The Washington Diplomat / September 2017
By Larry Luxner
In mid-June, Stanley Kao tossed a baseball — and ended up sparking a diplomatic incident.
Throwing out the ceremonial first pitch in an Atlanta Braves game against the Miami Marlins, Kao was proudly identified by a Braves’ TV sportscaster as “Stanley Kao, current ambassador of Taiwan to the United States.” A month before, the same thing happened at the start of a Major League Baseball game at Seattle’s Safeco Field, eliciting protests from China.
“Recently, I was invited in my current capacity as leader of Taiwan’s delegation here for a meeting with [Secretary of State] Rex Tillerson of the global coalition with 68 other countries to defeat ISIS,” Kao said, referring to an acronym for the Islamic State. “China complained almost immediately after the State Department put the group picture on their website.”
That’s because Kao is in fact the representative of the Taipei Economic and Cultural Representative Office (TECRO) in D.C., Taiwan’s de facto embassy in the U.S. He’s not officially an ambassador, a diplomatic distinction that is crucial to China, which views the democratic, self-ruled island of nearly 24 million people as a renegade province. Any perceived recognition of Taiwan as a sovereign entity is a red line for Beijing.
So the Chinese were particularly infuriated when Donald Trump — barely a month after his November 2016 election victory — accepted a congratulatory phone call from Taiwanese President Tsai Ing-wen, temporarily driving a wedge between the world’s two largest economies.
“This was the first time in over 60 years that the leader of Taiwan and the leader of the United States had talked on the phone,” said Kao. “The last U.S. president to visit Taiwan was Eisenhower in 1953, and since then, no leader of Taiwan has had personal, first-hand contact.”
Beijing immediately lodged what it called “stern representations” with the United States, and Foreign Minister Wang Yi accused Taiwan of “engaging in a petty action that cannot change the ‘one-China’ structure,” which dictates that countries recognize there is only one Chinese government. Under the somewhat ambiguous policy, the U.S., which formally switched relations from Taiwan to China in 1979, acknowledges China’s position that Taiwan is not a state but also says that the island’s status remains undetermined, taking a neutral stance on how the two sides resolve that status. This delicate balancing act has allowed Washington to maintain unofficial ties with Taipei and served as the bedrock of Sino-U.S. relations for decades.
The election of Tsai Ing-wen in 2016 already had China on high alert. Unlike her predecessor, Ma Ying-jeou, who spearheaded a rapprochement with China that led to increased economic and cultural ties, Tsai remains cool toward the mainland. While she has vowed to maintain the status quo and not push for independence, she has not endorsed the one-China policy and has defended her government’s right to engage world leaders such as Trump.
Likewise, Trump was defiant after the call, tweeting: “Interesting how the U.S. sells Taiwan billions of dollars of military equipment but I should not accept a congratulatory call.” He then publicly mulled using the one-China policy as leverage to extract concessions from China’s communist rulers, sparking alarm among policymakers and even some Taiwanese that the moves might jeopardize the fragile peace in cross-strait relations.
Trump eventually backtracked, acknowledging that the U.S. abides by the one-China policy. Yet his relationship with Beijing remains rocky and unpredictable.
On the campaign trail, he blasted China for manipulating its currency and ruining the U.S. economy. After an April meeting at his Mar-a-Lago estate with President Xi Jinping, however, Trump had nothing but praise for his Chinese counterpart and conceded that the issue of North Korea was more complicated than he originally thought.
But after Beijing apparently failed to curb North Korea’s pursuit of a nuclear weapon capable of hitting the United States, Trump tweeted that he’d given up on China — only to boast a few weeks later that he’d convinced the Chinese to sign off on a tough package of U.N. sanctions that could slash North Korea’s annual earnings by a third.
Taiwan seems to be along for the roller-coaster ride, although Kao is eager to downplay his government’s role in any diplomatic provocations. He likens the whole phone call imbroglio to an overblown “happy birthday” message.
“From the very outset, nobody believed that the five-minute call represented anything dramatic, or even a major policy shift,” he contends. “The reality is that one phone call will not change the longstanding U.S. China policy whatsoever.”
