1994—A Turning Point for the KMT and CCP: Excerpt from The Era of Lee Teng-hui in Taiwan (5)

Whether through pragmatic diplomacy, military procurement strategies, or secret envoys across the strait, these seemingly disparate policy moves all point to a central question: What exactly did Lee Teng-hui envision as the 'Republic of China'? As authoritarian rule receded, balancing national identity and cross-strait positioning between idealism and reality became increasingly complex. In August 1992, the National Unification Council passed a resolution defining the meaning of 'One China,' stating that while Beijing viewed 'One China' as the People's Republic of China, Taipei regarded it as the Republic of China established in 1912, whose sovereignty extended to mainland China, though its governing authority was currently limited to Taiwan, Penghu, Kinmen, and Matsu. This distinction between 'sovereignty' and 'governing authority,' with each side interpreting 'One China' differently and treating 'unification' from a Taiwan-centered perspective, laid the foundation for the '1992 Consensus' formed after functional talks between representatives in Hong Kong that autumn.

Re-defining the meaning of 'China' was a continuation of Lee Teng-hui’s pragmatic approach to cross-strait issues since serving as Chiang Ching-kuo’s vice president. This pragmatic mindset was even tacitly accepted at one point by China’s top leadership. In early September 1992, when Tseng Yung-hsien and Chang Jung-feng met with Yang Shangkun in Beijing, the latter bluntly stated, 'We shouldn’t talk about what kind of relationship the two sides have—let’s just do some practical things first.' He emphasized the need to establish communication channels to prevent political fraudsters from spreading rumors. Yang also asked Tseng and Chang to relay a message to Lee: 'Let’s avoid saying things that hurt feelings or boastful nonsense. If we keep cursing each other daily, we can’t remain friends!'

Although Yang Shangkun demonstrated pragmatism through secret channels, Lee Teng-hui’s perception of mainland China had subtly shifted. He believed the Chinese Communist Party was riddled with internal problems and that China would inevitably face chaos, making deep involvement risky for Taiwan. This 'self-preservation first' mindset was not baseless. Through Su Chi-cheng’s communications with mainland contacts, Lee gradually realized that CCP leadership was deeply divided on Taiwan issues, with no one willing to take responsibility. Under such conditions, serious negotiations yielding concrete results seemed unrealistic.

Regardless of Lee’s private views, his public reaffirmation of the 'One China' stance through the National Unification Council preserved maneuvering room within the 'unification narrative.' This allowed dissidents within mainland China to secretly look to Taipei as the legitimate 'Chinese' government, sustaining momentum for the KMT’s mainland operations. At this time, Taiwan’s Military Intelligence Bureau, guided by the National Unification Guidelines, continued promoting peaceful evolution on the mainland under the ultimate goal of unification. In autumn 1992, they successfully recruited Major General Liu Liankun, head of the PLA General Logistics Department’s Armaments Bureau. Over the next six years, Lee obtained vast amounts of classified intelligence through Liu, who believed that unification was inevitable and that the KMT could play a key role in China’s transformation.

Meanwhile, as Taiwan democratized, despite official claims that long-term unification remained unchanged, Lee’s version of 'One China' grew increasingly abstract and hollow—a flexible political rhetoric. In autumn 1993, at the first APEC Leaders' Summit in Seattle, Economic Minister John Chiang, representing Lee, publicly rejected Beijing’s claim that 'Taiwan is a Chinese province.' Taiwan’s Foreign Ministry then emphasized that both sides were sovereign political entities. To Western observers, Lee appeared to play a dual strategy: telling Chinese leaders like Jiang Zemin that the two sides were 'separate political entities under a divided nation,' while telling the international community that 'two sovereign and independent states exist across the strait'—effectively muddying, blurring, and diluting the concept of 'China.'

