The IMF and World Bank are convening their annual meeting this weekend, and in Tokyo this year, against a backdrop of global economic stress that has been worsened by the frictions between China and Japan over contested outcroppings south of Kyushu. Japanese nationalists have whetted the dispute, but the most notable behavior has been on the mainland, where boycotts and threats against the (now considerable) business presence from Japan have taken place.
In the early going, these seemed to have Beijing’s blessing. Although the official incitements seem to have stopped, China has held back its top central banker and finance minister from attending the Tokyo meetings, which would otherwise be routine.
This is obviously destructive to Japan, still struggling to break out of a long torpor. China accounts for 20% of its exports and a growing part of its manufacturing output. But China, too, suffers when trade is discouraged, even if the current mantra there is for stimulus through consumption of domestic goods and services. Let’s not forget that the tiff with Japan is only one of China’s seagoing sore points at the moment–others involve Southeast Asian countries also important to its trade picture.
So how does this bring up Taiwan? For one thing, the island has an unusual history that blends both Japanese and mainland Chinese influences. The 50 transformative years of Japanese colonialism that ended in 1945 left a predictably mixed legacy. They were followed, of course, by another tortured relationship, with mainlanders. (Of course, the intertwining of the cultures goes back centuries.)
Through it all, Taiwan has emerged as a prosperous democracy that has bruising battles within its own electorate but lives in basic harmony with those around it . Even its reaction to the so-called Diaoyu Islands brush with Japan has been benign. Perhaps this traces to the complex ties. As American academic Shelley Rigger notes in her useful 2011 book, Why Taiwan Matters, it was Japan that built the model for the informal relations that Taiwan has kept with most of the world since the 1970s, when the PRC displaced it as the “one China.”
Today Taiwan is politically stable, without a murky succession process such as has likely exacerbated recent outbursts in China. The island is in fact a model for a China that builds, on top of its regional might, a record of world citizenship in which the mountain of mass affluence dwarfs the molehills of symbolic strife.
UPDATE Nov. 1: Here’s a new study on the economic future of Taiwan.