The already difficult relationship between the US and China escalated in January 2021 after the start of the global “semiconductor crisis”. At the time, it was announced that the US was lifting all restrictions on contacts between US and Taiwanese officials that had been in place for decades, violating the "One China" principle .
Beijing said that the United States was "meddling in China's internal affairs" and threatened to annex Taiwan militarily, despite its commitment to the idea of "peaceful reunification" with the island. Officials say Washington is colluding with Taipei to challenge Beijing and support forces at home that want the island to formally declare independence. This is how Beijing argues for the increased fleet exercises off the coast of the island. China also says that any attempts by Taiwan to gain formal independence would mean war.
On April 15, 2021, Taiwanese President Tsai Ing-wen received an American delegation for an unofficial visit to Taiwan. According to the White House, the visit was initiated by US President Joe Biden, which was seen as a sign of Taiwan's respect and commitment to Taiwanese democracy. China's foreign ministry said it was calling on the US to "not play with fire" and immediately stop all forms of official exchanges with Taiwan. After the arrival of the delegation to Taiwan, the PRC resumed military exercises near the island on the same day.
In May 2022, US President Joe Biden said that the United States was ready to defend Taiwan by military means in the event of a Chinese attack. At the time, Biden was directly asked if the United States would defend Taiwan by military means in the event of a Chinese invasion, although the Americans did not do so after the Russian invasion of Ukraine. Biden responded, "Yes... that's a commitment we've made."
Why the States of Taiwan
In 2018, Taiwan accounted for 84.8% of the global motherboard market, 68.1% of the wireless LAN technology market, 46.4% of the mobile phone optical lens market, and about 30% of the liquid crystal display market by value.
As of 2019, the US was Taiwan's second largest export market and third largest source of imports, as well as Taiwan's second largest foreign direct investment (FDI) destination (total $18.3 billion). FDI from the US to Taiwan ranks third among foreign investments (total $24.7 billion). For example, in October 2020, the US corporation Microsoft announced its largest investment in Taiwan in the amount of about $10 billion amid weakening US-China trade ties.
“In the most advanced technologies (processors), Taiwan provides well over half of the world’s production,” an expert who develops analog and power integrated circuits for the space industry explained to The Insider. - Taiwan produces chips from almost all key American companies - Apple, AMD, Qualcomm, NVIDIA, etc. The exception is Intel, but even they partially produce chips in Taiwan. The US government is taking measures to localize production (and reduce risks for the military-industrial complex), but it will take several more years before they are implemented. Right now, an attack on Taiwan by China would instantly bring down the global economy.
The government of Taiwan purposefully carried out the transformation of the country's economy from agrarian to technological in the late seventies and early eighties. One of the key areas was microelectronics. Around the same time, active globalization began in microelectronics, integrating Taiwan into the world's production chains. The current government of Taiwan actively uses this embeddedness as a shield against the claims of mainland China.
At the same time, mainland China has been and remains Taiwan's main export market. In 2020, its exports to China (including Hong Kong) reached $136.74 billion, accounting for 43.8% of the island's total exports. One can see a serious degree of the island's dependence on mainland China. Given the political tension, reducing this dependence is one of the priorities of Taiwan's foreign economic strategy.
The semiconductor crisis of 2021 brought Taiwan and the US closer together
The pandemic has forced global digitalization to accelerate, and 2020 saw a surge in innovation in 5G, artificial intelligence and high-performance computing, in which semiconductors play an important role.
This led to the fact that in January 2021 the world faced the problem of a shortage of semiconductors. The crisis was also affected by a general increase in demand for electronics and the impact of the trade war between China and the United States on supply chains. Car companies around the world: Volkswagen (Germany), Ford (USA), Toyota (Japan) - were forced to suspend production. According to the interlocutor of The Insider, this crisis has not yet been overcome. “The peak of the crisis has passed, but the deficit is still there,” the expert says. It is expected that it will continue until the end of the year. At the same time, on the one hand, demand dipped due to the war and lockdowns in China. On the other hand, the same Chinese lockdowns also undermined the supply due to the fact that Chinese factories were standing still.”
Taiwan's largest semiconductor maker is TSMC, which amid the crisis said it plans to invest $40 billion to $44 billion in 2022 to ramp up chip production. At the same time, the company does not report exactly where it is planned to build factories, and it is the United States that can be such a technopark: in May 2020, the company announced that it would build a semiconductor plant in the US state of Arizona. The total cost of the project is $12 billion.
