ANNUAL REPORT

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SECTION 2: CHINA AND TAIWAN
Introduction
On May 20, 2016, Taiwan’s President Ma Ying-jeou, whose policies
led to an eight-year period of improved relations between Taiwan
and China, left office and Tsai Ing-wen of the Democratic Progressive
Party (DPP) became president of Taiwan. President Tsai
has pursued a pragmatic cross-Strait policy of ‘‘maintaining the
status quo’’ of neither formal independence for Taiwan nor unification
of Taiwan and China. However, she has not acquiesced to Beijing’s
demand that she endorse the ‘‘one China’’ framework for
cross-Strait relations that Taipei and Beijing both endorsed during
the Ma Administration. Although Beijing’s approach to the Tsai
Administration is still developing, cross-Strait relations have entered
a new period, and Beijing is using various levers to pressure
President Tsai, including the suspension of official communication
with Taipei.
President Tsai faces tremendous challenges in formulating a
cross-Strait policy, boosting Taiwan’s economic growth, and addressing
the threat from China’s military modernization. She is
pursuing the objectives of diversifying Taiwan’s export markets and
enhancing Taiwan’s deterrent capability, efforts in which Taiwan’s
relationship with the United States plays a key role. U.S.-Taiwan
economic and security ties are robust, but they also have areas in
need of strengthening.
The United States continues to support Taiwan’s efforts to participate
in the international community. Taiwan’s international engagement
expanded during the Ma Administration, but it remains
limited in many ways due to Beijing. Since President Tsai’s election,
Beijing has increased its pressure on Taiwan in the international
arena, a problem that could grow more severe in the coming
years if cross-Strait relations sour significantly.
This section explores cross-Strait relations since President Tsai’s
election, cross-Strait trade and investment, Taiwan’s international
engagement, Taiwan’s military and security situation, and U.S.-
Taiwan relations. It is based on consultations with experts on Taiwan
and cross-Strait relations, the Commission’s fact-finding trip
to Taiwan and China in 2016, and open source research and analysis.
Cross-Strait Relations
Cross-Strait Political Relations after President Tsai’s Election
Despite President Tsai’s efforts to reassure Beijing of her policy
direction, the Chinese government has suspended official communication
with Taipei. Also, during the Commission’s June 2016 trip
to Taiwan, a Taiwan official told the Commission that China had
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