HOW TO BE RICH, BUT FRIENDLESS

Martin Vander Weyer on

the country that dare not speak its name

WHICH London ambassador is forbidden to visit the Foreign Office, has only recent- 1Y been permitted to speak to officials there by telephone, and cannot display the name of his country outside his office? The emissary of some worthless, blood-soaked, third-world despot you might guess. You would be entirely wrong. The diplomat concerned, Dr Raymond Tau, represents a sophisticated free-market democracy, the world's 14th largest trading nation and its richest holder of foreign exchange reserves. His country is a power- h°11se of advanced manufacturing with a growing appetite for imports and an urge to build factories in Europe. It has just res- cued 4,000 jobs at British Aerospace. It has a deep admiration for modern Conser- vatism, and has been blessed by a visit frem Baroness Thatcher. It is the very Model, in fact, of the sort of country Britain should strive to befriend, towards winch the royal yacht Britannia should !steam at the earliest opportunity. But British officialdom does its best (in public) to pretend that the place does not exist. The nation which dare not speak its Caine is the Republic of China on Taiwan, a designation fully acknowledged only by 29 other governments — mostly of the sta- tus of Paraguay and Liberia — and given consular recognition by a handful more. The problem, of course, is that the govern- ments seated in Taipei and Beijing both Persist in regarding Taiwan as part of one greater' China, despite 44 years of heavily fortified stand-off, and it is impossible diplomatically to recognise both of them. Most of the world, therefore, salutes 9nly the red flag of the People's Republic in Beijing, which is simply too big for any major nation to ignore. South Korea, for example, has recently had to de-recognise Taiwan — despite close affinities of politi- cal tone and industrial development — in order to establish formal relations with its mainland neighbour for the first time. .Korea thereby joins the other 120 coun- tries rtes which conduct trade-based relations With Taiwan under a variety of sub rosa arrangements, some much less covert than others. The United States maintains a huge embassy in Taipei labelled 'American Institute'; in Tokyo, the bustling Taiwan visa office is called the 'Association for East Asian Relations'. The office of Tai- wan's commercial attaché in London mas- querades bizarrely as the 'Majestic Trading Company', whilst Dr Tai's chancery has recently been upgraded from `Free China Centre' to 'Taipei Represen- tative Office'.

The Taiwanese themselves insist that de facto relations are more valuable than diplomatic ceremonial. But 'face' is essen- tial to Chinese self-esteem, and they are acutely sensitive to gradations of protocol allowed or denied to them. Britain has always been the most reticent of the west- ern powers in testing Beijing's tolerance in this respect, for two reasons. The first, understandably, is the problem of Hong Kong, delicate enough without provoking the communists by elegant gestures to Taipei. The second is the ingrained atti- tude of our elite corps of Foreign Office sinologists, who aspire to become ambas- sador to Beijing, and not one of whom, it is safe to guess, has set foot on Taiwan (except perhaps as a spy) since 1949.

Britain's standing with the zealously anti- communist ruling Kuomintang (KMT) party in Taipei got off to a notably bad start; their historians blame us for the rise of Chinese communism in the first place. From the time of the mid-19th-century Opium Wars, it was foreign interference and exploitation, led by the British, which provoked the unrest on which Mao Tse- tung eventually built his power-base among the peasant masses. And when Chiang Kai- shek's nationalists were driven out by Mao in 1949, to retreat to Taiwan, the British government was second (after India) to recognise the new regime in Beijing.

From then on, whilst the Americans, Japanese and Germans provided aid for Taiwan's early, low-tech industrial develop- ment, relations between London and Taipei were almost non-existent. When `Majestic Trading' was set up in 1973, the Foreign Office insisted that its name should have no direct association with China. To this day it is hidden away, virtu- ally unmarked, in an alley-way off Oxford Circus. No meetings were permitted with civil servants or ministers: when textile quotas had to be discussed, delegations sat in separate rooms at the CBI while mes- sages were passed between them. The Majestic attaché became an enthusiastic member of the Norwegian Chamber of Commerce, which provided opportunities for accidental meetings with Whitehall offi- cials. Taiwanese seeking to visit Britain had to endure an arcane visa procedure which took months to complete; few of them came.

