Is China A Master of Economic Statecraft in Cross-Strait Relations in the New Millennium?

Abstract

The standoff between Taiwan and mainland China in August 2022 heated the debate on the possibility of forceful unification of Taiwan again. The economic linkages between China and Taiwan have been seen as, on the one hand, the stabilizing factor that incorporated the two camps together. On the other hand, it can also be disturbing catalysis that agitate anti-China protest in Taiwan. Undoubtedly, the effectiveness of the Chinese economic statecraft towards Taiwan as a research subject deserves greater scholarly attention not only because of its contemporary relevance but because it can provide empirical cases for the theorization of economic sanctions and economic inducement. This article looks at the Chinese economic statecraft towards Taiwan in the first two decades of the new millennium. This article applies the qualitative method and case studies. By looking at the case of sanctions on Taiwanese business figures, the fruit deals in 2005, this article evaluates the effectiveness of the Chinese economic sanctions and economic inducements in the early 2000s. This article then looks at the Chinese institutional balancing by excluding Taiwan from joining AIIB and the BRI initiative. Finally, this article concludes that the Chinese economic statecraft will remain effective as its institutional influence is growing in the region. This article argues that despite the NSP appearing to attenuate the Taiwanese economic influence of the mainland, the Chinese economic statecraft has been, in general, effective. The Cross-Strait economic interdependence is likely to continue.