Sept 2022

Undue costs of conflict

Taiwan has faced threats from Beijing for decades.  But last month’s Chinese military exercises flagged up a warning that goes far beyond the routine to-and-fro about its future.

Triggered by the visit of US House Speaker Nancy Pelosi, Beijing surrounded Taiwan with live-fire zones, disrupting commercial flights and shipping and firing ballistic missiles over the island.

China aimed to show that it could blockade Taiwan should tensions escalate to the extreme. Its actions were evidence that the 43-year-old One China Policy and associated cross-straits agreements are fragmenting.

This long-running and ambiguous system has allowed both China and Taiwan to keep the peace, trade and create mutual wealth over many decades.  It is now under threat, and new understandings over Taiwan must be drawn up before, and not after, any conflict breaks out. 

A speaker of the US House of Representatives has been there before. Newt Gingrich’s 1997 visit to Taiwan also came at a sensitive time because, a year earlier, Taiwan had become a fully-fledged democracy in elections offset by Chinese anger, missile tests and military exercises.

But a generation ago, China had neither the strength nor firepower to threaten as it can today. Nor would the consequences of conflict have been as catastrophic.

A miscalculation now could trigger a global crisis, not least because both China and the US are backing themselves into ideological corners, where compromise and common-sense are beginning to be trampled.

Pelosi’s argument that the world faces a choice between democracy and autocracy is nonsense. The black-white rhetoric which resonates so well with American voters cuts little ice in Asia, where people know exactly that they have to work with whatever political systems are around them. They are weary of polarised talk about values.

Xi Jinping‘s constant warnings that China may take back Taiwan by force are equal nonsense, particularly in the light of Vladimir Putin’s failure in Ukraine. 

Militarily, China would lose badly. Economically, it would be stripped of its growth. Politically, its global status would diminish into that of an outcast.

And for what? 

Does Xi really cast an envious eye across to Moscow and wish he could steer China towards where Russia is?  More pointedly, is this what the Chinese Communist Party will aim for when – or if – it reappoints Xi for a third presidential term later this year?

China has carried out its own analysis of the impact of a Taiwan war and the conclusions, presented in April, sent shock waves through the senior leadership, according to Nikkei Asia.

Western sanctions would return China to a ‘planned economy closed off to the world’, the report found.  China’s foreign earnings would stop, and essential products would not be imported.  One example was soya beans, 30 per cent of which China brings in from the US.

There would be a high risk of food shortages. Some 7.6 per cent of China’s Gross Domestic Product would vanish, ripping apart the Chinese dream for those who had trusted their government to keep raising living standards and deliver a brighter future.

China would not bear the brunt alone.  $2.61 trillion would vanish from the global economy fuelling recession, shortages and social unrest. 

All of this would unfold amid headlines of body bags and military losses on both sides.

Decoupling is already underway to prepare for this worst-case scenario. Companies are moving out of China, while Beijing is reducing its reliance on the dollar and building alternative supply chains.

Taiwan is of critical importance due to its strategic position, geopolitical role and massive market share in computer products.  It is also a beacon of political and economic development. 

Against a hostile neighbour, Taiwan has deployed commerce and the semi-conductor rather than insurgency and suicide bombs, as happens in too many other places around the world. Its 24 million citizens have done well from it. 

It has also been a lesson to other nations that are impatient living next to a bigger, not particularly pleasant, neighbour.

With its proximity to China, Taiwan has shown the world not how to choose between democracy and autocracy, but how the two systems can work together.

Chinese and Taiwanese citizens have little interest in Sino-American rhetoric. They are focused more on day-to-day worries: the pandemic, power cuts, jobs, housing, the economy and, specifically for Taiwan, population decline.

‘These issues are at the forefront of people’s minds in Taiwan, even more than the threat of armed conflict with China,’ Dr Syaru Shirley Lin of the Center for Asia-Pacific Resilience and Innovation told The Democracy Forum debate on Taiwan last month.

It would be far better for the leaders of China and the US to make smart choices and focus on these challenges, instead of getting entrapped in tit-for-tat provocations.

They should stop using Taiwan as a domestic political football and build on the foundations of their predecessors who patiently and slowly, over the years, avoided conflict and encouraged liaison and trade that has benefited societies on both sides.