G.V.C. Naidu • Taiwan and the Indo-Pacific
The idea of Indo-Pacific as a conceptual framework to understand the unfolding dynamics in a region broadly comprising the West Pacific and East Indian Oceans has attracted considerable attention in the recent past. However, it has been subject to a variety of interpretations ranging from describing it as a ploy led by Japan, India and the U.S. to contain China, that it basically refers to developments in the maritime realm, that it is one of those passing fads that will soon fade away and so on. To be sure, neither it is an exclusive club of a few select members nor is it aimed at China. It is inclusive and all those countries that either geographically belong to the region broadly from India to Japan and China to Indonesia are part of it as well as those that have major stakes in the region such as the U.S. It certainly not limited to the maritime zone although maritime sphere is under the spotlight and gaining enormous salience for a variety of reasons.
Those who consider the Indo-Pacific as a temporary phenomenon and hence would soon disappear should keep mind that almost all the nomenclatures in the last several centuries have been transient. What once used to be largely referred to as “Oriental” later became the Far East in the early 2oth century. Then Asia-Pacific became popular, which gradually made way to East Asia beginning from the mid-1990s as the region became economically the most vibrant, which was dubbed as the new global center of gravity. Now the Indo-Pacific is the latest that has come into vogue although both Asia-Pacific and East Asia are yet to fully fade away. Indeed, there is no contradiction between the Asia-Pacific and the Indo-Pacific. The latter is evolving from the former because larger regions are becoming reference points rather than subregions. Just as Southeast Asia’s economic issues are closely interlinked to developments in Northeast Asia, today the Asia-Pacific is getting interconnected with the Indian Ocean. All these merely reflect changing circumstances and is a dynamic process.
Today, it is unthinkable with India and Sri Lanka as members of ASEAN but back in 1967 when it was launched both were offered to join the Association but they declined. Had they joined, the idea of Southeast Asia would have been totally different. Similarly, India was hardly considered belonging to the Asia-Pacific/East Asian region when it initiated the Look East policy (and hence could not become a member of the Asia Pacific Economic Cooperation-APEC) in the early 1990s, but by the time the East Asia Summit was inaugurated in 2005, it became one of the founding members. Even as late as a couple of decades back it was inconceivable that China would be a key factor in the Indian Ocean but today that is a reality. Consequently, the way we imagine what constitutes a region has dramatically changed and certain vital developments constitute the basis for that. Thus, the emergence of the Indo-Pacific is part of a historical process whereby regions, which are basically imaginary, have acquired different nomenclature and hence meanings depending on evolving politico-economic environment. It should, however, be remembered that they do not merely represent names but are a reflection of changing environment. A big of this is that they help us understand the dynamics a region is witnessing, which, in turn, influence the way policies are made and thus will have implications. This is the case with the Indo-Pacific too. The U.S. renaming the Pacific Command-- its largest and oldest naval command based at Honolulu-- as the Indo-Pacific Command in June 2018 signifies not simply a change in name but carries enormous strategic significance.
So, what has given rise to the Indo-Pacific and why is acquiring such salience? The Indo-Pacific is as much a geoeconomic construct as it is geostrategic. It represents the unfolding reality that the West Pacific Ocean and the Indian Ocean regions are increasingly becoming interdependent and their interface is getting stronger (as they used to be for nearly two millennia before the European colonization). Comprising a third of the world’s population and flanked by some of the economically most dynamic regions, the Indian Ocean is already the second fastest growing region in the world after the Asia-Pacific. The Indian Ocean rim potentially can emerge the world’s most dynamic region and thus a major driver of the global economy. The combined GDP of the littoral countries is likely to go up to more than US$10 trillion by 2020 from $5.7 trillion in 2010, which will be nearly 11 percent of global output. The intra-regional trade, which stood at US$1.6 trillion in 2015 constituting over 13 percent of global trade, is growing rapidly indicating growing markets and expanding economic opportunities. Its vast natural and human resources, especially oil and gas, and a large market of a third of the global population are critical to the Asia-Pacific. Thus, it is difficult to envision an Asian Century without factoring in the Indian Ocean. Soon, it may be called the Indo-Pacific Century.
Not least is the emergence of India as a major economic and military power. It is the only power that can match up to the Chinese military power (including nuclear weapons and an array of ballistic missiles). The nearly US$10 trillion economy (in PPP) endowed with the largest population of young people in the world, it is one of the fastest growing economies in the world whose full potential is yet to be fully realized. The rise of the Indian Ocean in many ways is also due to the rise of India. Today India is a factor in East Asia/Asia-Pacific as much as China, Japan and the U.S. are in the Indian Ocean.
It needs no reiteration that the Indo-Pacific is witnessing the most momentous shifts than any other region in terms of its economics as well as security. Surely, the region is the most vibrant and regional economic cooperation and integration is taking place apace. Concomitantly, it is also witnessing equally profound developments on its security front such as the rise of new power centers, fundamental power shifts, a large number of boundary disputes, lingering historical animosities and mutual suspicions, rapid modernisation of militaries, continued state of political flux and a lack of stable balance of power and so on.
Seen in the above perspective, it becomes easy to appreciate the emergence of the Indo-Pacific as the new template in which the main focus in more than one sense is on the maritime sphere. Thanks to globalization and critical dependence on seas and oceans especially for trade, oceanic spaces are becoming critical. The rise of new power centers in the Indo-Pacific region is also exemplified by the rise of new maritime powers in an unprecedented way, such as China, India and Japan. It is not either an accident or coincidence that all the major maritime powers in the region have come up with new maritime strategies: ‘Open and Free Indo-Pacific’ by Japan and the U.S., ‘21st Century Maritime Silk Road Initiative’ by China, ‘Act East Policy’ by India, and ‘Global Maritime Axis’ policy by Indonesia.
