China challenges Taiwan over membership in international bank

China's formal application to join the Asian Development Bank has presented Taiwan with yet another challenge to its international legitimacy. The island republic will shortly have to choose between leaving the Manila-based bank or compromising its ideological opposition to mainland China.

Since the bank acknowledged China's application last week, Taiwan has shown signs it will remain a member of the bank once China joins it. Analysts say this would signal a new flexibility in Taiwan foreign policy. ``Tai-wan is slowly accepting that it has to survive in a different world,'' says a Peking-based diplomat. ``Resolving the membership issue will be a major test of this.''

Taiwan has opposed China's inclusion in the 45-member lending institution since negotiations on the issue began nearly three years ago. But Peking's application has the support of most member governments, including the United States and Japan, the bank's principal donors.

Though Taiwan is a founding member of the 19-year-old bank, indications are Taiwan has been losing diplomatic ground. A year ago bank president Masao Fujioka traveled secretly to Peking to discuss membership.

At the bank's annual meeting in Bangkok last April, Chinese officials quietly informed member delegations that China would soon join the bank. Mr. Fujioka's announcement of China's formal application signaled that an agreement had been reached. The bank's board is expected to approve the application in February.

The only major issue outstanding is the name under which Taiwan will operate within the bank. The bank and China have agreed that Taiwan would be formally known as ``Taipei, China'' -- a designation that Taiwan says implies the island's subordination to Peking.

Last week Taiwan's Foreign Ministry strongly denied it would accept any change in Taiwan's ``existing status, rights, and designation'' within the bank. But officials have since been more conciliatory. ``We're willing to maintain a dialogue -- on the name issue as well as others,'' says Samuel Hsieh, Taiwan's negotiator in Manila.

As with other questions involving China, Taipei appears divided between those who stress the island's long ideological war with the mainland and those who see a need for more pragmatic policies. The Asian Development Bank is among the only global institutions in which Taiwan has not been replaced by China. Over the past 15 years, the island has lost its membership in the United Nations, the World Bank, and the International Monetary Fund. Having a presence in such organizations is becoming more importan t for Taiwan's policy planners. It agreed to participate in the 1984 Olympics under the name ``China-Taipei.'' Asked if Taiwan would consider leaving the bank, Mr. Hsieh said, ``You have asked that question too soon. This is not our choice yet. We have to leave the door open.''