Media  Global Economy  2022.11.01

U.S.-China Relations After Speaker Pelosi’s Visit to Taiwan: “Cold Politics and Warm Economy”

U.S. Congress sticking to hard-line stance toward China, whereas U.S. companies focus on China

The article was originally posted on JBpress on September 20, 2022


1. U.S. Congress highly evaluating Pelosi’s visit to Taiwan

In U.S. politics, the conflict between Democrats and Republicans is intensifying.

The Joe Biden administration set at its inception a top goal of mending the partisan divide to achieve U.S. unity. However, with a year and eight months having passed since the administration took office, it has yet to show any such results.

Despite serious partisan feuds, they are working together across party lines in support of a hawkish stance toward China.

Ahead of House Speaker Nancy Pelosi’s trip to Taiwan in early August, President Biden tried to stop her, but she eventually opted to go ahead.

Since then, a bipartisan group of U.S. lawmakers has visited Taiwan one after another.

This is taken to mean that the U.S. has changed its stance of respecting the “One China” policy, which has defined the country’s foreign policy vis-à-vis China since 1972.

“One China” is China’s assertion that Taiwan is an inalienable part of China’s territory, and the Government of the People’s Republic of China is the sole legal government representing the whole of China.

China experts and scholars of international politics, who have traditionally constituted mainstream opinion in the U.S., are critical of these moves of lawmakers.

By contrast, congressional representatives have given strong support to the hard-line approach toward China taken by Speaker Pelosi and others.

The Biden administration has repeatedly stated that it respects the One China policy. Even House Speaker Pelosi’s remarks have been in line with this policy.

However, China experts in the U.S. agree that Washington’s actions under both the Donald Trump and Biden administrations have been against the One China policy in practice, as witnessed by the visits of high-ranking officials to Taiwan, the invitation of the representative of the Republic of China (Taiwan) to the United States to Biden’s inauguration, the expansion of arms exports to Taiwan, etc.

Consequently, China no longer believes the U.S. government’s repeated statements that it respects the One China principle, and the trust between the two countries has been broken over Taiwan.

The Taiwan Policy Act, currently under deliberation by Congress, calls for the U.S. government to recognize the Taiwanese government as the legitimate representative of the Taiwanese people, and contains a fundamental rejection of the One China principle.

There is strong concern that if this Act is enacted and enforced, the distrust between the U.S. and China will grow further and the risk that China will unify Taiwan by force will increase further.

2. Argument about U.S. “strategic ambiguity”

The U.S. has traditionally adopted a principle of “strategic ambiguity” in defense of Taiwan.

“Strategic ambiguity” refers to the ambiguous posture of the U.S. in defending Taiwan, i.e. it does not clarify whether it may or may not intervene militarily in the event of Taiwan contingency.

The purpose of the strategy of ambiguity is to maintain a situation in which it is unclear what the U.S. will do, thereby producing the effect of “dual deterrence”: on the one hand, it deters China from intervening militarily in Taiwan, while on the other, it deters Taiwan from gaining independence from China.

Recently, however, an increasing number of people have begun to argue that the conventional strategic ambiguity should be abandoned and Washington should pledge to defend Taiwan militarily if China attacks Taiwan.

Based on this change in tone within the U.S., I asked U.S. experts on foreign and security affairs about the possibility of U.S. armed intervention to defend Taiwan, and received the following responses.

1) A general view is that if China attempts to unify Taiwan by force, the U.S. military will immediately intervene with the support of Congress.

With that being said, there is also a possibility that if the U.S. military is attacked by China, it will immediately intervene by counterattacking China without congressional approval.

2) Since China is a nuclear power, it is undeniable that it may be difficult for the U.S. to make an immediate decision on armed intervention.

In this regard, the situation differs from past situations in which the U.S. started wars with Vietnam, Afghanistan, Iraq, and other countries.

3) The U.S. assumes that the Japanese Self-Defense Forces will work together with U.S. forces in the defense of Taiwan, but there is a wide range of methods and scopes for Japan’s military role in the war.

If Japanese public opinion is split on the Taiwan contingency response and the Diet cannot make a quick decision on the extent to which the Self-Defense Forces should cooperate with U.S. forces, it will become even more difficult for the U.S. to decide on armed intervention.

4) It is assumed that if the Chinese military makes preemptive missile attacks on U.S. bases in Japan, the Self-Defense Forces will immediately enter the war in order to exercise their right to self-defense.

3. Deepening mutual distrust between the U.S. and China

The U.S. adhering to “strategic ambiguity” was originally due to a shared recognition between the U.S. and China that it was desirable for both countries to maintain the status quo in Taiwan.

However, with the rapid expansion of China’s military and economic power, the threat from China has increased, and the U.S. now finds it difficult to maintain the status quo in Taiwan unless it shows its stronger commitment to defend Taiwan militarily.

This has changed the traditional stance of the U.S. regarding armed intervention in Taiwan.

China saw this as a sign that the U.S. has effectively abandoned the One China policy and decided to commit U.S. forces to stopping any aggression by China in support of Taiwan independence.

Even within the U.S., with most of the Republican candidates expected to run in the 2024 presidential election being hardliners against China, it has been pointed out that if the Republican Party wins the election, the U.S. may recognize Taiwan as an officially independent country.

