Inherited Rivalry: Conflict Across the Taiwan Straits 9781685854928

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INHERITED RIVALRY

INHERITED RIVALRY

Conflict Across the Taiwan Straits edited by

Tun-jen Cheng Chi Huang Samuel S. G. Wu

LYN

NE

R I E N N E R PUBLISHERS

B O U L D E R L O N D O N

Published in the United States of America in 1995 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 1995 by Lynne Rienner Publishers, Inc. All rights reserved Library of Congress Cataloging-in-Publication Data Inherited rivalry : conflict across the Taiwan Straits / edited by Tun-jen Cheng, Chi Huang, and Samuel S. G. Wu. p. cm. Includes bibliographical references and index. ISBN 1-55587-534-3 (alk. paper) ISBN 1-55587-551-3 (pbk. : alk. paper) 1. China—Politics and government—19762. Taiwan—Politics and government—19883. Chinese reunification, 1949I. Cheng, Tun-jen. II. Huang, Chi, 1953- . III. Wu, Samuel S. G., 1957- . DS779.26.I54 1995 303.48'251051249—dc20 94-31532 CIP British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library. Printed and bound in the United States of America The paper used in this publication meets the requirements (g) of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1984. 5 4 3 2 1

Contents Acknowledgments Transcription Conversion Acronyms 1

The Mainland China-Taiwan Dyad as a Research Program Tun-jen Cheng

Part 1 Patterns of Interaction 2

3

Rivalry Between the ROC and the PRC: An Expected-Utility Theoretical Perspective Chi Huang, Woosang Kim, and Samuel S.G. Wu The Mainland China-Taiwan Relationship: From Confrontation to Interdependence? Steve Chan and Cal Clark

Part 2 The Impact of Domestic Factors on Interaction: Beijing to Taipei 4 5

6 7

Beijing's Policy Toward Taiwan: An Elite Conflict Model Parris Chang Mainland China's Bargaining Tactics: Future Negotiations with Taipei An-chia Wu The Making of Beijing's Taiwan Policy Qingguo Jia Economic Reform, Cross-Straits Relations, and the Politics of Issue Linkage Yu-Shan Wu

Part 3 The Impact of Domestic Factors on Interaction: Taipei to Beijing 8

Chiefs, Staffers, Indians, and Others: How Was Taiwan's Mainland China Policy Made? John Fuh-sheng Hsieh

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9

Contents

The Political Economy of Taiwan's Investment in China Cheng-Tian Kuo

153

Part 4 External Environment and Interaction 10

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The Reluctant Dragon: Taiwan as a Psychological Factor in Mainland China's U.S. Policy Chih-yu Shih An Evaluation of the Republic of China's Foreign Policy Alternatives Emerson M.S. Niou The ROC-PRC Rivalry and International Relations Studies Samuel S.G. Wu and Chi Huang

173

195

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Part 5 Inherited Rivalry: A Chronology Chi Huang and Samuel S.G. Wu

227

Appendix: Statistics on Taiwan and Mainland China

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Table A.l Military Balance Between the PRC and the ROC Table A.2 Basic Economic Statistics of Taiwan and Mainland China Table A.3 The Share of Indirect Trade in the Total Trade of Taiwan and Mainland China Table A.4 Taiwan's and Hong Kong's Investments in Mainland China About the Contributors Index About the Book and the Editors

265 269 277

Acknowledgments The idea of combining various analytic frameworks to study the growing interaction between the two sides of the Taiwan Straits had been brewing in our minds during the 1980s. A conference grant from the Chiang Chingkuo Foundation for International Scholarly Exchange enabled us to realize this idea in a conference project, and then this volume. We are most grateful to the Chiang Ching-kuo Foundation for its financial support; the Department of Political Science, College of Liberal Arts, and Institute for Pacific Asia at Texas A&M University for hosting this project and extending warm hospitality to conference participants; and both the Department of Political Science at the University of Kentucky and the Department of Government at the College of William and Mary for providing the most amicable and enjoyable ambience in which to complete the editing of this book. We express our gratitude to George Chen, Michael Ying-mao Kau, Chong-pin Lin, and Guoqing Zhang (from Beijing University) for their contributions to lively discussions at the conference. We also thank the contributors of this book for their patience in revising their chapters several times. We owe special thanks to John Fuh-sheng Hsieh and Qingguo Jia, who promptly and gracefully responded to our postconference recruitment. Finally, thanks are also due to Alexander Tan and Jian Liu (Texas A&M University) and Kun-Jung Liao and Todd Shields (University of Kentucky) for their most competent research and clerical assistance; and Alice Hsu and Kevin Landdeck (University of Michigan) for their editorial assistance. The names of the editors of the volume are listed in alphabetical order. Tun-jen Cheng Chi Huang Samuel S. G. Wu

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Transcription Conversion In this volume, transcriptions of the Chinese names and terms under PRC jurisdiction are according to its official Pinyin system; those under ROC jurisdiction are according to Wade-Giles romanization or other conventional use. Names and terms frequently mentioned in both systems are: Pinyin Beijing Chang Jiang Chen Changwen Chen Rongjie Chen Yun Deng Xiaoping Deng Yingchao Fujian Fuzhou Gaoxiong Gu Zhenfu Guangdong Guangxi Guangzhou Guomindang Haicang Hao Bocun Hu Yaobang Hua Guofeng Huang Kunhui Jiang Jieshi Jiang Jingguo Jiang Zemin Jinmen Li Denghui Li Huan Li Xiannian Li Yuancu Liao Chengzhi Liaowang Lian Zhan Lin Biao

Wade-Giles (or other general use) Peking Yangtze River Chen Charng-ven Chen Jung-chieh Ch'en Yun Teng Hsiao-p'ing Teng Yingch'ao Fukien Foochou Kaohsiung Koo Chen-fu (C.F. Koo) Kwangtung Kuanghsi Canton Kuomintang Haits'ang Hau Pei-tsun Hu Yao-pang Hua Kuofeng Huang Kun-huei Chiang Kai-shek Chiang Ching-kuo Chiang Tse-ming Kinmen (Quemoy) Lee Teng-hui Lee Huan Li Hsien-nien Li Yuan-zu Liao Ch'eng-chih Liao-wang (Outlook) Lien Chan Lin Piao

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Transcription Conversion

Liu Shaoqi Jiangsu Ma Yingjiu Mao Zedong Mazu Nanjing Peng Dehuai Penghu Qian Fu Qiu jinyi Renminbi Rong Yiren Shi Qiyang Shenzhen Sun Yunxuan Taibei Tang Shubei Tiananmen Wang Daohan Wang Yongqing Wang Zhaoguo Wenhui Bao Wu Xueqian Xisha Islands Xiamen Xinjiang Yijiang Yan Jiagan Yang Shangkun Ye Jianying Yu Guohua Zhejiang Zhao Ziyang Zhou Enlai Zhoushan Zhu Rongji

Liu Shao-ch'i Kiangsu Ma Ying-jeou Mao Tse-tung Matsu Nanking P'eng Te-huai Pescadores Frederick Chien Cheyne J.Y. Chiu Jenminpi Jung I-jen Shih Chi-yang Shenchen Sun Yun-suan Taipei Tang Shu-pei T'ienanmen Wang Tao-han Wang Yung-ching (Y.C. Wang) Wang Chao-kuo Wenhui Pao Wu Hsueh-chien Paracel Amoy Sinkiang Ichiang (Yikiangshan) Yen Chia-kan Yang Shang-kun Yeh Chien-ying Yu Kuo-hwa Chekiang Chao Tzu-yang Chou En-lai Choushan Chu Jung-chi

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Acronyms ADB AIT ARATS CCNAA CCP DPP FDI KMT MAC NCNA NIC NPC NUC PLA PRC ROC SEF

Asian Development Bank American Institute in Taiwan, U.S. Association for Relations Across the Taiwan Straits, PRC Coordination Council for North American Affairs, ROC Chinese Communist Party, PRC Democratic Progressive Party, ROC foreign direct investment Kuomintang, or the Nationalist Party, ROC Mainland Affairs Council, ROC New China (Xinhua) News Agency, PRC newly industrializing country National People's Congress, PRC National Unification Council, ROC People's Liberation Army, PRC People's Republic of China Republic of China Straits Exchange Foundation, ROC

1 The Mainland China-Taiwan Dyad as a Research Program Tun-jen Cheng The relationship between the Republic of China (ROC) on Taiwan and the People's Republic of China (PRC) on the mainland has undergone significant changes since the late 1980s. Essentially, both sides have moved from three decades of military confrontation to more conciliatory interaction. The Beijing regime has shifted from an uncompromising one-China policy to a slightly more accommodating policy of one China with two socioeconomic systems. The Beijing regime has also suspended, but not renounced, the use of force or the war of nerves in the Taiwan Straits. On the Taiwan side, following the political decontrol initiated by the late President Chiang Ching-kuo and accelerated by President Lee Teng-hui, the Kuomintang (KMT) leadership began to permit family/tourist visits and cultural exchange and indirect trade with—and even some direct investment in—the mainland. Policies, however, have often been outpaced by unofficial contacts and private transactions, which have grown exponentially in their scope, variety, and frequency (J. F. Chang 1989; Chu et al. 1989). As of mid-1993, Taiwanese family/tourist visits to the mainland had reached 4.5 million trips, Taiwan's direct investment in the mainland had exceeded US$4.5 billion, and indirect exports to the mainland were approximately 10 percent of Taiwan's total exports.1 Meanwhile, the Nationalist government in Taipei terminated its hostile policies toward the Beijing regime—which has yet to respond in kind. Awaiting goodwill and reciprocity from Beijing, the Taipei regime persists in disallowing direct trade and postal and transportation services across the Straits. Size Asymmetry, Regime Asymmetry, and Economic Interdependence Instead of simply discussing events blow by blow, this book uses several analytic models to examine the trends and patterns of interaction between 1

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Taipei and Beijing. Exploring the Taiwan-Mainland China relationship can yield at least three intellectual gains, one substantive, the other two theoretical. First, substantive knowledge on the Taiwan-Mainland China relationship is crucial to a better understanding of international politics in the Asia Pacific Rim, which is more amenable to case-by-case analyses than to broad-stroke characterizations. The Asia Pacific region has yet to show major global trends that post-Cold War literature has identified elsewhere, such as regional economic integration, the resurgence of nationalism, and disarmament. In every region except Asia Pacific, one finds region-wide interstate organizations and sweeping issues that concern every member of the organization—for example, collective regime collapse and economic transformation in Eastern Europe; expansion and further integration of a common market in Western Europe; a unified stand against apartheid and secessionist movements in multiethnic sub-Saharan African countries; and debt crisis, economic restructuring, and democratic revival in Latin America. In contrast, there is no overriding pattern of region-wide political dynamics in the Asia Pacific Rim; although regional economic interaction intensifies, there is no trace of regional integration like the European Community (Kahler 1988, 1991; Krause 1991). Here, international politics and regional economies are as diverse, slippery, and fragmented as ever. Jeffrey Frankel (1991) demonstrates that the so-called Yen bloc in East Asia and the Pacific is more apparent than real, and Peter Petri (1993) shows that postwar Pacific Asia has a lower degree of intraregional economic interdependence than in the prewar era. Politically, three major sources of tension and potential conflict—namely the divided Korean peninsula, the Taiwan Straits, and Indochina—continue to evolve according to their own internal dynamics. The international megatrends, such as the changing relations among major powers, affect but do not determine the direction of change in these three problem areas. The Taiwan-Mainland China relationship, like the other two regional issues, has to be studied for its own sake. Second, the case of the Taiwan-Mainland China dyad permits us to reexamine the relationship between national attributes (such as size and regime types) and foreign policy conduct. Intensive international conflicts, at both global and regional levels, have occurred mostly between relatively symmetric powers or blocs, that is, between two parties with roughly equal or comparable capabilities. Asymmetric rivalries, since the age of colonialism and imperialism, were often assumed to be brief, and their outcomes to be predictable (indeed predetermined) by the discrepancy in capabilities. However, the Vietnam War experience—in which a David outmaneuvered a Goliath—has led theorists to argue that power as capability does not mean much; that power is elusive; that size does not determine outcome; and that national attributes such as leadership, regime type, and morale

