But not for the reasons you might think. Of course Nancy Pelosi’s visit provided a convenient opportunity for China to reemphasize about how important retaking Taiwan was to it. But there was no news there. Just as there was no real news that Pelosi was reciting the virtues of democracy to enthusiastic Taiwanese. Pelosi would seem to have had no strategic objective other than to annoy China. This is an objective that most American politicians enthusiastically and routinely support. A senior American official going over to Taiwan and reciting the Star Spangled Banner always gets American political points and annoys the Chinese. So what.

But on a strategic level the big winner was China. By miles. The Pelosi visit provided an excuse for China to roll out its new military might. Which was very impressive. The Chinese military with all its new ships, planes, missiles, drones and satellites encircled Taiwan. Six zones in waters off Taiwan were designated for practice drills and a simulated invasion of Taiwan was staged. These exercises were scheduled to last three days. As a by-product, some foreign nation planes and ships either held off landing in Taiwan or diverted. All the while China never fired a live shot at a real target.

The message here was loud and clear. If it can’t do it yet, China in the near future will be able to throw up an air and sea blockade all around Taiwan. This blockade could bring Taiwan to its knees. No need for an invasion. And who knows?  China’s got the guns and the home court advantage.

Who would break this blockade? Realistically, there is only one country that could do this and that country is the United States. But direct US intervention would almost certainly lead to a greater US/China war which would be a catastrophe. For example, suppose hypothetically carrier-based American air power breaks through the Chinese blockade. But then a land-based Chinese missile takes out the American carrier with the loss of several thousand American lives. You can guess what happens next…

Alternatively, people talk about a “porcupine” strategy by which the US pours weapons into Taiwan and makes the cost of invasion too high for China. The US could remain out of the conflict as it has in Ukraine. But this is David vs Goliath In the Bible David wins. But in real life the chances for David, ie Taiwan, don’t look too good. And a blockade doesn’t require an invasion. And can the US afford such a porcupine strategy on top of its Ukrainian expenditures? And would the weapons be available?

The position of the US in this appears dire. It would seem as China gets stronger militarily that Taiwan will inevitably go over to China. Thanks to Nancy Pelosi’s trip, the Chinese got lots of practice on how to enforce a blockade that would bring Taiwan to its knees.

An awareness of this may be spreading in the American military and desperate measures are being considered. The Financial Times quoted Rick Fisher, a senior fellow at the International Assessment and Strategy Center, a US think tank. Mr. Fisher suggested deploying tactical nuclear weapons on and around Taiwan. (Don’t be shocked. General MacArthur advocated dropping 30 atomic bombs on China during the Korean War. Putin’s not alone. The US isn’t so pure.) Fisher’s not a senior military officer but he is an established expert on China’s military. Is he articulating a sentiment creeping through Washington? Behind closed doors, is the US military so pessimistic about Taiwan that it would consider tactical nuclear?

Consider:

Taiwan is not Ukraine. Taiwan is an island (actually there is the main island of Taiwan and close to 200 small islands under Republic of China control). So there aren’t friendly neighboring countries like Poland from which arms could be shipped in by truck or rail.

Second, realistically there are no countries in Asia which would want to join the United States in a shooting war to break a Chinese blockade of Taiwan. China is most of these countries largest trading partner and is the colossus they would not want to cross. They might want the US to protect them from China but they will leave actually fighting China to the US. Japan, perhaps the best armed of the US Asian allies, has a no- war clause in its constitution. Furthermore, it is unlikely any European countries would have the ability or the will to join such a fight. Colonialism dies slowly but it is dying. That leaves Australia which it had any brains should stay out of any conflict with China. 

Realistically, the US would be alone.

Taiwan Is Extremely Important to the US and the World

If anyone had asked me back in the day should the United States intervene in the Vietnamese or Korean civil wars, I would have answered “NO”. Why should the US have interfered and sacrificed so many lives in countries on the other side of the world that posed no threat to the United States. I would not say the same thing regarding Taiwan. TAIWAN IS EXTREMELY IMPORTANT TO THE US AND THE WORLD.

Tiny twenty three million population Taiwan is a technology miracle which is indispensable for the US and global economy. Taiwan is teeming with tech companies and plays a key manufacturing role in global supply chains. Not everyone is aware of this. In many cases, (fabless) American companies do the designing while Taiwanese companies(fabs) do the manufacturing. In some cases, a large part of the manufacturing is done in China. American politicians may not like this arrangement but the economics scream for it. Taiwan and China are one huge manufacturing engine.

