Transcript of an Interview
with President Chen Shui-bian
by Rebecca Blumenstein, China Bureau Chief,
and Jason Dean, Correspondent,
The Wall Street Journal
April 25, 2006
Q1. What was your reaction to last week's visit by Hu Jintao in the US? And more broadly, the US and China are becoming more interdependent, especially economically. Is there any risk that Taiwan will get squeezed out in the process?
A: I would like to look at this issue from four angles. The first of these is human rights. We can understand from the Wang Wenyi incident that the human rights issue is of utmost importance. That a woman from China who has received such a high education would openly protest against Chinese leader Hu Jintao in front of the world media is a very serious matter. Its true significance is that China's human rights record is indeed notorious and is among the worst in the world. This incident involving Ms. Wang highlighted not only China's suppression of Falun Gong followers and of the freedom of religion and belief, but also its human rights record. During his meeting with Hu Jintao, President Bush emphasized that, in addition to its lack of religious freedom, China also faces problems in terms of freedom of speech, freedom of the press, and freedom of association and assembly.
The second aspect I wish to talk about relates to the so-called "one-China" issue. When announcing that the national anthem of the People's Republic of China would be played, the US protocol officer mistakenly said the "Republic of China" instead. I believe that this was more than just a slip of the tongue. It was a result of this so-called "one-China" issue. Many people in the international community are confused and cannot tell the difference between the People's Republic of China and the Republic of China. That is why the US protocol officer made such a blunder. As a matter of fact, the ROC is very often mistaken for the PRC in the international community. It is difficult for the international community to understand that the Republic of China means democratic Taiwan, while the People's Republic of China means totalitarian China.
For many decades, the previous Kuomintang government claimed internationally that there was only one China. When both sides of the Taiwan Strait claimed that there was only one China, it is no wonder that people were, and still are, confused about which one truly represents China.
The third aspect is the Taiwan issue, which was high on Hu Jintao's agenda during his visit to the United States. President Bush took the initiative to bring up the Taiwan issue in his welcoming remarks during the military salute ceremony. Because of its firm and consistent position, the US government did not allow China to score on the Taiwan issue. Of course, President Bush made no comments that would take Taiwan by surprise, and for that, we are very grateful and appreciative.
We could clearly see the differences between how the United States and China view the Taiwan issue, however. For China, the one-China principle means peaceful unification, namely ultimate unification, and strong opposition to Taiwan independence.
For the United States, the one-China policy means that it does not support Taiwan independence, but it does not mean that it opposes Taiwan independence. The United States does not have a predetermined position or conclusion as opposed to the so-called ultimate unification or peaceful unification proposed by China. What it emphasizes is the process. The United States therefore made a distinct proposal that any differences between the two sides of the strait must be resolved peacefully.
We have taken special notice that, at the Oval Office, President Bush particularly stressed to President Hu Jintao that China should engage in dialogue with the democratically elected government of Taiwan. No mention was made during their meeting of the China fever that caught Taiwan in mid-April when the Kuomintang and the Chinese Communist Party held a forum and former KMT Chairman Lien Chan met with Hu Jintao for a second time.
The fourth aspect concerns economic and trade issues. Whether concerning the exchange rate of the renminbi or the trade conflict between the United States and China, I believe such issues were the main focus of the Bush-Hu summit. People have made different interpretations and analyses as to whether the summit has dealt with the trade deficit problem between the United States and China, and whether Hu's visit brought positive developments in this area. What demands our attention, however, is what kind of impact China, this sleeping lion, will bring to the world when it awakens, whether it will create some kind of squeezing effect economically. This is something worthy of attention.
Internally, China has a serious developmental imbalance between its urban and rural areas, and between the rich and poor. It suffers from social unrest. Most importantly, China suffers from waste and inefficient use of energy. China's influence on world economy is seen as presenting an opportunity. Some see it as more of a threat, that China is plundering the world's raw materials and energy, causing an increase in crude oil prices and in the prices of commodities around the world.
Furthermore, China makes use of its cheap labor, poor labor conditions, and cheap land resources to dump very low-priced goods on the world market. Many countries around the world have suffered as a result, which has caused diminished profits and hollowing effects in industries, and worst of all, even led to problems of structural unemployment. Trade conflict exists not only between China and the United States but also between China and the rest of the world.
Q2. Are you concerned that Taiwan could get squeezed out of that process?
A: Of course, we are concerned because China has been trying all means to belittle Taiwan and to marginalize Taiwan, and ignore the fact that Taiwan is a sovereign nation with its own government.
