Insight & Analysis

Taiwan: time to think the unthinkable?

Published: Aug 2022

US Speaker Nancy Pelosi’s visit to Taiwan has exacerbated tensions in the triangular relationship between the United States, China and Taiwan. With China flexing its military muscles around Taiwan, some are making comparisons with Ukraine and assessing the likelihood of China attempting unification by force.

Kaohsiung's famous tourist attraction in Taiwan

What may seem like an innocuous detail by the head office of a multinational corporation can quickly expose the sensitivities in China-Taiwan relations. If a company – to take an anecdotal example – describes its international presence and lists Taiwan as a ‘country’ and not as a ‘market’ or ‘geography’, then there may be trouble ahead. There may be phone calls, a panicked request to change the wording, and an implicit threat from the powers that be in China. If the company doesn’t take China’s stance on Taiwan – ie not recognising its sovereignty – then it may not be able to do business in mainland China.

It is this kind of dynamic that played out on a much larger, and more perilous, scale following the visit of Nancy Pelosi, to Taiwan. She was the most senior US official to visit the country – or ‘market’ – for 25 years, a visit that China declared as ‘dangerous’ and triggered China’s military exercises that Taiwan described as a simulation of an attack on the island.

The visit exacerbated tensions that have long-existed and Chinese president Xi Jinping has reportedly stated that the ‘reunification’ of Taiwan and China ‘must be fulfilled’. This has left some questioning whether the situation in Taiwan could go the same way of Ukraine and result in an invasion.

The Financial Times reports that US companies with a presence in Taiwan are getting the jitters, and political risk consultants have had an increase in enquiries related to a possible invasion of Taiwan, with concerns that their assets could be seized, as well as concerns about what a destabilisation in relations could mean for supply chains – particularly with electronics and chips – as well as the Chinese economy, and the global economy more broadly.

A recent policy brief by Ryan Hass at Brookings notes that tensions were escalating over Taiwan, even before Russia’s invasion of Ukraine, and states this is one of the issues that could spark a conflict between the United States and China. Is this a situation that is comparable to Ukraine though? The policy brief is quite clear on this: “While Russia’s barbarism in Ukraine is reprehensible, it is not a foreshadowing of events in Taiwan. There is no automaticity between war in Ukraine and war in the Taiwan Strait.”

Hass writes about three features of the Taiwan situation that are worth noting. First, the relationship between the US, China and Taiwan does not follow a straightforward linear trajectory; the parties have shifted in their positions over time eg US using its military presence to influence China, to both US and China urging Taiwan not to seek independence, to the current concerns about China preparing to exert force on Taiwan.

Secondly, the Brookings research notes that Taiwan voters have been pragmatic and switch voting for the pro-independence and the pro-reunification parties when the politics swings to an extreme position, and they ultimately want to maintain their autonomy and democracy.

And thirdly, the report notes that Taiwan-Strait relations operate according to their own logic – and are not a derivative of US-China relations – and so cannot be comparable to the situation in Ukraine.

And on the question of the potential of war breaking out, the report states: “The current tensions in the Taiwan Strait are a product of a strategic dilemma with a military component, and not a military dilemma with a military solution.” It goes on to explain that if a war breaks out involving China, Taiwan and the United States, “it is difficult to imagine a scenario whereby any party could prevail and come out strengthened by conflict. More likely, all three sides would be devastated by a sprawling and violent conflict that produced no clear absolute victor.”

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