Intricate Diplomatic Dance
Yet the intricate dance of maintaining cross-strait relations dictates Kao’s diplomatic routine, down to who he speaks with to where he sleeps at night.
Kao, 64, spoke to The Washington Diplomat over tea and cookies at Twin Oaks — an 18-acre estate off Woodley Road that functioned as the official residence of Taiwan’s ambassador from 1937 until 1979, the year President Jimmy Carter switched U.S. diplomatic recognition to the People’s Republic of China.
Born and raised in Taipei, Kao joined Taiwan’s Foreign Service in 1978. His first overseas assignment was in Washington as a junior officer; he came back years later as deputy chief of mission. Kao has also served in Atlanta, Boston, Kuala Lumpur, Geneva, Budapest and Rome.
Despite his status as the chief of Taiwan’s mission here — and despite the fact that Twin Oaks hosts Washington’s largest single diplomatic party, with more than 3,000 guests regularly attending Taiwan’s annual “10-10” celebration in October — Kao cannot enjoy most of the State Department trappings that normally come with being an ambassador.
“There’s no formal, official recognition, but still we try to conduct business as usual, based on the Taiwan Relations Act of 1979 and the Six Assurances, which remain the bedrock of our robust relationship in almost all areas,” Kao told us in his first sit-down interview with any U.S. media outlet since arriving in Washington a year ago.
The Taiwan Relations Act assures that the U.S. will support the island’s defense and security needs and will maintain commercial, cultural and de facto relations with it.
Former President Ma, speaking at the Brookings Institution in May, observed that this unique arrangement has made Taiwan the “most recognized, unrecognized government of the United States.”
Along Taiwan’s road to recognition, there have been victories and setbacks, both large and small. Taiwan became a member of the World Trade Organization in 2002, but still has only observer status at the World Health Organization. Locally, in 2014, TECRO officials got diplomatic license plates for the first time ever. And on Jan. 1, 2015, Kao’s predecessor, Shen Lyu-shun, raised the Taiwanese flag over Twin Oaks for the first time since 1979 — in an emotional but low-key ceremony that was not televised to avoid antagonizing Beijing. The State Department did clarify at a later press briefing that “no U.S. government personnel attended the event in any capacity.”
“Even now, there are certain policy constraints in how the U.S. government conducts its relations,” Kao said. “Twin Oaks has been standing here for 80 years, but since 1979, none of my 22 predecessors have lived here, even though this is my official residence. We are politely advised that no one can stay here overnight.”
Still, TECRO’s Washington office employs about 60 people, with another 120 at 12 former consulates now called “economic and cultural offices” in Boston, New York, Atlanta, Miami, Houston, Chicago, Denver, Los Angeles, Seattle, San Francisco, Honolulu and Guam.
Coming to Taiwan’s Defense
By coincidence, our June 30 interview with Kao took place hours before the Trump administration announced its first arms sale to Taiwan — a $1.42 billion package that includes technical support for an early-warning radar system, missile components and torpedoes.
Also that day, the U.S. Treasury Department announced it would sever financial ties with China’s Bank of Dandong, which the Trump administration claims is acting as a pipeline to support illicit North Korean financial activity.
Rep. Ed Royce (R-Calif.), chairman of the House Foreign Affairs Committee, said the U.S.-Taiwan arms deal was long overdue.
“Sales of defensive weapons, based on Taiwan’s needs, are a key provision of our commitments as laid out in the Taiwan Relations Act and the Six Assurances,” he said in a press statement. “And that’s why, as chairman, I have repeatedly called for regular sales to Taiwan — just like we would see with any other partner. A stable and prosperous Taiwan is good for the people of Taiwan, good for the stability of the Asia-Pacific region, and good for U.S. national security.”
Yet Cui Tiankai, China’s ambassador to the United States, sees things very differently. “U.S. arms sales to Taiwan and the sanctions against Chinese enterprises have damaged the basis and mutual trust between the two countries. It also contradicts the spirit and consensus of the two leaders’ meeting at Mar-a-Lago,” said Cui. In a press statement, his embassy said the weapons package “grossly interferes” in China’s domestic affairs and that “the Chinese side reserves every right to take further action.”