In fact, I had declared in my inaugural speech of 2000 that, so long as China did not resort to the use of force against Taiwan, I would offer my "Four Noes Plus One" pledge. I especially called on the Chinese leaders to use wisdom and creativity to deal with Taiwan's government regarding the future of the one-China issue, based on existing foundations and the principles of democracy and parity.
When I offered such an opportunity, the other side refused to seize it. Indeed, last year China passed the "anti-separation law" (the so-called anti-secession law) and even arranged for the chairmen of two of Taiwan's opposition parties, Lien Chan and James Soong, to visit China. Such actions, rather than closing the gap between the two sides of the Taiwan Strait, have widened it. Nevertheless, as long as dialogue and negotiations are based on the four principles of sovereignty, democracy, peace, and parity, then we are very willing to start dialogue, consultations and negotiations with the other side.
In terms of sovereignty, we hope that China will respect and accept the fact that the Republic of China exists as an independent, sovereign nation. In terms of democracy, we hope that the free choice of Taiwan's 23 million people regarding future relations between the two sides of the strait, and the future of Taiwan, will be respected. In terms of peace, we call upon China to resolve differences with Taiwan peacefully through dialogue and not through the use of force or other non-peaceful means. In terms of parity, we call upon China to engage Taiwan in dialogue and negotiations and resolve cross-strait issues on a government-to-government basis.
Although the "1992 consensus" in truth does not exist, we are still willing to use what we have achieved in the 1992 Hong Kong meeting as a basis from which to start government-to-government dialogue, consultations, and negotiations.
Q3. What might be your legacy as president when it comes to the relationship with China? And what will be your legacy more broadly? What do you hope to accomplish over the next two years?
A: First of all, I would like to see the international community gain a better understanding of the differences between democratic Taiwan and totalitarian China. Second, democracy is definitely an asset for Taiwan. It is Taiwan's pride, and it is Taiwan's best weapon, as well as the best "theater missile defense (TMD)," against totalitarian China.
Elaborating on my first point [about the differences between democratic Taiwan and totalitarian China], for the past 50 years, it has been abundantly clear to the world that there is only one China. Indeed, there is only one China, a totalitarian China. But at the same time, there is also a democratic Taiwan. For the past half-century, the status quo in the Taiwan Strait has been that there is one democratic Taiwan and one totalitarian China, and neither of these two has had effective jurisdiction over the other. Each has its own national moniker, national flag, constitution, government, armed forces, and judicial system. Indeed, they are two separate countries.
Taiwan is not the problem; China is not the problem either. The present problem is that totalitarian China desires to use force or other non-peaceful means to annex democratic Taiwan.
With regard to my second point, we think that our democracy is Taiwan's pride, asset, and a "theater missile defense." In the past six years, we have made efforts to consolidate and strengthen Taiwan's democracy. We will seek to further promote and strengthen the foundation of Taiwan's democracy over the next two years. From holding the first national referendum to the decision that the National Unification Council should cease to function and the National Unification Guidelines should cease to apply, all are part of our effort to consolidate democracy in Taiwan. The right to referendum is a universal value and a basic human right. Previous governments, however, had educated Taiwan's people to consider referendums as something equivalent to a catastrophe, a war, or a political taboo.
Taiwan's first Referendum Act was promulgated in 2003, and the first national referendum was held in 2004. The Constitution was amended in 2005; this abolished the National Assembly and incorporated the right to referendum into its articles. Now, we not only have a national Referendum Act, but we have also seen it at the local government. The Kaohsiung City Council, for example, formally passed a statute on local self-governance that uses referendums.
It is clear, however, that having the right to referendum is not enough. We cannot have only the right to referendum without the right to free choice. This is why we had no choice but to deal with the issues of the National Unification Council and the Guidelines for National Unification, and why we decided the council would cease to function and the guidelines cease to apply. Out of respect for the principle of popular sovereignty, we should not set any positions, preconditions, or conclusions regarding the future of Taiwan, the future form of cross-strait relations, or other issues of serious concern to the nation. We should return the right to decide the future of Taiwan and the final say regarding cross-strait relations to the 23 million people of Taiwan. The previous government and the ruling party had made ultimate unification with China the only choice and conclusion for our people. This runs counter to the democratic principle of popular sovereignty.
Perhaps in the future when the Chinese Communist Party has given up its one-party totalitarian rule, when China has introduced true democracy and freedom to its society, when China has stopped suppressing Taiwan, has renounced the use of force against Taiwan, has repealed its anti-separation law, has withdrawn all the missiles deployed against Taiwan, and respects the right to free choice of Taiwan's 23 million people, maybe then the people of Taiwan will change their current attitude of refusing to accept ultimate unification with China. Perhaps one day the people of Taiwan might change their minds regarding ultimate unification, but ultimate unification absolutely cannot be set as Taiwan's only choice.
