NEW DELHI: There seems to be some perceptible change with Kuomintang (KMT) Chair Cheng Li-wun visiting China on a “Peace Tour” and meeting with Xi Jinping and senior functionaries of Communist Party of China.
Cheng is the first KMT chairperson to have led a delegation to the Chinese mainland in a decade. Beijing refused to communicate with the Democratic Progressive Party (DPP) after it came to power in 2016 and has shown scant interest in engaging with KMT leaders in the recent past. The visit is, therefore, significant and need to be studied by policy and military analysts alike. There is a USD 11 billion weapons package approved by the US for sale to Taiwan in the backdrop and that too should form a part of various discussions and changing goalposts, if any.
China issued a White Paper on Taiwan in August 2022. This White Paper, which articulates the view of the establishment is different from the white papers issued on Taiwan, previously in 1993 and 2000 in its lexicon as well as narrative. The text envisaged “Use of Force” by PRC in a bid for unification as also “No Foreign Interference” in Taiwan. These two facets hinge on the stated policy of the CPC with respect to the “One China Principle” and seemingly, outline a clear elaboration of the de novo course of action, if required.
Militarily, for prosecution of prospective conflict, it may not be a simple task since Taiwan is not littoral and thereby the operations will hinge on synergising all three dimensions simultaneously, presumably in heavily contested waters and airspace. An important facet, sometimes glossed over is that application of force in such a scenario is extremely complex and requires clockwork coordination of disparate elements.
A full-blown conflict may not apparently suit the strategic thinking of China at this juncture. With a prospective economic downturn aspect, focus stands on reunification, geographic limitations to prosecute operations, complex force structuring and a temporary ceasefire in Iran-US conflict, a conflict in Taiwan Straits looks unlikely. Managing the pre and post escalatory actions in the present era of manufactured trade wars may be difficult in the present scenario.
The acclaimed “Porcupine Strategy” of Taiwan, which looks at many small things with distributed, survivable and affordable options, is not only astute but practical. Taiwan is no stranger to high technology manufacturing, and its defence sector has been developing drones since the 1990s. It can be inferred from reports that the ongoing Ukraine war has reinforced the belief in many countries, including Taiwan, that drone warfare is a good antidote to numerically superior adversary. The “stealth” Carbon Voyager 1, Black Tide 1 & Sea Shark 800 drones are in various stages of development. Taiwan is investing in conventional indigenous systems to bolster its asymmetric capabilities.
Economically, the cross straits trade heralds a fact that the Chinese mainland, 130 kilometres at its shortest distance, has been Taiwan’s largest export market for the last two decades. This is decreasing steadily and thereby requires a new geographical focus with another growing market. Correspondingly, China is also a destination for Taiwan’s off land investment due to the geographical proximity, technology market dynamics and logistics which may change.
The transformation of Taiwan’s “Paddy Economy” to a leading “Chip Economy” was facilitated by the government in the 1980s by clearly gauging a huge demand of semiconductors, making chips the focal point of development, investing heavily in R&D as also providing tax incentives. The concentration of chip design, manufacturing, packaging, testing and distribution in this geographical region does create ample vulnerabilities in severing of supply chains. Taiwan is located on the confluence of two tectonic plates which makes it seismically sensitive in addition to belligerence in the neighbourhood.
As per European Institute for Asian Studies, TSMC alone drives 50% of all foundry revenues with an 84% market share in the production of cutting-edge technology chips smaller than 10 nanometres. This technological prowess is the very core of every high-end computing system and sophisticated weapon system in the world. This dynamic makes the entire digital chessboard very complex. It may not be a very well-known statistic that semiconductors are the fourth most traded commodity worldwide (by value) after crude oil and petroleum products, refined oil and automobiles.
Taiwan is surrounded by a double ring of fire with China on one end and natural calamities on the other. The recent earthquakes in Taiwan are a reminder of the requirement of diversification of fragile, global supply chains, perils in concentration of technology and a requirement of dovetailing disaster management and risk mitigation measures into policy.
As part of a potential derisking, India offers a great advantage to Taiwan with an available demographic dividend, semiconductor design process, enabling policies of the Central and State governments, a large startup ecosystem and a high innovation ranking in the region. Consistent FDI inflows, a robust chemical industry, MSME advantage to catalyse the ecosystem and a big footprint of renewable energy can steer the green process advantage vis-à-vis the rest of the world.
There are 250 Taiwanese companies which have operations in India and this can be a starting block for a variety of engagements for the future. It is a notable policy metric that most semiconductor fabrication and ATMP facilities coming up in India are in varied geographical spaces, which provide inherent risk mitigation and the “First Mover” advantage to Taiwan. In addition to this, there is a big scope for a joint workforce development combining Indian STEM talent pool with Taiwan’s fabrication and process management expertise.
The world is undergoing a challenging geopolitical upheaval with several technological mosaics being redrawn. India needs Taiwan’s foundries for its tape outs and technology knowhow as its design base increases. Taiwan can harness India’s abundant talent and strategic expertise in defence and aerospace. This could be an opportune time to look at a long-term industrial plan than a short-term specific incentive-based approach. Taiwanese entities need to look at India from a long-term perspective as it presents a very strong case as an alternative to build electronics global value chains, besides defence partnerships.
Technology and politics are deeply intertwined as is evident from the current visit and the ever-changing dynamics of belligerence and poise. In the present circumstances, the four Ts—trade, trunk infrastructure, talent and available technological expertise—are in India’s favour which can provide an opportunity to Taiwan for diversifying the supply chains and relocation of critical technology.
India-Taiwan collaboration can accrue much loftier bar charts of trade, which have the power to shape the technological future of Asia, if not the world. This can happen beyond the optics of visits and viability of peaceful straits of Taiwan.
Anurag Awasthi is a veteran, and CEO of Escape Velocity Mediaworks. He is a known policy expert and a columnist who writes extensively on critical technologies, security and geopolitics. Views are personal.
