China-Taiwan Summit: Huge Symbolic Significance, But No 'Game-Changer'

BMI View: The first-ever summit between Chinese and Taiwanese leaders on November 7 will be of huge symbolic importance, but it will not be a 'game-changer', as Taiwanese voters are wary of the mainland's rising influence over the island. We continue to expect the main opposition Democratic Progressive Party (DPP) to win Taiwan's elections in January 2016. 

Chinese President Xi Jinping will meet his Taiwanese counterpart Ma Ying-jeou in Singapore on November 7, in what will be the first summit between the two sides since 1945.

According to Xinhua, both sides will: "exchange views on promoting peaceful development of cross-Strait relations, and discuss major issues on deepening cross-Strait cooperation in various areas and improving the people's welfare, in a bid to safeguard and further push forward peaceful development of cross-Strait relations."

Details on the talks are quite scarce, with even the official statement being somewhat broad and vague. In addition, Ma Ying-jeou is already a lame duck, with his second and final term ending in early 2016, and his popularity below 10%. In other words, Ma is increasingly irrelevant in Taiwan.

Even so, the summit will be of huge symbolic importance, being the first such meeting since 1945, when Communist Party leader Mao Zedong last met Nationalist (Kuomintang, KMT) leader Chiang Kai-shek. The KMT subsequently lost the Chinese civil war and fled to Taiwan, where it established the rival Republic of China, in opposition to Mao's People's Republic of China.

China continues to view Taiwan as a breakaway province, and has never precluded the use of force to retake the island, should it formally declare itself independent or host foreign military bases. Cross-Strait relations have improved substantially since 2008, when Ma Ying-jeou of the KMT was elected Taiwan's president on a platform of closer relations with the mainland.

However, in recent years, there has been a backlash, with many Taiwanese becoming wary of the island being economically subsumed by China, as evidenced by the protests in March-April 2014 against the ratification of the proposed Cross-Strait Service Trade Agreement (CSSTA). The CSSTA remains in limbo, and will likely remain so for the foreseeable future. This wariness favours the pro-independence main opposition Democratic Progressive Party (DPP) in Taiwan's January 16, 2016, presidential and parliamentary elections. We expect the DPP's candidate Tsai Ing-wen to win the presidency and adopt a cooler attitude towards China. The DPP has long been sceptical about rushing to develop close ties with the mainland.

The Xi-Ma summit is likely to be China's way of trying to influence Taiwan's elections by highlighting the KMT's effectiveness in cultivating close ties with China, and ensuring that a victory (which we anticipate) by the DPP would be harmful to cross-Strait relations, and by extension, Taiwan's economic wellbeing.

China's move will probably backfire, as per previous such attempts to sway Taiwanese voters. For example, in 1996 Beijing carried out live-fire military exercises to dissuade Taiwanese voters from electing the separatist-minded Lee Teng-hui as president; Lee won won by a landslide. This time round, China is offering peace, but potentially at the cost of increased Taiwanese dependency on the mainland.

China may offer some economic carrots that are dependent on the KMT retaining its legislative majority, since a hawkish posture on Beijing's would only strengthen DPP support.

Nonetheless, even this will not convince Taiwanese voters to back the KMT, since many voters are quite wary of the KMT's overly close ties with China.

Over the longer term, the summit could set a new precedent for meetings between China's and Taiwan's presidents, with Beijing using the prospect of a summit as leverage over future Taiwanese leaders. Even if the DPP comes to power in 2016, as we expect, it will probably have to adopt a pragmatic stance towards Taiwan, for failure to do so could cause economic problems that might eventually favour the return of the KMT to power.