TIME Asia | Have I Got a Deal for You

GREATER CHINA: Beijing and Taipei compete for their neighbors' affections	ASIA	February 2, 1998 VOL. 151 NO. 4
Have I Got a Deal for You Taipei and Beijing are vying to reap diplomatic gains from the economic ills of their neighbors By TERRY McCARTHY Hong Kong eeking opportunity in a crisis, war-profiteering or simply keeping their heads while all others lose theirs? Call it what you will, but as Asia's economic crisis deepens, the two states that have so far been least damaged--China and Taiwan--are resolutely pushing their own agendas as they pick their way through the region's financial rubble. The risks are high on both sides, and the stakes extend far beyond economic concerns. Taiwan, protected by huge foreign exchange reserves and a healthy banking system, has been the busier of the two. Last week Premier Vincent Siew began flying stealth missions into Southeast Asian capitals, sneaking in and out of presidential palaces with, one assumes, offers of financial aid in exchange for greater political bargaining power for Taipei. Siew visited the Philippines on Monday and Indonesia the following two days. A trip to Malaysia is said to be imminent. At the same time a delegation of 80 of Taiwan's top businessmen and economic planners were touring the region on a government-sponsored trip in search of investment bargains, including a possible takeover of Bangkok Bank by the Kuomintang-owned China Development Corp. China has been moving on a broader stage, projecting a new outward-looking, responsible image worldwide by pledging not to devalue the yuan--"China's contribution to Asia's financial stability," in the words of Vice Premier Zhu Rongji. In recent meetings with U.S. Deputy Treasury Secretary Lawrence Summers and International Monetary Fund chief Michel Camdessus, top Chinese officials have tried to show a statesmanlike concern for the problems in the rest of Asia--and a steady hand in the management of their own economy, which has remained buoyant largely because the yuan is not yet a convertible currency. The fact that Japan has shied away from any leadership role in managing the economic crisis has only further enhanced China's image. "The Chinese leaders must be quite pleased that they have maintained China in such a stable manner while the rest of the region is in such turmoil," says James Tan, associate professor of politics and public administration at the University of Hong Kong. "If we push the whole thing into the long-term rivalry of China and Japan, this does give China an opportunity to demonstrate they have a role to play, that they are paying attention to things elsewhere." Beijing signaled this new approach from the early days of the crisis a half-year ago, when it offered to contribute $1 billion to the bailout of Thailand--a pleasant surprise from a country so famously inward-looking. Not that gazing at the bigger picture has blinded China to Taiwan's forays into Southeast Asia. Last week the Foreign Ministry in Beijing blasted Taiwan for "capitalizing on the temporary difficulties" of Southeast Asian countries and seeking "political reward ... for its financial assistance and cooperation." A commentary in China Daily compared Taiwan's actions to "a handful of looters" rushing into a burning house "to snatch and grab anything handy." Maintaining diplomatic relations with a mere 29 countries--South Africa switched its recognition to Beijing on Jan. 1--Taiwan is prepared to go to extraordinary lengths to boost its international profile. President Lee Teng-hui began a series of so-called "private" golfing holidays to Southeast Asia in 1994 to open political contacts and also to persuade Taiwanese corporations to "go south"--to invest more in the region and thus reduce their dependence on business links with the mainland. China has been watching every step of the way. "The golf diplomacy didn't really work because of Chinese objections," says Shiu Sin-por, executive director of the One Country Two Systems Research Institute in Hong Kong. "Now they are trying again, but I don't think they will succeed because regional countries have a lot at stake in their relations with China." Siew went out of his way last week to avoid embarrassing his hosts, who have signed on to the "one-China" policy. He refused to confirm details of whom he met or what he discussed in Manila and Jakarta. "I saw the friends I wanted to see and discussed the issues I wanted to discuss," Siew said after returning to Taipei. Diplomats in Jakarta, however, said the Premier met Indonesian President Suharto on Tuesday evening, and the Taiwan press reported that Siew had promised "appropriate aid" to Indonesia. In Manila Siew had barely landed before China's Ambassador Guan Dengming lodged a "severe" protest with the Philippine government. Guan was seen camping out in the lobby of the Manila Hotel, where Siew's party was staying, consuming endless cups of coffee as he monitored the comings and goings of the Taiwan delegation. Finance Secretary Roberto de Ocampo initially reported that Siew had met President Fidel Ramos--before being rebuked by Ramos for his "slip of the tongue." But if Taiwan's offers of financial aid sound attractive, Southeast Asians are still wary of being drawn into a fight with China. As an aide to Ramos put it: "Beware of the Taiwanese who comes bearing gifts." With reporting by Jaime A. FlorCruz/Beijing, Don Shapiro/Taipei and Nelly Sindayen/Manila
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Taipei and Beijing are vying to reap diplomatic gains from the economic ills of their neighbors

By TERRY McCARTHY Hong Kong

eeking opportunity in a crisis, war-profiteering or simply keeping their heads while all others lose theirs? Call it what you will, but as Asia's economic crisis deepens, the two states that have so far been least damaged--China and Taiwan--are resolutely pushing their own agendas as they pick their way through the region's financial rubble. The risks are high on both sides, and the stakes extend far beyond economic concerns.

