History || China Taiwan Conflicts

The Republic of China was founded in 1912.  At that time, Taiwan was under Japanese colonial rule as a result of the eighteen ninety five Treaty of Shimonoseki, by which the Qing ceded Taiwan to Japan. The REPUBLIC OF CHINA government began exercising jurisdiction over Taiwan in 1945 after Japan surrendered at the end of World War II.

After World War II, there was combat in mainland China between nationalist government troops and the Chinese Communist Party, which led to the division between the two. In 1949, the communists prevailed, and Mao Zedong seized power in Beijing. The Kuomintang, a nationalist party, withdrew to neighboring Taiwan during this time. Since then, the Kuomintang has been one of Taiwan’s leading political parties and has ruled the island for a sizable portion of its history. China puts a lot of diplomatic pressure on other nations to avoid any actions that can be seen as recognition of Taiwan. Only 13 nations currently recognize Taiwan as a sovereign state.

Importance of Taiwan || China Taiwan Conflicts

Taiwan’s economy is hugely important. Much of the world’s everyday electronic equipment – from phones to laptops, watches and games consoles – is powered by computer chips made in Taiwan. Certainly on the semiconductor front, we’ve over the years developed a greater dependency on Taiwan.

By one measure, a single Taiwanese company – the Taiwan Semiconductor Manufacturing Company or TSMC – has over half of the world’s market. TSMC is a so-called “foundry” – a company which makes chips designed for consumer and military customers. It is a vast industry, worth almost $100bn (£73bn) in 2021.

Present || China Taiwan Conflicts

China has held its biggest-ever show of military force in the air and seas around Taiwan, including the firing of ballistic missiles. The military exercises followed a visit to the island by the Speaker of the US House of Representatives, Nancy Pelosi. Relations between Taiwan and China appear to have deteriorated sharply following Ms Pelosi’s visit, which Beijing condemned as “extremely dangerous”.

China’s military exercises focused on six danger zones around Taiwan, three of which overlap the island’s territorial waters. Taiwan says the move, which forced ships and planes to find routes around those areas, violated its sovereignty and amounted to a blockade. The drills were due to end on 7 August, but China continued large-scale military activities around Taiwan on 8 August.

Tensions between China and Taiwan had already been increasing. In 2021, China appeared to ramp up pressure by sending military aircraft into Taiwan’s Air Defence Zone, a self-declared area where foreign aircraft are identified, monitored, and controlled in the interests of national security. Last year, the numbers of aircraft reported peaked in October 2021, with 56 incursions in a single day, with Taiwan’s defence minister saying relations were the worst they had been for 40 years.

Taiwan made data on plane incursions public in 2020. China sees Taiwan as a breakaway province that will eventually be under Beijing’s control again. However, the self-ruled island sees itself as distinct from the mainland, with its own constitution and democratically-elected leaders. China’s President Xi Jinping has said “reunification” with Taiwan “must be fulfilled” – and has not ruled out the possible use of force to achieve this.

Impact on the World of Taiwan’s Accession

to China || China Taiwan Conflicts

Trade and external relationships have been deteriorating with rising tensions over China’s over-powering strategies. Near term outlook for Taiwanese trade seems to be favorable. However, long term outlook stresses the need for diversification to enhance business. Despite Chinese threats, Taiwanese democracy remains strong, evident from the “Economists – Democracy Index,” which ranked Taiwan as the 11th most democratic country—higher than other Asian peers and the U.S. High uncertainty, geo-political risks, and the long, unresolved status of Taiwan have kept the economy under a dangerous flashpoint in the Asia Pacific region.

• TSMC (Taiwan Semiconductor Manufacturing Company) is the largest foundry in the world and holds around 65 percent of the global production of chips.
• Any potential conflict with China would completely disrupt the entire supply chain of TSMC and labor availability, and could cause major shortage of electronic chips.
• Additionally, China controls five percent of the global production of chips, which could also be affected.
• This could further impact the already existing supply-demand gap for electronic components.

Any military aggression in the South China sea will cripple around 80 percent of the production capacity, severely impacting semi-conductor chips production, that are facing order backlogs due to the existing semiconductor shortage. A Chinese takeover in Taiwan could give Beijing chock-full control over one of the world’s most important industries.

Apart from the semiconductor industry, other major implication can be on the trade, because China will be able to control the trade route in the Strait of Taiwan. The tourism industry of the adjoining countries may also suffer. The economic and geopolitical impact on the neighboring countries like Japan, South Korea, Philippines, Indonesia, India and other south East Asian countries can be seen in the near future. 

Beijing taking steps to increase its military pressure on Taiwan, carrying out now regular amphibious assault exercises and military and spy flights over the nation. There are so many different factors right now that could potentially lead to a Chinese invasion of Taiwan. I think for older generations, they may remember a Taiwan that produced cheap toys.