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may be crucial intervening variables between power resources and bargaining outcomes (Baldwin 1979). If the process and outcome of the Vietnam War were not merely a function of the conduct on the battlefield and at the negotiation table, we probably need to shift the analysis from the systemic level to the unit level and take the attributes of units seriously. Of the various national attributes that may impinge on foreign policy conduct, regime types are probably the most intriguing. For a while the U.S.-Vietnam conflict has served as a heuristic case for this sort of discussion. The stylish question has always been: Was Goliath's defeat in the Vietnam War due to the asymmetry between democracy and totalitarian or authoritarian regimes? The Vietnam War literature, though often ensnared in the moral debate over foreign intervention or the ideological dispute on the role of mass media, seems to have convinced us that liberal democracy itself severely constrains the use of force as a foreign policy tool if public support is lacking. The Gulf War in early 1991, however, stands in contrast to the Vietnam War. Historical learning and the end of the Cold War aside, the Gulf War suggests an antithetical proposition, namely that the leaders of liberal democracies are not necessarily handicapped, and that their counterparts in authoritarian regimes do not necessarily have comparative advantages in conducting foreign policy. If anything the Gulf War—and for that matter, the three Israeli-Arab Wars—indicate that under skillful leadership, democracy can even be a positive factor in the pursuit of national security and foreign policy objectives. The democratizing regime in Taiwan and the seemingly tenacious "totalitarian" regime in Mainland China offer an interesting dyad to test propositions linking regime types to foreign policy conduct. This dyad is theoretically more significant than that of the Israeli-Arab conflict because Taiwan's small size, international isolation, controversial support from the United States (its former ally), and its adversary's diplomatic prowess make the odds it faces far more unfavorable than those faced by Israel. If democracy is not a fatal factor in Taiwan's management of the relationship with its giant rival, Mainland China, it is probably not likely to be a hindrance to other democratic countries in less adverse situations. In other words, the Taiwan-Mainland China dyad can be a critical, theory-testing case study (Eckstein 1976). Third, the case of Taiwan-Mainland China interaction can also shed light on the debate between structural-realism theorists, such as Waltz and Gilpin, and their liberal-globalist critics such as Keohane, Nye, Rosecrance, and Rosenau (see the Waltz-Rosecrance exchange in International Organization 1982; for recent characterizations of this debate, see Rosenau and Tromp 1989, Deudney and Ikenberry 1991-92). Both schools of thought are pitched at the systemic level of analysis but are amenable to analysis of dyadic interaction.

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To a structural realist, military security is the primary national concern. Military prowess is the principal composition of national power; other sources of power, such as economic capability, are not readily usable and can be put to use only at high conversion and opportunity costs. As long as nation-states continue to be basic units of an anarchical international system, all issues bear national security implications. To liberal globalist critics, the complex interdependence of the modern world has upset the hierarchy of issues, interactions are issue-specific, and threat or coercion tends to give way to bargaining for mutual gains (Wagner 1988). Economic interdependence might affect foreign policy behavior by three "causal paths": via the transformation of national goals or values, for example, for territorial states that become trading states (Rosecrance 1986); via the creation of interest groups and hence the alteration of domestic political processes; or simply by issue linkages (Kahler 1992). The realists deny the first two causal links while disagreeing with their global critics on the third one. Economic interdependence, if not too asymmetric, permits the strategic use of economic resources to reduce a nation's security threat; Japanese aid to and investment in the Soviet Pacific is a good example. But economic interdependence between two nations may also give rise to reversed leverage if trade and investment become hostage to political coercion. The liberal globalist theorists do not deny that issue linkage and asymmetric interdependence can be a source of influence. But when are issues credibly linked? How asymmetric does economic interdependence need to be to become a source of power? What is the threshold? To borrow from Albert Hirschman (1945), when do the gains from trade turn into a national security issue? It is over these questions that the two schools of thought clash. The Taiwan-Mainland China dyad provides an excellent laboratory in which to refine our theoretical thinking on power and complex interdependence. Other cases, notably the European oil pipeline, technology licensing, and grain export to the now defunct socialist countries, have been used to examine various propositions on the linkage between trade and security. However, most of these "conventional" cases pertain to bloc-tobloc relations and intra-alliance politics. The Taiwan-Mainland China dyad, in contrast, is a case of asymmetry. The size disparity of this dyad can never be overstated. Understanding how Taiwan, as a small country, manages economic interaction with its formidable adversary, China, without jeopardizing its national security, can shed light on the nature of other asymmetric dyads, such as those involving Sri Lanka and India, Israel and the Arab countries, and indeed Cuba and the United States. Moreover, the Taiwan-Mainland China relationship also highlights how policy intention shapes the structure of dyadic interaction. Mutual sovereignty claims force both sides to calculate the political objectives and security implications of

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trade and investment. Flows between these two societies or economies do not just grow or contract in accordance with market forces. Rather, on the one hand, they are intimately conditioned by political calculus; on the other, they condition political decisions. The Taiwan-Mainland China dyad, in short, exemplifies the conscious management of power and interdependence. Major Approaches to the Taiwan-Mainland China Dyad There are at least five major approaches to the studies of Taiwan-Mainland China relations: diplomatic history, the divided nation, rational choice, elite conflict, and asymmetric political process. Each has its virtues and limitations. The Diplomatic

History

Approach

The study of diplomatic history is an age-old, interpretative approach that seeks to document every important event, identify the thrust of foreign relations, and understand the meaning of vicissitude in foreign policies. Focusing on major decisions and key policymakers, this approach is often riveted at the systemic level of analysis and takes the form of "great leader diplomacy" in power games. History unfolds as leaders of major powers shape and reshape their countries' foreign policies in perpetual balance-ofpower games. Not surprisingly, the issue of Taiwan-Mainland China ties is often subsumed under broad studies of the relationship between China and the United States. Examples of this approach abound, including Thomas Stolper's (1985) well-documented study of the Quemoy crisis in 1958, Stephen Gilbert and William Carpenter's (1989) description of U.S.China relations, Yu San Wang's (1985) detailed treatment of the evolution of policies on both sides of the Taiwan Straits, John Copper's (1992) most up-to-date work on how U.S. foreign policy initiatives and Chinese responses restructured the Washington-Taipei-Beijing triangle, and Harry Harding's (1992) meticulous study of Sino-U.S. relations since Nixon's visit to China in 1972. Works of diplomatic history are not necessarily atheoretical, in that the balance-of-power game is, as just mentioned, often their implied analytic framework. However, historical development of foreign relations being its major concern, this body of literature is primarily narrative and fact confirming in nature. Writings in this genre do not attempt to spell out explicitly the logic of interaction across the Taiwan Straits, and their underlying analyses are not geared toward predicting policy behavior on either side. The primary contribution of this body of literature lies in trying

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to "get the facts straight." However, the contribution of this sort of literature should never be belittled because facts are never self-evident. The Divided Nation

Approach

The divided nation approach is more a normative exercise than a positive one. Developed out of the experiences of the two Germanies and the two Koreas, or for that matter, the two Vietnams, this paradigm has frequently been applied to Taiwan and China (Bao 1990; Chu 1989; Klintworth 1991; Senese and Pikcunas 1989; Tsai, Cheng-Wen et al. 1991; Wang 1985; Wei 1981; Zhao and Sutter 1991). The divided nation model frequently has a normative bent, a teleological assumption, and a functionalist bias (Haas 1989; Henderson, Lebow, and Stoessinger 1974). Major works of the divided nation seek to prescribe formulae by which two ideologically opposed systems—socialism and capitalism—can move from confrontation, through cohabitation, to integration, and eventually to reunification. The peaceful "integration" of Germany seems to impart more hortatory power to the divided nation paradigm. Because reunification is an eventual goal that both regimes or central governments across the Taiwan Straits have vowed to achieve, the divided nation model is undoubtedly a legitimate and useful approach to examine Taiwan-Mainland China relations. This approach helps one to understand the parameters of interaction and to show how selfdefined goals ultimately guide or constrain leadership's policy options. However, the analytic utility of the divided nation paradigm has limitations. Using the successful German model to predict the processes, stages, or even outcomes of the interaction on the Korean peninsula or across the Taiwan Straits can be very misleading. West Germany's Ostpolitik certainly contributed to peaceful German unification, but the result would have been quite different had Gorbachev not abandoned the empire. Moreover, the two regions of Germany did not really unify, but rather the West absorbed the East, as was the case with Vietnam when the North conquered the South. In addition, an aspect often overlooked in the German case is that, from its inception, the former West Germany had been a democratic regime facing an authoritarian, now defunct East Germany. The impact of West Germany's democratic process on the path of German reunification has been left unstudied. Finally, using the divided nation model to analyze Taiwan-Mainland China relations overlooks the size factor as well as the subethnic factor. Size disparity in the Taiwan-Mainland China dyad is the most acute among the four divided nations in the postwar era. Unification proves to be less difficult if the larger party is economically successful and politically open. The subethnic cleavage between mainlanders and Taiwanese in Taiwan and the complex issue of independence versus unification are also unique factors not found in other divided

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nations. After adding up all these idiosyncratic factors, one can easily make the Taiwan-Mainland China case an exception to the family of divided nations (Bao 1990). Not all divided nation works are normative and prescriptive in nature. Some are positive analyses, attempting to explain and predict changes or the status quo in bilateral relationships without assuming that unity is the normal condition. For example, Wen-hui Tsai (1991) suggests that political separation is likely to persist if socioeconomic convergence between the two sides of the divided nation does not increase. Ramon Myers (1991) shows how two societies under two competing regimes have drifted further apart. Robert Bedeski (1991), in studying the interaction between the two Koreas, argues that dialogue and bargaining tend to make both sides even more conscious of their different, rather than common, interests and stands, thereby further separating both sides. The Rational Choice

Approach

The rational actor paradigm offers a third perspective for the study of the Taiwan-Mainland China dyad. This type of analysis can be either formal modeling (Niou 1992) or game-theory-like exercises (Bao 1991). Works on PRC-U.S. interaction in crisis situations (Whiting 1960) or in strategic triangles (Dittmer 1981, 1992) also fall into this category. 2 This approach assumes that leaders are rational actors, making full use of the available information and examining available policy options either simultaneously or sequentially, and maximizing the gains of policy objectives. The forte of this approach lies in analyzing decisionmaking in crisis situations or strategy for crisis management. Deterrence theory is also subsumed under this approach. Studies focused on large-scale environments also have an underlying assumption of the rational actor responding shrewdly to opportunities offered by the international system and prudently coping with the constraints imposed on units. The Baltic states' paths to independence provide the best example. People in these three states harbored deep-seated hatred toward the Soviets, but they never resorted to violence against Soviets inside their borders. Small size and a collective memory based on historical lessons made it easy for people to "coordinate" their nonviolent but persistent actions even without communicating with one another. Pushing the assumption of rational choice literature to the extreme, game-theoretical models appear to be very tempting to the analysts of the Taiwan-Mainland China relationship. Because of their intensive interaction, both the KMT regime and the Chinese Communist Party (CCP) regime are indeed in a game-like situation. Elegant and parsimonious, game-theoretical models seem to be powerful analytic tools. For example, with respect to bargaining, their highly selective variables promise to