Our unofficial man in Taipei, meanwhile, operated under CBI sponsorship as the representative of the 'Anglo-Taiwan Trade Committee'. For many years, the post was filled by a modest retired engineer called Pointon, over whom Beijing's ever-vigilant intelligence service can have lost few nights' sleep. At the political level, Taiwan's only friends in Britain were a handful of robust Tory back-benchers. The more convention- al attitude was typified by Edward Heath, one of that exclusive order of statesmen to have been given Beijing's highest accolade, a pair of giant pandas. In Hong Kong in the early 1980s, the ex-prime minister was asked by a British industrialist what his attitude would be towards improving rela- tions with Taiwan. Heath's answer was an anecdote: he had recently taken a flight from Tokyo to Hong Kong unaware that it would stop to pick up passengers in Taipei — where, to his horror, he was obliged by airport regulations to disembark for half an hour. On reaching Hong Kong, he had felt it necessary immediately to send a telegram of apology to his old friend Deng Xiaoping. That was all he had to say on the subject.

Against such a background, it is not sur- prising that most British businessmen (with the honourable exception of ICI, which has built eight factories there over the past 20 years) failed entirely to notice the rapid growth of Taiwan's wealth and manufac- turing skills. Helped by a level of scientific education which has already produced three Nobel Prize winners, those skills have progressed from cheap garments and plastic toys, through the ubiquitous Reebok 'trainers', to advanced electronics.

The general British view of Taiwan, however, was that it is small — only 20 million people — raunchy, impenetrable, and politically incorrect. It was certainly a tough place to do business — the award of contracts governed mostly by 'connections' and bribes, patents and copyrights often abused, legal disputes difficult to pursue — and the Americans, Japanese and Ger- mans were all well in ahead of us. Across the straits, meanwhile, the mainland mar- ket presented similar obstacles, but what seemed also to be a vastly bigger opportu- nity: the theory that a billion mouths need a billion toothbrushes.

But as Beijing went temporarily out of fashion after the events of Tiananmen Square, Taiwan at last began to attract attention. In 1992, British trade with Tai- wan exceeded trade with the mainland for the first time. The margin was substantial: demolishing the toothbrush theory, we did almost a hundred times more business with Taiwan per head of population. The offshore island had begun to look not just significant in its own right but pivotal to the future of the region.

Geopolitics apart, the first fact which hypnotised the world's bankers was that Taiwan had amassed over US$80 billion of foreign exchange reserves, more even than Japan. It also had plans to rebuild the entire infrastructure of its shabby, pollut- ed, gridlocked cities — now formalised into a US$300 billion six-year plan, an unequalled bonanza for engineering con- tractors. It had an ambitious privatisation programme. It had a new taste for luxury consumer goods. It had manufacturing companies in need of access to Europe and willing not only to build new factories but, on occasion, to rescue existing busi- nesses — as happened to the Decca televi- sion factory, the Glaxo penicillin plant and now, through joint-venture arrangements, British Aerospace's regional jet pro- gramme.

Perhaps most surprisingly, Taiwan offered a new gateway to trade with the People's Republic: since Taiwanese began

. returning to the mainland as tourists in 1987, they have created more than 30, factory ventures in the coastal provinces or Guangdong, Fujian and Zhejiang. Much of the boom in the hinterland of Hong Kong is funded by Taiwanese cash.

