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Nov 15, 2023

The intensifying dynamics over Taiwan have heightened the risk of a direct clash between China and the U.S., a situation with grave global implications, writes the Crisis Group in their latest report

At the crux is the increasing assertiveness of China, the evolving Taiwanese identity seeking separation from the mainland, and the overarching geopolitical rivalry between the two superpowers. Historically, peace was maintained through a tacit understanding, rooted in the “one China” philosophy. China sees Taiwan as part of its territory, while the U.S. views its status as unresolved. Yet, both nations have previously abstained from crossing each other’s boundaries. 

However, changing global politics and growing ambitions are now straining this delicate balance. The U.S. has ramped up its support for Taiwan, fostering an increasingly official-looking relationship. This move is partly due to China’s increased military manoeuvres around Taiwan and its unwavering stance on Taiwan’s reunification – a goal seen as paramount to restoring China’s global prominence.

Taiwan’s politics further complicate the equation. The island’s populace and political leaders, largely sceptical of China’s ambitions, lean away from reunification. The Democratic Progressive Party (DPP) currently in power believes Taiwan and China are separate entities, a view that directly contradicts Beijing’s. With the DPP’s stance gaining traction, Beijing has countered by isolating Taiwan internationally and exerting economic pressure.

The landscape is undeniably treacherous, but war is not a foregone conclusion. To de-escalate, the U.S. and China must undertake reciprocal measures to rebuild trust. China should scale back its military presence near Taiwan, even if it faces domestic pressure to appear assertive. The U.S., in reciprocation, should subtly reduce public endorsements of Taiwan and reiterate its commitment to the “one China” policy. It’s essential to convey that the U.S. does not advocate Taiwan’s formal independence and remains open to any peaceful resolution both parties agree upon.

The forthcoming Taiwanese presidential election in January 2024 provides a unique opportunity to renew cross-strait dialogue. Regardless of the winning party, it’s vital to initiate discussions on defining their relationship with the mainland.

Stabilising the Taiwan Strait also demands military deterrence, says Crisis Group. Taiwan would have to upgrade its defensive capabilities, ensuring its ability to repel an offensive long enough for potential aid from the U.S., despite the inherent ambiguity surrounding such intervention.

The stakes are undoubtedly high, with a potential conflict having nuclear implications. While navigating this path will challenge all parties, the shared goal of preventing catastrophic conflict should serve as a powerful motivator. As the global implications are immense, it’s crucial that a way forward is found.

Columnist Walter Mead asserts in the Wall Street Journal that if China opts for forcible unification with Taiwan through invasion or blockade, the global consequences could be the most severe since the economic shock of World War II. Taiwan, heavily reliant on imports for energy and food, would be acutely vulnerable to a blockade. Yet, the repercussions would be felt far beyond its shores.

The closure of the South China Sea and waters near Taiwan would severely impact regional trade. South Korea and Japan, reliant on importing fuel, food, and materials for their manufacturing sectors, would be particularly hard hit. The resulting chaos might prompt North Korea to attack, exploiting the challenging circumstances facing U.S. support to South Korea.

China wouldn’t escape unscathed either, with key ports potentially avoided and possible US-led blockades. Globally, supply chains would be in turmoil, notably impacting industries reliant on Taiwan’s semiconductors and goods from China, Japan, and South Korea. Additionally, the financial fallout could see stock markets crash, currencies fluctuate wildly, and debt markets implode, pressuring both nations and businesses.

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