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predict a variety of outcomes. And their identification of goals and strategies (i.e., specification of preference order) is essential to identify the pattern of interaction. The rational actor approach has a tendency to be very normative oriented. It can inform decisionmakers what they ought to do in order to best achieve their objectives, and it prescribes strategies to accomplish what is maximally possible in a given situation (Elster 1989). Taking the goal as a given while listing preferences as possibilities, this approach—through a sort of implementation analysis—prescribes various choices that will lead to outcomes desired by actors. This type of analysis separates the rational choice approach from the divided nation approach; the former asks what makes it most likely for an actor to achieve a given goal, whereas the latter asks what may be done that will be useful to achieve the noble goal. Applied to the Taiwan-Mainland China dyad, the divided nation approach sees peaceful unification as a noble goal and documents various methods that would be conducive to that goal. The rational choice approach identifies the possible specific objectives of decisionmakers, including conquest, status quo (or deterrence), negotiated settlement, and capitulation. Then it explores the best action plan to achieve the specified objective. The elegance and parsimony of the rational choice approach—especially in its rigorous game-theoretical formulations—often come at a price, however. Critics have always cast doubt on the utility and relevance of game theory to the real world, saying that the model is at most heuristic, at worst reductionist; they denounce it as incapable of adding new information to the real issue, which is too complex and too dynamic to be captured by a simplified model. Often, the model gives an impression of formalizing what is already known, telling the same story twice in esoteric symbols that impede intellectual communication with those scholars who do not have training in formal modeling. This may not be a fair criticism of the rational choice approach. Formal modeling clarifies our thinking, which can easily be obscured by semantics. Precise and strict, modeling is an excellent mechanism to examine the logical consistency of verbal arguments. Akin to rules that are stipulated to minimize human errors, formal modeling checks logical flaws that may exist in our impressionist accounts. The findings can be very surprising. Kenneth Arrow's (1951) "impossibility theorem" on democracy is a prime example. The major shortcoming of the model is that it does not attempt to explain preference order and preference change. But for an issue such as Taiwan-Mainland China relations, preferences are precisely what need to be explained. In this regard, works on China's threat perceptions, complex nationalism, and quest for status and national pride (Hinton 1970; Kim 1979; Oksenberg 1990; Townsend 1992; Zhang 1993, esp. 272-276) and works on Taiwan's postwar history (Kerr 1965; Lai, Myers, and Wei 1991;

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Mendel 1970) are more inspiring than the abstract model of rational choice. To explain preference and preference change in PRC's foreign policies, we need, among other things, in-depth empirical studies to tease off layers of research and policy institutions and examine the texture of information flow (Shambaugh 1991). In fact, critics of the rational choice approach have begun to gain momentum in political science. Gabriel Almond (1990, 133) correctly points out that rational choice assumptions on individuals' calculations of costs and benefits, as well as on the maximization of interests through market exchange, unwisely obscure the studies on political belief. Politics as market exchange is but one of many analogies; politics can also be religiouslike, war-like, and theater-like (Almond 1990, 121). A cognitive perspective on decisionmaking (George 1974; Steinbruner 1974) points to the habitual, or cybernetic, mode of interaction among key international actors. Critics are not necessarily rejecting the rational choice approach. Rather, they point out its inadequacies and its tendency to trivialize issues, reducing complex and often normative-oriented political phenomena to mere power plays between self-interested leaders. Indeed, the whole literature of "international regimes" is premised on the assumption that rules and norms influence behavior independently of power and self-interest. Donald Emmerson (1991, 294) argues that rational choice theories—according to which autonomous individuals calculate and compare the net costs and benefits of alternative behaviors—are impotent in the pervasive post-Cold War circumstances of political conflict characterized by nationalist disputes, collective identity, and cultural attachments. The criticism here needs to be greatly qualified, however. First, the findings of the rational choice studies are labeled "trivial" primarily because the rational choice researchers are concerned with preciseness of measurement, solvability of equations, and parsimony of the model. Hence, they are required to start out with strict assumptions. Second, the rational choice model does not attempt to explain everything, though the phenomenon it deals with (namely, choices) is arguably a central feature of human behavior. Of course, other things such as value and identity can be equally essential to our behavior. Third, in recent years, the rational actor school has begun to turn attention to the emergence of rules, norms, and preferences, which it had previously taken as merely a given. More than anyone else, Allen Whiting (1960, 1975) has systematically attempted to test the limits of the rational choice approach to the study of the PRC's foreign policy behavior. Comparing the rational choice studies of Chinese foreign policy decisions with actual behavior, Whiting (1990) suggests that, probably because of insufficient understanding of what China values (i.e., its utility function), the predictive power of the analytic model seems to be no better than Chinese fortune cookies. The model has

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yet to explain the rationality of China's bargaining behavior; the PRC has a propensity to assert principles it adheres to, and hence the bargaining process often begins by directly confronting conflicting principles rather than by tackling nonpolitical, functional details (Chiu and Jen 1987; Pye 1982). Thus, bargaining with China tends to be an excessively protracted process that rarely leads to a fruitful outcome. The Elite Conflict

Approach

A fourth approach to the Taiwan-Mainland China dyad focuses on elite conflict and group dynamics. This perspective goes beyond the narrow scope of analysis provided by the game-theory approach. It opens up the highly restricted game-like situation among top decisionmakers to encompass more actors—elites in politics, bureaucracy, and even business—who bear on policymaking and policy implementation. The analysis centers on elite structure, political alignments, and, in Peter Katzenstein's terms, a policy network or nexus, where major actors are densely related to each other around the axis of policy under development. The elite conflict model is not equivalent to Graham Allison's bureaucratic model, which lacks an interactive or dyadic dimension and which is never clear on whether it deals with administrators' infighting or organizational conflict. Examples of the elite conflict model include Parris Chang's (1981) work on policymaking in post-Mao China, Robert S. Ross's (1986, 1989) works on U.S.-China relations over the Taiwan issue and on the impact of succession politics on foreign policy conducts, and Cheng-wen Tsai et al.'s (1991) work on Taiwan's foreign policy. In all these works, the key explanatory variable is the structure of elite conflict. The ending of charismatic leadership under Mao and the first-generation leadership's incessant game of political succession implies the advent of collegial policymaking in a constantly shifting locus of decisionmaking (Barnett 1985; Zhao 1992). Deng is first among equals, and there are signs that China's policy toward Taiwan is a delicate equilibrium between hardliners and softliners within the growing constraints of some provincial interests of South China. Robert Ross (1986, 284) also shows that Deng's policies toward the United States and Taiwan at times "have served his domestic needs [in responding to his peers' critique] rather than fit into a well-thought-out tactical plan" in managing the strategic triangle. Elite conflict and policy debate can be anticipated when China fares well in the dynamic strategic triangle and hence has some range of foreign policy choices (Ross 1986, 286). The same model is now used to analyze the inconsistent mainland policy under a seemingly dual leadership, or bifurcated ruling elite, in Taiwan. The mainstream and nonmainstream factional conflict in Taiwan's

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domestic politics seems to have compounded its external relations, which were already constrained by the economic interests of those with a stake in trade and investment in the mainland. Disagreement between the two factions on the pace, if not direction, of interaction with Mainland China results in either a stalemate or policy inconsistency. The key thing about this approach is that policy is not carefully crafted by top leaders armed with the best information; rather, policy is the result of a process dominated by conflicting elite groups. The scope of political conflict among elites then becomes a key question to answer. Whether it will externalize is another question to raise. The forte of this approach is that it seeks to explain preference and preference change. The rational choice approach takes preferences as a given and sees preference change primarily as a function of new information. The elite conflict approach attempts to identify the sources of preference formation (e.g., socialization, primordial and associational ties) and the situation under which preference changes (e.g., democratic change that makes it possible for political elites to redefine their identity and rethink the value system). However, preference tracing is a very difficult task. Given the impossibility of interviews and participatory observation, the content of media coverage needs to be painstakingly analyzed for one to infer policy stands of different leaders and organizations (Whiting 1979). The Asymmetric Political Process Approach Finally, the asymmetric political process model is seemingly being developed to capture the impact that democratization has created on Taiwan's external relations. Here, characteristics of democratic regimes—such as the structure and attributes of public opinion, the electoral process, and social coalitions—are brought into the model. The asymmetry between the two sides is significant, and the impact of the democratization of one side on the bilateral relationship is important. Andrew Nathan (1992) argues that the public in Taiwan is inevitably injected into the bilateral interaction between the KMT and the CCP and that the two parties are no longer in a position to strike any deal without strong public support in Taiwan. Institutions rather than elites are the leading explanatory variables of the asymmetric political process model. The key question seems to be: Does democracy necessarily handicap foreign policy conduct? Or conversely, is democracy itself a powerful foreign policy weapon? Chi Su (1987) contends that apertura (political liberalization) psychologically disarms Taiwan. Democracy widens the scope of policymaking, which is made more disjointed, moody, and transparent. The opposition party's foreign policy agenda and its quest for Taiwan's sovereignty in every conceivable forum undermines the ruling party's efforts to overcome adverse

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foreign relations that Taiwan faces (Ho 1992; Ming 1990). However, Hu Chang (1989) argues that Taiwan's opening up to Mainland China, such as by allowing family and tourist visits to the mainland, will create heavy pressure on the Beijing authority for reform. Democracy may turn out to be a blessing to Taiwan; a demonstration of the effects of change in Taiwan's regime may cause Chinese on the mainland to demand political transformation as well, making the Beijing regime even less legitimate and less compelling when bargaining with Taiwan for any political settlement of disputes between the two sides. Tun-jen Cheng (1993) argues that democracy has aggravated problems arising from subethnic cleavages between Taiwanese and mainlanders in Taiwan, but that it also provides a framework to alleviate, if not solve, these problems and forge some sort of consensus on Taiwan's ties with the mainland.

