The threat to Taiwan from China

For those of us that have traveled to Asia on business and pleasure, it’s been so sad to see what’s happening to Hong Kong and its people. The city is being depleted of its vibrancy, its independence and its reputation as one of the most important financial and tourist centers of the world. Most importantly, its people are losing their basic freedoms and being subjected to draconian laws of censorship and dictatorship. It’s the result of China and its premier, Xi Jinping, ignoring its agreement to allow Hong Kong to function semi-autonomously from mainland China, and imposing its dictatorial rules on this once free society. Hong Kong has been the favorite destination of world travelers for its beauty, its energy, and its people. But no more as China continues its takeover. Just like that, Hong Kong is having its life sucked out of it.

What worries Asian experts even more is what it means for Taiwan, an island democracy that China has threatened, much as they’ve threatened Hong Kong, over the years to annex as part of their “one China” policy.  Taiwan is a unique country that has had a tenuous relation with China since it was founded in 1949. While enduring threats from China over its short life, much of China’s modernization and growth of its technology industry has been the result of Taiwanese-based companies expanding into China and designing and building their products there.  Taiwan’s largest tech companies have built thousands of modern factories in China that produce the world’s computers, cellphones, and much of the world’s consumer electronics.  Many of these factories are at the size of college campuses, with a number of them as large as small cities. It’s where I’ve spent the last twenty years getting products built for companies such as Seiko, Apple, and dozens more. These are not the sweatshops we’ve read about making clothing and shoes, but factories more akin to what we see in Japan and the U.S. –  modern facilities with decent work conditions that have been responsible for a large segment of the population moving into the middle class.

When I first visited Taiwan in the late 90s to build telephones, it was a poor country striving to become a leader in technology. I remember their dirt roads leading to tiny factories. There were hundreds of startup tech companies beginning their life developing boomboxes, radios, phones, calculators, and even Apple II clones. They took their lead from the Japanese who were then the innovators in many of these areas. The Taiwanese put a huge emphasis on education and a decade later had overtaken the Japanese in innovation, design, and manufacturing. They had the hardest working and smartest technology professionals of any country in the world, and a smart government that invested heavily in becoming a technology force.

U.S. and Japanese companies, such as HP, Toshiba, and Dell flocked to Taiwan to first build and then design their computers, both desktops and notebooks. Taiwan expanded its manufacturing and then its design organizations into China to both lower their cost, support their growth, and build mega-factories to build more product.  These in turn sparked the growth of new cities in China. Taiwan was where the world went to design and build new technology products, supported by their factories in China. China’s lead today as the manufacturing center for electronics is the result of its cooperation with Taiwan. China is still highly dependent on Taiwan for advanced chips that power the electronics.  TSMC, the Taiwanese semi-conductor company, provides the most advanced chips to many of the Chinese companies, as noted in this New York Times story.

But with China’s move to take over Hong Kong, there’s a growing concern that their years of threats to do much the same with Taiwan is more serious than ever. China has always claimed that Taiwan is part of China and needs to be under their control as a single “One China.”

While the US no longer recognizes Taiwan, Congress passed in 1979 the Taiwan Relations Act “to pledge a continued moral commitment to Taiwan after official diplomatic relations were terminated. With that has been occasional arms supply for the defense of the small island.

With this country’s increased belligerence with China, there’s been an increase in our taunting China over Taiwan. Several cabinet members have visited Taiwan in recent months, much to the objection of Xi.

According to industry analyst, Tim Bajarin, who works closely with many of these tech companies, “China’s threat of doing something to take back control of Taiwan has been a threat for decades, I am getting indications from top business leaders in Taiwan that they are the most concerned about this happening than ever in their lifetime.”

 He goes on to report that, “The biggest short term fear is that China could try and bring Hong Kong-like control to Taiwan. The second biggest fear is that they would make a military strike of some sort. I was told that China could start by taking over one of Taiwan’s disputed islands. They could take one of the Taiwanese islands to test the US and other countries’ responses. China would also have the option to an all-out military advance and impose their rule.”

“After speaking with high-level tech execs in Taiwan and my contacts in Washington, who are now watching US and China relations related to Taiwan, I am deeply concerned about this area of the world. If China should move on Taiwan, its overall impact on tech nationally and globally could be enormous.”

I last visited Taiwan in late December and early January, five years after my previous visit. What I found was a vibrant free democratic country that had revamped its infrastructure with new subways, skyscrapers, highways, and trains, new office complexes and new parks. What was still evident was the friendliness of the people, especially toward Americans.

Little did we know that the first case of Covid was about to appear and test the country. Taiwan dealt with it head-on and was able to identify, screen and track all cases coming into the country, using their government run medical system and technology infrastructure, and escape the brunt of the disease. This was more amazing when you realize they’re a short one hour trip from many cities in China with scores of flights each day.

Taiwan has had a total of 514 covid cases and 7 deaths. 483 people have recovered. Their economy is open and functioning as normal. As far as Covid is concerned, it’s the safest place you can be in the world. Let’s hope it stays that way.


by Phil Baker