An island smaller than Switzerland (36,000 km2 vs. 41,000 km2) with a population of about 23 million, Taiwan, is it really important? If the PRC annexed it tomorrow, would it really change the face of the world?
These questions may seem incongruous in light of Taiwan's history, its official name, the Republic of China (DRC), the well-known and insistent claim to the other China, the People's Republic of China (PRC), and its geographic proximity to China. continental, no more than 150 kilometers. However, for several years now, analysts have focused – and rightly so – on the island due to the growing threats posed to its security by the People's Liberation Army (EPL) and the growing and increasingly open concern for it expressed by United States (only real protector of the survival of Taiwan and the status quo in the Taiwan Strait), as well as other countries in the region, such as Japan and even the European Union. The invasion of Ukraine by Putin's Russia in February 2022 has sharpened those concerns.
To the two questions posed at the beginning, the answer can only be positive, and for the following three reasons. Ranked 21st with a GDP of $829 billion in 2022 and 16th in terms of foreign trade with trade in goods and services amounting to $922 billion in 2021, the Taiwanese economy plays a fundamental role in the value chain of the world economy, especially in the field of semiconductors. On a geostrategic level, Taiwan constitutes a veritable tectonic plate that, if it were to give way, would put an end to the pax americana established in the Asia-Pacific after the second world conflict. Finally, since the late 1980s, Taiwan has become a full-fledged democracy and a model for non-Western societies, especially Asian ones; above all, for People's China in case it ever decided to abandon the one-party dictatorial system established by Mao Zedong in 1949.
Taiwan is above all an inescapable economic center. Its success is based on three decades of rapid development, based on a successful agrarian reform that led to the emergence of a dynamic business class capable of substituting expensive imports for their own products and then exporting them not only to the US market, but to the four corners of the world. world. That success was reinforced by the Cold War context, as the United States provided financial aid and Japan outsourced many of its productions to the island.
In the late 1980s, Taiwan ended its frozen relations with People's China. Its nationals and especially its businessmen (the taishang in Chinese) began to travel to the mainland. In 1992, an informal communication channel was established between Taipei and Beijing. Since then, despite the tensions that have arisen on various occasions on both sides of the strait, Taiwanese investments in the PRC have not stopped increasing. In 2018, the number of these investments amounted to more than 43,000 million dollars, and their total amount, to 183,000. And so, in the early 2000s there were about 2 million Taishang in mainland China, concentrated mostly in the Pearl River Delta in Guangdong (Shenzhen, Dongguan) and the lower Yangtze River (Shanghai , Kunshan in Jiangsu).
More generally, like Hong Kong, but also like Japan and later South Korea, Taiwan has contributed a lot to the economic development of People's China. The island has relocated its companies in need of labor to the mainland; companies in sectors ranging from clothing to shoes, from toys to bicycles, from sporting goods to mobile phones. Chinese special economic zones established in Shenzhen and elsewhere were directly modeled on those created two decades earlier in Taiwan.
It is true that, since about 2010, the industrial progress of the Chinese economy, the increase in the cost of labor and the increase in geostrategic tensions have led many Taiwanese companies to relocate their production lines to Southeast Asia (especially , Vietnam) or South Asia (for example, Bangladesh). All in all, Taiwan's level of dependence on China remains high: in 2022, 42% of its exports went to that country; the cumulative number of Taiwanese investments amounted to 45,000 million dollars in 2021 and the total amount of those investments to 194,000; the big electronics manufacturer Foxconn (Hon Hai) still has more than a million employees on the mainland; the taishang community is still large, estimated to still be around 400,000 people. And all this despite the efforts made by the Government of Tsai Ingwen, president of Taiwan since 2016, to reduce that dependency. In reality, although it has increased economic, cultural and political ties with the other Indo-Pacific countries (Asean, India, Australia, etc.), the “new southward policy” (xin nanxiang zhengce) launched by Tsai has only changed marginally things.
However, the dependence is reciprocal: the Chinese economy imports most of its semiconductors from Taiwan, an island that today manufactures 92% of the most sophisticated semiconductors (less than 10 nanometers). The main Taiwanese company, TSMC (Taiwan Semiconductor Manufacturing Company), produces 35% of automotive microcontrollers and 70% of the microprocessors used in mobile phones; it also dominates the production of semiconductors for the most modern graphics processing units (high-end graphics processing units) of computers and servers. And more generally, the entire world depends on Taiwanese semiconductors; above all, the United States, Japan, the European Union, especially Germany, and Southeast Asia.
