Yesterday’s news cycle opened with a shocking headline that Taiwan had applied to join the Asian Infrastructure Investment Bank (AIIB), an international lending bank led by China. Later in the day, social media feeds blew up with news of protests in Taiwan against its government’s decision. In a stunning parallel to events almost exactly one year ago during the Sunflower Movement, the Ma Administration had proceeded with the AIIB application without any public discussion.

In response, the Black Island Nation Youth Front and other organizations protested outside Taiwan’s Presidential Office, highlighting the Ma Administration’s repeat lack of transparency and accountability.

China has expressed the undesirability of creating a “two Chinas” or “One China, One Taiwan” situation, effectively imposing a “One China” principle as the guiding paradigm to Taiwan’s membership. President Ma’s subsequent application, as J. Michael Cole explains in the Diplomat, could be interpreted as tantamount to setting precedence for accepting Beijing’s “One China” principle.

What is the AIIB?

Conceptually, the AIIB is China’s version of the International Monetary Fund (IMF) and the World Bank. The AIIB represents China’s desire to further its new-found sense of hegemony, but it is also China’s effort to break free of IMF’s and World Bank’s environmental and regulatory guidelines. In a surprising turnabout from its usual conciliatory demeanor towards China, the United States has been very outspoken against the AIIB, citing the AIIB’s likely loose observation of established international standards.

The AIIB hit the major spotlight two weeks ago when important US allies such as the UK, Italy, France, and Germany applied to join as founding members. By March 20, there was even news that Japan was considering joining the AIIB — all despite the US’s vocal opposition to the AIIB. (Since then, Japan has declined to join at the current time). The situation has become an embarrassment for the United States, essentially highlighting how US policymakers (i.e., the State Department) have mishandled the rise of China in the last decade, to the detriment of the United States’ standing in the world stage.

Should Taiwan join the AIIB?

Though the UK claims it has joined the AIIB as a founding member in part to influence the AIIB’s actions, ultimately the world’s nations, including those of the EU, are joining for economic reasons. In a weak global economy, no country wants to miss out on the chance to benefit from investment opportunities under the AIIB. Everyone is desperate for easy money to potentially fuel economic growth. Even those who disagree with the AIIB have a sense that it is one of the few games left in town, and so it must be played. Neither does any country want to be left out of a new, China-centered world order, should it come to that. For Taiwan, being left out of the AIIB reinforces its self-perceived isolation even more, both regionally and globally.

At the same time, there are some real concerns that the leading backer, China, is headed towards economic collapse. News media is now full of reports on China’s woes. The Associated Press reported recently that China’s manufacturing index dropped to an 11-month low last week. Bloomberg reported on China’s failure to address its bad debt “time bomb“, and commentary in the Wall Street Journal spoke to the inability of Chinese officials to lead China out of its economic quandary. Western firms are finally waking up to the issues surrounding investment in China, as evidenced by Yahoo’s departure from China. Even the United States’ vocal opposition to the AIIB speaks to a trend of more active awareness on the issues of the United States’ engagement policy on China.

As for Taiwan, the country can definitely benefit from the AIIB, especially in regional infrastructure development. However, does Taiwan need to be a member to receive these benefits? Does Taiwan need to be a member to request investment from the AIIB? As a member, would Taiwan even be allowed to play any significant role, or be able to receive investment free of conditions? For Taiwan’s government and its people, the decision to join the AIIB should involve a weighing of the sovereignty that will be lost, against a clear-minded consideration of what practical benefits membership could even possibly bring.

Then again, that China may not even allow Taiwan to join the AIIB at all points toward the answer. With a yielding of sovereignty for Taiwan, even nominally, sure to be part of entry to the AIIB, does it make sense for Taiwan to apply knowing that Beijing will likely reject a major Taiwan role anyway?

Instead of tunnel visioning towards flashy but empty promises of global economic integration, Taiwan should seek to stand on its own as a “Silicon Valley” of Southeast Asia. There are definitely strong arguments for Taiwan to find a path that does not involve being China’s economic lap dog, instead focusing on developing Taiwan’s own, rich human capital and creative energy.

(Feature photo by epSos.de on Wikicommons, CC BY 2.0)

 

Albert Tseng

Albert Tseng is Ketagalan Media's Executive Editor.He has been a close observer of US-Taiwan-China issues for the past decade and curates the Ketagalan Media: Week in Review.

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