sufficient self-defense capability – which entails transferring weapons to the government in Taipei.

Recent years have seen the development of more friendly ties, especially after the election of pro-China President Ma Ying-jeou in 2008 (then re-elected in 2012). In particular, there has been a sharp rise in economic and people-to-people interactions. According to the Xinhua, in 2012 trade between the Chinese mainland and Taiwan expanded 5.6 percent year on year to US $168.96 billion. Exports to Taiwan rose to US $36.78 billion, 4.8 percent year on year, and its imports from Taiwan reached 132.18 billion U.S. dollars, 5.8 percent up from 2011.

In 2010, the two governments signed the “Economic Cooperation Framework Agreement” (ECFA) to lower tariffs on hundreds of traded goods. At the time the Wall Street Journal described it as a deal which “promises to bind Taiwan’s economy to its giant neighbor to an unprecedented degree”.  According to Xinhua, in 2012 “the mainland imported goods worth 8.43 billion U.S. dollars from Taiwan under the Economic Cooperation Framework Agreement, a jump of 105 percent from a year earlier”.

Increased economic ties are good both for growth and political relations, but Beijing has not yet come down to the thorny issue of how to unite two very different political systems and two peoples who do not share the same sentiments toward each other.

The solution could be another “one country, two systems” policy similar to the one adopted for Hong Kong and Macau, bar the presence of Chinese armed forces in Taiwan. For now, however, there is no agreement and no agreed framework to get to one, which means that Taiwan has to stay in the rather uncomfortable position of “potential flashpoint” in the Pacific region.