3. The divided nations of China and Korea: discord and dialogue

Summary

The confrontations between China and Taiwan and between
North and South Korea will continue to pose the greatest threats to security
in East Asia. However, during the first half of the 1990s there were hopeful
developments, as new channels of bilateral dialogue and contact were established
in the political, economic, humanitarian and cultural spheres.

Fundamental political differences present the most immediate
problems for reconciliation. In both cases the parties have entirely different
economic, social and political systems and neither side in these two stand-offs
is prepared to accept the other's form of political, social and economic
organization.

Domestic political difficulties in mainland China, Taiwan,
North Korea and South Korea exacerbate the problems and undermine the political
processes which might lead to negotiated settlements. In mainland China
the long-term stability of the 'collective leadership with Jiang Zemin at
the core' remains in question. In any event, no leader in mainland China
can afford to appear weak vis-à-vis Taiwan. A growing body of opinion
on Taiwan, led by the Democratic Progressive Party, openly advocates independence
from the mainland and presents complications for dialogue. The two Korean
leaders must not appear to be 'selling out' to the other side. Uncertainties
concerning leadership succession in North Korea, coupled with its apparent
economic deterioration, further weaken prospects for political settlements.

On the other hand, economic ties, trade relations, and
humanitarian and cultural exchanges offer the best channels for positive
interaction. Such relations hold out immediate economic benefits and an
serve the parties' political aims. For China, closer economic relations
with Taiwan would knit the two sides together in a way that Beijing sees
as favourable to its goal of reunification. For Taiwan, the development
of China's standard of living and a more open and prosperous mainland is
in Taiwan's interest whatever happens with reunification. South Korea sees
political benefits in opening up the North to economic relations and trade.
For the North, a properly managed economic opening will attract hard currency
exchange and investment, strengthen the regime's influence and legitimacy,
and possibly prevent an undesirable reunification scenario on the South's
terms. Each side will find benefits in economic relations and will seek
to use them to gain concessions in their ongoing adversarial relations.

The promises of economic ties have drawbacks, however.
For South Korea, they must be managed in a way that does not bring about
the rapid disintegration of the North and avoids contributing to its political
and military resources. For the North, over-exposure to the South's economic
dynamism would threaten the legitimacy and survival of its leadership, which
explains the North's go-slow approach. For Taiwan, entrepreneurs are concerned
that the mainland exercise proper protection over trade and investments.
Fearing the development of over-dependency, the government on Taiwan has
resisted most attempts to open direct trade links between the island and
the mainland. Of the four parties, it would appear that only the mainland
would benefit from a rapid opening of economic ties with its adversary.