Here are some major Taiwan tech companies:

1. Taiwan Semiconductor—The world’s number one foundry for making the most advanced logic chips. Perhaps the most important company in the world. A key supplier for NVIDIA, AMD, Qualcomm, Apple and many others.
2. Media Tek—A fabless semiconductor designer. Now the largest by volume global designer of mobile phones.
3. UMC —The world’s third largest semiconductor foundry.
4. Foxconn— World’s largest contract electronics manufacturer The number one assembler of Apple phones. This assembly takes place in Foxconn factories in China with the phones’ logic chips flown in from Taiwan
5. Pegatron—Mainly develops computing, communications and consumer electronics for branded vendors. Also an assembler of Apple phones with, as with Foxconn , actual assembly factories in China
6. Quanta Computer—Largest manufacturer of notebook computers in the world. For companies like Dell, Apple etc
7. Compal Electronics—Also manufacturer of various consumer electronic items such as notebooks etc
8. Wistron Corporation — Company designs and manufactures products for other companies to sell under their own brand name. Wistron products include notebook and desktop computers, servers, storage, LCD TVs, handheld devices, and devices and equipment for medical applications. 

The US cannot just let Taiwan “go dark” as the result of a Chinese blockade or invasion. And I don’t believe the managers of these Taiwanese companies will want to see their decades of work go down in flames from a Chinese takeover. They may want to make deal if they realize a Chinese takeover is inevitable.

The US Is Going To Have To Get Creative—In a Hurry

Thanks to the Pelosi trip, the US should now realize that it faces a terrible dilemma, ie, surrender Taiwan to a Chinese blockade/invasion or intervene and start a world war. The US has to face reality and make some hard decisions. There is no choice in my opinion but to make some kind of deal with China. In other words, find a third way. China is never going to give up its claim on Taiwan. I believe this would be true even if China were to cease to be a communist one-party state. The one thing going for the US right now is that the Chinese know that the Taiwanese and Chinese economies are so integrated and that destruction or disruption of this relationship would be extremely harmful to China.

In earlier Dismal Optimist papers, I had argued that prolonging the status quo on Taiwan was in America’s best interest. But American politicians dislike China and dislike the status quo.

The US should improve the atmosphere by ceasing the current policy of poking China in the eye with all kinds of sanctions. The improvement in the lives of its people is the major Chinese objective along with realizing its full potential. And that means progress in tech which the US is signaling it is trying to stop. For example the semiconductor industry is global but the US is doing its best to cut China out of that industry. The US can delay China but will ultimately fail to do so. The US is going to have to accept that China’s technological rise is a reality and not see it as a threat.

A second step to create a better negotiating environment would be to rescind the Trump tariffs. These have been retained apparently for political and not economic reasons.

What is needed is that the US, Taiwan and China sit down and reach some type of agreement that lets the Chinese flag fly over Taiwan but lets its free market and democratic political system continue. The Chinese leader Deng Xiaoping recognized this problem many years ago when he proposed a system called “one country, two systems”. A version of this concept has been adopted in Hong Kong. 

The Western verdict on the Hong Kong experiment is that it has been a failure and that China has reneged on its part of the agreement. I totally disagree with this conclusion and think Hong Kong critics have let the perfect plan be the enemy of the good plan. The US should take another look at this. People forget that the British never allowed democracy in Hong Kong (London appointed the governors), that Chinese troops have never intervened in the city and that Hong Kong had become ungovernable thanks to the disorder and destruction caused by the recent protestors. Hong Kong is often compared with Singapore. The British first allowed elections in Singapore in 1959.

The Elephant In the Room—America’s Fear of the Yellow Peril

“China has a 5,000 year history of cheating and stealing. Some things will never change..” So tweeted Republican Senator Marsha Blackburn. Her views in my opinion are held by substantial number of Americans including those in Congress. Anti-Asian views and discriminatory practices were widespread in nineteenth and early twentieth century America (as well as Australia and Canada). Some may argue that these things have disappeared in a new, diverse America. But then why did assaults against people who looked Chinese—and that includes Eskimos—increase when Trump began his China virus campaign. And why is Marsha Blackburn still in the Senate.

Harvard political scientist Graham Allison has written of something called the Thucydides trap.  That describes an apparent tendency towards war when an emerging power threatens to displace an existing great power as a regional or international hegemon. The emerging power of course is China and the US the existing great power. What Allison left out was what if the citizens of the existing power harbored racist views of those of the emerging power. Obviously that can only make things worse.

The Taiwan problem may be the greatest diplomatic challenge America has ever faced.