Baba’s Explainer – US-China’s tussle on Taiwan

• China has pursued a typical carrot and stick policy to achieve the reunification of Taiwan with the mainland.
• It has held out the prospect, indeed preference for peaceful reunification, through promising a high degree of autonomy to the island under the “one country two systems” formula first applied to Hong Kong after its reversion to Chinese sovereignty in 1997.
• According to this formula, Hong Kong would retain its free market system and its political and judicial institutions and processes for a period of 50 years, thus enabling an extended and gradual transition.
• The same was promised to Taiwan, but with the added assurance that it could also retain its armed forces during the transition period.
• However, China is a much stronger power in world politics today. The Chinese government passed a law in 2005, giving Beijing the legal basis for military action if it judges Taiwan to have seceded or to be about to.

However, in recent years, Taiwan’s government has said only the island’s 23 million people have the right to decide their future and that it will defend itself when attacked. Since 2016, Taiwan has elected a party that leans towards independence. This has made China take more aggressive measures towards Taiwan not making it a secret that it is willing to take military actions if needed

• With China itself adopting market-oriented reforms since 1978 and becoming a significant economic and commercial opportunity globally, Taiwan business entities have invested heavily in mainland China and the two economies have become increasingly integrated. 
• Between 1991 and 2020, the stock of Taiwanese capital invested in China reached U.S. $188.5 billion and bilateral trade in 2019 was U.S. $150 billion, about 15% of Taiwan’s GDP.
• By contrast the stock of Chinese capital invested in Taiwan is barely U.S. $2.4 billion
• China hopes that burgeoning economic relationship with Taiwan would weaken opposition to unification. 
• At the same time, China is capable of inflicting severe economic pain on Taiwan through coercive economic policies if Taiwan is seen to move towards an independent status.

• The United Nations does not recognise Taiwan as a separate country; in fact, only 13 countries around the world — mainly in South America, the Caribbean, Oceania, and the Vatican — do.
• S. has declared that it will “maintain the ability to come to Taiwan’s defence” while not committing itself to do so. This is the policy of “strategic ambiguity” of USA
• In June 2022, President Biden said that the US would defend Taiwan if it was invaded, but it was clarified soon afterward that America does not support Taiwan’s independence. While the US has no formal ties with Taiwan, it remains Taiwan’s most important international backer and arms supplier.
• China, on the other hand, is committed to pursuing peaceful unification but retains the right to use force to achieve the objective. This is its China’s version of strategic ambiguity. 

• For China, the presence of a senior American figure in Taiwan would indicate some kind of US support for Taiwan’s independence.
• Chinese Foreign Ministry had said China would take “resolute and strong measures” if the visit takes place.
• China has clearly stated that Pelosi going to Taiwan would gravely impact the foundation of China-US relations and send a seriously wrong signal to Taiwan independence forces.
• Domestic political considerations appear to be driving both sides into their respective corners in this entirely avoidable crisis.
  • China’s public warnings have forced US to ensure the trip takes place because cancellation would be seen as weak and politically costly for the Biden administration.
  • Xi is three months away from a politically sensitive Party Congress that will mark the start of his third term. Any hint that Xi has been weak in confronting the US on Taiwan issue could weaken his authority and embolden rivals waiting in the wings.
  • A sharp response would discourage other countries from engaging with Taiwan at higher political levels and it may also shine Mr. Xi’s status at home.
  • The fact that neither side wants, nor can afford, a military confrontation may lead to diffusion of the current tensions with each side walking away and claiming a show of strength for their domestic audiences.

• The initial moves have been predictable. Military exercises around Taiwan have been expanded, with Chinese aircraft intruding more frequently across the Taiwan’s air space.
• Chinese naval ships are cruising within the Taiwan Straits and around the island itself. During the period the exercises continue, there will be a virtual blockade of Taiwan as foreign vessels and aircraft will be obliged to stay clear.
• Economic sanctions have been announced, prohibiting imports of a whole range of foodstuffs from Taiwan. There may be more to come.
• One item which will be left out is semi-conductors, a critical import for a range of Chinese high-tech industries.
  • Taiwanese firms like the Taiwan Semi-Conductor Manufacturing Company (TSMC) are world leaders in the most sophisticated brands of chips imported by a large number of countries. This is an area of acute vulnerability for China.
• This may either hasten Chinese plans to invade and occupy Taiwan in order to gain access to this critical capability or to deny China’s adversaries — in particular, the US — access to it.
• Therefore, Taiwan sits right in the middle of US-China high-tech competition.

• In March 2021, the U.S. Pacific Commander, warned that China could invade Taiwan within the next six years as part of its strategy of displacing U.S. power in Asia. He suggested that Chinese military capabilities had been developed in order to achieve this objective.
• The recent initiatives of the Quad and AUKUS may act as a deterrent against Chinese moves on Taiwan.
• But they may equally propel China to advance the unification agenda before the balance changes against it in the Indo-Pacific.
• For these reasons, Taiwan is emerging as a potential trigger point for a clash of arms between the U.S. and China.

• There is always the risk of an accident or miscalculation triggering a wider military clash despite the China wanting to avoid a direct and possibly dangerous confrontation with the US
• The main target of China’s escalating response will be Taiwan and therefore many serious analysts in Taiwan have criticised the Pelosi visit as making Taiwan more vulnerable without any assurance that the US will commit to defending the island against the Chinese military threat.
• Taiwan is indeed caught in the crossfire between China and the US and being a proxy in a fight between giants is the most uncomfortable position for any state to be in

• They feel reassured by the considerable US military presence deployed in the region and tacitly support its Indo-Pacific strategy. However, their economic and commercial interests are bound tighter with the large and growing Chinese economy.
• Just as Taiwan is caught in a crossfire between the US and China, so are the East Asian and South East Asian countries. Most do not wish to be forced into making a choice.
• The long period of relative peace in Asia may be nearing its end.

• Pragmatism tells that India should be consistent with its one China policy even while maintaining and even expanding non-official relations with Taiwan.
• For the US, Japan and Australia, Taiwan is a key component of the Indo-Pacific strategy. It is not for India.
• In one sense, China’s preoccupation with its eastern ocean flank of the Yellow Sea, the Taiwan Strait and the South China Sea is good for India. It diminishes Chinese attention toward the Indian Ocean, India’s primary security theatre.
• One should use the opportunity to expand India’s naval capabilities and maritime profile in this theatre before the Chinese begin to look to our extended neighbourhood with renewed interest and energy.