MS Risk Blog

Will China see Taiwan as getting too big for its boots?

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The saying goes that the road to Hell is paved with good intentions.

“We will not accept the Beijing authorities’ use of ‘one country, two systems’ to downgrade Taiwan and undermine cross-strait status quo”. Words from none other than Taiwan’s President Tsai Ing-wen.

China has always claimed Taiwan to be part of its territory, and has been overt in its threats to militarily bring it to heel if push comes to shove.  The hawkish Chinese rhetoric towards Taiwan has gotten ever more pointed since pro-independence President Tsai Ing-wen got re-elected earlier in the year in a landslide over an opposition candidate backed by Beijing. That said, there has been a cross current of events on the global stage that has put Taiwan in China’s crosshairs like nothing in the recent past – In what has no doubt been a frosty and contentious relationship between the two countries.

Chinese President Xi Jimping delivered the opening speech at the annual meeting of the World Health Organisation on May 18th making a number of pledges to the international battle to stem Covid-19, including a $2 billion commitment. However, China’s handling of the coronavirus, pre-pandemic stage, has drawn the ire and criticism of many nations – who complained over what was perceived as its lack of transparency and disclosure on the origins of the disease.

Taiwan, on the other hand has been eulogised as an exemplar of how to wage an effective response to Covid-19 with its pro-active public health policy accounting for only 7 deaths from 441 infections, and a rigorous regime of testing, tracing, and isolating of hundreds of thousands of its citizens. Against this backdrop, 29 countries, including America called for Taiwan to be at the WHO meeting as an observer. The request was blocked by Beijing, a move consistent with its stance of claim to Taiwan, and denying it any form of international recognition.

“Taiwan can help” is the sloganeering initiative used by Taiwan in its outreach to offer international donations and assistance to countries whose health care systems have been swamped by Covid-19 infections. In April, its foreign ministry announced the donation of 10 million masks to Europe, America, and the 15 countries with which it has diplomatic relations. US Secretary of state called the gesture from Taipei a “model for the World”. A “gesture of solidarity” were the words of Ursula von der Leyen President of the European Commission.  Taiwan is also working on bilateral partnerships and cooperation with America, Czech Republic, and India. These developments have been characterised by Beijing as a “despicable move and a political plot to use the Covid-19 Pandemic to achieve independence” and embarking on a wrongful path of confrontation with the motherland.

There is little doubt that Taiwan is taking advantage of its good fortunes on the International stage from the Covid-19 fall out, to ramp-up its soft power profile, and drive a wedge in the pro-Beijing global camp. America has sniffed opportunities similarly – by using Taiwan as a tool in its attempts to stymie Chinese Telecommunications behemoth Huawei. America has sought to traduce Huawei as a spying instrument for the Chinese government, and create stigma on the brand as it bids to win contracts to build 5G Networks of Countries America considers allies. Huawei is reliant on one of the biggest computer chip makers in the world – Taiwan Semi-Conductor manufacturing Company (TSMC) as a high-tech supply chain of the vital component – microchips. Washington has agreed to bear some of the cost of getting the Taiwanese chip making giant to set-up a manufacturing base in Arizona, with the upshot being a Taiwanese company at odds with a Chinese state backed company to the potential advantage of a rival – America.

What does this all mean? The Chinese have always emphasized the One China policy as the bedrock of its foreign relations. It has sought to use this position to ward off any form foreign overtures into this orbit it sees as its exclusive prerogative. Taiwan has flirted with the idea of its Independence. It has a vibrant democracy, and in recent surveys, its people have favoured closer ties with America rather than China. These latest developments mark an inflection point. China could never accept losing face, least not in the trifecta of American manoeuvrings on a Taiwanese Company, Taipei’s soft power projection, and all the blow-back that has come China’s way over the Covid-19 pandemic.

Taiwan’s recent positive global attention has sparked a chauvinistic response in China with calls for “reclaim” of the Island. Social media and the Chinese media have ratcheted-up calls for the Army to invade Taiwan.  America has stepped up its Naval presence close to the Taiwanese straits; CNN reports that in recent weeks, the Liaoning, China’s sole Aircraft carrier has sailed around the Island of Taiwan. It really does sound like the kettle is at boiling point.

Most analyst take a contrarian view, suggesting that military action by Beijing is not on the table. Timothy Heath, an international researcher at the RAND Corporation (a US think tank) muses that “China needs access to the (global) markets once they recover, and so it in China’s interests to maintain good ties with US and the World”.

That being said, no one can deny the rising tensions coming at such a precarious moment has a dangerous potential. There is a limit to how much Beijing can eschew, and if Taiwan goes off on a limb, China will probably suffer any cost, markets included – to protect its One China policy.