Risk Propensity, Rationality, and Regime Asymmetry All five approaches are present in this book. Multiple analytic frameworks obviously allow us to compare the utilities and limitations of different approaches. More importantly, multiple approaches allow us to reflect on the soundness of different assumptions. Are assumptions in some models more reasonable and tenable than those in others? The conclusion of any intellectual exercise is only as fruitful as the soundness of its assumptions. An analytic model can be assessed not just in terms of its parsimony, generalizability, and internal logical consistency, but also in terms of whether its assumptions are tenable. If the conclusions from two paradigms clash, it provides an excellent opportunity to discuss whether one set of assumptions is more reasonable than the other. Regarding the Taiwan-Mainland China dyad, at least three types of assumptions are most often made, but not defended or justified; these three pertain to (1) risk propensity of leadership, (2) rational action undertaken by leaders, and (3) the degree of freedom in policymaking under different regime types. Rational choice literature does not prespecify an actor's risk propensity, which is seen as an exogenous variable; whether an actor in either Beijing or Taipei is risk averse or risk neutral depends on situational logic. (Risk averse means that one prefers a lesser payoff with low risk as opposed to gambling for a higher payoff with greater risk. Risk neutral means that one is indifferent to either outcome.) However, the divided nation and asymmetric political process models would suggest risk aversion for Taiwan's leadership, while supposing risk neutrality for the leadership in Beijing. Being risk averse, the KMT leadership does not take Beijing's conciliatory words at face value, and instead assesses the situation based on the military and political capability of the CCP regime, not on the

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presumed good intention of its leadership. I contend that risk aversion, for the KMT leadership, is inherent as a result of the acute territorial asymmetry, as well as the regime asymmetry between authoritarianism and democracy. (An obvious point, in no need of emphasis, is that cyclical fluctuations of policy in the past mean that leaders in Beijing and their promises will lack credibility.) The size (and power) asymmetry between Taiwan and China implies that the margin for policy error is very narrow for Taiwan. This asymmetry is aggravated by the unevenness of the Beijing leadership's capacity in handling internal and external affairs. Until the 1980s the CCP regime had been internally unable to lead the country out of backwardness or make good use of favorable relations with the West. Externally, though, the CCP regime has been very adroit and astute in managing relations with Western countries and Taiwan. Despite the debacle of the Great Leap Forward, the Beijing regime was able to engage Taiwan in military confrontation in the 1950s. Despite the devastation of its cultural revolution, the Beijing regime succeeded in reducing Taiwan's political living space in the international arena in the 1970s. Despite Reagan's distaste for socialist countries during the 1980s, the PRC continued to receive a high credit line from the West, de facto preferential quotas for textile exports to the United States, numerous programs for scholarly exchange, and so on. Despite the Tiananmen massacre, the Beijing regime has continuously been able to isolate Taiwan diplomatically, as illustrated by Taiwan's loss of diplomatic ties with Saudi Arabia and South Korea. This isolation is also evident in the tremendous difficulties that Taiwan has encountered in staying, joining, or reentering purely functional international organizations, such as the Asia Development Bank and the General Agreement of Tariff and Trade, not to mention those organizations of a political nature, such as the United Nations. Differing risk propensities between the Taipei and Beijing leaderships are also a function of regime asymmetry. As a communist regime, China is highly capable of suppression, intimidation, or in Charles Tilly's terms, organized violence; however, its capacity for organizing and inspiring the society for economic activities and hence eliciting political support is very low. Under the pressure of democratization, leadership in Taiwan can no longer depend on coercion to maintain power and has begun to face electoral accountability. Everything else being equal, voters in a democracy have a retrospective bias, penalizing politicians for mistakes or costs associated with them, but not necessarily rewarding them for potential or even actual benefits (Fiorina 1981). Ceteris paribus, leadership in Taipei should be more risk averse than its counterpart in Beijing. However, the above distinction in risk propensity derived from the divided nation and regime asymmetry models may wash away if we examine

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the elite conflict model. Intensive electoral competition may conceivably lead to a risk-taking policy if both the ruling party and the opposition are outbidding each other to organize political support, especially in the crucial years of democratization (Cheng and Krause 1991). Likewise, elite conflict within the ruling body may lead to either adventuresome or timid, even inactive, policymaking. So far Taiwan's political elites have not engaged in a game of outbidding each other on policy toward the mainland for either rapid reunification or instant independence. By and large, political elites in Taiwan predictably seem to play it safe so as not to jeopardize national interests, security, and prosperity. Such behavioral orientation is probably attributed to the electoral accountability and the risk-averse electorate that Taiwan's political elites face. The behavior of political elites in Beijing, however, is more difficult to characterize. This leads us to reflect on the soundness of a second assumption, which is that leaders in Beijing are rational actors who know their best interests and attempt to maximize them. Rhetoric aside, leaders in Beijing have been quite restrained in dealing with Taiwan since the aborted attempt for armed takeover in the late 1950s. As Chapter 2 of this book shows, this could be attributed to the support that the United States extended to Taiwan. This also assumes that leaders in Beijing make good use of available information and calculate costs and benefits for any action or policy they pursue. Similarly, rhetoric aside, Beijing leaders since the turn of the 1980s appear to be avoiding the use of the political stick to interrupt economic transactions across the Taiwan Straits. Invasion, armed conflict, and the exercise of political coercion are not necessarily irrational if they can accomplish sensible objectives that are not Pyrrhic in nature. Nonetheless, irrational action remains possible. Intelligence failures, breakdowns in the chain of command, and accidents represent one set of reasons. Another set of causes lies in fanatic leaders who act spontaneously and inflexively (versus calculatingly) for the sake of acting. Consider what would have happened to Chinese foreign relations if Lin Biao or the Gang of Four had succeeded in dislodging Mao and Zhou at the turn of the 1970s. Or imagine that Chen Yun—who was reportedly urging military punitive action against Taiwan because the KMT leadership, in his words, had become so cocky (see Chapter 4)—had been able to engineer a winning coalition within the Old Guard of Eight in Beijing. A rational actor model can certainly analyze the conditions within which two adversaries interact without miscalculation or misperception, for example, the existence of communication and signaling devices, defensive force postures, and so on (Jervis 1978). But the elite conflict model will inform us whether, when, and how the situation will deviate from what the rational actor model will predict. As factionalism begins to

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develop following the end of one-man rule in Taiwan, the political signals from Taipei are bound to be confusing to Beijing. And perhaps by using the divided nation model, we can more clearly understand what is meant by "sensible" objectives and "bearable" costs for each side of the Taiwan Straits. Is the degree of freedom in policy action really that wide for the Beijing regime and that narrow for the Taipei regime? Does democracy necessarily mean comparative disadvantages for Taiwan when it comes to bargaining with the hard authoritarian regime in Mainland China? Democracy is undoubtedly a good thing desired by most people in Taiwan, but under democracy the policymaking process tends to become more transparent and often more protracted; voters can turn into what William Kornhauser (1959) calls accessible masses captured by political leaders of all ideological stripes. Democracy presupposes political liberty, including the free flow of information, which reduces the information cost for rival regimes. Democracy makes it difficult for Taiwan's political leadership to quickly engineer a national collective action vis-à-vis Mainland China, while permitting anyone in Taiwan to criticize, oppose, or even discredit the leadership's mainland policy for partisan purposes. Cheng-wen Tsai and Jiacheng Lin (1989) argue that Taiwan's democracy facilitates Beijing's pursuit of a two-pronged strategy—combining political sticks with economic carrots to drive Taiwan out of every international arena while incorporating Taiwan into the coastal economy of Mainland China—a strategy designed to force the leadership in Taipei to negotiate with Beijing. In the worst scenario one could imagine, political losers in Taiwan either defect to the PRC or clear the path for the Beijing regime to advance onto Taiwan. However, although democracy may handicap the leadership in conducting foreign policy, it may also create some advantages. Domestic opposition and veto groups may enable the delegation at the bargaining table to stand firm credibly: "I would like to agree, but this won't be acceptable at home" (Putnam 1988). In fact, the uncertainty about the balance between hardliners and softliners within the target country (say, the regime in Taiwan) helps minimize the incentives by which leaders in the initiating country (say, the regime in Beijing) trigger violent confrontation or coercive diplomacy (Bueno de Mesquita and Lalman 1990). Indeed, one should not rule out the possibility of coordinated action among rational politicians in a democracy vis-à-vis external threat, if they can share the benefits of working together. Furthermore, bellicose public statements by Beijing will anger Taiwan's electorate, and the KMT regime's foreign policy will reflect this as a result of electoral accountability. For four decades the literature on East Asian international relations has given short shrift to Taiwan-Mainland China relations. The characteristics

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of ideological conflict and confrontation and the Taiwan-Mainland China dyad have been treated primarily as a subset of great-power diplomacy in the Cold War environment. The global milieu within which the TaiwanMainland China dyad was embedded has undergone a sea change since 1989. The Cold War in Asia was slow to come and is proving slow to go; most notably, the ancient regimes in North Korea, Mainland China, and Vietnam remain intact, although they appear to be anachronistic. National security, no longer an imminent and overriding concern, is never an obsolescent issue, especially in Asia Pacific, where one superpower seems to be receding, the other has imploded, and regional powers loom large. Nonetheless, ideological antagonism has attenuated while economic transactions and social contacts among age-old political adversaries have accelerated. Trade appears to be obscuring, but not obliterating, political or military conflicts. The Taiwan-Mainland China dyad epitomizes the change in the new Asian order. Economic ties between the two sides of the Taiwan Straits certainly predated the end of the global Cold War; they were primarily cemented by market considerations and were tacitly permitted. The increasing economic interdependence and intersocietal links inevitably compound political dynamics in each regime and between the two regimes of this divided nation. Independence, unification, economic integration, and other previously unthinkable issues are no longer diplomatic rhetoric, but possible historical courses. And yet the clear-cut interests, principles, and instruments of the Cold War years are now confused. Risk assessment, domestic politics, and rationality of policy preferences—being reordered— become prominent subjects in the study of the Taiwan-Mainland China dyad, which calls for more analytic models than the literature has offered. The Taiwan-Mainland China dyad as a research program now stands on its own.

Organization of This Book This book is organized in five parts. Chapter 1, by Tun-jen Cheng, lays out the rationale for treating the Mainland China-Taiwan dyad as a research program and expounds the major approaches to studying this dyad. Part 1 addresses the past and present patterns of interaction: In Chapter 2 coauthors Chi Huang, Woosang Kim, and Samuel Wu use the expected-utility model to explain the political calculations that underlie the foreign policy behavior of the ROC and the PRC. Since the ROC was, and arguably still is, covered by a security guarantee of the United States, the notion of extended deterrence is also used. In so doing the authors also address the macrostrategic environments—especially Sino-U.S.-Soviet relations—

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which undoubtedly defined the range of constraints and/or opportunities Taipei faced while interacting with Beijing. Chapter 3, by Steve Chan and Cal Clark, applies the concept of complex interdependence to the dyadic interaction across the Taiwan Straits. The authors argue that complex interdependence between the two sides will probably substitute for military power to ensure mutual security, and that the increasing density of multiple, nonpolitical linkages, as time goes by, is conducive to trust building and cooperation between the two regimes but will not necessarily lead to a rapid political unification. Part 2 of the book focuses on the impact of China's domestic factors in its external relations with Taiwan. In Chapter 4 Parris Chang, after an overview of China's policy toward Taiwan, uses a number of paramount leaders to delineate China's elite structure during the Maoist and post-Mao periods. He then explores the modes of policymaking and the patterns of policy change regarding China's policy toward Taiwan. In Chapter 5, Anchia Wu focuses on the bargaining behavior of the Beijing regime in its "bid" for unification. Guided by I. William Zartman's analytic framework of international negotiation, Wu first "observes" China's negotiations with the West in the past and hypothesizes the planning, format, and conduct of bargaining with Taiwan in the future. Qingguo Jia, in Chapter 6, analyzes the degree of centralization of Beijing's foreign policymaking process in general and toward Taipei in particular. In Chapter 7 Yu-Shan Wu discusses the impact of China's economic reform on political interaction between the Beijing and Taipei regimes, concentrating on the potential and limits of issue linkages. Part 3 continues to examine domestic sources of external behavior but focuses on Taiwan. In Chapter 8 John Fuh-sheng Hsieh constructs an elegant policymaking matrix of democratizing Taiwan to explain why rational individual leaders can collectively produce irrational policy toward the mainland. Chapter 9, by Cheng-Tian Kuo, examines factors contributing to the growth of Taiwan's investment in China and presents a very parsimonious analytic model for a discussion on the political use of economic linkage. In Part 4 the book turns its attention to strategic environments and security issues. Chapter 10, by Chih-yu Shih, goes beyond the realism paradigm to illuminate an often overlooked dimension of China's external relations, the moral-cum-psychological basis of its foreign policy conduct. Shih confines himself to the study of China's policy toward the United States, which remains a crucial "third party" across the Taiwan Straits. In Chapter 11 Emerson Niou presents a typical rational choice model, defining the sequence of decisionmaking and delimiting the range of choices for Taiwan's leaders in their high-politics game with their counterparts in Beijing. The concluding chapter, by Samuel Wu and Chi Huang, integrates the

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major findings of the book and offers several substantive and methodological observations for future studies. Finally, Part 5 of the book, by Chi Huang and Samuel Wu, chronicles the major events of cross-Straits relations between 1949 and 1993.

