China offers Taiwan promises of economic opportunities while ramping up military drills near the island

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China is promoting new economic opportunities for Taiwanese people while at the same time ramping up military activity around the island it claims as its own.

Experts say the “carrots and sticks” approach, which Beijing has employed for years, signals a choice between peaceful “reunification” and military aggression ahead of a Taiwanese presidential election next year.

This week, China unveiled a plan for an “integrated development demonstration zone” in its southeastern Fujian province, the closest to self-governed, democratic Taiwan. Taipei strongly rejects China’s sovereignty claims.

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As part of the plan, Beijing is encouraging Taiwanese companies to list on Chinese stock exchanges and is promising better conditions for Taiwanese investors and a more “relaxed” environment for travel, according to a statement Tuesday by the Communist Party’s Central Committee and the State Council, China’s Cabinet.

“The goal is to build an integrated development demonstration zone in the entire area of Fujian province to fully show the effect of Fujian as the first-choice destination for Taiwanese people and enterprises to pursue development on the mainland,” Pan Xianzhang, deputy director of the Taiwan Affairs Office of the State Council, said at a news conference Thursday.

The economic overture comes at a time of increased Chinese military activity around Taiwan. On Thursday, Taiwan’s defense ministry said it spotted 68 Chinese warplanes and 10 warships near the island over the previous 24 hours. It said 40 of the aircraft entered Taiwan’s air defense zone, in the latest of near-daily incursions meant to threaten Taiwan’s government, which Beijing deems “separatist.”

Taiwanese Navy ship Keelung, foreground, monitors the Chinese aircraft carrier Shandong, background, near the Taiwanese waters in September 2023.  (Taiwan Ministry of National Defense via AP)

Earlier this week, China sailed an aircraft carrier 70 miles to Taiwan’s southeast.

Pairing economic incentives with military coercion of Taiwan “is a very old playbook on China’s part,” said Drew Thompson, a research fellow at the Lee Kuan Yew School of Public Policy at the National University of Singapore.

Many of the policies underlined in the Fujian plan, such as easy access for Taiwanese to the mainland, were already in place, making the initiative more performative than substantive, he added.

“At the end of the day, this is not an actual economic plan for integration of China with Taiwan,” Thompson said. “It’s a political tool that seeks to drive a wedge between the ruling party and that portion of the electorate that probably doesn’t support the ruling party anyway.”

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Taiwan is set to have presidential elections in January. The front-runner, current Vice President William Lai, is considered by Beijing a separatist. China has refused to hold talks with Lai’s party, the Democratic Progressive Party, which has been in power since 2016.

Taiwan’s Mainland Affairs Council said the document was a compilation of existing policies and measures.

“It is completely one-sided wishful thinking to try and seduce our members of the public and enterprises to the mainland and integrate into their system, laws, and norms and accept the leadership of the Communist Party,” it said.

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The council also urged Beijing to respect Taiwan’s “insistence” on freedom and democracy.

Some of the measures zero in on outlying Taiwanese islands that are closer to Fujian province than to Taiwan’s main island, such as Matsu and Kinmen, which Chinese state media have said should play “an even more prominent role” in boosting ties.

But news of the announcement appeared to have gone unnoticed in Matsu. A coffee shop owner, reached over the phone, said he didn’t know of the measures and hadn’t been reading the news.

Carlk Tsao, who runs a bed and breakfast on the islands, said he did not know about the new Fujian economic integration plan. “Usually, we in Matsu won’t see these type of things,” he said. “For me personally, I think they’re just making empty promises.”