Taiwan Signs New Investment Agreement with the Philippines
In a diplomatic victory for Taiwanese President Tsai Ing-wen, Taiwan signed a new bilateral investment agreement with the Philippines on Thursday, Dec. 7. The agreement, which seeks to update legal foundations, procedure, and protections for bilateral investment dating back to the last Taiwan-Philippines agreement signed in 1992, was declared by Taiwan’s Minister of Economic Affairs as a “win-win for the economic development of both countries.”
This is the first agreement successfully concluded by Taiwan under President Tsai’s “New Southbound Policy.” Due to Taiwan’s government becoming increasingly isolated in the international political environment and Taiwan’s economy becoming increasingly dependent on Chinese economic activity, President Tsai laid out a new economic, political, and cultural strategy to diversify Taiwan’s economy and court new regional partners, especially member-states of the Association of Southeast Asian Nations (ASEAN).
Taiwan’s Vice Minister of Economic Affairs expressed hope that “the achievement with the Philippines will inspire other Southeast Asian countries” to ink new investment deals with Taiwan and stated three other nations are currently in talks with Taiwan regarding new agreements.
In a daily news briefing held on Dec. 8, China’s Foreign Ministry spokesman Geng Shuang maintained China’s position of having no issue with countries having “‘normal’ trade relations” with Taiwan but expressed concern over the “cooperation documents that are obviously official in character.” Shuang also said that Beijing had formally lodged complaints to Manila over the signing of the bilateral investment agreement.
Taiwan, officially the “Republic of China,” claims to be the only legitimate government of all of China and the successor to the government of the same name that was established in 1912. While the Chinese Nationalist Party (KMT) withdrew to Taipei and set up a government-in-exile after losing control of the mainland in 1949, it retained its international legal status as the legitimate government of all China until 1971, when the United Nations General Assembly declared the Communist government in Beijing, officially the “People’s Republic of China,” as the legitimate government of China.
While relations between Beijing and Taipei have been historically strained, a brief period of relative détente between the two rival governments under Taiwanese President Ma Ying-jeou (KMT, 2008-2016) culminated in closer economic ties under the “Cross-Straits Economic Cooperation Agreement” that concluded in 2010.
Taiwanese public backlash to closer economic ties with China along with increasing concerns over Beijing’s designs regarding political reunification influenced the 2016 Taiwan general election, which elected Tsai Ing-wen as Taiwan’s first female president and granted the opposition Democratic Progressive Party (DPP). The DPP, skeptical of closer ties with China, also secured a majority in the Taiwanese legislature.
Beijing views Taiwan as a breakaway province unqualified for diplomatic recognition and has made recognition of the “One China policy” with Beijing as the sole legitimate government of all China a precondition for states seeking formal diplomatic relations and economic ties. Furthermore, Beijing views President Tsai with much suspicion, especially with regards to her previous statements endorsing Taiwanese independence. Since the 2016 election, China has embarked on a campaign to entice countries still recognizing Taipei to turn to Beijing, most notably securing Panama’s recognition of Beijing at the expense of Taipei in June 2017.
However, numerous countries that recognize Beijing, including the United States, maintain unofficial ties with Taipei, including consular-level relations and trade ties. Despite the limited diplomatic options available to Taipei, Taiwan has been able to continue economic and cultural ties, including free trade deals, trade consultations, and technological and industrial collaboration.
The Philippines has traditionally maintained strong economic ties with Taiwan, although under current Philippine President Rodrigo Duterte, elected June 2016, Manila has pursued closer economic and political ties with Beijing. This signing of a new bilateral investment agreement with Taipei along with lingering disputes between Manila and Beijing regarding the South China Sea only fuels further speculation over the future direction of China-Philippines relations and Beijing’s strategy with regards to Taipei.