In a statement, the Taiwanese company explicitly stated that the construction is necessary for the United States: "This project is of critical strategic importance to the vibrant and competitive US semiconductor ecosystem, which allows leading US companies to manufacture and benefit from their advanced semiconductor products in the US."
Why Taiwan is not Ukraine
“If we are talking about the fact that the United States has an obligation to defend Taiwan, then this is also a broad discussion in the United States,” says Vladislav Faraponov. - This means that, in fact, this is another member of this club, which is called "US Allies outside NATO", i.e. states with which the United States has a special relationship in the field of defense security, enhanced cooperation, and so on. The obligations relate to US guarantees that if the territorial integrity of Taiwan is violated, then it will be the US that will provide Taiwan with the opportunity to defend itself, which includes the supply of weapons from the US.
According to Faraponov, nominally the same guarantees are provided by the United States to Ukraine, but in the event of China's invasion of Taiwan, the United States will suffer both political and serious economic losses, which will ricochet around the world.
“Taiwan is one of the top trading partners of the United States, and this is certainly a loss of markets, as we see in the example of Ukraine, when there are difficulties in exports. The US will not allow this, but there are more political and military threats than economic ones.
Don't forget that Taiwan itself is the 21st economy in the world, its GDP consists of technological and service products. Still, what you said about semiconductors, I can't say. I see more political risks. It will be another blow for the United States if China allows itself aggression, this is the face of the United States in this region - this is a reputation, these are obligations and trust in the United States in the international arena. There is more symbolism, military-political benefits and other issues than the economy itself.”
Orientalist Andrei Smolyakov believes that it is too early to predict an armed conflict between Taiwan and China with the active participation of the United States. According to him, the states are indeed actively supplying weapons to the island, but this is not enough to protect against a full-scale offensive by Beijing.
“The United States has always supplied weapons, but the volumes are unlikely to be enough to fully protect the island - its army, although equipped, is very small, smaller than that of Ukraine, and the condition of the Chinese army, apparently, is much better than Russia.
The main question, it seems to me, is whether the United States is ready to get involved in a direct confrontation with China for the sake of Taiwan. The usual position of the White House on this issue is “strategic uncertainty”. Taiwan is not recognized as a sovereign state by the US; they have sworn off interfering in its affairs with Beijing, they will sell weapons to it - but only defensive ones - and "the decision of the future of Taiwan by any measures other than peaceful ones" will be considered a direct threat to the United States. As a result, no coherent strategy is deliberately expressed in case of an escalation, no promises are made to anyone, but the fleet, if anything, is always there.
What is interesting here is that recently Biden openly stated that in the event of China's invasion of Taiwan, the United States would intervene directly, and this goes against “strategic uncertainty”, and no one expected this at all. The White House immediately issued a statement that Mr. President did not mean anything like that, but the word is not a sparrow. Whether this is a reservation, another trick to contain Beijing, or a complete turn in policy towards Taiwan is unclear.”
US interest in an independent Taiwan is high, Smolyakov says.
“This is the largest technology hub, a manufacturer of semiconductors, which in the future, due to a lack of domestic production, the US military sector can count on - and this indicates strategic importance. On the other hand, Taiwan is a very small trading partner for the United States, with a turnover ten times less than trade with China. From this point of view, maintaining economic relations with China is more important for the US than with Taiwan.
But there are other indirect factors as well. First, ideological: Taiwan is an example of a “different”, democratic China, a symbol of the possibility of the victory of Western values and the political system in the PRC itself. Second, strategic. Taiwan, for all its strategic ambiguity, is the closest partner and ally to China. This is another island (literally) of containing Beijing in the Asia-Pacific region, and this is important for the United States. And finally, an indirect economic factor - the seizure of control over Taiwan will give China access to technologies and production, which it currently does not have, greatly strengthening its position in both military equipment and in commerce. Well, the last factor, of course, is reputational - but it really, it seems to me, is the last one.
Unfortunately, it is not yet possible to give an answer to the main question - what will happen if China moves to real actions. This, strictly speaking, is the meaning of that very strategic uncertainty: no one knows, including China, and this significantly strengthens the position of the United States in terms of deterrence.
On July 30, the situation escalated again. Amid reports that the People's Liberation Army of China (PLA) began a live-fire exercise 120 km from Taiwan, the head speaker of the US House of Representatives, Nancy Pelosi, flew from a US base, presumably to Asia. It was also reported that she plans to visit Taiwan. US National Security Adviser Jake Sullivan and other senior National Security Council officials opposed the trip because of the risk of escalating tensions, according to US media. US President Joe Biden said he could not advise Pelosi on her plans to visit Taiwan.