Seeing this change in U.S. attitude, Beijing no longer believes that the U.S. will respect the One China principle.

In this regard, U.S. experts on China believe that China must understand that Japan is in the same position as the U.S.

As seen above, Speaker Pelosi’s visit to Taiwan has caused U.S.-China relations to deteriorate further, as mutual distrust has intensified on the political front.

4. Effects of policies to promote U.S.-China decoupling expected to be limited

Amid further deterioration of U.S.-China relations over the Taiwan issue ahead of the midterm elections, Congress passed the CHIPS Plus Act in late July and the China competition bill is currently under deliberation with a view to promoting U.S.-China decoupling.

However, both are not seen as highly effective.

In the first place, as leading U.S. companies have gained huge profits from the Chinese market, it is difficult for them to cooperate with the policy measures that are likely to damage their profits.

The CHIPS Plus Act has a budget size of $280 billion, of which the majority is R&D subsidies for government agencies and $52.7 billion is subsidies for semiconductor manufacturers to help them construct plant facilities, etc.

However, the appropriation period is stipulated to be over 5 years.

According to an expert well-versed in the semiconductor industry, building a single large-scale plant for integrated semiconductor manufacturing, including front-end processing, would require this amount of money, and it is said that the cost of plant construction and labor in the U.S. is much higher than in Taiwan.

Therefore, it is considered impossible to establish a foundation for the development of the semiconductor industry in the U.S. with a budget of this size, and the policy is evaluated as producing little effect.

Considering that the policy alone is unlikely to enable U.S. semiconductor manufacturers to become as competitive as their Chinese counterparts, its effect of promoting decoupling will be minor.

On the other hand, there are quite a few people in the U.S. who advocate the exclusion of Chinese students from the U.S. scientific and technological fields.

According to professors at Harvard University, MIT (Massachusetts Institute of Technology), and the University of California, talented Chinese researchers who produce innovative technologies often prefer to reside in the U.S., where they can continue to carry out their research activities freely, and do not return to China.

This is because it is extremely difficult in China to ensure an environment in which researchers can work freely.

What China is good at is not developing such cutting-edge technologies, but introducing those technologies from the U.S. and promoting the development of manufacturing industries on the basis of it.

For this reason, the U.S. and China are in fact interdependent.

However, U.S. lawmakers do not fully understand the reality of such economic activities.

Rather, they focus on whether it will lead to the creation of local jobs, and few have a perspective that attaches importance to strengthening U.S. industrial competitiveness.

If Chinese researchers are removed, it would make the U.S. semiconductor industry even less competitive.

This is contrary to the purpose of the CHIPS Plus Act mentioned above, but lawmakers are said to be unconcerned about this point.

As just described, although the U.S. Congress has passed a series of new laws to promote decoupling between the U.S. and China, they are all ineffective because the U.S. and Chinese economies are so mutually dependent that neither can do without the other anymore.

Political pressure to stop economic exchanges is unlikely to change the “cold politics and warm economy” structure.

5. Suggestions for constructive efforts to improve U.S.-China relations

During this period, the Chinese government has impeded free competition by restricting foreign businesses’ market entry and subsidizing Chinese enterprises. Accordingly, Beijing is not trusted by Western governments.

An effective measure to dispel this distrust would be for China to join the Trans-Pacific Partnership (TPP) together with the U.S. and come under scrutiny that would strictly control inappropriate government involvement in its industries.

Meanwhile, the Japanese government should hammer out a policy vis-à-vis China aimed at promoting market mechanisms and sound and free competition in the global economy. It should also encourage the U.S. government to return to the TPP.

Even within the U.S., the majority of economic experts believe that the U.S. should return to the TPP.

The decoupling policies that the U.S. government is pursuing are going in the opposite direction, and will be detrimental to both the U.S. and Japan, as well as to the global economy.

Basically, the U.S. and China should engage in a constructive bilateral dialogue to improve relations between them.

However, as evidenced by the mutual distrust over the Taiwan issue, they appear to have missed the chance to talk bilaterally.

Many observers are concerned that if no solution is sought, the possibility of a U.S.-China armed clash will increase.

Therefore, it is necessary for Japan, Germany, France, and even the U.K. to work together to ease the tense confrontation between the U.S. and China. That is, Japan will encourage Asian countries, while Germany, France, and the U.K. will encourage European countries so that the whole of Asia and Europe will repeatedly urge the U.S. and China to come up with concrete measures to de-escalate the conflict.

For China, it would be a prerequisite for constructive dialogue with the U.S. to ease the zero-Covid policy in a phased manner and demonstrate a conciliatory stance by toning down the aggressive foreign policy dubbed “wolf warrior diplomacy.”

To this end, it is necessary for China to go back to the spirit of “Taoguang Yanghui” (韜光養晦: hide your strength, bide your time) that Deng Xiaoping advocated, to suppress domestic nationalism, and to continue efforts to ensure that it does not become isolated in the world.

I hope that Asia, Europe, the U.S. and China will start moving in such a direction after the two major political events, namely China’s 20th Party Congress (October 16) and the U.S. midterm elections (November 8).