That, however, has really shifted. Certainly on the semiconductor front, we’ve over the years developed a greater dependency on Taiwan. We don’t have much choice in the matter. The world sort of allowed Taiwan to become the top manufacturer of advanced chips. Silicon Valley was created, we created the semiconductor industry here in America, and over the past few decades we’ve just allowed ourselves to fall behind. If something happens in Taiwan, we are in trouble.

The one-China policy is actually different from the one-China principle, which is a concept that mainland China has. So Beijing says that there is one China that is under the communist government of the PRC. At the end of the civil war in 1949, the Communists won and formed the People’s Republic of China. And then the Nationalists fled the mainland and went to the island of Taiwan, where they formed their own government. Pre-dating 1979, we recognized Taiwan as the sole and legitimate government of China.

Then, under the Carter administration, that recognition was switched. The US has tried not to make any definitive statements about Taiwan and its status. We have the so called strategic ambiguity in our commitment to Taiwan, which dates back 40 years because we were just as afraid that Taiwan would use the American security umbrella to be more assertive and declare independence as we were worried about China attacking. 

So we tried to prevent either of those possibilities by making it unclear whether we would come to Taiwan’s defense. Things have changed now primarily for two reasons. The threat from China is simply becoming has simply become too significant to ignore. Its military has grown enormously since the 1990s.

With Taiwan, with its democracy, we don’t have that same concern or certainly it’s significantly reduced that Taiwan would unilaterally declare independence. Taiwan has managed to position itself over the last 30 years as a contract manufacturer or original design manufacturer of choice for many of the world’s leading technology companies, most of which come from the states, quite frankly. Companies like Apple, Hewlett-Packard, Microsoft, Google, Amazon and others.

The key major company that people talk about with Taiwan is a company called TSMC, which is a chip foundry, and they make chips and parts for so many different American companies as well as other companies around the world. We don’t make any of the world’s most sophisticated, smallest, leading edge chips in the United States of America. 

Somehow we’ve allowed ourselves to get into a position where we are utterly dependent on Taiwan for those chips. And those are the very chips that you need in artificial intelligence, high end computing, communications, military equipment. We’re still seeing capital being plowed into Taiwan at really significant levels. Yes, there are tensions in the Taiwan Strait, but the global business community see Taiwan right now as an important place to deploy capital.

And that’s taking place.  One of Xi Jinping’s major goals is what is called national rejuvenation, which he wants to achieve by 2049.  And part of that national rejuvenation is bringing back to the homeland all territories that that have not been subject to Beijing’s controls. Xi is bet his entire life on being able to bring back Taiwan into China’s fold. And so I think that what they did to Hong Kong is a horrible omen for what’s about to happen in Taiwan.

Officially, Beijing has not changed its position on Taiwan. They constantly say that they want to have unification with Taiwan. However, we have seen President Xi Jinping and his administration over the past couple of years increase the military intimidation of Taiwan with, for example, flyovers. A lot of it coincides with China really feeling its oats in military terms because it’s now about 15 years that China’s been, I think, pretty clearly the world’s number two military power.

Tensions between the United States and China are now rising. At a news conference today in Tokyo, President Biden gave Beijing a stern warning. Are you willing to get involved militarily to defend Taiwan if it comes to that?

Yes, we agree with the one-China policy. We signed on to it and all the attendant agreements made from there. That really made a lot of headlines because it seemed as though it was a breach of what has been the traditional relationship between the US and Taiwan. If you’re worried that China may decide strategic ambiguity means that the Americans really would sit this one out because we didn’t come to Ukraine’s defense either.  You don’t really want China to think that way. You want them to believe there’s a high probability of a US response, a US military response.

When the US made the shift to recognize Beijing as China, it didn’t necessarily want to be seen as walking away from its relationship with Taiwan. The US continues to supply arms to Taiwan and continues to see Taiwan as an important economic partner. And because of that, Beijing has been very concerned in the past couple of years that the relationship between Taiwan and the US appears to be getting closer and closer.

So what we did have was we had the Indo-Pacific economic framework the President launched several weeks ago in Japan, and a number of economies have signed up from that. It’s an interesting framework.  Obviously, we’ll have to see what what the meat looks like on the bones. That’s always where, you know, that’s where where the rubber meets the road.

Definitely a fear that we potentially could get into a situation where China decides that it’s best for Beijing to take Taiwan by force. And one wild card in all of this is that the power in Beijing is becoming much more centralized.

I think we should be able–we collectively China, Taiwan, the United States, Japan, other players–we should be able to avoid war because we’ve been all talking about it long enough, preparing long enough that everybody has to go into this thing clear eyed about what could happen if there were a fight.

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