The Chairman of Foxconn is running for president of Taiwan. What does this mean for China?

Christian Patterson
2019-06-22
Underground Mall

The Taiwan Right Wing supports closer relations with Mainland China. This seems contradictory, so let’s untie this geopolitical and economic knot!

The Chairman of Foxconn, Terry Gou, announced his resignation, because he plans on running for President of Taiwan, as a member of the right-wing Kuomintang Party.

Quoting from the South China Morning Post:

Taiwan’s election follows a period of increasing tension between Beijing and Taipei, with Gou seeking to represent the China-friendly opposition Kuomintang (KMT) party.

I’ll get back to Terry Gou and Foxconn, but to outsiders of cross-Strait politics, it seems like a major contradiction that the right-wing party of Taiwan is “China-friendly”. To illustrate how confusing this contradiction is, we need to look at the history of the Kuomintang (KMT). Once we trace the history of this political knot closer to the present, it becomes familiar.

KMT is the oldest modern political party in China (China, Taiwan, Hong Kong et al). It arose out of predecessor “parties”, although these weren’t parties in the modern political sense. KMT began as a Chinese nationalist party, against the Qing Dynasty, and led a revolution abolishing the old dynastic order, and establishing the Republic of China.

The early Republic of China would remain tumultuous, but intact, as China continued to deal with Western imperialism, the Warlord Period, and Japanese imperialism.

About ten years after the KMT abolished the dynastic system, and after the Russian Revolution, interest in Communism spread in China. Originally, both the KMT and the Chinese Communist Party (CCP), had very similar goals of abolishing foreign capitalist / Imperialist exploitation of China. However, throughout the first half of the 1900s, the contradictions between the KMT and CCP grew. From the CCP’s perspective, the KMT wanted to end Imperialism in China, because the KMT wanted to become domestic, national capitalists.

Mao wrote about this in “On New Democracy“:

The Chinese revolution must be divided into two stages. The first step is to change the colonial, semi-colonial and semi-feudal form of society into an independent, democratic society. The second is to carry the revolution forward and build a socialist society. At present the Chinese revolution is taking the first step.

The preparatory period for the first step began with the opium War in 1840, i.e., when China’s feudal society started changing into a semi-colonial and semi-feudal one. Then came the Movement of the Taiping Heavenly Kingdom, the Sino-French War, the Sino-Japanese war, the Reform Movement of 1898, the Revolution of 1911, the May 4th Movement, the Northern Expedition, the War of the Agrarian Revolution and the present War of Resistance Against Japan. Together these have taken up a whole century and in a sense they represent that first step, being struggles waged by the Chinese people, on different occasions and in varying degrees, against imperialism and the feudal forces in order to build up an independent, democratic society and complete the first revolution. The Revolution of 1911 was in a fuller sense the beginning of that revolution. In its social character, this revolution is a bourgeois-democratic and not a proletarian-socialist revolution.

The CCP collaborating with the KMT was an explicit part of their party platform. They knew that it was necessary for ending their “semi-colonial and semi-feudal” society. But they also knew that the KMT would resist the socialist revolution, which they did.

The original leader of the KMT, Sun Yat-Sen – the father of Chinese nationalism, was a huge influence on both Mao, and Sun’s successor Chiang Kai-Shek. Sun Yat-Sen was extremely well-educated, well-traveled, and cosmopolitan. Chiang Kai-Shek, on the other hand, was much more fanatical about Chinese “culture”, and much more skeptical of foreign cultures. Chiang traveled to Soviet Russia in 1924, met Leon Trotsky, and was generally repulsed by the socialist system, claiming it would never work in China.

The Chinese Civil War was a war between the KMT, led by Chiang, and the CCP, led by Mao. The CCP gained control of China. KMT retreated to Taiwan, and established the Republic of China there.

It’s more complicated than that though, because the CCP claims that Taiwan is the territory of the People’s Republic of China, and the Republic of China doesn’t have a legitimate claim to Taiwan. Conversely, the Republic of China claims that mainland China is their territory, and the People’s Republic of China doesn’t have a legitimate claim to Mainland China.