Even as the Indo-Pacific acquires greater credibility and acceptance, it is obvious that it will have implications not merely the region but for Taiwan too. Then, two issues need to be considered: One, what does Indo-Pacific mean to Taiwan, and two, what kind of impact it might have on its New Southbound Policy. Before examining the above, it needs to be kept in mind that Taiwan is the six largest economy (with about US$1.2 trillion GDP measured in PPP in 2017, larger than that of the Philippines) in the Asia-Pacific and 22nd largest in the world, which should give an idea about its economic strengths, and by most measures it is an advanced economy. Its contribution to and involvement in the rise of Asia-Pacific as an economic powerhouse by way of investments, technology and skills transfers are substantial. Taiwan has also played a key role in China’s phenomenal rise as an economic power with more than US$200 bn. investments and generous technology transfers. It is also a member of the WTO and its economy is deeply embedded in the world in general and the Asia-Pacific in particular—eight out of nine of its top trading partners are from this region. Hence, given its political status, what happens in rest of the Asia-Pacific economically or in terms of regional security would be of immense importance to Taiwan. So, any framework that can help understand the unfolding dynamics in the region is directly relevant to Taipei too.
Just like the other East Asian countries that are heavily dependent on the Indian Ocean region both raw material imports and export of manufactured goods, Taiwan too has no option but to use these sea lanes for its trade with most parts of Southeast Asia, South Asia, the Middle East, Africa, Europe and the east coasts of North and South Americas. Taiwan remains a major trading nation and the fact of the matter is that its external trade is larger than its GDP (compared to China’s less than 30 percent) in 2017. Thus, trade is critical to its prosperity and any disruption of that can adversely affect the Taiwanese economy.
The second aspect is the ‘New Southbound Policy’, announced soon after Tsai Ing-wen of the Democratic Progressive Party (DPP) won the election as president of Taiwan in May 2016. Indeed, it is the third time that Taipei has launched the Southbound Policy in the last decade or so. However, unlike in the past when the previous ones failed to take off, this time around the Tsai government appears to be pursuing it far more seriously. Moreover, the contours and objectives of the present policy seem to be quite different. While on face of it the intent in a way is to pivot away from the People’s Republic of China so that ‘overreliance’ on the mainland is reduced to the extent possible, no question that a combination of economic and political compulsions underlie the new initiative. By any measure, it is expansive and comprehensive that is not limited to trade and investments but encompasses a range of dimensions from education to culture and from technology to people-to-people links.
One factor, among others, that is likely to weigh heavily in Taipei’s thinking is the risk of marginalization due to a large number of bilateral, multilateral and mega trade agreements being signed and negotiated, for they are not only comprehensive in scope but are becoming major drivers of rapidly growing economic cooperation and integration in the Asia-Pacific. Given that so far Taiwan has very limited participation in these arrangements and the issue about ‘overreliance’ on the mainland China for its economic development has been a politically sensitive subject, there is growing clamor to hedge Taiwanese economic bets by looking at other potential sources for economic interactions such as South Asia and Southeast Asia. Two issues need to be taken into account. One, the Indian Ocean owes its ascent into prominence partly due to the emergence of India as a major economic and military power, Southeast Asia where bulk of the region actually falls within the Indian Ocean region (seven out ten countries), and besides Australia. Consequently, Taiwan’s New Southbound Policy in many ways is its Indo-Pacific policy. So, the success of the New Southbound Policy actually makes Taiwan a part of the unfolding dynamic in the Indo-Pacific, both economically and strategically.
Economically the target countries of the New Southbound policy constitute a market of more than 2.5 billion people and a combined GDP of nearly US$20 trillion in PPP. Moreover, all these economies are very dynamic and expanding rapidly logging some of the fastest growth rates in the world. A huge upside is that they also have a very young population (India alone has about 850 million people below the age of 35 as of 2017). As the Chinese economy begins to show signs of slowing down, with a labor that is not cheap anymore, and starts competing with products that Taiwan enjoyed a niche place, it makes enormous economic sense to ‘reset’ its economic relations in a phased manner. As Taiwan’s economic relations consolidate with India, the ASEAN countries and Australia, the next step would be to enter into a kind of comprehensive economic partnership agreements with these countries, which, in turn, will bring in its own geopolitical dynamic, for increasingly geoeconomics is influencing geopolitics of the region.
Since Indo-pacific is also a testimony to the rapidly shifting geostrategic environment, it certainly will have impact on Taiwan’s security as well. While the China factor remains the most important, the Indo-Pacific brings in different elements. Besides shifting permutation of forces, a nascent regional balance seems to be emerging even as great powers redefine their roles and the relations that govern them undergo a notable transformation. A key factor is that economic interdependence has become so deep that a war as an option for whatever reason is increasingly become remote. As a new security order begins to take shape centered on reformulated great power relations and regional multilateralism (although its record has been less than satisfactory), the Indo-Pacific will not only offer better prospects for regional stability but also greater room, both literally and figuratively, for countries to manoeuvre their policies. Hence, Taiwan should welcome the Indo-Pacific idea and also formulate its strategies premised on this.