Taiwan counters that it also has the right to take action to increase its self-defense, particularly in light of Beijing’s territorial ambitions in the disputed South China Sea and Pyongyang’s saber-rattling.
Kao said Taiwan currently spends 2.2 percent of its budget on defense, though the long-term goal is 3 percent.
“We want to develop our own defense capabilities,” he said. “During the Obama years, total arms sales were $18 billion. From what we have heard, there was one last package, and he wanted to leave that to the current administration to send a green light. Given Taiwan’s location and our diplomatic situation, we are very concerned about what’s going on in North Korea and the South China Sea.”
Pyongyang’s nuclear program notwithstanding, he added, “the only country in the world that has territorial ambitions on our country is our distant neighbor across the street.”
On July 25, Taiwan said it would defend itself after Chinese training exercises that brought fighter and reconnaissance aircraft dangerously close to Taiwanese airspace.
Kao said mainland China has no less than 1,600 missiles pointed at his country, even though “nobody in Taiwan has used the ‘I’ word” — independence — and “the great majority of people in Taiwan don’t want to do or say anything nasty against Beijing. We don’t want to give them any excuse.”
Whipping the Checkbook Back Out
But the Taiwanese did vote into office a leader from the independence-leaning Democratic Progressive Party last year, following fears that the opposition Kuomintang party was getting too cozy with Beijing. Tsai’s election rankled China and revived the so-called “checkbook diplomacy” race for recognition whereby both sides compete for allies using aid and investment as a carrot. It is a battle where Taiwan is the decided underdog, going head to head against the world’s second-largest economy and a consumer base of over 1.3 billion people.
Due to political pressure from Beijing, the number of countries with embassies in Taiwan has dwindled throughout the years. Today, only 19 nations plus the Holy See maintain diplomatic relations with Taiwan — down from 30 in the early 1990s — though TECRO has offices in more than 110 countries.
“Even with no diplomatic recognition, we’re able to conduct ourselves as de facto diplomatic missions, promoting peace,” Kao said. “Life is not always fair. Some of this is cold, brutal reality, but we don’t bow to this pressure.”
Yet the Taiwanese are no doubt feeling the squeeze as Beijing sets its sights on the remaining countries that recognize it over China.
In 2007, Costa Rica became the first Central American nation to abandon Taiwan. In a classic case of checkbook diplomacy, then-President Oscar Arias announced he’d recognize China, which later built a new sports stadium in San José worth $100 million.
But a year later, when Kuomintang’s pro-Beijing leader became president, China relaxed its aggressive efforts to isolate Taiwan. Since Tsai’s election in May 2016, however, Beijing has renewed those efforts with a vengeance, prompting both Panama and the tiny African nation of São Tomé e Principe to jump on the Beijing bandwagon.
“China has always been the Panama Canal’s biggest customer,” Kao said by way of explaining why the Panamanian government turned its back on Taiwan after decades of bilateral friendship. “We felt hurt, so we expressed our strong indignation and deep regret. But even with this Panama setback, our government has continued to give back to the international community and play on Taiwan’s strengths as a beacon of freedom and democracy. We are not competing with China dollar for dollar. There’s no more diplomatic bidding wars; we don’t believe that’s the right thing to do.”
To prevent Taiwan’s other Spanish-speaking allies from defecting, Tsai paid a January visit to El Salvador, Guatemala, Honduras and Nicaragua — which together account for over 40 percent of the combined populations of the 19 countries that still have embassies in Taiwan.
Ironically, Costa Rica remains Taiwan’s top Central American business partner by far, with bilateral trade consistently outpacing that of its neighbors. Yet for such countries, the battle isn’t just about money, said British professor Colin Alexander, the author of a 2014 book, “China and Taiwan in Central America.”
“If you’re from a small Central American republic and you have Taiwan as your ally, Taiwan treats you as a princess really, and you get a lot of benefits from it,” Alexander recently told BBC News. “If you move over to China, you’re just another country that recognizes China.”
Supporting American Jobs
Meanwhile, Taiwan ranks as America’s 10th largest trading partner globally — ahead of Italy, Brazil and the Netherlands. Home to 23 million people and roughly the same size as Maryland, Taiwan’s economy exceeds that of some G7 countries. Last year, bilateral trade came to about $65 billion, not including services and arms sales.
