Beijing Throws Cold Water on Taiwan’s AIIB Hopes

The Asia Infrastructure Investment Bank's mission is to fund infrastructure development projects in underdeveloped countries throughout Asia and to promote regional connectivity.
The Asian Infrastructure Investment Bank’s mission is to fund infrastructure development projects in underdeveloped countries throughout Asia and to promote regional connectivity.

 

Taiwan must apply for membership in the China-led Asian Infrastructure Investment Bank (AIIB) through the People’s Republic of China’s finance ministry in accordance with Article 3 Paragraph 3 of the bank’s articles of agreement, said AIIB President Jin Liqun on Friday.  Jin was speaking in his capacity as the head of the newly created international financial institution, but his statement is a clear indication that Beijing demands from Taiwan a high price (and in this case most likely a prohibitively high price) for its new economic carrots.

 

Last April when China rejected Taiwan’s bid to become a founding member of the bank, China’s Taiwan Affairs Office spokesman Ma Xiaoguang said that Taiwan was welcome to join the AIIB under an “appropriate name.”  In the past, Beijing has acquiesced to the Republic of China’s (Taiwan’s official name) participation in international organizations under various names such as “Taipei, China,” “Chinese Taipei,” and the “Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu.”  Following last year’s rejection, President of the Republic of China Ma Ying-jeou made clear that his government would not accept the name “Taipei, China”—the name that his country grudgingly accepted in 1986 as the price it had to pay Beijing in order to maintain membership in the Asian Development Bank.  President Ma laid down his administration’s bottom line stating “If we cannot use ‘Chinese Taipei’ to join, then we would prefer not to participate.”  Yet, given the Ma administrations inability to push two major cross-Strait trade agreements through Taiwan’s legislature and the recent resurgence of Taiwan’s Democratic Progressive Party (DPP)—a political organization that Beijing views with great skepticism for its longtime support of Taiwan independence—it is highly doubtful that the Ma administration could have won admission to the AIIB simply by accepting “Taipei, China” as Taiwan’s membership name.

 

Taiwan would, quite literally, abnegate its sovereignty by applying for membership to the AIIB via China’s finance ministry (see Article 3 Paragraph 3 of the AIIB’s Articles of Agreement below).

 

In the case of an applicant which is not sovereign or not responsible for the conduct of its international relations, application for membership in the Bank shall be presented or agreed by the member of the Bank responsible for its international relations.—Article 3.3, Asian Infrastructure Investment Bank’s Articles of Agreement

 

Therefore, Beijing cannot realistically expect either the Ma administration or the administration of Tsai Ing-wen who will be inaugurated as president of Taiwan on May 20th to accept the conditions for AIIB membership laid out by the bank’s president on Friday.  It is probable that Beijing issued this impossible proposition to squeeze Taiwan so that it might become more compliant in other areas such as the stalled trade deals or, in the case of the incoming Tsai administration, on the “1992 Consensus”—a term that refers to the tacit understanding between Taiwan’s Kuomintang party and the People’s Republic of China reached in 1992 that there is but one China; although, the two sides maintain their own interpretations of what that one China is.  President-elect Tsai’s DPP has historically been opposed to the “1992 Consensus” as the party supports the Taiwanese people’s right to choose their own political future and has seen the “1992 Consensus” as limiting that right.

 

At a time when Taiwan like many other states around the world is grappling with tough economic challenges, Beijing’s decision to start wielding carrots like sticks seems an act of extreme ill will especially considering how Beijing has shown itself to be quite capable of maintaining warm economic relationships during the chilliest political weather.  This could be further evidence that, as Andrew Browne of The Wall Street Journal put it in a recent article about China, “[t]oday, politics trumps economics.”

2 Comments on “Beijing Throws Cold Water on Taiwan’s AIIB Hopes

    1. Hi,

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