For the cross-strait relationship, 1994 was a critical turning point. In March, the shocking 'Qiandao Lake Incident' shocked the region: 25 Taiwanese tourists were劫-killed in Zhejiang’s Qiandao Lake. Lee Teng-hui angrily denounced the CCP as a 'bandit regime.' In April, driven by Lee’s strong will, the KMT’s 14th Central Committee Plenum passed a resolution for direct presidential elections two years later and described the KMT’s rule in Taiwan as a 'foreign regime,' openly discussing 'the sorrow of being a Taiwanese.' In May, Lee led a delegation to visit Central American allies. During a planned overnight stop in Hawaii, U.S. authorities denied entry under pressure from Beijing. An enraged Lee refused to disembark upon arrival, protesting Washington’s decision. His anger was justified: after years of pushing democratic reforms and preparing for direct presidential elections, Taiwan’s status as a sovereign nation remained unrecognized. Becoming the first ROC head of state to visit the U.S. mainland became Lee’s greatest personal aspiration.

Also in 1994, Lee formally introduced the concept of a 'community of common destiny,' emphasizing local connections to foster new civic consciousness—through democracy, all residents would shape a shared future. Simultaneously, he stopped using the term 'base for national restoration' in public, increasingly using 'Taiwan region' instead, clearly distinguishing between 'mainland Chinese' and 'Taiwanese Chinese.' Years later, these terms evolved into the 'New Taiwanese' identity. At the KMT’s 14th Second Plenum in August, while the party prepared to celebrate its 100th anniversary, Lee, as party chairman, declared publicly: 'The KMT is only two years old,' 'The century-old store must clear inventory—not sell antiques, but reopen as a new shop,' and 'The Chinese KMT is also the Taiwan KMT.' Lee clearly believed that as political reform approached direct presidential elections, democratization required 'Taiwan identity' and 'localization' as its core. Under this view, 'Taiwan' and 'China' inevitably became opposing entities, not two sides of the same coin as during the Chiang era. As Western scholars noted, Lee was launching a 'Taiwan revisionism'—gradually reshaping the status quo in ways that deeply unsettled Beijing.

Notably, across the strait, China was also launching its own form of 'revisionism.' In this pivotal year, Beijing introduced three key reforms that laid the foundation for its rise as a global power: First, the CCP Central Committee abandoned planned command economy in favor of a socialist market economy, opening a vast domestic market. Second, the RMB was sharply devalued, boosting competitiveness of labor-intensive exports and cementing China’s role as the 'world’s factory.' Third, Beijing implemented a fiscal decentralization system, requiring 55% of local revenues to be remitted to the central government. This empowered Beijing to independently fund infrastructure and military expansion, posing a growing threat to Taiwan.

As the 'June 4' shadow faded, European nations resumed ties with Beijing, weakening Taiwan’s economic diplomacy. Beijing gained greater leverage to restrict Taipei’s international space. That spring, Jiang Zemin told officials in a closed-door meeting: 'Lee doesn’t truly want unification. He’d rather be the head of a chicken than the tail of an ox. He plays a two-handed strategy—keeping the unification banner while using public and secret channels to test our bottom line and posture.' Another 1994 episode revealed that cross-strait relations had reached a crossroads—from manageable differences to irreconcilable opposition.

Given that the National Unification Guidelines placed 'Three Links' (transport, trade, mail) in the mid-term phase, and indirect trade via Hong Kong had reached $13.8 billion with over 6 million tons of shipping, and with Hong Kong’s return to Beijing just three years away, Lee proposed a tripartite shipping company with mainland China and Singapore—registered in Singapore, handling cross-strait land and sea transport, with Taipei and Beijing each holding 45% and Singapore 10%. This would bypass sovereignty and jurisdiction disputes while pragmatically solving direct transport. Beijing, however, argued that high-level secret talks had been smooth and saw no need for Singapore’s involvement, insisting on direct talks with Taipei. To mediate, former Prime Minister and Senior Advisor Lee Kuan Yew visited Taiwan in September. Excitedly proposing solutions, he was surprised when Lee Teng-hui used the meeting to promote his vision of full democratization and stronger foreign ties, criticizing Beijing’s contradictory stance: wanting direct leader talks yet opposing natural meetings at APEC or the upcoming Hiroshima Asian Games. Lee Kuan Yew frankly replied that Beijing deeply doubted Taiwan’s intentions, always fearing 'Taiwan independence.'

The two Lees found little common ground. Their relationship cooled, drifting apart until Lee Teng-hui stepped down in spring 2000, six years later.