Friday, December 13, 2002

TAIPEI, Taiwan Chen Shui-bian slew a giant two years ago with an election victory that ended the 55-year reign of the Nationalist Party, the only ruling party the modern Republic of China (Taiwan) had ever known.

Now he is grappling with another behemoth, the People’s Republic of China, as mainland China is formally known, and his success will determine whether he wins a second term as president of this offshore island of 23 million people.

Mr. Chen faces a daunting task. Beijing leaders are rattled by the pro-independence bent of many of Mr. Chen’s most ardent supporters in the Democratic Progressive Party.

In an effort to dampen those sentiments, more than 300 Chinese missiles are pointed at Taiwan, a reminder that Beijing has refused to rule out the use of force in dealing with a democracy it considers a renegade province across the Taiwan Strait.

Yet many people here will judge Mr. Chen on his ability to get stalled talks on cross-strait affairs moving, particularly now that Taiwanese businesses have invested nearly $140 billion on the mainland.

“The candidate who strikes a balance between national security and business opportunities will win the [2004] election,” said Wu Tung-yeh, a professor of political science at National Chengchi University.

Direct talks between Beijing and Taiwan were halted in 1999 after Taiwanese leader Lee Teng-hui suggested that China and Taiwan establish “special state-to-state relations,” arguing that China and Taiwan had become two separate and distinct countries.

In August, Mr. Chen said essentially the same thing as he lent his support to a proposal for a referendum on Taiwan’s future, including the option of independence.

“Taiwan, China, on each side of the strait, are different countries,” he said in what appeared to be off-the-cuff remarks to independence activists.

It was all the Beijing leadership needed to hear.

“Chen Shui-bian finally has been unmasked,” the People’s Daily, the newspaper of China’s Communist Party, declared in an editorial.

The economic stakes in establishing the so-called three links direct trade, transport and mail are great. Last year, China replaced the United States as Taiwan’s largest export market.

But the ban on direct transport with the mainland means that all cargo has to go through Hong Kong or Macao, special administrative regions of China, cutting profits by as much as 20 percent, a loss more and more exporters are finding hard to stomach.

Businessmen and tourists flying to the mainland likewise transit through Hong Kong or another hub, Macao.

Mr. Chen, a former mayor of Taipei, has been quick to point out that new trade and transport links are not panaceas for the economic woes in Taiwan, which has suffered along with the rest of the region.

“It’s not a cure-all,” Mr. Chen has warned. “We must not be naive.”

Lin Lee-hua, 38, who works for a trading company in Taiwan, believes the lack of progress on direct links and Mr. Chen’s tough talk are hurting the economy. “His comment about separate countries on each side of the strait only caused turmoil and tension in our economy and hurt us diplomatically,” she said.

A recent poll, however, found that two-thirds of Taiwanese interviewed believed that the “magnet effect” attracting large amounts of capital to mainland investments was the chief reason for Taiwan’s economic woes.

As China grapples with its economic problems, it has softened its position on direct links, dropping references to “one China” and suggesting trade, transport and mail could be considered a “cross-straits” issue.

Mr. Chen, however, has rejected a call for talks to proceed through private organizations.

He wants negotiations to resume between China’s Association of Relations Across the Taiwan Strait and its Taiwanese counterpart, the Straits Exchange Foundation.

Many people here say the onus for cross-strait links shouldn’t rest on Mr. Chen’s shoulders.

“It’s China’s leaders who won’t give us an acceptable proposal,” said Yeh Shu-hui, 35, a manager in an advertising agency. “I think President Chen is doing all that he can.”

If progress doesn’t come, Mr. Chen at least needs to avoid any missteps.

“Chen needs to avoid a crisis in cross-strait relations,” said a Western observer.

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