Taiwan, protected by huge foreign exchange reserves and a healthy banking system, has been the busier of the two. Last week Premier Vincent Siew began flying stealth missions into Southeast Asian capitals, sneaking in and out of presidential palaces with, one assumes, offers of financial aid in exchange for greater political bargaining power for Taipei. Siew visited the Philippines on Monday and Indonesia the following two days. A trip to Malaysia is said to be imminent. At the same time a delegation of 80 of Taiwan's top businessmen and economic planners were touring the region on a government-sponsored trip in search of investment bargains, including a possible takeover of Bangkok Bank by the Kuomintang-owned China Development Corp.

China has been moving on a broader stage, projecting a new outward-looking, responsible image worldwide by pledging not to devalue the yuan--"China's contribution to Asia's financial stability," in the words of Vice Premier Zhu Rongji. In recent meetings with U.S. Deputy Treasury Secretary Lawrence Summers and International Monetary Fund chief Michel Camdessus, top Chinese officials have tried to show a statesmanlike concern for the problems in the rest of Asia--and a steady hand in the management of their own economy, which has remained buoyant largely because the yuan is not yet a convertible currency. The fact that Japan has shied away from any leadership role in managing the economic crisis has only further enhanced China's image.

"The Chinese leaders must be quite pleased that they have maintained China in such a stable manner while the rest of the region is in such turmoil," says James Tan, associate professor of politics and public administration at the University of Hong Kong. "If we push the whole thing into the long-term rivalry of China and Japan, this does give China an opportunity to demonstrate they have a role to play, that they are paying attention to things elsewhere." Beijing signaled this new approach from the early days of the crisis a half-year ago, when it offered to contribute $1 billion to the bailout of Thailand--a pleasant surprise from a country so famously inward-looking.

Not that gazing at the bigger picture has blinded China to Taiwan's forays into Southeast Asia. Last week the Foreign Ministry in Beijing blasted Taiwan for "capitalizing on the temporary difficulties" of Southeast Asian countries and seeking "political reward ... for its financial assistance and cooperation." A commentary in China Daily compared Taiwan's actions to "a handful of looters" rushing into a burning house "to snatch and grab anything handy."

Maintaining diplomatic relations with a mere 29 countries--South Africa switched its recognition to Beijing on Jan. 1--Taiwan is prepared to go to extraordinary lengths to boost its international profile. President Lee Teng-hui began a series of so-called "private" golfing holidays to Southeast Asia in 1994 to open political contacts and also to persuade Taiwanese corporations to "go south"--to invest more in the region and thus reduce their dependence on business links with the mainland. China has been watching every step of the way. "The golf diplomacy didn't really work because of Chinese objections," says Shiu Sin-por, executive director of the One Country Two Systems Research Institute in Hong Kong. "Now they are trying again, but I don't think they will succeed because regional countries have a lot at stake in their relations with China."

Siew went out of his way last week to avoid embarrassing his hosts, who have signed on to the "one-China" policy. He refused to confirm details of whom he met or what he discussed in Manila and Jakarta. "I saw the friends I wanted to see and discussed the issues I wanted to discuss," Siew said after returning to Taipei. Diplomats in Jakarta, however, said the Premier met Indonesian President Suharto on Tuesday evening, and the Taiwan press reported that Siew had promised "appropriate aid" to Indonesia.

In Manila Siew had barely landed before China's Ambassador Guan Dengming lodged a "severe" protest with the Philippine government. Guan was seen camping out in the lobby of the Manila Hotel, where Siew's party was staying, consuming endless cups of coffee as he monitored the comings and goings of the Taiwan delegation. Finance Secretary Roberto de Ocampo initially reported that Siew had met President Fidel Ramos--before being rebuked by Ramos for his "slip of the tongue."

But if Taiwan's offers of financial aid sound attractive, Southeast Asians are still wary of being drawn into a fight with China. As an aide to Ramos put it: "Beware of the Taiwanese who comes bearing gifts."

With reporting by Jaime A. FlorCruz/Beijing, Don Shapiro/Taipei and Nelly Sindayen/Manila