Plan for Confederation With Mainland Reflects Evolving Public Opinion on Island

BEIJING, July 8 -- Taiwan's main opposition party is poised to endorse the idea of creating a confederation with China, a major policy change that would intensify an already fractious political battle on the island between proponents of unification with China and those who want independence.

On Saturday, the Nationalist Party issued a policy paper on relations with China that argued that the best option for Taiwan would be to form a confederation under which both entities would maintain their central governments and control their own diplomacy, national defense and internal affairs.

Nationalist officials said they expected the policy to be approved by the party's Central Standing Committee this week and by its national congress at the end of the month. The policy would then become the party's official platform for legislative, mayoral and county magistrate elections in December.

The policy, proposed by party leader Lien Chan, who was defeated in last year's presidential election, is the furthest any major Taiwanese political organization has gone in proposing a union with China. It constitutes a serious challenge to Taiwan's president, Chen Shui-bian, who before taking office had advocated independence, and illustrates how far parts of Taiwan's society have come in the past year toward accepting the proposition that unification with Beijing is inevitable. The percentage of Taiwanese who say they could accept the "one-country, two-system" arrangement under which China regained possession of Hong Kong from Britain in 1997 is reportedly the highest it has been in years -- about 33 percent, up from 23 percent last December, according to a survey by the United Daily News.

The Nationalist move also presents a challenge for the Bush administration. President Bush has said he will base his Asian policy in part on forging stronger ties with Taiwan, backed by a multibillion-dollar weapons sale designed to free the island from worrying about forced unification with China for years. The action by the Nationalists indicates that at least one major political entity on Taiwan is actively preparing for that eventuality.

The Nationalists, who fled the mainland after their defeat by Communist forces in 1949, governed Taiwan until last year, when Chen became the first outside candidate to win the presidency. Until this weekend, the Nationalists' policy was essentially to stall for time and maintain the status quo, neither rejecting unity with China nor doing anything to further it.

A combination of factors contributed to the new Nationalist policy. First, there is a sense that the democratic, self-governing island is adrift; it lacks political leadership and its economy has sunk to its lowest point in 19 years. At the same time, China's economy continues to grow and attract not only Taiwanese investment but Taiwanese immigration.

About 50,000 Taiwanese companies manufacture goods on the mainland, with total investment of more than $45 billion. An increasing number of influential Taiwanese say the way to improve Taiwan's economy is to forge closer ties with Beijing.

Second, since losing power, the Nationalists have attempted to portray their party as the only one that can improve ties with Beijing and have criticized Chen, who has adopted a cautious policy toward Beijing. The Communist government here has helped to bolster that impression, inviting high-ranking Nationalist officials and legislators to Beijing. The "confederation" plank is another part of that program, although some analysts in Taiwan wondered whether Lien was going too far in extending an olive branch to Beijing.

It's not clear whether Lien's gambit will succeed. In an interview in March, President Jiang Zemin said China could not accept a confederation, and other officials have rejected the idea that Beijing and Taiwan are equals. Beijing maintains that Taiwan is part of China and has threatened to invade the island if it declares independence.

A large percentage of Taiwan's 23 million people, including former president Lee Teng-hui, are still extremely wary of close ties with Beijing. Lee opposes reunification and in recent weeks, he has all but thrown his support behind Chen and encouraged talk among his supporters within the Nationalist Party about forming a splinter party.

The new policy was unveiled by the National Policy Foundation, a Nationalist Party research group, and presented by Su Chi, the former head of the Mainland Affairs Council, the government agency that first set Taiwan's policy toward the mainland under Lee.