Decoding China’s demands on global airlines

On June 13, Taiwan lodged a protest against a decision by Singapore Airlines and its budget carrier Scoot to change the island’s designation to “Taiwan, China”.

This comes after the Civil Aviation Administration of China demanded more than 40 foreign airlines to re-designate Taiwan as part of China.

They have until July 25 to comply with the demand – which also says that airlines must display China, Taiwan and Hong Kong in the same colour on maps – or face punishments.

China considers Taiwan a rogue province to be taken back by force if necessary to be reintegrated into its One Country Two Systems governing framework that already encompasses Hong Kong and Macau.

While other international airlines such as Air France and Lufthansa have made the change on their booking interfaces, three main American airlines – United, American Airlines and Delta – have chosen not to comply with Beijing’s demands.

In response, Taiwan has stated that it will encourage its people to boycott airlines that list it as a Chinese territory.

The Trump administration has also urged American airlines to resist Chinese pressure, describing the demands as “Orwellian nonsense”.

It is tempting to brush off this latest incident and ask, “what’s in a name?”.

However, to do that would be to ignore the deeper strategic manoeuvers that the move represents.

At the heart of China’s growing assertiveness over the Taiwan issue is its economic strength.

As the world’s second largest economy and a significant source of trade and tourism for many countries, China has certainly established its centrality in the global economy.

Indeed, the relatively muted response to its demands – aside from the US and Australia, there has been little resistance from other countries – is largely due to other nations’ unwillingness to disrupt the flow of Chinese trade and tourist dollars.

This stands in stark contrast to the post-WW2 era, when Taiwan, as the Republic of China, was formally recognised by the United Nations as the assembly’s representative of China.

It is certainly by no coincidence that the UN General Assembly Resolution 1758, which recognised the People’s Republic of China as the sole legitimate representative of China to the UN, was passed in the early 1970s, at the same time that China was opening up its economy.

China’s rapid economic rise over the past few decades has been accompanied by an increasingly assertive diplomatic stance, whether in terms of its ‘nine-dash line’ territorial claims in the South China Sea or its ongoing trade war with the United States.

More than simply a matter of becoming more affluent, China’s economic growth has also placed it at the centre of global finance and trade flows and made it an indispensable part of global growth.

This economic centrality has provided the middle kingdom a broad range of economic tools and levers with which it can shape its diplomacy.

However, the recent Taiwan naming issue is not simply a matter of economics and territorial contestation. Rather, there is a deeper symbolic aspect to China’s efforts to change the way that Taiwan is perceived by the rest of the world.

According to the policy theorists Frank Baumgartner and Bryan Jones, every policy issue has multiple ‘images’.

A particular image can become more salient when a country or policymaker chooses to increase public attention to that image.

Hence as China continues to emphasise the policy image of ‘Taiwan, China’, it will likely enhance and normalise the perception that Taiwan is part of its One Country Two Systems framework.

As Chairman of the newly-opened American Institute in Taiwan James Moriarty has argued, China is trying to create the “impression that a fact exists, that does not exist”.

Frequent reiteration of this image of Taiwan as a Chinese province may serve to solidify this impression.

In contrast, Taiwan’s slowing economy and its diminishing influence in global diplomacy may leave it with limited room to manoeuver in this global contest of narratives.

In the last decade, Taipei has lost numerous diplomatic allies after they switched ties to China.

HOW SHOULD SINGAPORE REACT?

The effects of China’s demands on major global airlines will reverberate across Asia. In Singapore, this raises difficult questions for both policymakers and management of companies such as SIA.

As the national airline, SIA’s decision to adopt the new ‘Taiwan, China’ designation will be perceived to be linked to Singapore’s position vis-à-vis China-Taiwan relations. While Singapore has long supported the One China policy, it also retains close relations with Taiwan.

At the same time, SIA’s position as a corporatised, albeit government-linked, entity also means a certain extent of distance between the airline and the government.

Indeed, the point of corporatising SIA was to ensure its commercial viability and to minimise government influence over the airline’s commercial decisions.

China’s astronomical growth over the past few decades and the growing affluence of its citizens makes it an important client base for SIA.

From January to October 2017, more than 2.7 million Chinese tourists visited Singapore, with the strong growth in Chinese tourist arrivals driven by greater flight connectivity between China and Singapore.

Therefore, from a commercial perspective, it is in SIA’s commercial interest to accede to China’s demands.

From a governance perspective, it would seem the prudent thing to do is not to interfere in SIA’s business decisions. This will prevent any unnecessary conflicts of interest between the firm and the state.

The elephant in the room however is whether this will embolden China to use similar tactics in the future to pressure Singapore companies on Taiwan and even other issues.

Singapore has over the years built up a good reputation internationally for standing its ground on core foreign policy issues and not yielding to pressure from major powers or bigger neighbours.

With global diplomacy becoming increasingly complex, major powers such as China will increasingly rely on a mix of strategic economic and narrative tools – the proverbial Machiavelli and Orwell – to establish their positions in the global order.

In this new global landscape, Singapore will need to develop the necessary capabilities to address, or at the very least work with, such efforts at economic diplomacy and narrative shaping.

In this new global landscape, Singapore will need to develop the capabilities needed to understand and respond to such efforts at economic diplomacy and narrative shaping.

This will allow us to better protect our core interests, or at the very least, recognise the various ways in which the actions of other countries could potentially affect these interests.

ABOUT THE AUTHOR:

Woo Jun Jie is an Assistant Professor in the Public Policy & Global Affairs Programme at Nanyang Technological University, where he teaches Singapore politics and foreign policy.