Q4. Military threat ...... Despite your efforts, Taiwan has still not acquired any of the ...... offered by President Bush in 2001. Familiar with the background ...... do you see any hope of acquiring those weapons, in total or in part ...... progress on that? On a related note ...... some people in Taiwan have advocated that you adopt offensive military capabilities, such as cruise missiles as a deterrent against China. And I wonder, what role do you see offensive weapons playing in Taiwan's defense?
A: Taiwan's defense strategy is that of a passive, defensive, and preventative approach. The overarching strategy of our national defense is to have "effective deterrence and solid defense." Our three major goals are to prevent war, defend our homeland, and counter terrorism and respond to contingencies. Taiwan will definitely not launch attacks, let alone a first strike. We can only put up a good defense, and as this is the case, we must strengthen our defense capabilities. We would certainly not initiate war. We want to avoid the outbreak of war. We will employ all means to prevent the outbreak of war.
We face China's refusal to renounce the use of force against Taiwan, however, and its introduction of the anti-separation law, which was an attempt to create a legal pretext for future use of force. Moreover, China continues to deploy missiles along its southeast coast targeting Taiwan, the number of which now exceeds 784. This number does not include its 36 Donghai-10 cruise missiles. The expansion and modernization of China’s military, and the double-digit annual growth of its military budget over the last 18 years, are, as US Secretary of Defense Donald Rumsfeld noted, in excess of its self-defense needs. Similarly, US Assistant Secretary of Defense Peter Rodman recently stated during a congressional hearing that the expansion of China's military has undermined and changed the status quo of the Taiwan Strait.
For this reason, the national security reports issued by both the United States and Japan pointed out that the cross-strait military balance is gradually tilting in China's favor, and that this trend is significant.
It is very important, therefore, that Taiwan strengthens its self-defense capabilities. Taiwan appreciates the Bush administration's 2001 approval of many of our arms procurement requests. In June 2004, my administration formally presented three major procurement requests to the legislature for its approval. The submarines, P3C anti-submarine planes, and PAC3 missiles, are all items that had been formally requested prior to 1998 by the KMT when it was the ruling party. We believe that there should be no division between the governing and opposition parties on issues of national defense, and that ideology should not even be a concern, since the nation's defense is in the shared interest of all Taiwan's people. Regrettably, however, when the KMT became the opposition party following the transition of political power, it changed its stance and has tried all means to sabotage this arms procurement package.
Another point worth noting is that some people are trying to create the false picture that peace prevails across the Taiwan Strait. Especially after then-KMT Chairman Lien Chan and People First Party Chairman James Soong visited China last year, some people came to believe that cross-strait tensions and antagonism no longer exist. Under this false impression, they think that there is no need to strengthen our defense capabilities, but they are wrong. Only by strengthening our national defense can we ensure and safeguard the hard-won fruits of democracy as well as economic prosperity. It is only through the strengthening of our defense capabilities that we can have the confidence to resume dialogue, consultations, and negotiations with the other side, and only in this way can we maximize the benefits for Taiwan. We are very appreciative, therefore, of KMT Chairman Ma Ying-jeou's statement that he is willing to support reasonable arms procurement. His remarks are a very positive start, and we hope that he will communicate with other leaders of the opposition so that this reasonable arms procurement proposal may be approved by the legislature as soon as possible.
Perhaps getting all three procurement cases approved at one time will be difficult, but we will continue to try to win the approval of the legislature. I think that in the very near future we can expect to see a measure of consensus and some conclusions reached on certain parts of the arms procurement proposal.
Q5. In terms of economics, you mentioned earlier that some people see China's economic rise as an opportunity, some people see it as a threat. I think a lot of Taiwanese companies see it as an opportunity. How do you see it, as a threat or an opportunity? And to add on as a related issue ...... a lot of economists and businesspeople in Taiwan think that allowing Chinese tourists to come to Taiwan would be of great benefit to the economy here. Despite that, there's really been very little progress that you can see, concrete progress, and the fact that your government places the blame on Beijing. Isn't there anything you can do to solve that particular issue ......?
A: Some see China's economic development bringing opportunities for the world; others, however, see threats along with these opportunities. Businesspeople go where their interests lie. But the government may not have such a narrow view. That businesspeople care first and foremost about their own interests is understandable, but the government must consider national security and the country's overall interests.