Chiang Kai-Shek remained the leader of the KMT, and dictator of the Republic of China until his death in the 70s. For the next 20 years, the KMT retained a lot of the dictatorial elements of Chiang Kai-Shek’s rule, but liberalized some elements of society. By 1996, other political parties became legal, and Taiwan had it’s first election.

In contemporary times, Taiwan has a system of government strongly resembling a western style parliamentary system, but with elements of Sun Yat-Sen’s more China-specific political theories. This means the country has multiple political parties, but the KMT has remained very powerful there.

Although Taiwan has many political parties, it’s functionally a two-party state. The system is comprised of the right-wing Pan-Blue Coalition – which is primarily the KMT, along with loosely affiliated, smaller parties – and the center-left Pan-Green Coalition – which is primarily the Democratic Progressive Party (DPP), along with another group of smaller parties.

So this brings us to modern Taiwanese politics. There have only been two times in the history of China that the pan-Green, center-left coalition has had control over government. The first was from 2000-2008, and the second time was 2016 until the present.

However, the 2016 election was the first time a pan-Green candidate won with a majority of the vote, because in 2000, the KMT party was split between two candidates.

There was controversy in the 2016 election, because the KMT candidate, Hung Hsiu-Chu, is well-known for her support for Mainland China. She was polling very low, so KMT hastily replaced her with KMT chairman Eric Chu. Chu remained polling quite low, and so pan-Green candidate Tsai Ing-Wen won the election.

Both times the pan-Green coalition has been in control of government, China hasn’t been happy about it. And considering the cursory history I spelled out, it’s not immediately clear why. The CCP fought KMT in a civil war with over a million deaths, why would they prefer KMT?

For the most part, it has to do with the 1992 Consensus. This was an agreement made by the governments of China and Taiwan that there’s only one China, and both governments claim to be the rightful government of China. The KMT still support the 92 Consensus. The pan-Green coalition, however, do not, and consider Taiwan and China two distinctly different countries.

This foundational difference leads to several other differences. One of the biggest, cultural differences, is it led to the pan-blue coalition emphasizing Taiwan’s Chinese national identity, whereas the pan-greens emphasize a unique Taiwanese national identity.

But this still doesn’t exactly explain why China prefers the KMT/pan-blues. If both the PRC and the ROC contend that there’s one China, and they’re both it, then shouldn’t that be grounds for conflict?

But no. For China, a lot hinges on how the Taiwanese conceptualize of their national identity. Chairman Xi’s speech to Taiwan in January 2019 illuminates the Chinese position.

Quoting from the Brookings Institute summary of the speech (I know, normally I’m skeptical of Brookings, especially on China, but it seems like neutral reporting):

[The terms and conditions for resolving China’s dispute with Taiwan and achieving unification] were developed in the early 1980s and summarized by the slogan “one country, two systems” (1C2S). This is the approach that China first implemented in Hong Kong, and the formula that was applied there gives the best sense of how it might be used in Taiwan, although that is not for certain. Under 1C2S, in summary:

– Taiwan would become a special administrative region of the People’s Republic of China (PRC), and, by implication, the Republic of China (ROC) government would cease to exist. The Chinese flag would fly over Taiwan.

– Taiwan’s economic and social life would continue more or less as before.

– Politically, Taiwan’s institutions would be transformed into sub-national bodies, and, based on Hong Kong’s experience, these would be structured to prevent political forces and political leaders that China didn’t like from coming to power.

This makes things a bit more clear. China supports the KMT because they’re pro-Chinese identity. And if they’re pro-Chinese identity, then it means that, potentially, Taiwan would someday agree to become a sub-national state within a federated Chinese apparatus. However, if Taiwan supports fostering a new, Taiwanese-specific identity, and no longer consider their “national soul”, to use flowery language, as Chinese, then the chance of “one country, two systems” being applied to Taiwan even more of a political impossibility.

To illustrate this dynamic, here’s a CNBC article, about how the Hong Kong riots against extradition to China has resonated in Taiwan:

The sentiment that has overwhelmed Hong Kong over the China extradition bill in the past weeks has spilled over to neighboring Taiwan, pushing relations with China to the forefront of upcoming general elections.