Notes This chapter is a significantly revised version of my essay "On MainlandTaiwan Dyad," Issues and Studies, February 1992. The author thanks Samuel Wu for his valuable comments on various versions of this chapter. 1. All figures are taken from Monthly Statistical Report on Bicoastal Economies, published by the Mainland Affairs Council, Taipei. According to an estimate by The Economist (1 May 1993, 31), an estimated 12,000 Taiwanese enterprises have committed to invest US$8 billion in the mainland. 2. Lowell Dittmer (1992) shows that the PRC has generally been playing the game of strategic triangle by "rationally" following the logic of its position in the structure.

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Chang, Parris H. (1981). Elite Conflict in the Post-Mao China. Occasional Papers/Reprints Series in Contemporary Asian Studies. College Park: School of Law, University of Maryland. Cheng, Tun-jen. (1993). Democracy and Mainland China-Taiwan Ties: A Critique of Three Dominant Views. Journal of Northeast Asian Studies, Spring, 7289. Cheng, Tun-jen, and Lawrence B. Krause. (1991). Democracy and Development: With Special Reference to South Korea. Journal of Northeast Asian Studies, Summer, 3-25. Chiu, Hungdah, and Hsiao-ch'i Jen. (1987). Chung-kung t'an-p'an ts'e-lue yenchiu (A study of the Chinese Communists' negotiating strategy). Taipei: Lienho pao. Chu, Hai-yuan, et al. (1989). Da-lu tan-qin jifan-wun de ying-xiang (The effects of mass visits to Mainland China). Taipei: National Policy Research Center. Chu, Shong-beu (Ed.). (1989). Fen-lieh kuo-chia chih hu-tung kuan-hsi, i chung han wei li (Interactions of divided nations: The case of China and Korea). Taipei: Institute of International Relations. Copper, John F. (1992). China Diplomacy: The Washington-Taipei-Beijing Triangle. Boulder, CO: Westview. Deudney, Daniel, and G. John Ikenberry. (1991-92). The International Sources of Soviet Change. International Security, 16, 74-118. Dittmer, Lowell. (1981). The Strategic Triangle: An Elementary Game-Theoretical Analysis. World Politics, July, 37-67. . (1992). Sino-Soviet Normalization and Its International Implications, 1945-1990. Seattle, WA: University of Washington Press. Eckstein, Harry. (1976). Case Study and Theory in Political Science. In Fred I. Greenstein and Nelson W. Polsby (Eds.), Handbook of Political Science, Boston, MA: Addison-Wesley. Elster, Jon. (1989). Solomonic Judgements: Studies in the Limitations of Rationality. New York: Cambridge University Press. Emmerson, Donald K. (1991). Diversity, Democracy, and the "Lessons" of Soviet Failure: Western Hopes, Asian Cases. The Pacific Review, 4, 289-300. Fiorina, Morris P. (1981). Retrospective Voting in American National Elections. New Haven: Yale University Press. Frankel, Jeffrey. (1991). Is a Yen Bloc Forming in Pacific Asia? Amex Bank Review, November, 4-21. Freedman, Lawrence. (1992). Order and Disorder in the New World. Foreign Affairs, 71, 20-37. George, Alexander L. (1974). Deterrence in American Foreign Policy: Theory and Practice. New York: Columbia University Press. Gilbert, Stephen P., and William M. Carpenter. (1989). America and Island China: A Documentary History. Lanham, MD: University Press of America. Haas, Michael (Ed.). (1989). Korean Reunification: Alternative Pathways. New York: Preager. Harding, Harry. (1992). A Fragile Relationship: The United States and China Since 1972. Washington, DC: Brookings. Henderson, Gregory, Richard N. Lebow, and John G. Stoessinger (Eds.). (1974). Divided Nations in a Divided World. New York: McKay. Hinton, Harold. (1970). China's Turbulent Quest. New York: Macmillan. Hirschman, Albert. (1945). National Power and International Trade. Berkeley, CA: University of California Press.

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Ho, Szu-yin. (1992). Walking the Tightrope: The ROC's Democratization, Diplomacy, and Mainland Policy. Issues and Studies, March, 1-20. Ijiri, Hidenori. (1992). "Taiwan keiken" to reisan-go no Ajia ("The Taiwan Experience" and Post-Cold War Asia). Toa (East Asia), June, 8-29. Jervis, Robert. (1978). Cooperation Under the Security Dilemma. World Politics, 30. Kahler, Miles. (1988). Organizing the Pacific. In Robert Scalapino et al. (Eds.), Pacific-Asian Economic Policies and Regional Interdependence. Berkeley: Institute of East Asian Studies. . (Ed.). (1991). Beyond the Cold War in the Pacific. San Diego, CA: Institute on Global Conflict and Cooperation. . (1992). Strategic Uses of Economic Interdependence. Paper presented at the Conference on Pacific Security Relations After the Cold War, held in Hong Kong and hosted by the Institute on Global Conflict and Cooperation, June. Kerr, George H. (1965). Formosa Betrayed. Boston, MA: Houghton Mifflin. Kim, Samuel S. (1979). China, the United Nations and World Order. Princeton, NJ: Princeton University Press. Klintworth, Gary. (1991). Taiwan/China Reunification Issue in his (Ed.), Modern Taiwan in the 1990s. Canberra Papers on Strategy and Defense, no. 75. Kornhauser, William. (1959). The Politics of Mass Society. Glencoe, IL: Free Press. Krause, Lawrence. (1991). Pacific Economic Regionalism and the United States. Academic Studies Series, 1. University of California, San Diego, and the Korea Economic Institute of America. Lai, Tse-han, Ramon H. Myers, and Wei Wou. (1991). A Tragic Beginning. Stanford, CA: Stanford University Press. Lee, Toi T. (1991). The Reunification of China. New York: Praeger. Mendel, Douglas Heusted. (1970). The Politics of Formosan Nationalism. Berkeley, CA: University of California Press. Mengin, Francoise. (1992). The Prospects for France-Taiwan Relations. Issues and Studies, March, 38-59. Ming, Chu-cheng. (1990). Liberalization and Foreign Policy: The Case of the Republic of China. Unpublished paper. Myers, Ramon H. (1991). Two Societies in Opposition: The Republic of China and the People's Republic of China After Forty Years. Stanford, CA: Hoover Institute. Nathan, Andrew. (1992). The Effect of Taiwan's Political Reforms on TaiwanMainland Relations. In Tun-jen Cheng and Stephan Haggard (Eds.), Political Change in Taiwan. Boulder, CO: Lynne Rienner. Nelsen, Harvey. (1989). Continuity and Change in Chinese Strategic Deterrence. In June Teufel Dreyer (Ed.), Chinese Defense and Foreign Policy. New York: Paragon. Niou, Emerson M.S. (1992). An Analysis of the Republic of China's Security Issues. Issues and Studies, January, 82-95. Oksenberg, Michael. (1990). The China Problem. Foreign Affairs, 69, 1-16. Petri, Peter. (1993). The East Asian Trading Bloc: An Analytical History. In Jeffrey Frankel and Miles Kahler (Eds.), Regionalism and Rivalry: The United States and Japan in Pacific Asia. Chicago: University of Chicago Press. Putnam, Robert. (1988). Diplomacy and Domestic Politics: The Logic of TwoLevel Games. International Organization, Summer, 427-460.

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Pye, Lucian W. (1982). Chinese Commercial Negotiating Style. Santa Monica, CA: RAND. Rosecrance, Richard. (1981). International Theory Revisited. International Organizationi, Autumn, 691-714; also see his exchange with Kenneth Waltz, International Organization, Summer 1982, 679-685. . (1986). The Rise of the Trading State: Commerce and Conquest in the Modern World. New York: Basic Books. Rosenau, James N., and Hylke Tromp (Eds.). (1989). Interdependence and Conflict in World Politics. Aldershot: Avebury. Ross, Robert S. (1986). International Bargaining and Domestic Politics: US-China Relations since 1972. World Politics, January, 255-287. — . (1989). Succession Politics and Post-Mao Foreign Policy. In June Teufel Dreyer (Ed.), Chinese Defense and Foreign Policy. New York: Paragon. Senese, Donald J., and Diane D. Pikcunas. (1989). Can the Two Chinas Become One? Washington, DC: Council for Social and Economic Studies. Shambaugh, David. (1991). Beautiful Imperialist: China Perceives America, 1972-1990. Princeton, NJ: Princeton University Press. Steinbruner, John D. (1974). The Cybernetic Theory of Decisions: New Dimensions of Political Analysis. Princeton, NJ: Princeton University Press. Stolper, Thomas E. (1985). China, Taiwan, and the Offshore Islands. Armonk, NY: M. E. Sharp. Su, Chi. (1987). Tan chin tui hai hsia liang an cheng chuan ti cheng chi ying hsiang. Political impacts of family visits to regimes on both sides of the Straits. Chung kuo shi pao (The China Times), December 23, 1987. Townsend, James. (1992). Chinese Nationalism. The Australian Journal of Chinese Affairs, January, 97-132. Tsai, Cheng-wen, and Lin Jia-cheng. (1989). Tai-hai lian-an zheng-zhi guan-xi (Political relations between two sides of the Taiwan Straits). Taipei: National Policy Research Center. Tsai, Cheng-wen, et al. (1991). Zhung-hua-ming-guo duai-wai guan-xi (Foreign relations of Republic of China). Taipei: National Policy Research Center. Tsai, George W. (1991). An Analysis of Current Relations Between Taiwan and Mainland China: A Political Perspective. Issues and Studies, September, 18-42. Tsai, Wen-hui. (1991). Convergence and Divergence Between Mainland China and Taiwan: The Future of Unification. Issues and Studies, December, 1-28. Wagner, Harrison R. (1988). Economic Interdependence, Bargaining Power, and Political Influence. International Organization, Summer, 461-483. Waltz, Kenneth N. (1982). Letter to the Editor. International Organization, 36: 679-681. Wang, Yu San (Ed.). (1985). The China Question: Essays on Current Relations Between Mainland China and Taiwan. New York: Praeger. . (1990). Foreign Policy of the Republic of China on Taiwan: An Unorthodox Approach. New York: Praeger. Wei, Yung. (1981). The Unification and Division of Multi-System Nations: A Comparative Analysis of Basic Concepts, Issues, and Approaches. In Hungdah Chiu and Robert Dowmen (Eds.), Multi-System Nations and International Law, Occasional Papers/Reprints Series in Contemporary Asian Studies, no. 8, College Park, MD: School of Law, University of Maryland. Whiting, Allen S. (1960). China Crosses the Yalu: The Decision to Enter the Korean War. New York: Macmillan.