At the same time, political reforms have made the Taipei regime as inoffensive as it could possibly be without actually abandon- ing its basic belief in the unity of greater China. The generation which actually fought the communists is dying out; ancient MPs claiming to represent mainland con- stituencies they had not seen since 1947 were forcibly retired in 1991, and the Con- fucian grip of the KMT has relaxed enough to allow the domestic opposition to come out of jail and win one-third of the seats In the recent general election. The effect of all this has been a frenzy of `unofficial' British efforts to catch up With the Taiwanese bandwagon and jump on it, while the Foreign Office distracts Beijing and sternly pretends that nothing is hap- pening. The Anglo-Taiwan trade office is now manned by a 'temporarily retired' diplomat, Philip Morrice, transferred from the British embassy in Brazil. Visas have been made much easier to obtain, allowing 2,000 Taiwanese post-graduates to come to British universities. Dignitaries sneak qui- etly backwards and forwards in both direc- tions.

Three of our junior ministers have been out on 'private' visits, most recently the Welsh Minister of State, Sir Wyn Roberts, soliciting the Formosa Plastics company to site a factory in the Rhondda. A delega- tion of contractors hoping for infrastruc- ture work has been led by the eyepatch-sporting former whip, Lord Mowbray and Stourton, whose warlike appearance and ancient lineage evidently made quite a hit with the militaristic KMT establishment.

The Governor of the Bank of England, Robin Leigh-Pemberton, found time, con- veniently, 'to visit his son' in Taipei. Mean- while, his opposite number, Governor Sam Shieh, the man with the US$80 billion cheque-book (People are nice to me wherever I go,' he has remarked) has been spotted lunching with the future Governor, Eddie George, on neutral ground in Lon- don.

The most visible expression of this dis- creet courtship is an agreement on aircraft landing-rights at Heathrow and Chiang Kaishek International Airport, which takes effect next month. In deference to Beijing, this will not involve the respective national flag-carriers, British Airways and China Airlines, but a specially invented BA sub- sidiary, 'British Asian Airways', and a pri- vate Taiwanese airline, Eva. But it is a concession long sought by the Taiwanese, and a matter of enormous 'face' to them.

Other western governments have been more blatant: the French sent a cabinet minister in his official capacity and pro- voked Beijing's rage by selling Mirage jets to the Taiwan air force. Even the Irish, rather lamely, welcomed a Taiwanese min- ister in the (so far unfulfilled) hope of tempting factories to Cork. But nothing has had quite the effect of last autumn's swoop by Lady Thatcher, sponsored by the American Citibank and distinctly not sponsored by the British Foreign Office, which prevailed on her not to visit in the late 1970s, as leader of the opposition. As Prime Minister she had been obliged to ignore the place, but at last the Taiwanese could welcome her as their most presti- gious visitor since 1949. She, in turn, paid them her ultimate compliment: 'Thatcherism is clearly alive, well and liv- ing in Taiwan.'

But, however big the opportunity of Tai- wan, Hong Kong is still the bigger prob- lem. Given the knife-edge on which relations are balanced between the Goya' nor, Chris Patten, and the communists to whom he hands over in 1997, how far an Anglo-Taiwanese relations go? Here, Per: haps, is the most intriguing aspect of Tai- wan's new significance. Richard Nixon, pungently, has recendY described Taiwan as China's 'big enchila- da'. The Taiwanese share the goal of reuni- fication, but on their own terms. Taiwan President, Lee Teng-hui, has spoken 1,11 n-rot favour of Patten's modest gestures tow' democratisation; the Taiwanese are waiting to see whether the communists are capable of keeping their word on 'one country, tw0 systems'. Only if the Hong Kong expert/ ment works, will Taiwan will be open 1° offers.

If not, there is another possibility for the end of the century: an alliance, based on economic linkages, of Taiwan, Hong 10111 and the increasingly prosperous coast;" provinces — in violent conflict with bow' ward, repressive Beijing. That prosPen,1 could be ruinous for the communists, a11,1 their arrogance will have to be tempered accordingly. The faster the pace of economic progress on the southern Chinese mainland, there' fore, the more Britain can afford to flirt' despite the shudders of the Foreign Office China-watchers — with our rich and clever new friends in Taipei.