“Beijing holds out Hong Kong’s One Country, Two Systems arrangement as the model for eventual unification with Taiwan, which it claims as its own,” Ben Bland, a researcher at Australian think tank Lowy Institute, wrote in a recent note published online. “But (Taiwanese) President Tsai Ing-wen was using the extradition bill, and the massive protests in Hong Kong, to highlight once again why her country must keep its distance from China if it is to remain a vibrant democracy.”The sentiment that has overwhelmed Hong Kong over the China extradition bill in the past weeks has spilled over to neighboring Taiwan, pushing relations with China to the forefront of upcoming general elections.

[…]

Beijing has been trying to sell the same model to Taiwan for years.

But with presidential and legislative elections in Taiwan set to take place in January 2020, candidates — even from opposition parties seen to be more pro-China — have been speaking out against Beijing and showing support for the Hong Kong protesters.

So, we should conclude by returning to Terry Gou. I think with this context, it’s much easier for a westerner to get a better sense of how, and why, Terry Gou is both the richest capitalist in Taiwan, but also extremely pro-PRC, despite the contradictions that lie underneath.

Even though Gou is a capitalist, and Taiwan has economically been more within the sphere of global capitalist interest, Gou has higher aims than being a small-time satellite capitalist of the American imperial system.

Gou has already infiltrated the Chinese political economy, because Foxconn is the world’s largest electronics manufacturer, one of the world’s largest private employers, and employs more people in China than any other country.

Meanwhile, the U.S. has become increasingly hostile to Chinese economic interests, which Gou is increasingly financially invested with. Gou surely also realizes that, in the long-term, the Chinese economy has much more potential for growth, and has a much stronger projection of becoming the world economic superpower than the US.

In other words, Gou wants his corporate empire to be the focal point of the regional east Asian capitalist apparatus, instead of being a peripheral, pseudo-colonial element of the American capitalist apparatus.

Quoting from Financial Times:

Wearing a baseball cap emblazoned with the company logo and that of the Kuomintang (KMT) — the China-friendly main opposition party on whose ticket he wants to run — Mr Gou sat in the front row at a regional security conference to celebrate the 40th anniversary of the Taiwan Relations Act, the US law that obliges Washington to help the country defend itself against China.

The tycoon asked a panellist [sic], a lawmaker from the ruling Democratic Progressive party (DPP), which country was more important for Taiwan’s economy — the US or China — and worked himself into a rage over her response.

“You didn’t answer my question. And when you responded, you didn’t even look at me, didn’t even show me basic respect!” he shouted. “Don’t dare look at the Republic of China, heh?” he pointed at the KMT logo on his cap. “I’m no longer participating in this conference. I will tell the White House! This is what the DPP is like!” He stormed out.

Mr Gou also publicly insinuated US diplomats would interfere in Taiwan’s election and warned Taipei not to rely on Washington for security as “America dupes us with old weapons”. With one stroke, the tycoon has thrown Taiwan’s political landscape into disarray, triggering fears about the future of the island democracy, claimed and threatened with annexation by Beijing.

The more Taiwanese private enterprise integrates into the PRC economy, the more the “Taiwan question” resolves itself. Gou’s Utopian future for Greater China would probably look something like Hong Kong being the financial core and liaison to the west; Taiwan being the domestic capitalist core, comprised of C-level executives. Taiwan and Hong Kong would be semi-isolated, capitalist class city-states, using the unwashed masses of mainland China as their national factory.

Terry Gou is a proud Taiwanese, in the sense that Taiwan’s liberal economic policy allows him to build his capitalist empire. However, as a good capitalist, Gou can see the structures of geopolitical-economic power, and he knows the central Chinese economy will grant his corporation more power.

By mixing Taiwanese capitalist interest from Foxconn with the centralized Chinese government, China’s role as a world superpower, in a capitalist world, accelerates. Chiang Kai-Shek’s vision of a national-capitalist pan-China federation becomes real, he just didn’t live to see it.

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