And that is where geopolitical factors come into play: in August 2022, with the Chips and Science law, the Biden government decided, on the one hand, to impose unprecedented restrictions on China on the export of the most miniaturized semiconductors and, on the other , provide massive financial support (280,000 million dollars) for the development on US soil of production lines for this new black gold. The decision has had a direct and significant impact on Taiwanese semiconductor companies such as TSMC. If they sell a large number of semiconductors to China, they will have to rethink their strategy and go to other markets, such as the American one. The US authorities have only granted TSMC a one-year exemption to continue selling to mainland China as before. For this reason, anticipating such an evolution, Morris Chan, the owner of TSMC, decided in 2020, that is, two years after Donald Trump started the economic war with Beijing, to invest 12,000 million dollars in the construction of a factory in Arizona. and produce semiconductors smaller than five nanometers. Such a factory is scheduled to open in 2024. Furthermore, in December 2022, TSMC announced that it had begun construction of another factory capable of producing 3-nanometer chips. Its opening is scheduled for 2026. TSMC's total investment in the United States now amounts to 40,000 million dollars. However, TSMC is determined to maintain its core business, both in research and development and in production, in Taiwan.
The company announced at the beginning of 2023 that it would invest 61,000 million dollars on the island to manufacture its most advanced semiconductors (5, 3 and 2 nanometers). Hence, despite the growing risks, the island's continuing importance to the world economy.
Currently, Taiwan is not only at the center of the strategic confrontation and what I am tempted to call the new cold war, between China and the United States, but also in the front line due to its geographical location.
Since the start of reforms in 1979, the Communist Party of China (CPC) leadership has advocated peaceful unification with Taiwan. It has done its best to strengthen commercial and human relations on both sides of the Straits in the hope of increasing the island's economic dependence on the mainland and thus increasing the willingness of Taiwanese elites and, eventually, of society itself. islander to accept some form of political unification with the PRC.
However, such unification is impossible without ending the existence of the DRC in Taiwan, a de facto sovereign state since the end of the civil war between the CCP and the Kuomintang (KMT) in 1949. Given that it has preserved the Constitution (promulgated in 1946) of the DRC (established in 1911 on the mainland), Taiwan cannot agree to become an administrative region of the PRC under the “one country, two systems” formula applied to Hong Kong and Macao without sabotaging itself as a country and jeopardizing endanger the survival of their democracy. The Chinese government's white paper released in August 2022 makes it clear that only "patriotic" Taiwanese (meaning, willing to submit to the supreme authority of the CCP) will be able to rule Taiwan. Neither the KMT, now in opposition, nor the pro-independence Democratic Progressive Party (PDP), now in power, can accept that solution. Although the KMT has endorsed the “one China” principle according to its own interpretation (that is, the DRC continues to legally include the entire Chinese nation) and has maintained a communication channel with the CCP since 2005, it It is true that he is as committed to the sovereignty of the island as the PDP. It only foresees unification with the continent in the distant future and on the condition that the continent becomes democratized.
For a long time, the Chinese authorities were favorable to the status quo; They promoted as a priority the "peaceful development" of relations between the two shores of the Strait and tried above all to prevent any formal declaration of independence by Taiwan. Following Xi Jinping's rise to power in 2012, Beijing has wanted to speed up the unification process. The arrival in the government of Tsai Ingwen and the PDP in 2016 convinced Xi of the need to intensify his military pressure on Taiwan, multiplying the incursions into the air and maritime space near the island, although without the PLA ships and planes enter proper Taiwanese territorial waters or airspace (12 nautical miles from the coast). By adopting a coercive gray area strategy (ie, staying below the war threshold), the PLA has only fueled Washington's concerns and strengthened US-Taiwan strategic ties and military cooperation. And all the more so since, since the missile crisis of 1995-1996, the PLA has grown rapidly and now owns more ships than the US Navy (340 versus 293), a much more modern air fleet equipped with a large number of fourth-generation fighter-bombers, a strong cyber and electromagnetic warfare capability, as well as a panoply of conventional and nuclear missiles capable of neutralizing the advanced US military deployment in the Western Pacific (Japan, South Korea, Guam), in case of US intervention in an armed conflict around Taiwan.