“We help support at least half a million high-paying jobs in the U.S., and we’re the seventh-largest agricultural export market for American farmers,” Kao said. “People don’t know that on a per-capita basis, we’re the second-largest consumer of U.S. agriculture products after Canada. That includes wheat, soybeans, corn and dairy products, chicken, beef, pork, Washington apples and California wines.”
Recently, the island sent a huge trade delegation to D.C. comprising 140 people representing 80 companies in steel, semiconductors, energy, pharmaceuticals, textiles, aviation, defense and biotechnology. The visit will eventually result in at least $30 billion of investment, said Kao, noting that executives visited Georgia, Texas, Louisiana, Boston and California’s Silicon Valley.
In late July, Taiwanese electronics giant Foxconn, which supplies Apple and other high-tech manufacturers, announced it would open a factory in Wisconsin to churn out flat-panel display screens for TVs and other consumer electronics. The $10 billion investment, which will reportedly create 3,000 jobs, was unveiled at the White House by Foxconn Chairman Terry Gou, with Trump and two Wisconsin Republicans — House Speaker Paul Ryan and Gov. Scott Walker — in attendance.
“There’s strong bipartisan support for Taiwan on Capitol Hill,” Kao said. “Many opinion leaders and think tanks believe Taiwan is really a worthy friend and reliable partner to safeguard regional, even global peace. In the meantime, the U.S. has its own one-China policy and nobody at this point is talking about altering it.”
The irony here is that Taiwan itself has enormous investments in China. Under the love-hate relationship that seems to characterize Taiwan and its huge neighbor, roughly 1 million Taiwanese work, study and live on the mainland, and more than 100 flights a day link Taipei to some 50 Chinese cities. Foxconn, with 1.2 million workers, is China’s largest single private employer. Officially, Taiwanese companies have invested close to $25 billion in the mainland, says Kao, “though unofficially it’s a lot higher than that, because lots of money goes through Hong Kong or Singapore.”
And this is definitely nota good thing, warned Kao.
“There’s too much dependence on Chinese money,” he said bluntly. “In these past few years, we’ve seen some reconciliation and all this opening of trade and investment. But people in Taiwan believe the previous administration was doing too much too fast — compromising Taiwan’s sovereignty, democracy and dignity, and just making too many concessions. We have too many eggs in one basket.”
This especially concerns the current government, Kao said, because “Taiwan has been helping China’s economic development in one way or another, but in the meantime, China never for one day has been shy about taking over Taiwan by force if necessary.”
Asked about the experiences of Macau, a former Portuguese colony that reverted to Chinese control in 1999, and Hong Kong, which in July marked the 20th anniversary of China’s 1997 takeover with a military parade reviewed by Chinese President Xi Jinping, Kao said neither case bodes well for his country.
“Taiwan definitely is not Hong Kong or Macau. We’ve been running our own shop just fine since 1949,” he said. “There have been bumps here and there, no doubt about it. But when they want to apply ‘one country, two systems’ to Taiwan, nobody’s buying that. We’ve been there and done that.
“Personally, I have strong reservations,” he added. “Although Hong Kong remains a good place to do business, in terms of political freedom or freedom of speech or assembly, people have no illusions whatsoever that in Taiwan this would be the case [under Chinese rule]. The bottom line is that Taiwan needs to keep its own system and its own identity,” he said, citing recent polls showing that 90 percent of Taiwan’s residents under the age of 35 don’t identify as Chinese, but rather as Taiwanese.
“Any future relationship between Taiwan, Hong Kong and China has to be determined through a peaceful, democratic process — not one that is imposed on us. That’s non-negotiable.”
Kao declined an opportunity to speculate on how Taiwan’s relationship will evolve with Donald Trump in office. But in baseball parlance, it appears that neither a home run nor a strikeout is likely at this point.
“We’re just innocent observers,” said the TECRO chief. “No matter who’s in the White House, U.S.-Taiwan relations should be marked by continuity, consistency and predictability. At the end of the day, the United States is the only country in the world that has committed to support Taiwan’s defense, so we certainly wish the U.S. success. We want whoever’s in the White House to succeed.”