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. (1975). The Chinese Calculus of Deterrence: India and Indochina. Ann Arbor, MI: University of Michigan Press. . (1979). Chinese Domestic Politics and Foreign Policy in the 1970s. Michigan papers in Chinese studies, no. 36. Ann Arbor, MI: Center for Chinese Studies. . (1990). Forecasting Chinese Foreign Policy and I.R. Theory, or Is the Fortunate Cookie Better? Paper prepared for the Conference on Ideas and Interpretations in Chinese Foreign Policy, sponsored by American Enterprise Institute, Snowmass, CO. Zhang, Shu G. (1993). Deterrence and Strategic Culture: Chinese-American Confrontations 1949-1958. Ithaca, NY: Cornell University Press. Zhao, Quansheng. (1992). Domestic Factors of Chinese Foreign Policy: From Vertical to Horizontal Authoritarianism. Annals, January, 176-190. Zhao, Quansheng, and Robert Sutter (Eds.). (1991). Politics of Divided Nations. Occasional paper series. School of Law, University of Maryland.

Part 1 Patterns of Interaction

2 Rivalry Between the ROC and the PRC: An Expected-Utility Theoretical Perspective Chi Huang, Woosang Kim, Samuel S. G. Wu

Regional rivalry is a situation in which two states (or regimes) are engaged in a long-standing competition over regional issues that could easily escalate into war (McGinnis 1990, 111).1 During the Cold War era, many regional rivalries were extensions of superpower confrontations. Although the end of Cold War has eased tension between East and West, it is far from obvious that it has reduced tension between some regional rivals, such as Greece and Turkey or the Republic of China (ROC, or Taiwan) and the People's Republic of China (PRC, or Mainland China). Indeed, regional rivalry may well emerge as one of the most debilitating factors to world peace in the 1990s. Regional rivalry can be differentiated into two types, symmetric and asymmetric, according to the relative power of the two countries involved. If the distribution of power between the two states is roughly equal, then the regional rivalry can be considered a symmetric case. On the other hand, if one side's pressure is too strong for the other to resist all by itself, then the regional rivalry is considered an asymmetric one. North and South Korea, Iran and Iraq, and Greece and Turkey are examples of symmetric regional rivalry. Mainland China and Taiwan, as well as Iraq and Kuwait, may be seen as examples of asymmetric cases.2 The symmetric regional rivalry cases have been investigated by several studies (Huang, Kim, and Wu 1994; Kim 1991b; McGinnis 1990). However, few theoretical and empirical studies of asymmetric regional rivalry cases have been conducted.3 In an asymmetric rivalry, one side is much stronger than the other. Thus, it seems natural for the stronger side to overwhelm its rival and force the latter to accept its policy stand. However, asymmetric rivalries such as between Mainland China and Taiwan have been sustained for decades. The fact that the weaker side is able to resist the pressure without conceding to the stronger side on controversial 25

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issues deserves serious investigation. Some scholars suggest that the extended deterrence policies of the superpowers may have guaranteed the coexistence of the rivals in those regions (Jordan, Taylor, and Korb 1989, 33; Weede 1985, 223-238). 4 Others caution that superpower involvement in a regional rivalry may reduce the frequency of conflicts in the region but, once a conflict does break out, increase the probability of escalating a regional rivalry into a multilateral war (Wu 1990, 546-547). 5 Either way, the impact of superpower competition, and for that matter, the end of superpower confrontation, on regional rivalry cannot be ignored. The purpose of this chapter, therefore, is to construct a comprehensive framework for analyzing the cases of asymmetric regional rivalry, and then to examine the confrontation between the Republic of China and the People's Republic of China during the two decades after 1950 from this theoretical perspective. 6 In particular, we intend to explain the pattern of the two regional rivals' interactions by taking into account relevant domestic, bilateral, and international factors. In the following sections, we will specify those factors that, from the expected-utility theoretical viewpoint, may influence the conflict and cooperation calculations of the national leaders in an asymmetric regional rivalry. The propositions derived from this analysis will then be examined against two critical events in the history of ROC-PRC interactions.

Expected-Utility Calculation Our analysis begins with the assumption that elites of a state, dominated by a strong leader who behaves as a gatekeeper on conflict initiation, make decisions for the nation either to challenge or not to challenge the status quo. It is reasonable to argue that leaders, while considering a potential action against their regional rivals, first evaluate the probabilities of winning and losing in the conflict. They then use these probabilities to weigh what might be gained by succeeding in the contest and what might be lost by failing in the conflict. The maximum gain for a leader is being able to force the adversary to adopt the leader's ideal policy position, and the maximum loss is having to comply with the adversary's desired policy. The expected-utility is simply what the leader expects to get after balancing the weighted (or expected) gain against the weighted loss and then comparing this net gain (or loss) with the perceived value of maintaining the status quo. In the process of conflict decisionmaking, leaders behave as if they are maximizing the expected utility of their potential actions against their regional rivals. (See the appendix to this chapter for assumptions and for the formalization of our theoretical arguments based on the expected-utility framework.) Therefore according to the expected-utility

Rivalry Between the ROC and the PRC

27

theory of international conflict, a national leader's decision to initiate a conflict is based on the following factors: (1) the perceived probability of winning against the opponent state in case of conflict, (2) the perceived difference between the leader's ideal policy position and that of the adversary in terms of the issue of controversy, and (3) the perception about the enemy's future policy changes if the leader does not challenge the status quo (Bueno de Mesquita 1981, 46). A state leader may contemplate attacking the other country for a variety of reasons. However, intention does not always lead to action. A leader will initiate a conflict only when he or she believes that the action's potential benefit outweighs its cost. In other words, positive expected-utility is a necessary, although not sufficient, condition for a national leader to initiate a war. After all, military action is not the only way to achieve a nation's policy goals. Nevertheless, a higher positive expected value of launching a conflict does give a state leader a higher incentive for using force to achieve a foreign policy goal (Bueno de Mesquita 1981; Bueno de Mesquita and Lalman 1986). This consideration makes the expected-utility theory appropriate for analyzing regional rivalry. The hostility between regional rivals usually remains quite high, so state leaders of these dyads may constantly consider using force against their opponents. However, we argue that conflict intention will turn into action only when the leader concludes that the expected-utility of attacking is positive. In the following sections, we discuss factors that influence a decisionmaker's expected-utility calculation. The effect of each factor on expected-utility is then examined. Determinants

of the Probability

of Winning

Other things being equal, the higher the probability of winning, the greater the leader's expected-utility of initiating a conflict. But the question is how this probability is determined. In the literature it is widely held that the power balance between belligerents is one crucial element in national leaders' war decisionmaking (Claude 1962; Garnham 1976a, 1976b; Gulick 1955; Kaplan 1957; Kim 1989, 1991a; Liska 1962; Morgenthau 1973; Organski 1968; Organski and Kugler 1980; Weede 1976; Wright 1965). We therefore define the probability of winning in terms of the relative power (or capability) available to each of the rivals. Suppose that nation i is the stronger and nation j the weaker in a regional rivalry. The probability for nation i to win over its opponent j is a function of i's relative available capability, which is defined as the proportion of i's available capability from the total capability available to both i and j. The available capability of each side, in turn, is a function of the state's economic, political, and military capability. In this study we

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Chi Huang, Woosang Kim, Samuel S. G. Wu

focus on the following four factors: (1) a state's overall national capability, (2) the capability it needs to deal with domestic instability, (3) the capability it needs to deal with other foreign conflict(s), and (4) the sum of its allies' capabilities available to itself. The first and fourth contribute positively, and the second and third negatively, to a state's relative capability. National capability. An augmentation of a nation's capability relative to its rival's increases its probability of winning a conflict, and consequently increases the expected-utility of initiating conflict. An increase in one side's national capability, then, might preempt the other side's potential aggression or even provide an opportunity for the growing side to initiate conflict against its rival. In an asymmetric rivalry, the same absolute amount of increase in national capability for both rivals tends to decrease the stronger side's probability of winning; therefore, other things being equal, it tends to decrease the stronger side's incentive to initiate hostile actions. On the other hand, an equal absolute amount of decrease in national power increases the stronger side's probability of winning and therefore increases its incentive to initiate hostile actions. Domestic instability. A nation's probability of winning a conflict against its rival is also influenced by the domestic resources at its leaders' disposal. When leaders of a nation face serious domestic instability, it is difficult for them to mobilize all the internal capabilities to deal with the rival nation. Instead, they have to utilize some portion of the capabilities to deal with internal instability. The more national power that is needed to deal with domestic instability, the less of the nation's internal capability that is available to fight against its rival.7 In an asymmetric rivalry, the same level of domestic instability in the two rivals tends to do greater harm to the weaker side. This is so because subtracting the same amount of national capability from the gross potential capability of two asymmetric rivals lowers the relative available power of the weaker; thus, it leads to an increase in the stronger side's probability of winning. In general, the weaker side is more vulnerable to domestic instability than the stronger side. Other external threats. Like domestic disturbances, external threats from third parties other than the nation's long-standing rival, such as border disputes with neighboring states, may also demand leaders' attention and require part of the available national resources to handle them. In other words, when there are serious external threats to nation i, it is difficult for i to utilize its military capabilities to fight against j exclusively.8 Therefore, the probability for i to win conflict against j decreases as the number (or seriousness) of the external threats to it increases. Nation j, as a longtime rival, may even take advantage of the situation to attack. Similar to

Rivalry Between the ROC and the PRC domestic instability, the same level of external threats to the two rivals tends to do greater damage to the weaker state in an asymmetric rivalry. Superpower involvements. The influence of alliances on the relative available capabilities of nation-states cannot be ignored (Kim 1991a; Kim and Morrow 1992; Most and Starr 1984). The most important alliance relationship in an asymmetric regional rivalry, as we mentioned earlier, is the superpower alliance. Superpowers distinguish themselves from other relevant states (allies) by their significant ability to influence the outcome of regional war. If each of the two superpowers supports one side of the regional rivalry, respectively, the involvement of the two superpowers substantially decreases the stronger side's probability of winning.9 As a result, the stronger side's incentive to attack may be neutralized. This is why some scholars argue that, during the Cold War era, the extended deterrence structure provided by the superpower competition was one of the most important reasons for regional stability (Jordan, Taylor, and Korb 1989; Weede 1983, 1985). Based on this line of reasoning, when the two superpowers choose to stay away from the regional rivalry, the stronger side's incentive to initiate hostility against the weaker side increases.10 Under such circumstances, if the policy difference between the two regional rivals is big enough to make the stronger nation feel that it is better to challenge the status quo than to maintain it, a clash between the two would appear imminent.11 The Effect of Policy Difference on Utility Calculation We assume that each state in a regional rivalry has an ideal policy position on the issue in controversy. The further apart their ideal policy positions are from each other, the less a state prefers its adversary's position. That is, in a leader's utility calculation, the perceived value of the opponent's policy position is negatively related to the distance between the most preferred positions of the two states. Other things being equal, one state's incentive to fight against another state is higher when the policy differences between the two states become greater and when the state perceives that it has a greater than 50 percent chance of winning. If a state's perceived probability of winning is lower than .5, then the state is less likely to fight against its enemy when a policy difference between the two states becomes greater. This is so because when state i has a better chance of winning than losing against its rival j, the increase in its expected gain (which is due to the greater policy difference) exceeds the increase in its expected loss. On the other hand, if state i has a lower chance of winning than losing, the increase in its expected loss (resulting from the greater policy difference) exceeds the increase in its expected gain. In an asymmetric rivalry, it is very unlikely for the relevant states to misperceive their respective probabilities of winning. Therefore, the