Actually, today the risks of a military crisis and even a war between China and Taiwan have increased considerably. On the one hand, Beijing now realizes that any peaceful unification is increasingly unlikely. Attached as they are to their democracy and de facto independence, the Taiwanese only contemplate such a unification under duress. On the other hand, the PLA has an increasing capacity, in the absence of US intervention, to annex the rebel island by military means. The key uncertainty for Xi and the CCP leadership lies precisely in the degree of US determination to intervene in such a conflict. Since its normalization with the PRC in 1979, the United States has maintained a "strategic ambiguity" on the issue that has sown doubts in both Beijing and Taipei; This has enabled it not only to avoid a Chinese attack, but also any Taiwanese declaration of independence. However, given the intensification of Chinese threats, the US government has gradually clarified its position. For example, since his inauguration in January 2021, President Biden has already declared four times that the United States would intervene in the event of a PLA attack on Taiwan. The last occasion was in September 2022, a month after the visit to Taiwan by Nancy Pelosi, the (Democratic) Speaker of the House of Representatives, and the subsequent maneuvers of an unprecedented magnitude by the PLA simulating a blockade of the island. .
US Pentagon experts predict that a Sino-US war over Taiwan would be very painful for all parties involved, with up to 500,000 dead on both sides; not to mention the risk of nuclearization of the conflict.
Bound by the Taiwan Relations Act, an April 1979 act of Congress that obliges it to provide Taipei with defensive weapons and to be concerned with maintaining peace and stability in the Taiwan Straits, the US government cannot sit idly by. . For several years now, it has been increasing its support for the Taiwanese military and also increasing pressure on the Tsai Ingwen government to increase its defense effort. Thus, the Taiwanese defense budget has gone from 11,000 million dollars in 2018 to 19,000 million in 2022. Even though it continues to be much lower than that of the PRC (230,000 million in 2022), it allows Taiwan to strengthen its capacity to conventional deterrence. With the same objective, Tsai announced in December 2022 that military service would be extended to one year, compared to four months since 2013. At the same time, the Taiwanese government has reinforced the reserve forces (2.5 million of men) and civil defense (1 million volunteers).
In the opinion of the Pentagon, Taiwan should do more, much more. However, this effort is linked to a strengthening of the position of the United States in the western Pacific and an increase in the military spending of its allies in the area.
And, above all, from Japan, which now knows that it will not be able to stay out of an armed conflict in the Taiwan Strait in the event that it occurs. Due to its geographical proximity to Taiwan (Yonaguni, the southernmost and westernmost island of the Ryukyu Islands, of which Okinawa is the main one, is 110 kilometers from Taiwan) and its close strategic-military ties with Washington, Tokyo will be forced to to provide at least logistical support to any US military engagement. Consequently, the Japanese government plans to double the defense budget by 2027, which will go from the current 54,000 million dollars to 108,000 million.
However, the growth of the power of the PLA also worries Australia, which has not only increased its defense effort (36,000 million dollars in 2022-2023, 7.4%), but has also strengthened its strategic ties with the United States and the United Kingdom: it concluded a new pact called AUKUS with those countries in September 2021. Canberra then abandoned the supply of French diesel-electric submarines and agreed to acquire US-made nuclear submarines to better face the Chinese threat.
The goal of the United States is to build a coalition of allies and partners strong and cohesive enough to deter China from launching a military operation against Taiwan.
In this sense, Russia's aggression against Ukraine has contributed to reinforcing Taiwan's strategic importance and undoubtedly also made Xi Jinping think twice before embarking on a military adventure against the island.
In reality, Vladimir Putin's decision – unexpected for many – to invade Ukraine has fueled questions about the possibility of a war in the Taiwan Strait. He has shown that any authoritarian regime can quickly make such a decision. He has also shown that nationalist and irredentist passion can prevail over calculations and rational decisions. However, he has also shown that any armed conflict is fraught with uncertainties and unforeseen difficulties.
For this reason, Xi and the leadership of both the CCP and the PLA are closely watching the war to draw from it all the necessary lessons from a military, diplomatic and economic point of view. That said, taking over an island is much more dangerous than maneuvering tanks over a mainland. Furthermore, Moscow's international isolation is not without concern for Beijing, which is already trying to find the best way to protect itself against any economic and financial sanctions imposed by the United States and its allies.
Thus, taking advantage of the trade war with Washington and the covid pandemic, the Chinese authorities have tried, in their own way, to decouple the Chinese economy from the West and increase its technological autonomy in all fields, including, of course, semiconductors. .
In any case, the increase in Sino-US geostrategic tensions has reinforced the importance of Taiwan in the eyes of Washington, Tokyo, Canberra and even Brussels. In fact, it is hard to conceive of the United States leaving Taiwan to its own devices. Such a decision would have serious international consequences, it would call into question their credibility with the Asia-Pacific allies and would force them to accept not only Chinese economic dominance but also military dominance in their environment; With this, the United States would run the risk of replacing the pax americana in the region with a new pax sinica.
