Bold call for China to rethink Taiwan policy

By Benjamin Kang Lim

BEIJING (Reuters) - A Chinese economist whose contrarian views have previously caught the leadership's eye has suggested Beijing revise its "one country, two systems" formula for Taiwan and consider a federation or confederation.

The contentious idea for a rethink of China's policy towards self-ruled Taiwan, which Beijing claims as its own, is almost certain to trigger a heated debate in the Communist Party, the government and academia.

Most ordinary Chinese buy the government's official line about the inevitable return to the fold for Taiwan, a rival to the mainland since their split in 1949 amid civil war.

"It's one country, two governments," Lu De, the eldest son of the late reform-minded vice-premier Lu Dingyi, told Reuters in a rare interview.

"To resolve the cross-Strait problem, (we) must create new concepts and thinking or else it would give rise to contradictions and chaos in policy, thinking and action," said Lu, a board member of Beijing's semi-official China Council for Promoting Peaceful Reunification.

China and Taiwan signed a landmark deal last week to launch regular flights as politics were put aside in favor of practicalities in their first formal talks in almost a decade.

Nonetheless, Lu called for bold new thinking on how to deal with Taiwan's new President Ma Ying-jeou, who has vowed "not to unify (with China), not to declare independence and not to go to war".

In a deviation from conventional thinking, Lu said the "one country, two systems" formula, under which Hong Kong and Macau reverted to Chinese rule in 1997 and 1999 respectively, was unfit for Taiwan.

REFLECTING REALITY

He said Beijing and Taipei could instead eventually form a federation or confederation to reflect the political reality that China and Taiwan have different currencies, armies, fiscal systems and diplomatic allies.

Taiwan's Ma is anti-independence, but has rejected overtures toward a "one country, two systems" formula, instead styling Taiwan as the Republic of China and favoring the status quo of no unification but also no independence.

Mao Zedong declared the demise of the Republic of China when he founded the People's Republic of China on October 1, 1949, and the U.S.-backed Republic of China government moved to Taiwan.

For China's Communist leadership, civil war has not ended as the two sides never signed a ceasefire or peace treaty.

Lu said he was expressing a personal view to spark discussion and find the least costly solution for peaceful unification. But as a "princeling" -- one the privileged offspring of China's political elite -- he has close ties to the leadership.

Lu said China could not go so far as to recognize the existence of a separate country.