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China Must Try to Co-exist With Democratic Taiwan, Tsai Says

Samson Ellis and Cindy Wang

(Bloomberg) -- Taiwanese President Tsai Ing-wen urged China’s Xi Jinping to “find a way to co-exist” with the island’s democratic government as she started her second term -- a plea for compromise that was quickly rejected by Beijing.

Tsai, 63, riding high with a record approval rating and a surge in U.S. support, issued one of her most forceful calls yet for an equal dialogue with Beijing after being sworn in a pared-down inauguration ceremony Wednesday. Xi’s government cut off direct communications across the Taiwan Strait during Tsai’s first four years in office, citing her refusal to accept the notion that both sides belong to “one China.”

“Cross-strait relations have reached a historical turning point. Both sides have a duty to find a way to co-exist over the long term and prevent the intensification of antagonism and differences,” Tsai said. “I also hope that the leader on the other side of the strait will take on the same responsibility, and work with us to jointly stabilize the long-term development of cross-strait relations.”

Tsai called for “peace, parity, democracy and dialogue” in relations between the two sides and reiterated her opposition to unification with China under the “one country, two systems” framework used in Hong Kong. Tsai also pledged to build core industries including 5G and other information and communication technologies, bio-technology, medicine, defense and renewable energy.

A spokesman for the Taiwan Affairs Office in Beijing responded that a dialogue would only be possible under its “one China” principle, calling the state of ties “complicated and grim.” “Certain politicians have created confrontation and obstructed cross-strait exchanges and cooperation, and attempted to cut the relationship between Taiwan and the mainland geographically and legally,” TAO spokesman Ma Xiaoguang said Wednesday, according to state broadcaster China Central Television.

The benchmark Taiex stock index rose 0.4% in Taipei. The Taiwan dollar remained little changed.

“President Tsai took a non-provocative and principled approach on the political issues,” said Roy Lee, a deputy director at the Chung Hua Institution for Economic Research. “Tsai will likely continue to face any comments from China with a gentle and firm attitude.”

The event marked another high point for Tsai’s Democratic Progressive Party, which has grown over the past four decades from a loose band of pro-independence dissidents to become Taiwan’s dominant political bloc. A landslide election victory in January reaffirmed the DPP’s control of the executive and legislative branches and left the Kuomintang -- who ruled Taiwan for much of the time since the Chinese civil war ended in 1949 -- stuck in the opposition.

The KMT said that cross-strait exchange had been curtailed over the past four years under the president and she had provided no indication on how to build mutual trust with China in her speech Wednesday.

Tsai begins her second term with an approval rating of 61%, the highest since she took office in May 2016, according to a survey by broadcaster TVBS released Monday. She was also sworn in Wednesday as the DPP’s chairwoman, a position she gave up after the party suffered a sweeping local election defeat in 2018.

The DPP’s rise has upended efforts to by Xi, the Chinese president, to use his country’s economic might to draw Taiwan toward a unification deal. Tsai views the Taiwan -- formally known as the Republic of China -- as a sovereign nation and has rejected Beijing’s “one-China” bottom line.

The stakes for Tsai could rise in her second term, as disputes between Washington and Beijing prompt predictions that the two sides are headed toward a new cold war. China passed a law in 2005 asserting the right to use “non-peaceful means and other necessary measures” to prevent Taiwan’s formal independence.

While Tsai had so far avoided any moves that might prompt an aggressive response from Beijing, she may face greater demands from the DPP’s pro-independence wing. A constitutional amendment process that Tsai outlined Wednesday could become a potential flash point, since Beijing could view any discussion about changing the Republic of China’s name, symbols or boundaries as separatist.

One figure to watch is Tsai’s incoming vice president, Lai Ching-te, a former premier who has described himself as an “independence worker” and is a more outspoken advocate for a formal break from China.

In her first term, Tsai benefited from Donald Trump’s feuding with China, holding an unprecedented phone call with the U.S. president in December 2016 and securing Taiwan’s first American fighter jet deal in three decades. Tsai’s support for pro-democracy protests in the former British colony of Hong Kong last year helped her consolidate her China-skeptic base and secure re-election.

The Trump administration threw its weigh behind an international campaign to grant Taiwan access to the World Health Assembly earlier this week. And while the attempt ultimately failed, it highlighted the lengths to which the U.S. was willing to go to back a greater international role for Taiwan.

Since Tsai came to office in 2016, Beijing has persuaded seven former Taiwanese allies to switch ties to the People’s Republic of China. Taiwan is now officially recognized by just 15 countries, mostly small states in Latin America and the Pacific, many of whom sent envoys to Wednesday’s swearing-in.

Some nations that lack formal ties with Taiwan, including the U.S. and Japan, still issued statements congratulating Tsai on her inauguration. U.S. Secretary of State Michael Pompeo called Taiwan “a force for good in the world and a reliable partner” while Chief Japanese Cabinet Secretary Yoshihide Suga expressed a desire to “deepen cooperation and exchanges.”

Tsai vowed to continue pursuing greater international recognition, despite the failure of an effort earlier this week to restore Taiwan’s observer status at the World Health Organization. She pledged to accelerate a push to develop “asymmetrical” capabilities and homegrown weapons systems to counter China’s greater military might.

“We have made the greatest effort to maintain peace and stability in the Taiwan Strait over the past four years, gaining approval from the international community,” Tsai said. “We will continue these efforts, and we are willing to engage in dialogue with China and make more concrete contributions to regional security.”

Tsai’s speech comes just two days before Chinese Premier Li Keqiang is scheduled to deliver his annual report to the National People’s Congress in Beijing, a platform that Chinese leaders have often used to deliver pointed messages to Taiwan. Last year, Li vowed that China would “resolutely oppose and deter any separatist schemes or activities seeking Taiwanese independence.”

“Beijing will continue to employ a mix of its carrots and sticks approach with Taiwan, but with an emphasis on the latter,” said Russell Hsiao, executive director of the Washington-based Global Taiwan Institute. “Indeed, most indicators point to China ratcheting up its multifaceted pressure campaign against Taiwan.”

(Updates market reaction in fifth paragraph, as well as key takeaways.)

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