Taiwan is an island country that cannot afford to isolate itself from the world. This, however, does not mean that we can afford to put all our resources into, and place all our bets on, the Chinese market. China does indeed have a huge market, but we should never see it as Taiwan's only or ultimate market. We insist on maintaining Taiwan's distinct identity and economic autonomy. Taiwan's economy cannot become merely an appendage of China's economy. In the past, I have stated many times that, as long as we keep our hearts in Taiwan, and as long as companies have their headquarters, R&D centers, and bases of operations in Taiwan, then the whole world can be Taiwan's market. This, of course, includes the Chinese market.
According to a survey undertaken by the US Congress, total foreign investments in China amount to US$560 billion. Half of this, some US$280 billion, comes from Taiwan. Forty percent of goods ordered from Taiwan are manufactured overseas, and of this 40 percent, nine-tenths is made in China.
When Taiwan's economy becomes overly dependent on or tilts excessively toward China, I think the government has a responsibility and duty to issue an early warning. That is why we need to engage in risk management and why we introduced the policy of "proactive management." Risk management does not mean, however, that we have tightened our policy. In fact, it means that we have to issue advance warnings and take preventative measures. On the one hand, we strive to normalize trade and economic relations across the strait. On the other hand, neither advance warnings nor preventive measures should be neglected.
As to the liberalization of visits to Taiwan by people from China, we had proposed a program on the issue as early as 2001. China has recently proposed its own program on the issue, which is four and a half years later than the program issued by the government of Taiwan. It can be seen, therefore, that China has been trying to prevent implementation of these measures for four and a half years. The problem is not with Taiwan, but rather with China. It is China's government that has not listed Taiwan as a "favored tourism destination." It is China's government that does not allow its citizens to visit Taiwan, rather than Taiwan's government that refuses to let these tourists come. Some say that the Chinese government is afraid of letting its citizens see Taiwan's democracy, as these tourists would put the Chinese government under tremendous pressure upon their return home.
As long as both sides are sincere and willing to open their doors and to walk the right path, I don't think there should be any problem in opening Taiwan to Chinese tourists.
Q6. The Chinese leadership under Hu Jintao seems to intend to wait until the end of your presidency rather than negotiate directly with you. Do you see any chance for meaningful discussion with China on key issues over the next two years?
A: I especially pointed out earlier that China has missed many windows of opportunity. We have not given up yet, however. We are still willing to start consultations, dialogue, and negotiations with China, in accordance with the principles of sovereignty, democracy, parity, and peace. We are willing to talk about any issue, without setting any restrictions.
When I was elected president in 2000, the Chinese government waited for Taiwan's opposition parties to impeach me. Without enough support from the people, their attempt failed, however. I was reelected in 2004. The Chinese government again waited, this time to see if the election lawsuits would turn out in their favor. The opposition parties lost both election lawsuits, however, and failed to negate my election. Now, the opposition is launching a "soft decapitation" [of attacks aimed at my administration and my family]. The Chinese government works with them in this regard, using all means to try to paint an ugly picture of the current administration and the leader of Taiwan. The Chinese government waited from 2000 to 2004, and now they are waiting from 2004 to 2008.
They did not want to see me be elected president, and after I was elected the first time, they wanted to see me impeached. When I was re-elected, they had hoped the election lawsuits would invalidate my win. The goal now shared by China's government and the Kuomintang is that the KMT regains power in 2008.
My presidency will end in 2008. If the DPP continues as the ruling party after that year, will the Chinese government wait until 2012? Even were the KMT to regain power in 2008, I do not think there would be a better chance for improving cross-strait relations than there is right now.
The Chinese government has often misjudged the situation in Taiwan, which is why it often makes wrong choices. This is something I very much regret.
Q7. To follow up on ...... just to try to pin you down on specifics. You mentioned if both sides have sincerity, there's no reason ...... from China to Taiwan. When do you expect that to happen, realistically speaking, your best guess? Could it happen six months from now that you'd actually see large numbers of Chinese tourists here, a year from now, or are we probably going to have to wait until after ...... And, the second follow-up, you said you are not tightening up on cross-strait business. I just want you to clarify that, and specifically, there's a great deal of anxiety among businesses in Taiwan that you are cracking down or planning to crack down on Taiwanese business operations or Taiwanese businesses that have operations in China. Is that incorrect in that ...... ?
A: As long as China is willing and sincere, we do not believe it is necessary to wait until 2008. We do not believe it is necessary to even wait one year. I think that within half a year, Chinese tourists could come to Taiwan. At the end of 2001, my government proposed measures to open Taiwan to Chinese tourists. Since then, we have been ready. We have been prepared for four and a half years, and we have been waiting for that whole time.
