The world has tilted decidedly towards the great game in the Indo-Pacific. Even that perennial headline grabber Israel v. Palestine doesn’t even seem to be moving the needle with either the press corps or the White House. President Biden looks content to be the first administration without its own reboot of the Middle East Peace Follies since Gerald Ford. This is to his credit: Jerusalem is a costly exercise in meaning without any real strategic value to the US, other than getting people elected.
No, new administration is all about China, for that matter so was the last guy, but Biden is a lot less Mar-a-Lago about it. What do the Chinese want? What will they take whether we like it or not? How far are we willing to go over Taiwan? On the surface, that last one might seem purely ideological or, more practically, the fight for the world’s shower flip-flop supply. It’s not.
At the heart of the last centuries great power competition was the oil that made everything go. For the 21st century, it is about a new technology that makes everything “smart.” Specifically the semi-conductor chips on which the world’s computing power – including Artificial Intelligence – runs. Over the last decade Intel, America’s leading-edge semi-conductor chip manufacturer, stumbled leaving South Korea’s Samsung and Taiwan’s TSMC to take up the slack. TSMC alone makes two thirds of the world’s semi-conductor chips – and all the next generation ones – in three high-tech facilities (called fabs) in Taiwan. Together with Samsung, that’s about 85% of the global supply. To put this choke-point in context, only 55% of the world’s oil reserves are concentrated in the Persian Gulf States. Not even the prickly Strait of Hormuz represents that kind of bottleneck.
You’d be forgiven for seeing two emerging powers vying for dominance over the world as the same game with a different roster. Unlike the great game of the Cold War, the Chinese economy is much more intertwined with the global economy than the Soviet system ever was. Simply choking a rival system off isn’t an option. As with 20th century oil, the stakes are high. Sure, cars still run off of gas – but they need a computer to talk to your refrigerator or send nasty comments to your fitbit. It would be more economical to list things that didn’t need chips to function properly.
For Taiwan’s part, it is trying thread the needle between the two rivals by making itself indispensable to both, and keeping most of its vital assets at home. TSMC has had a single factory in Nanjing sine 2018, but the chips it produces there are 2 or 3 generations behind the ones produced at Taiwanese fabs. An American facility is planned for 2024, and while it will be more advanced, it won’t be the leading edge chips.
The geopolitical problem for the US is not just China’s integration into world markets, but that Taiwan - the entire island, its population and its rowdy, pro-Western democracy – are notout of reach for China. In fact, to hear Beijing tell it, the island is China. They have a point: Until Chiang Kai-Shek and his Nationalist retreated there after Mao Zedong took over the mainland, everyone though it was China. The communists would have caught their breath and jumped the strait in their own sweet time had Truman not sent the 7th Fleet a year later and told them to cut it out.
Since then, though, China’s navy has grown larger (albeit less experienced) that ours, and Beijing has grown louder about reunification with Taiwan. Unfortunately for the West, Chinese President Xi’s expressionless face is the perfect metaphor for Chinese diplomacy – you just can’t tell what the guy is thinking. One theory is that Xi needs reunification to cement his legacy and retire in glory. Perhaps, but that is tricky final act all things considered (and he seems the sort to consider all things): The operation must go exactly his way or the regime goes down in flames. No legacy in that.
Recent war gaming in both Washington and Beijing have drawn the shockingly similar conclusions: If the fight can be constrained to the strait of Taiwan, China wins. If the fight gets drawn outside the strait, China loses. That’s the tricky thing about wars, though, you can start them anywhere you’d like, but there is absolutely no telling where they’ll end up.
Facing growing social unrest and a slowing economy at home, those odds aren’t very good. Xi’s talk may be his version of Trump’s border wall – a bold promise that sounds full of strength and hope to restless people, but to actually do it would be to court a public failure he can’t afford.
Biden, for his part, has announced some $50bn to give a shot to US chipmaking, but that’s no guarantee to push Intel to the bleeding edge. What is needed is a geo-economic deterrent to keep China from pulling the trigger on reunification. We could freeze China out of the dollar denominated financial system, but that’s risky as reunification. When we tried something like that with the Japanese, they bombed Hawaii. Better, then, market bloc solution, something like the Trans-pacific free trade deal that got shelved in 2016. You know the one: Hillary Clinton negotiated the thing under Obama, so Trump rallied against it and then, Twitter having spoken, so did Hillary.
Like the old Cold War, we are facing a precarious set of dominos. American troops are still in South Korea, but on the peninsula China needs to do even less for the chessboard to arrange itself to its advantage. Withdraw support from North Korea’s little dictator and Korean unification will happen, opening its markets to be entirely dominated by China without coercion or force. Although, letting a puppet regime collapse may be more than the Chinese Communist Party can stomach.
Abandoning Taiwan to her fate also forces Japan, staunch US ally and historically distrustful of China, to make an obvious, if distasteful choice. After that, all of Asia goes. So, what is an old dog of a superpower to do with a new game and new players all gunning for it. Well…
Well, it looks like I’m packing for the Far East.