Geopolitics of Taiwan

In Blog, Economic Security
August 17, 2022
Asfand Yar Khan
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The new Pelosi-Taipei camaraderie may lead to serious economic and security related repercussions for the world. The US House of Representatives Speaker Nancy Pelosi visited Taiwan provoking aggressive responses from Beijing. This recent development has only increased the uncertainty around global economy and international security, as experts predict beginning of another conflict that may have

The new Pelosi-Taipei camaraderie may lead to serious economic and security related repercussions for the world. The US House of Representatives Speaker Nancy Pelosi visited Taiwan provoking aggressive responses from Beijing. This recent development has only increased the uncertainty around global economy and international security, as experts predict beginning of another conflict that may have far-reaching implications.

In global power politics, rival states strive to exploit each other’s weaknesses. It has been like that since the beginning of nation-state system. Recent developments from the ‘first islands’ in East Asia leave no doubt that Taiwan is currently at the center of global power politics. Despite its uncertain position at the international stage where only a few countries recognize Taiwan as a Sovereign country, its strategic importance for both China and the US cannot be undermined. If Taiwan becomes a part of China, which China insists it should, then China will easily gain control over the Pacific Region. This will be detrimental for US’s superpower status.

US-China relations have gone from bad to worse in the last few years. Successive US Presidents have openly lambasted strategic and economic endeavors of China. From 2020 onwards, the US imposed sanctions and visa restrictions against several Chinese government officials and companies, in response to allegations of a genocide against the Uyghur population in Xinjiang and human rights abuses in Hong Kong and Tibet.

Nancy Pelosi’s visit of Taipei along with the congressional delegation seems like US’s attempt to hurt China where it might hurt the most. The visit has ignited strong response from Beijing that includes fresh trade restrictions against Taiwan and a threat of targeted military operations. China has also announced the start of military exercises in six zones around Taiwan, which according to Taiwan, is a blatant violation of its airspace.

The post-visit statement issued by the delegation shows the American ambitions behind this move which directly point towards the US National Security Strategy (NSS) 2017 and the Interim US NSS issued in March 2021. According to the statement, the controversial visit “honors America’s unwavering commitment to supporting Taiwan’s vibrant democracy.” Further, it says “our discussions with Taiwan leadership will focus on reaffirming our support for our partner and on promoting our shared interests, including advancing a free and open Indo-Pacific region.” This statement not only clarifies US’s strategic motives behind the visit but also directly takes a dig at China where it says “America’s solidarity with the 23 million people of Taiwan is more important today than ever, as the world faces a choice between autocracy and democracy.”

Taiwan is the world’s leading manufacturer and exporter of semiconductor chips, which are an essential component of major household and daily-use electronics such as, phones and cars. Along with other trade restrictions imposed on Taiwan by China like, suspension of import of citrus fruits and fish, the export of natural sand to Taiwan was also suspended by the Chinese Ministry of Commerce. It is noteworthy that natural sand is a key component used for the production of semiconductors. Hence, these restrictions are likely to disturb worldwide supply chain mechanisms. According to the World Bank, many countries are already failing to cope with ‘double digit’ inflations after strict COVID lockdowns and Russia-Ukraine War.

Pelosi’s visit triggered the anticipated outrage from Beijing. In a statement, the Spokesperson for the Chinese Ministry of Foreign Affairs said, “the US and Taiwan separatist forces must take the responsibility and pay the price for the mistakes they made.” Chinese authorities are clearly provoked over the recent US-Taiwan affair. It must be understood that no global power contender would tolerate any interferences near its borders. Ukraine’s bid to join NATO with US backing triggered a heinous war that has adversely impacted global economy.

World’s leading auto and tech giants must be following the Beijing-Taipei developments with worry and dismay, because these companies will be the first ones to bear the brunt of any possible disturbance in the world’s semiconductor supply chains. Moreover, the Taiwan Strait is an important shipping route that connects Asia with Europe. China’s intends to put its military muscle on display as it announced military exercises in the Taiwan Strait. This may impact maritime transits in particular and world economy in general.

Behind all significant incidents involving global powers at the international level, there are reasons that point towards local politics and consolidation of power. Although, Democrats and Republicans are more or less equally hostile towards China, Pelosi’s visit may have come with the intent of securing a strong ‘anti-China’ narrative before going into the upcoming mid-term elections. Another thing that makes this conflict look more prone to escalation is the re-election of President Xi Jingping for his third term.

This is not the first time that China is conducting military exercises in the Taiwan Strait and the South China Sea. However, Pelosi’s Taipei stint has brought China-Taiwan conflict to a point from where it could escalate. This escalation may not only cost lives but will carry with itself a huge pile of strategic and economic consequences. Given the dangerous level of verbal hostilities between the US and China, it is highly unlikely that Beijing would keep its response confined to air incursions and military exercises. China may think of exploiting Taiwanese dependence on imported crude and impose a blockade of the Island Nation. Any such move would be calamitous for world economy which is already on clutches.

Pelosi’s visit may have far reaching impacts on international peace and security. It may prove to be detrimental, not only for the people of Taiwan, but of the world at large. The third world is yet to recover from the economic shock after COVID-19 and Russia’s invasion of Ukraine. This could prove to be a diplomatic miscalculation at so many levels. Taiwan is the world’s 22^nd largest economy that has developed cutting edge technologies. This makes it a crucial player in the Silicon Valley supply chain. Moreover, the Taiwan Strait is a critical point in the Pacific that falls in the way of virtually the majority shipping to and from Japan and other East Asian countries.

Pakistan and Taiwan do not maintain any official embassy council, trade, and cultural center, but nevertheless, they are progressively carrying on trading. According to the Taiwan External Trade Development Council (TAITRA), Pakistan’s imports from Taiwan totaled US$626 million in 2019. In the same year, its exports to Taiwan were worth US$ 100 million. The major imports include petroleum products, electrical machinery, plastics, iron, and steel. So, if there is an escalation, Pakistan will most likely lose trade worth US$726 million. There might be an increase in the cost of iron and steel as traders will start looking for alternate but expensive import destinations.

It will not be wrong to assume that any Chinese aggression in the Strait would halt trade from the Region which can be called the world’s manufacturing hub. Escalation of the Taipei-Beijing Conflict may jeopardize the national securities of many other countries within East Asia and beyond. Like the Korean War of 1952, Taiwan conflict can also become the first armed intervention of a new cold war.