China's Xi Seeks Talks to Unify Taiwan With Mainland

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Chinese President Xi Jinping suggested that mainland China and Taiwan enter into “in-depth democratic consultations” and work toward unification, in the clearest sign yet that he wants to settle the 70-year dispute during his tenure.

“China must and will be united, which is an inevitable requirement for the historical rejuvenation of the Chinese nation in the new era,” Xi told a gathering in Beijing to mark the 40th anniversary of a landmark Beijing overture to Taipei after the U.S. and China established relations. The two sides have been ruled separately since Chiang Kai-shek moved his Nationalist government across the Taiwan Strait during the Chinese civil war.

Xi also sent a warning to Taiwan independence advocates, who include supporters of Taiwanese President Tsai Ing-wen.

“It's a legal fact that both sides of the strait belong to one China, and cannot be changed by anyone or any force,” Xi said. While the president said “Chinese don't beat Chinese,” he noted that the mainland was “not committed to renouncing the use of force.”

The speech closely tied the Taiwan issue to Xi's central pledge to make China a global power by 2050. While he stopped short of issuing a firm deadline, his remarks went further than his 2013 statement saying the political impasse between the two sides “cannot be passed on from generation to generation.”

Carrots and Sticks

Since coming to power six years ago, Xi has employed both incentives and pressure to steer Taiwan toward unification. In 2015, he held an unprecedented leader-to-leader meeting with then-Taiwanese President Ma Ying-jeou. After the island voted in 2016 to elect Tsai -- of the pro-independence Democratic Progressive Party -- he cut off ties and launched an effort to isolate her government.

On Wednesday, he suggested that “political parties and people from all walks of life on both sides of the strait elect representatives” to engage in talks on the future of their relationship, saying an agreement that both sides belong to “one China” must be upheld in negotiations. He cited the “one country, two systems” arrangement that preserves Hong Kong's liberal political and economic system after its return from the British as the intended model.

“The difference in systems is not an obstacle to reunification or an excuse for separation,” Xi said.

Taiwan Response

Tsai rejected the overture, saying that orderly exchanges should be carried out between the two governments and that Taiwanese people opposed one country, two systems.

“We are willing to sit down and talk, but as a democratic nation all political negotiations relating to cross-strait relations must be undertaken with the authorization and supervision of the people of Taiwan and must proceed across the strait under the government-to-government model,” Tsai said. “Under these principles, no individual or group has the right to represent the people of Taiwan in political negotiations.”

“Any ‘democratic negotiation' under the precondition of ‘One China' is a negotiation that aims to divide Taiwan and terminate our country's sovereignty,” Taiwan's Mainland Affairs Council said. “The practice of ‘One Country, Two Systems' in Hong Kong leads to a loss of freedom, rule of law and human rights,” it said. There's growing disillusionment in Hong Kong about the state of the financial hub's political autonomy from Beijing.

Taiwan's benchmark Taiex index declined Wednesday, falling as much as 1.9 percent, amid a broader slide across the region driven by worsening manufacturing data in China and Taiwan as well as continued trade jitters.

“The gathering had been largely taken as a nonevent by the market, but we believe President Xi's message turned out to be stronger than expected,” Citibank economists said in a note. “Cross-strait relations could be one source of market volatility in the New Year.”

70th Annivesary

Xi's speech comes a day after Tsai -- who has refused to accept the “one China” framework -- used her New Year's address to warn against continued threats from China. Her remarks signaled that she would continue to take a firm line toward Beijing despite her recent election losses to Taiwan's more Beijing-friendly Kuomintang, Chiang's former party.

This October also marks the 70th anniversary of the Communist Party's takeover of China, an occasion that Xi has been using to solidify his stewardship after repealing presidential term limits last year. The anniversaries come amid increased tensions with the U.S., whose moves to support Taiwan have drawn China's ire.

On Jan. 1, 1979, China stopped decades of regular artillery bombardment of Taiwan-controlled islands off the mainland. In a historic overture, it issued a public letter to the Taiwanese known as the “message to compatriots in Taiwan,” calling for an end to military confrontation across the Taiwan Strait and saying it would open communication between the two sides.

“I don't think the speech was negative,” said David Lu, vice president of the equity department at Taishin International Bank in Taipei. “Tsai Ing-wen took a hard stance and Xi Jinping was quite soft, for example saying Chinese won't hit Chinese and that the two sides should build a mechanism for economic exchanges.”

--With assistance from Adela Lin, Cindy Wang, Karen Leigh and Enda Curran.

To contact Bloomberg News staff for this story: Peter Martin in Beijing at pmartin138@bloomberg.net;Dandan Li in Beijing at dli395@bloomberg.net;Yu-Huay Sun in Taipei at ysun7@bloomberg.net

To contact the editors responsible for this story: Brendan Scott at bscott66@bloomberg.net, Sharon Chen

With assistance from Bloomberg