By Michael Gold
TAIPEI, April 7 (Reuters) - A chaotic sit-in to protest against a trade deal with China has shut down Taiwan's parliament and exposed deep divisions over the island's identity after seven decades of living apart from its vast, undemocratic rival across the strait.
The mainly student protesters, who proffer sunflowers as a symbol of hope, denounce the pact as an arrangement suiting Taiwan's wealthy. They say it will lead to mass encroachment by China, and its one-party mindset, on the island's cherished democratic values and institutions.
Its advocates, including Taiwan's president and his government, say it is a vital step to normalising relations with Beijing and will provide jobs and improve living standards.
Protesters demand the repeal of the trade deal, which was only one step away from parliamentary ratification before the sit-in began.
They also demand lawmakers pass an oversight mechanism of trade pacts with the mainland before they pass the current trade deal - a move the government has agreed to in principle and could potentially pave the way toward an end to the stalemate.
"The government has fallen into the palm of big money here in Taiwan," said Miles Lin, 25, the main protest leader. "That, combined with pressure from Beijing, drove them to ram this pact through the legislature."
For more than two weeks, the assembly has been a scene of tumult - anti-government slogans draped over deputies' desks, grotesque effigies of politicians, sleeping bags, some occupied, some not, strewn across the carpet.
This is the first time protesters, a common sight in Taiwan, have taken over the island's highest lawmaking body, and constitute the largest anti-China protest in years.
With police cordoning off the assembly, and the students installed inside, authorities have had difficulty pressing home arguments above the din.
"The pact will be a boon for Taiwan's overall economy and lead to the creation of 12,000 jobs in Taiwan," President Ma Ying-jeou told reporters last week. "It's a guarantee of Taiwan's future competitiveness."
The ruling KMT, or Kuomintang, the party of Chiang Kai-Shek, who led the nationalists in their retreat to Taiwan after losing the Chinese civil war in 1949, denies allegations that its leaders have caved into a business lobby with deep financial ties to China.
"This pact will bring benefits to a number of sectors of the economy, including the labour market," a KMT spokesman said.
But at a deeper level, the controversy reflects larger anxieties about the direction of Taiwan society amid unprecedented closer ties to Beijing.
"This issue is not about the economy," Lung Ying-tai, the director of Taiwan's Ministry of Culture and a noted critic during the 1980s of the then-authoritarian government, told Reuters. "It's much deeper than that."
Especially divisive, she said, was opening Chinese investment to "soft" sectors - printing, advertising and film production. She says she is in favour of the pact but the government needs to do a better job communicating its benefits.
"How do you define the soft sectors? It has to do with culture, it has to do with values," Lung said. "The problems are not about trade. The problems are about identity."
Once established on Taiwan, the KMT relied on repression to stay in power as the "Republic of China". But by the late 1980s, with Chiang gone, a transition to democracy took hold, with elections, a lively, if unruly, parliament and a free press.
Some Taiwanese began calling for the island to declare independence, anathema to Beijing, which threatened to bring the island back into the Chinese fold, by force if necessary.
Any chance of conflict has been drastically reduced by Ma's policies and the conclusion of a trade pact to Beijing's liking.
REVULSION TO CHINA
But the deal spawned revulsion among young Taiwanese who feel they have nothing in common with a mainland where the press is censored, protests crushed and dissidents jailed. The backlash is the latest threat to Ma, whose approval ratings had already fallen into single digits before the fracas broke out.
"Are we Chinese or are we Taiwanese?" said protester Yen Wei-chen, 21. "If you look at our parents' generation, everything was Republic of China, one China. But we're Taiwanese. I don't feel Chinese at all."
It is the approach to Beijing which produces the main divide in Taiwan's largely two-party governing system.
The KMT abides by the "1992 Consensus", under which both sides recognise a single China, but say "no reunification, no independence and no war" is in Taiwan's best interests.
The opposition DPP, or Democratic Progressive Party, rejects "one China". It has codified an independent Taiwan into its platform, saying its democratic attributes have all but made the distinction clear anyway.
"Taiwan being independent is a reality," said Joseph Wu, the DPP's director of policy research.
But the DPP still promotes a version of the trade pact with sensitive sections like printing and advertising removed.
China has maintained a largely neutral stance on Taiwan's democracy, saying its main concern, for now, is boosting trade and investment and not rocking the diplomatic boat.
But China's President Xi Jinping, in office for a year, said last October that a political solution to the question of Taiwan's sovereignty could not be postponed indefinitely.
"There are realities on the ground in Taiwan and then there are larger geopolitical realities," said Wu Rwei-ren of Academia Sinica, a government-sponsored think tank. "The only weapon we have in that arena is the moral legitimacy of our democracy."
But as the protests reveal the messy vibrancy of Taiwan's democracy, the presence of one-party China looms larger.
"We are working with a harsh reality, living under the shadow of something we distrust," said the Culture Ministry's Lung. "All the more reason we have to respect each other, understand each other and try to work it out with each other." (Additional reporting by Koh Gui Qing and James Pomfret; Editing by Ron Popeski)