Statecraft, Capital Mobility, and Institutions: Toward a Dynamic Interactive Model

Abstract

This book explores the paradoxical development of deepening economic integration and intensifying political rivalry in relations across the Taiwan Strait. In this dynamic process of interactions, Beijing’s long-term objective of national unification under its “one country, two systems” formula has been strongly resisted by Taipei. Under these circumstances, Beijing’s immediate goal is not to assert direct control over the island but to prevent it from drifting further away from China toward a permanent separation from the mainland. Beijing’s fear gained urgency when Lee Tenghui, who was born in Taiwan with a strong nativist leaning, became the president of Taiwan in 1988 and began making covert moves to support the Taiwan independence movement. Coinciding with these developments, the demise of communism throughout Europe, particularly the collapse of the Soviet Union and the reorientation of American foreign policy toward an increasingly confrontational posture in its relations with mainland China have provided Taiwan with a window of opportunity to break through its long-time diplomatic isolation and to explore new possibilities for nation building. These strategic realignments led to Lee’s visit to the United States in 1995 and eventually his formulation of the cross-Strait relations as a “special state-to-state relations” in 1999.