29

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Chi Huang, Woosang Kim, Samuel S. G. Wu

stronger side's incentive to attack the weaker side is greater as the policy position of the weaker state drifts away from the stronger side's ideal position. The weaker side, however, has a lower incentive to confront the stronger side when the stronger side's policy position moves further away from the weaker side's ideal position. 12 The Effect of the Value of the Status Quo on Utility

Calculation

For a rational national leader, the greater the difference between the net expected gain in a conflict and the perceived value of doing nothing (i.e., keeping the status quo), the higher the incentive to take actions challenging the status quo. This is the case even when the leader expects a net loss from the action, as long as the perceived status quo is considered extremely undesirable. So long as the leader believes that the expected value of the attack outweighs the value of the status quo, he or she is likely to initiate a conflict. A leader's perceived value of the status quo, in turn, is determined not only by the current conditions of the salient regional issues, but also by his or her anticipation of future changes in the opponent's policy position. Other things being equal, if a leader believes that over a reasonable length of time the opponent's policy stand will shift toward or even converge with the leader's desired position, then the leader's perceived value of the status quo increases. If the leader anticipates the opponent to move in the opposite direction, however, the perceived value of the status quo declines. In the next section, we will discuss the relevance of our theoretical perspective to understanding the regional rivalry between the Republic of China and the People's Republic of China.

Rivalry Between the ROC and the PRC: An Asymmetric Case The struggle between the Nationalist Party (the Kuomintang, or KMT) and the Chinese Communist Party (CCP) has lasted for more than half a century. But the confrontation between the ROC and the PRC across the Taiwan Straits began in 1949, when the Nationalist government lost the civil war and retreated to the island of Taiwan, retaining control of several offshore islands along the southeastern coast of Mainland China. Since then both regimes have attempted several times to defeat the other and to reunify China. Despite the unmitigated conflict between the two rivals, both share the view that there is only one China and that Taiwan is part of it. The issue in direct conflict is: Which government, the ROC in Taipei or the PRC in

Rivalry Between the ROC and the PRC

31

Beijing, is the sole legitimate government of China? Besides a naked power struggle, this confrontation also involves conflicts between two official ideologies, i.e., the Three Principles of the People (San Min Chu I) versus Communism, and more fundamentally, two ways of life, i.e., capitalist market economy versus socialist command economy. Unlike some cases of divided regimes, such as East and West Germany, the division of China into two polities is more a consequence of a protracted civil war than a result of superpower competition. But there is little doubt that the persistence of their rivalry has been strongly influenced by both superpowers, the United States and the Soviet Union. We therefore need to examine how leaders on each side of the dyad view this rivalry and the nature of superpower involvement. From the CCP's point of view, the PRC could have unified China in 1950 if it were not for the intervention of the United States. Before the Sino-U.S. rapprochement in the early 1970s, the PRC leaders considered the United States an imperialist power that tried to detach Taiwan from its motherland and thus threatened China's territorial integrity and sovereignty. The CCP leadership has made it clear for years that the liberation of Taiwan is the top priority in the regime's agenda and is an internal affair that does not allow for foreign interference. Even until recently this patriotic and nationalist call for reunification has been used by PRC leaders as a rallying point to mobilize political support. The role the Soviet Union played in this regional rivalry cannot be overemphasized. The Sino-Soviet treaty signed in 1950 remained effective until the late 1950s, when tension began to build between the two countries. Before then the Soviets had been the PRC's superpower ally. Without the protection of the Soviet nuclear umbrella, for example, the PRC may have faced a nuclear attack from the United States during the Korean War. Indeed, the Soviet Union was an important consideration in the minds of U.S. decisionmakers (Dupuy and Dupuy 1986). The conflicts between the PRC and the Soviet Union surfaced during the early 1960s because of the two countries' disputes on ideology, strategy, nuclear weapons, and border issues. Khrushchev's economic warfare against the PRC was followed by Brezhnev's military buildup along the Sino-Soviet border during the mid-1960s. The militarization of the dispute was heightened by the radicalism during the Chinese Cultural Revolution (1966-1969) and culminated in the border clashes (the Zhen Bao Island incidents) of March 1969 (Robinson 1972; Thornton 1987). Chinese leaders began listing Soviet "social imperialism" ahead of the United States as enemy number one. The Sino-Soviet confrontation imposed severe limitations on the PRC's ability to initiate conflicts elsewhere, including in the Taiwan Straits. The PRC's predominantly belligerent actions and rhetoric toward Taiwan in the 1950s and 1960s were replaced in the 1970s by a

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Chi Huang, Woosang Kim, Samuel S. G. Wu

mixture of peace initiatives and military threats. In the meantime the SinoSoviet rupture also paved the way for the Sino-U.S. détente in the early 1970s, which in turn caused a substantial decline in Taiwan's strategic importance and international status. From the viewpoint of the Nationalist leaders, the issue of reunification is a matter of survival (see Hsieh 1985). The ROC in Taiwan, controlling only about 0.4 percent of the entire Chinese territory and consisting of less than 2.0 percent of the Chinese population, is clearly in a disadvantaged position vis-à-vis its Communist rival. Furthermore, the Nationalist regime led by Chiang Kai-shek and its two million followers from the mainland during the late 1940s represent a minority force in Taiwan in relation to the native Taiwanese. Recovering the mainland through counterattack became the major justification for the KMT to maintain authoritarian rule through martial law on the island. However, its staunch anti-Communist stand also found a niche in the international alliance politics of the Cold War era. When the Nationalist government at Nanking moved to Taipei at the end of 1949, the United States had a hands-off policy. The eruption of the Korean War in June 1950 led to a change of U.S. policy and had significant effects on the subsequent ROC-PRC rivalry. First of all, it forced the United States to redraw its defensive line against Communist expansion much closer to the Asian continent by including both South Korea and Taiwan. The sudden boost in Taiwan's strategic importance brought in the U.S. aid and security commitment so badly needed by the island. Furthermore, the PRC, when its troops entered Korea in October 1950, was forced to postpone its aim of final victory over the KMT in Taiwan. This gave the Nationalist government a breathing spell to consolidate and legitimize its rule in Taiwan. By the time the Korean Armistice was signed in July 1953, Taiwan had nearly completed the final program (Land to the Tiller) of its land reform and had begun its first four-year economic development plan. For the next twenty-five years (until 1979, when the Carter administration established diplomatic relations with Beijing and de-recognized the ROC), Taiwan was shielded by the U.S.-ROC Mutual Defense Treaty. It is obvious that the United States' incorporation of Taiwan into its Pacific defense system during the 1950s and 1960s was driven by its global containment policy. Chiang Kai-shek, however, had a more ambitious goal than maintaining the status quo. Throughout his rule in Taiwan until his death in 1975, he tried to push this "defensive" line as close as possible to, if not into, the mainland to justify his claim of sovereignty over all of China. In the 1950s, he had some success in extending the U.S. defense commitment to the two groups of offshore islands, Quemoy and Matsu. In the 1960s, he attempted to turn this defensive alliance into an offensive one but failed. In the 1970s this defense commitment from the

Rivalry Between the ROC and the PRC

33

ROC's long-time superpower ally became increasingly ambiguous. This forced Chiang Kai-shek and his successor (his eldest son, Chiang Chingkuo) to turn more attention to self-preservation than to conflict initiation against the PRC. The rest of this chapter focuses on two significant events that occurred in the Taiwan Straits and interprets them from the perspective of the expected-utility theory of regional rivalry. We do not intend to present historical details, nor do we rely on any sources that are not well known already. However, by untangling the complex relationships among domestic, bilateral, and international factors specified in the previous section, we hope to demonstrate that this comprehensive framework can help us better understand the patterns of ROC-PRC interactions at the high-politics level.

The Taiwan Straits Crisis of 1954-1955 The Taiwan Straits crisis of 1954-1955 illustrates how the weaker side in an asymmetric rivalry can take advantage of the superpowers' competition in the region to maximize the security commitment from its major ally and thus resist seemingly overwhelming pressure from its stronger rival. With such a full commitment from its superpower ally, the weaker side can even reciprocate the hostile actions taken by the stronger side. The latter, failing to obtain its own superpower ally's full support, has to back down from the conflict because of a lower perceived probability of winning. The main reason for the failure of the stronger side's major ally to lend full support to its protégé is that the leader of this superpower intends to improve relations with its counterpart. The ROC and the PRC, despite their differences in ideology and administrative structure, followed a surprisingly similar sequence of domestic policies between 1949 and 1954: power consolidation, sweeping land reform, and then the beginning of their first economic plans in 1953. Both regimes achieved a high degree of internal stability within half a decade through these measures. Bilaterally, however, the hostility between the two sides remained very high. In February 1953 President Eisenhower announced that the U.S. Seventh Fleet would no longer "shield" the PRC. The Nationalist government, with its control of the offshore islands, seized this opportunity to step up harassing activities along Mainland China's central and southeast coasts. But the PRC leaders were patient enough to gain peace along their own border first. The Korean War ended in July 1953. In April 1954 the PRC reached a tacit agreement with India on the status of Tibet. And then the first Indochina war was settled in mid-1954 at a conference in Geneva. With the end of these potential external threats,

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Chi Huang, Woosang Kim, Samuel S. G. Wu

the PRC had free hands to deal with the KMT in Taiwan. In 1954 the superpowers' involvement in the ROC-PRC rivalry also seemed to be favorable to Mainland China. On the one hand, the Sino-Soviet relationship was still in its honeymoon period. On the other hand, the United States had not yet concluded a mutual defense treaty with the ROC and had been unwilling to extend its defense beyond Taiwan and the Pescadores (Penghu). Some officials in Eisenhower's administration believed that the small offshore islands were Chinese territory and had questionable value for the defense of Taiwan. On 3 September 1954 the PRC coastal batteries began to shell Quemoy, which is just two miles from the port of Xiamen, and PRC forces started to harass the 250-mile-long supply lines from Taiwan to the Tachen Islands, located at about 200 miles south of Shanghai. The ROC forces on Quemoy, then totaling about 50,000, fought back. This was the beginning of the so-called first Taiwan Straits crisis. In the following month, the PRC began to fire on the Tachens; this later escalated into sea and air battles around the area. In hopes of defusing the crisis by showing Washington's support for the Nationalists, President Eisenhower and Secretary of State John Foster Dulles opted to conclude a U.S.-ROC Mutual Defense Treaty with Taipei, signed on 2 December 1954. The treaty explicitly covered Taiwan and the Pescadores but vaguely mentioned that it would be "applicable to such other territories as may be determined by mutual agreement" (Gibert and Carpenter 1989, 126). Such an ambiguous commitment was not enough to deter the PRC, and the situation in the Taiwan Straits continued to deteriorate. On 20 January 1955 Communist forces overwhelmed Nationalist troops on Yijiang Island, just eight miles north of the Tachens. The ROC forces counterattacked with air strikes on mainland ports. Despite the tremendous military pressure from the PRC, Chiang Kaishek refused to budge from any territory his army held. Because Chiang deployed a large number of the best-equipped Nationalist forces on Quemoy and Matsu, Eisenhower concluded that the loss of them would do irreparable damage to the Nationalist regime and thus the defense of Taiwan. Dulles therefore informed the Nationalist government that the United States would join in the defense of Quemoy and Matsu if the Nationalists withdrew from the Tachens, which were too far away from Taiwan to defend militarily. A week later, the U.S. Senate passed the Formosa Resolution, authorizing the president to employ U.S. forces for the protection of Taiwan, the Pescadores, and "related positions and territories of that area now in friendly hands" judged to be required for the defense of Taiwan and the Pescadores (Gibert and Carpenter 1989, 131). In exchange for the U.S. commitment to Quemoy and Matsu, Chiang reluctantly agreed to withdraw from the Tachens. On 8 February 1955 Nationalist soldiers and

