IF Beijing hoped Hong Kong's return to mainland sovereignty would inspire a surge of pan-Chinese patriotism, events in Taiwan will sorely disappoint. If anything, opinion has hardened against unification, as Taiwanese ponder the fate of Hong Kongers under Beijing rule.
Some 50,000 people attended the 'Say No to China' rally in Taipei two days before the handover. And a poll by the United Daily News a few days later found 62 per cent of Taiwanese were against Beijing's 'one country, two systems' formula for unification. Yet, the defiance of the domestic population should not disguise Taiwan's difficulty in retaining its sovereignty under pressure from Beijing.
Unification with Taiwan tops Beijing's agenda. Chinese President Jiang Zemin chose the night of the handover itself to flag the 'one country, two systems' as the model for cross-strait unity.
And with the return of Hong Kong to China, Taiwan is even more vulnerable. Since the mainland forces fled to Taiwan in 1949, Hong Kong has been a neutral conduit for relations between the two sides. Most of Taiwan's estimated $30 billion in investments in the mainland (it is the largest source of investment after Hong Kong) have been channeled through the former colony.
Taiwan leaders agree there is one China but argue it is divided and that the two governments need to recognise each other as equals if negotiations are to begin. Beijing cut off talks between the two sides two years ago after President Lee Tenghui's trip to the US to attend a college reunion.
For his part, Lee describes Beijing's plan to apply the 'one country, two systems' formula to Taiwan as wishful thinking, saying: "In our pursuit of national unification, we are concerned not only about form, but more so about substance." Unification, he claims, could go ahead only "under the principles of democracy, freedom and equitable prosperity".
The Hong Kong handover assumes much significance as Taiwan still maintains a ban on the 'three links', prohibiting direct shipping, aviation and telecom links with China. The head of the Mainland Affairs Council, Chang King-yu, says there are no plans to lift the bans although a small-scale trans-shipment trial has begun between Taiwan and ports in Fujian province.
Apprehensive of being pushed into a corner, Taiwan is playing its only card, the economic one. The government has prohibited Taiwan enterprises from investing in what it regards as strategic sectors of the mainland economy. Under rules issued last week, real estate development, finance and all types of infrastructure projects are off-limits. But the bans may be tested later this year by Taiwan's leading industrialist, Y.C. Wang, who is committed to a $3.2 billion power plant in Fujian province.
Still, little is likely to happen before the end of the year. Both the Chinese Communist Party and Taiwan's ruling KMT will hold party congresses in the next few months. Moreover, domestic politics in Taiwan have become somewhat uncertain. A consensus worked out six months ago between the KMT and the opposition DPP over constitutional reform is threatening to fall apart. The reforms give the president powers to dissolve the legislature and would substantially downsize provincial governments and abolish elections for township leaders. The changes have become a battleground for internal warfare within the KMT between vice-president Lien and provincial governor James Soong over the succession to Lee.
For its part, the DPP is divided over whether to cooperate with the government. Its chairman, Hsu Hsinliang, is preparing for 'cohabitation' with the KMT after the legislative polls scheduled for end 1997, in which the KMT will almost certainly lose its majority. Others in the party believe it should attempt to form a government on its own. Among the latter is the charismatic Taipei mayor, Chen Shui-bian, who has sensed an opportunity from the Lien-Soong struggle to make a run for presidency in 2000. Chen, an ardent Taiwan nationalist, and his faction are pushing for the right to hold a referendum on the issue of independence.
Analysts believe such a vote is unlikely because opinion polls show that a majority of Taiwanese prefer the status quo to either independence or unification. And given such a mood, the prospect of a Taiwanese president willing to say no to China, unthinkable a year ago, is now a distinct possibility. It cannot be one that Jiang will relish.