And yet, China and Taiwan need each other

New escalation in the Taiwan Straits. And yet, the evidence shows that Taiwan’s economy is dependent on China’s economy, and vice versa.

Tensions across the Taiwan Strait began after the visit of US House Speaker Nancy Pelosi last week and are showing no signs of easing. In a rather unexpected development, the Chinese armed forces are extending for a second week the military high schools that started a few days ago, constantly violating the airspace of Taiwan, which for its part decided to “respond” with its own military exercise that ends on Thursday. barring unforeseen.

In addition, China is resorting to the weapon of economic sanctions, in an attempt to bring to its knees the economy of neighboring Taiwan, which it does not recognize as an independent country. Since last week, the importation of one hundred different kinds of food from Taiwan to mainland China has been banned. Now there is a ban on the export of …sand from China, which is considered essential for the construction sector in Taiwan. But will Beijing proceed with the decisive move to impose restrictions on imports of semiconductors and electronic devices as well?This would probably not benefit China itself either.

Small, but miraculous Taiwan

In size, but also in population, Taiwan of 23 million inhabitants seems dwarfed in front of the vast mainland of China. The total area of ​​the country does not exceed a quarter of the Greek territory and is roughly equivalent to the southwestern German state of Baden-Württemberg. And like Baden-Württemberg, Taiwan has developed into a dynamic, outward-looking economy based on exports. The semiconductor (microchip) industry is as important to Taiwan as the automobile industry is to Germany. 70% of the economy is based on exports. In 2021, the per capita national income in Taiwan reached $33,775, nearly three times that of China.

Today Taiwan’s most important trading partner is not the US, but China. 42% of its exports go there, 22% of imports come from there. In total, in 2020, goods and services worth $166 billion changed hands between China and Taiwan. It should be noted that Taiwan is also one of the biggest foreign investors for Beijing. From 1992 to 2021, Taiwanese enterprises have implemented 44,577 investment projects with a total value of 194 billion dollars in mainland China. One of the most important investments is considered to be that of the technological giant Foxconn, which manufactures in China iPhones for Apple, but also Galaxy mobile phones for Samsung, as well as consoles for Sony. The fact that 50% of Taiwan’s exports are semiconductors and other high-tech products proves how important Taiwan is to the whole world, including China.

Mainland China, for its part, exports to Taiwan rare earths and other precious raw materials, only to then import high-tech industrial products for which it lacks the know-how. Not yet, actually. Because the goal of the centrally directed Chinese economy, expressed explicitly in multi-year economic programs such as Made in China 2025, is for the country to acquire the necessary know-how as soon as possible so that it does not need imports from Taiwan.

A military invasion is not ruled out

Analysts fear that once this happens, China will no longer have any qualms about violently “reuniting” with the island of Taiwan. After all, “reunification” is a declared goal of Beijing, with the prospect of being realized by 2049, when the 100th anniversary of the founding of the People’s Republic of China is celebrated. Roderich Kiesewetter, a member of parliament for the Christian Democratic Party of Germany (CDU) and a security expert, as well as a member of the parliamentary committee for intelligence oversight, believes that an aggressive move by Beijing could be made sooner.

“Until now we have thought that China might attack when it is able to manufacture semiconductors with the same precision, speed and quantity as Taiwan and that is not expected to happen before 2027,” Kiesewetter tells the German newspaper’s TV program Die Welt. “On the other hand, some believe that especially now, at a time when the West has focused its interest on Ukraine and sanctions against Russia, the situation may favor China.” Kieseweter himself does not believe an immediate Chinese invasion is imminent. He believes that “we must be prepared for a future escalation, although not necessarily in the coming months.”

“The Chinese are not ideologues“

A similar prediction is expressed by Professor Kishore Mabubani, former representative of Singapore to the UN and author of the book “Has China Already Won? The Emergence of China as a New Superpower”. In his opinion, “the Chinese move more with the logic of the merchant and not the ideologue” and realize that at the present stage “the risks are much greater than the opportunities” of a military involvement. On the other hand, Kishore Mabubani warns, “they think in terms of decades, not years. When they feel strong, then they will take revenge for all the humiliations they suffered in the past.”

Thomas Coleman

Epimelaia: Yiannis Papadimitriou

Source: Deutsche Welle