Rivalry Between the ROC and the PRC

35

civilians were evacuated with the assistance of the U.S. Seventh Fleet. In March the United States even threatened to use tactical atomic weapons in order to deter the Chinese Communists. On the same day the ROC withdrew from the Tachens, Khrushchev became the new top Soviet leader. He quickly signaled interest in improving relations with the United States. A rumor suggests that Chinese premier Zhou Enlai secretly visited Moscow in early April 1955, where Khrushchev told him that the Soviet Union would not support Mainland China in a war over the offshore islands. Although there is no way to verify this rumor, the quick and sudden agreement of Moscow to conclude an Austrian treaty in April 1955 undoubtedly indicated to all sides that the Soviet Union eagerly sought improved relations with the West (Chang 1988, 117-118). Facing the strong commitment of the United States to Taiwan and the lack of full support from the new leader of the Soviet Union, the PRC quietly decreased its shelling of Quemoy and Matsu in April. Finally, on 23 April Zhou Enlai announced at the Bandung Conference of African and Asian States that his government wanted no war with the United States. Three days later Dulles also indicated that the United States would talk with Beijing if Mainland China ceased its fire (Goldstein and Freeman 1990, 89-90). The Chinese shelling of Quemoy and Matsu soon stopped, and this Taiwan Straits crisis ended.

The Taiwan Straits Crisis of 1962 The Taiwan Straits crisis in 1962 is much less well known than the other crises, which occurred in 1954-1955 and 1958, respectively, because it did not actually evolve into full-scale battles. However, this crisis vividly illustrates how larger-scale domestic disturbances in and external threats to the stronger side of a rival dyad can raise the weaker side's perceived probability of winning a war and, thus, the expected utility of initiating conflicts. The hostile actions taken by the weaker side then arouse reciprocal actions from the stronger side. The result of this confrontation also illustrates the vulnerability of the weaker side in an asymmetric regional rivalry, i.e., the difficulty for the weaker side to challenge the status quo actively without full support from its superpower ally even when its stronger rival is isolated. The PRC in the early 1960s was plagued by various problems. Domestically, the failure of the radical Great Leap Forward movement caused a substantial decline in economic production in 1960-1961, which was exacerbated by natural calamities such as drought and flood. Mao Zedong, the architect of this movement, was pushed by Liu Shaoqi and Deng Xiaoping into the "second line." The bloody suppression of the Tibetan

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Chi Huang, Woosang Kim, Samuel S. G. Wu

rebellions in 1959 and 1960 not only absorbed Mainland China's already strained resources but also increased the tension between Mainland China and India along their border. Internationally, disputes between Mainland China and the Soviet Union had reached a point that the latter unilaterally recalled all of its technicians in Mainland China and ordered the cessation of aid projects in 1960. With the Sino-Soviet alliance virtually defunct, the PRC was isolated. On the other hand, Taiwan had enjoyed political and economic stability since the end of the Taiwan Straits crisis of 1958. For Chiang Kai-shek, this was the best opportunity to launch military attacks to recover the mainland. He intensified guerrilla raids on Mainland China in the early 1960s, conscripted additional men into the ROC armed forces, and then imposed a (provisional) national defense special assessment in May 1962 to boost the military budget. In response to Taiwan's hostile actions, the PRC began to reinforce its forces along the coast opposite Taiwan in early June. By late June the concentration of men and planes already surpassed the number gathered in the Fujian province in the summer of 1958, immediately before the second Taiwan Straits crisis; it was considered the largest force since the one that preceded Mainland China's intervention in the Korean War in October 1950 (New York Times, 21 June 1962, 1, 5). Although the troop concentration fell short of what would be needed for an attack on Taiwan, the continuing buildup seemed to surpass a defensive deployment to deter attack by the ROC forces. A quick strike by the PRC forces against the offshore islands of Quemoy or Matsu or both, where more than one-third of the ROC's effective ground forces were stationed, became possible. Another Taiwan Straits crisis was imminent. Taiwan's superpower ally, the United States, did not share Chiang's objective of reunifying China through military force. On 23 June the U.S. ambassador to Poland reportedly informed the PRC ambassador that the United States would not support the ROC's attempt to "recover" the mainland (Chiu 1979, 173). Four days later President Kennedy, in a press conference, quoted Dulles's words in 1955 that "[t]he whole character of [the U.S.-ROC Mutual Defense Treaty] is defensive" (Gibert and Carpenter 1989, 148-149). This statement sent a clear message to the PRC that the United States was determined to help Taiwan defend Quemoy and Matsu. However, it also warned the Nationalist government of Taiwan against any military ventures against Mainland China. On 2 July Soviet premier Khrushchev also claimed that the Soviet Union would support the PRC against any attack. Realizing that the likelihood of defeating the PRC by itself was very small, Taiwan gradually decreased its hostile actions and the crisis subsided. In 1967 the turmoil on the mainland as a result of the Chinese Cultural Revolution rekindled Chiang's hope of launching the "counterattack"

Rivalry Between the ROC and the PRC

37

against the PRC. But the immediate and negative response from the Johnson administration again forestalled his attempt. Throughout the Chinese Cultural Revolution, the ROC took no military actions against the PRC (Chiu 1979, 177). Since 1969, when the Nixon administration began to improve its relations with Mainland China, Taiwan's international status has become too vulnerable to initiate conflicts against the PRC. The opportunity for Chiang to attack the mainland vanished.

Conclusion In this chapter we first presented an expected-utility model of asymmetric regional rivalry and then examined two significant events of the PRC-ROC confrontation from this theoretical perspective. We argue that one can best understand regional conflicts by taking into account domestic, bilateral, and international factors from the viewpoint of expected-utility theory. Domestic factors include the national capability and political stability of the adversaries. Bilateral variables include the policy distance between the rival nations' leaders on the most salient regional issue as well as their perceived values of the status quo. Finally, superpower involvement in the region and each rival's relationship with other countries constitute the international environment in which state leaders find themselves. They decide, after assessing the aforementioned factors, whether to initiate conflict by weighing expected gain or loss of action versus inaction and choose the course that maximizes their expected-utility. The two events discussed here concerning military confrontation across the Taiwan Straits, although not sufficient to verify our theory, do show patterns of interaction between an asymmetric dyad derived from our model. First of all, hostile actions from either side of the Straits tended to pull the leaders' policy positions on the reunification issue further apart and therefore trigger reciprocal responses. Second, leaders of both the ROC and PRC took into account not only their own national capabilities but also those internal and external events that might affect the national capability of their opponent. Larger-scale domestic instability in, as well as external threats to, the stronger side did affect the calculations of the weaker side's leader. But such windows of opportunity proved to be rare and difficult for the weaker side to take advantage of alone. Third, both sides of the Straits were heavily influenced by superpower involvement. Not surprisingly, however, Taiwan, the weaker side of the dyad, tended to rely more on the commitment of its superpower ally than the PRC and was thus more vulnerable to shifts in international alliance.

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Appendix, Chapter 2: Expected-Utility Model of Regional Rivalry Assumptions The assumptions used for this model are 1. Decisionmaking concerning war proceeds as if there were a single, dominant decisionmaker. 2. When making a war decision, the national leader identifies his or her interests with the interests of the collective body—the state. 3. The leader is assumed to be rational. That is, the leader tries to maximize the expected-utility when making a war decision. Expected-Utility Calculation Nation i's expected-utility of initiating a conflict against j, £(i/y), is postulated as E(U,j) = [a (Utt - Utj) + (1 - a) (Ul} - t/,,)] - [Uls]

(2.1)

where a = i's probability of winning in a war against j Uu = i's evaluation of its most preferred policy position Ujj = i's evaluation of j's policy position Uis = i's evaluation of the status quo Following Bruce Bueno de Mesquita (1981, 47), we set Uu = 1 and allow Utj to vary between 1 and -1. If i perceives that j's policy position is identical to its ideal position, then Uy = {/„. The further away j's policy position is from i's policy position, the less j's position is preferred by i. Therefore, (£/„• - Utj) > 0. But throughout this chapter, we are concerned only with the case in which (Uu - U^) > 0. In equation (2.1), nation i's probability of winning against j, a, is defined as a = (P, + PkmPi where

+ Pki) + (Pj + Pkj)]

(2.2)

P t = nation i's actual capability available to the conflict Pj = nation j's actual capability available to the conflict Pki = available capability of i's superpower ally Pkj = available capability of j's superpower ally

Nation i's actual (available) capability, Pt, in equation (2.2) is in turn defined as

Rivalry Between the ROC and the PRC

Pt = PPt-D,-Ei where

39

(2.3)

PPi = nation i's overall (potential) capability £>, = the capability i needs to deal with its domestic instability Et = the capability i needs to deal with other external threats

The power i needs to deal with its domestic instability, D ( , in equation (2.3) is Di = PPi x WD.

(2.4)

where WD. = the seriousness of nation i's domestic instability. The power i needs to deal with other external threats, in equation (2.3) is = PPi x WE. and 0 < (WD. + WE.) < 1

(2.5)

where WE. = the seriousness of nation i's external threat(s). Derivation of Hypotheses To examine the effect of each variable on the stronger nation i's expected utility, we first set PPt = / x PPj, where / i s the relative size factor between nations i and j. Given our definition of asymmetry,/> 5. In addition, from equations (2.3), (2.4), and (2.5), we can easily see that Pt = PPt( 1 - WDW E i ). Plugging these two equalities into equation (2.2) results in =

PPi{\-W°t-WC) + Pkl [PP( (1 - WD. - WE.) + Pkt] + [(1/f) PPi (1 - WD - W^) + Pkj]

=

c C+d

c = PPt (1 - WD - WE) + Pkj

where

d = (1/f) PPi (1 - WO.'- WE.) + Pk]

(2.6)

Determinants of the Probability of Winning National capability. When a state builds up its national capability relative to its regional rival, it causes a change in the size factor/: dE (Ui,) 1

3/

=

2c {c+dpp

PPi(l-WD

1

-WE)(U -Uij)>0 1 u

(2.7)

In other words, a change in the relative size factor/has a positive effect on nation i's expected-utility. We hence formulate the following hypothesis:

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Chi Huang, Woosang Kim, Samuel S. G. Wu

HI a: The more nation i builds its national capabilities relative to nation j, the more likely i is to initiate conflict against j. However, if both states' national capabilities grow in the same absolute amount, say e, where e > 0, then the relationship between their new national capabilities becomes PPt + e = / x PPj + e = f (PPj + e) - ( f - l)e. Now their relative size factor is smaller than/because PPi+e PPj+e

(f-l)e

=/-

PPj+e