Secondly, our policies regarding Taiwanese businesspeople investing in China are clear. If we were truly tightening our policies, then it would not only be United Microelectronics Corporation that should be investigated.
In fact, regarding the UMC case, it was not even the government that took the initiative to investigate this case. Allegations were made by citizens and the subsequent investigation was carried out in accordance with judicial procedure. It was due to allegations of violations of law, illegal transfer of capital and technology, and breach of trust that the judicial branch initiated the investigations. We consider the UMC case as an isolated case, a legal case. This does not mean that the government will start cracking down on all Taiwanese businesspeople investing in China. This is not in accordance with our policy. "Cultivating Taiwan while reaching out globally" is our policy. I believe that businesspeople consider the Chinese market as part of their global market, and the government will never prevent investments in China. The government's implementation of proactive risk management is meant to protect the rights and interests of our businesspeople in China. When investing in China, political risks as well as commercial risks should be included in the costs.
Q8. And there's been some progress in the reform of your financial sector. But recently you suspended the goals of the second phase of reforms. At the same time, major problems have developed in your consumer-lending sector. What are your current plans for financial reforms in the last two years of your term?
A: In 2000, we were very worried that there would be a domestic financial crisis here in Taiwan. We designated 2001 the first year for financial reform and, in that year, passed six major financial reform bills and convened the Economic Development Advisory Conference. In 2002, I proposed the 2-5-8 strategic goal for financial reforms, aiming at decreasing the non-performing loan ratio to under 5 percent within two years and also increasing the Bank-of-International-Settlements (BIS) ratio to over 8 percent. Even though the Act for the Establishment and Administration of the Financial Restructuring Fund did not pass at that time, we reached the 2-5-8 financial reform goal within two years. We have increased our BIS ratio to over 10 percent and lowered the NPL ratio of local banks from a high of over 11 percent to less than 2.5 percent. Not only has the government moved to write off many bad loans in order to solidify our financial system and provide a healthier financial environment, but we have also established the Agricultural Bank of Taiwan as well as, for the first time, a Financial Supervisory Commission. When we saw our success in the first phase of financial reform, of course we wanted to proceed with the second phase, and we announced such a policy in 2004 through the Presidential Economic Advisory Group. The aim of the first stage of our second phase of financial reform was that, before the end of last year, there should be at least three financial institutions in Taiwan that would each have more than 10 percent of the market share. We also want to reduce the number of banks in which the government has an ownership stake from twelve to six. This task is very difficult but we managed to complete the first stage of the second phase financial reform by the end of last year. Now we have come to the second stage, which is even more difficult than the previous one. In this stage, we aim to halve the number of financial holding companies from 14 to 7. As most of the holding companies are privately owned, we should respect the market mechanism while trying to achieve our goals. We have to be very cautious, however, so that we will not be accused of favoring certain conglomerates. We believe that we must clearly explain where the problem lies in order to avoid misinterpretation and misunderstanding. I believe we are definitely going in the right direction. But in regard of our methods and operations, we must be careful. We will not have mergers just for the sake of having mergers. We hope to diversify the market, and that is why we have slowed down. This does not, however, mean that we are giving up.
Q9. When you look at the future of Taiwan, where do you see Taiwan being a leader? Recently Taiwan has emerged with an emphasis on technology. For example, China obviously has an emphasis on low-cost labor. When you look at your vision of where you see the country moving in the future, and Taiwan's role in the regional economy, could you articulate what special talents that you feel Taiwan is known for?
A: Yes, indeed, our competitive edge does lie in our hi-tech factor. According to the World Economic Forum's Global IT Report 2005-2006, Taiwan ranks 7th out of 115 major countries. This is the first time that Taiwan has made it into the top ten and our rank increased by eight places compared with the previous year. In Asia, Taiwan is second only to Singapore. Hong Kong ranks 11th, South Korea 14th, Japan 16th, and China 50th. So, while Taiwan has climbed eight spots to number seven, China has fallen nine. That is where Taiwan's competitive edge and niche lie. Of course, we must accept challenges and competition from all sides. We will not be negligent or complacent. No matter whether we are speaking of semiconductors or flat-panel display, information or communication technology, or even cutting-edge biotechnology, we hope to maintain our competitiveness on the international stage.
I believe cross-strait relations will remain very stable and hope for Taiwan to become unified internally. As long as Taiwan's people are united and confident about their future, and do not hold the view that Taiwan is doomed or bound to have a dim future, then I believe Taiwan has hope and will be full of opportunities.
Should discrepancies exist between the Chinese and English transcripts, the Chinese version takes priority.
Due to problems with recording equipment, some of the questions were not clearly audible.