For this reason, the maintenance of peace and stability in the Taiwan Strait has become paramount, by containing not the economic development of the People's Republic, but its irredentist projects, and not only vis-à-vis Taiwan, but also in the South China Sea (Spratly Islands) and in the East China Sea (Senkaku-Diaoyu Islands). In general terms, Taiwan is a lock on China's ambitions in the western Pacific, preventing it from gaining control of the famous first island chain that runs from Japan to the Strait of Malacca via the Philippines and Borneo. Taiwan is thus an essential part of the front line against China.
The new cold war between China and the United States is different from the old one, which pitted Washington and Moscow for more than forty years: the Chinese and American economies are much more interdependent, and any complete decoupling of the two seems utopian. However, many of the ingredients of the previous contest have reappeared: strategic competition, technological competition, and also rivalry between two opposing political systems. And it is on this last point that Taiwan's democracy is most important.
Indeed, Taiwanese democracy –now consolidated– offers other authoritarian states and, especially, People's China an example of a peaceful exit from a one-party dictatorship (in this case, the KMT). In fact, Taiwan has become a vivid illustration of the compatibility between Confucian culture and democracy, whose principles are largely inspired by the spirit of the Enlightenment. It also demonstrates the universality of human rights and democratic values. Lastly, it proves that any democratization process depends both on the elites and on society, both on the political leadership of the country responsible for that courageous decision and on the level of democratic culture existing within the social body. The CCP and mainland society still have a long way to go before those conditions are met. However, during the last three decades, the Taiwanese democratic experience has been closely analyzed by all those who, in the People's Republic, want to see their regime evolve towards greater quotas of political freedom and citizen participation.
At a time when democracy is in decline throughout the world, the value of the Taiwanese example is enhanced and made even more precious. For this reason, too, it is inconceivable that Washington would give in to Chinese demands and reduce its support for Taipei in order to force it to reach a political compromise with Beijing, let alone enter into unification negotiations with the mainland. The fact that, since 2020, the "six guarantees" secretly given to Taiwan in July 1982 have been made public and are regularly referred to by the US government underscores how essential it is for the United States to maintain the status quo in the Strait. Those guarantees include a promise not to force Taipei into negotiations with Beijing, not to mediate between the two capitals and not to stop arms sales to Taiwan. They also include the fact that, for Washington, Taiwan's international status remains undetermined. However, for the United States, as for all democratic countries, the Taiwanese have the right to decide their future: independence, status quo, or unification with the mainland. The vast majority of Taiwanese have long supported the status quo, and if there has been a shift, it is toward independence rather than unification, at least as long as the People's Republic remains an authoritarian regime.
Re-elected in 2020, Tsai will retire in 2024. Her party is far from popular, suffering an electoral defeat in local elections in November 2022. However, the result of the presidential and parliamentary elections in January 2024 is far from much to be sure. The PDP can stay in power if they can agree on a credible candidate and stick together. However, the KMT will most likely win the election as many Taiwanese want to change their political majority and hand over the reins of the country to a new team. That is the virtue of democracy. In any case, as has already been mentioned, relations with People's China will not be seen to be fundamentally modified, even though some timid detente may appear. In fact, even if the KMT were in a position to re-establish a communication channel with Beijing, it absolutely does not wish to do so, nor could it enter into political negotiations with that capital, since such a measure would provoke negative reactions in Taiwanese society.
Thus, to the extent that there is a consensus in Taiwan, it is a consensus around the preservation of the DRC's sovereignty and security, the protection of its democracy, and the maintenance of the status quo in the Straits.
It seems clear. Taiwan is more important than its geographical and human mass allows to suppose. The island has an advanced and dynamic economy. It is on the front line between the US security apparatus in the Indo-Pacific and the PRC. It is also a source of democratic hope in a world increasingly tempted by authoritarianism and war.
Its future depends above all on the Taiwanese, on their ability to further consolidate democracy, but also on their willingness to better guarantee security and de facto independence. It also depends on the United States and its allies in the area. And, furthermore, it depends on us, the Europeans, who, although geographically distant, can do more to avoid conflict and ensure the peaceful future of the island. If Taiwan's democracy is endangered, we will all be affected. If it prospers, our own democracy and our future will be more secure.
Jean-Pierre Cabestan is a researcher at the Asia Centre, Paris.
