Finding the trade-security nexus: Taiwan’s economic statecraft from 2009 to 2021

Abstract

Over the last few decades, China has become one of the most important foreign investment destinations and centers of economic development in Asia. China’s growing economic clout and coercive measures lead to the following empirical puzzles: how has Taiwan perceived China’s increasing military capabilities and economic influence? What are the major factors that facilitate or constrain the role of a government agency of a weaker state in addressing the economic power of a stronger one? More specifically, what has been the purpose of Taiwan’s economic statecraft? Based on Taiwan’s official statements, regional trade data, and newspaper coverage in Chinese and English, this study investigates both positive and negative evaluations of China-Taiwan trade from 2009 to 2021. From 2009 to 2016, President Ma Ying-jeou adopted a desecuritization strategy in normalizing bilateral trade with China, and he actively promoted greater liberalization of Taiwan’s financial and service sectors for China’s investment. From 2016 to 2021, President Tsai Ing-wen employed a securitization strategy in light of the risks of economic reliance on China’s markets. The article proceeds as follows. First, it engages the current literature on economic statecraft, China-Taiwan relations, and Asian politics. Second, this study offers a framework of desecuritization and securitization of Taiwan’s trade toward China, and it highlights how the political leaders in Taiwan attempt to find a balance between trade and security. Third, it provides in-depth case studies on how Taiwan executed desecuritization and securitization strategies. Finally, it concludes with some initial thoughts on the studies of comparative economic statecraft, and provides policy implications for countries in the Asia Pacific region and beyond.