[EAI Special Report] Taiwan Special Series ②_Taiwan's Security Strategy and Challenges in the Era of US-China Competition

[Editor's Note]

In this Special Report, Wang Hsin-Hsien, Director of the Graduate Institute of East Asian Studies at National Chengchi University, Taiwan, explains the challenges Taiwan faces in cross-strait relations amidst the long-term strategic competition between the US and China. Taiwan is overly reliant on the US, while simultaneously experiencing intensified domestic political competition and division under China's escalating dual strategy of "punishment and reward." It is also grappling with the issue of hostile perceptions between the people of Taiwan and China. The author particularly notes that cross-strait relations are no longer a matter of improving relations, but rather a question of how to manage crises. He emphasizes that Taiwan's best course of action is risk avoidance and delaying tactics, urging patience for the post-Xi Jinping era.

1. Taiwan in the Era of US-China Competition

Since March 2018, the US and China have progressively escalated their conflict from economic and trade disputes to science and technology, and finally to comprehensive strategic competition. Following the outbreak of the COVID-19 pandemic, "vaccine diplomacy" also became a battlefield for competition. During the Trump administration, US-China competition intensified amidst the heated atmosphere of the US presidential election. While this trend continues under the Biden administration, the US is seeking to contain China through solidarity with allies and multilateral relations, returning to the traditional Establishment's approach. In April of this year, the US Senate Committee on Foreign Relations passed the "Strategic Competition Act of 2021." This is the first significant bipartisan legislation establishing a strategic guideline for the US towards China. Kurt Campbell, the Indo-Pacific Coordinator at the White House National Security Council (NSC), stated in May that the era of "strategic engagement" between the US and China had already reached its final stages. China lags behind the US in comprehensive national power and still avoids conflict militarily and strategically, but it displays a fearless attitude diplomatically. For instance, China's assertive "wolf warrior diplomacy" over the past two years reached its peak during the US-China talks in Alaska in March, with Yang Jiechi and Wang Yi taking the baton. Xi Jinping's assertion in the spring "Two Sessions" to "look at the world with pride" (平視世界) was also aimed at satisfying domestic nationalist sentiments and achieving the effect of "internal propaganda."

Due to its geostrategic characteristics and China's assertion of complete sovereignty and unification, Taiwan has found itself on the front lines of competition and confrontation between the two great powers. In April of this year, The Economist's cover story described Taiwan as "the most dangerous place on Earth." The "strategic ambiguity" of "One China," maintained by the US and China for many years, is gradually eroding, shaking the peace in the Taiwan Strait. Furthermore, China is determined to achieve unification, even through military invasion as a last resort, in pursuit of its goal to "realize the great rejuvenation of the Chinese nation." More alarming is the statement by Philip Davidson, former commander of the US Indo-Pacific Command, at a congressional hearing in March, identifying Taiwan as the most likely target for Chinese invasion and military action within the next 5-10 years. NBC also reported that simulations by the US Department of Defense on the use of force by China in the Taiwan Strait indicated that the US repeatedly faced disadvantages, placing Taiwan in an even more difficult position amidst US-China competition.

2. Taiwan's Security Strategy

In this challenging situation, Taiwan's security strategy consists of three main components. First, seeking strong external assistance, particularly relying on the United States. Second, employing a "hedgehog defense" strategy. Third, building an "industry" that is globally indispensable.

1) Bandwagoning with the United States

Generally, a state caught between two competing great powers has three options: balancing, bandwagoning, or hedging. Most states adopt the flexible strategy of hedging, seeking to maximize national interests by maintaining friendly relations with both sides. This is why many Asia-Pacific countries, amidst the full-scale competition between the US and China, adopt a hedging strategy, leaning towards the US for security while relying on China economically. Although the difficulty of hedging is increasing with the intensification of competition between the two great powers, many countries still lean towards the US strategically while trying not to offend China. Singapore is perhaps the most representative example of this stance. In June of last year, Prime Minister Lee Hsien Loong published a lengthy article in Foreign Affairs titled "The Endangered Asian Century." Lee stated that the US and China were entering a path of confrontation that would last for decades, and if the two countries forced Asian nations to choose sides, Singapore and other Southeast Asian countries would try to avoid offending either side. In other words, he advocated for the hedging strategy of risk avoidance. South Korea and Japan are similar. In the "2+2 meeting" in March and in meetings between their respective leaders and President Biden, both South Korea and Japan rely on the US for security but have not completely alienated China.

According to the logic mentioned above, Taiwan needs US assistance for its security but cannot achieve economic development without the Chinese market. Last year, Taiwan's exports to China accounted for 43.8% of its total exports, a record high. Therefore, the hedging strategy of risk avoidance would be the most suitable option for Taiwan's national interests. However, Taiwan is one of the few countries that has chosen to "bandwagon" with the US and "balance" against China amidst US-China competition. This is due to two reasons. First, China's sovereignty claims extend to Taiwan; the Chinese Communist Party (CCP) frequently declares, "Taiwan is part of China." Moreover, as China's comprehensive national power grows, it is increasingly intensifying its pressure on Taiwan, frequently resorting to military threats and diplomatic suppression. This compels Taiwan to rely on the support of great powers, especially the US, viewing it as a path to survival. Another reason is internal to Taiwan. Unlike the opposition party (Kuomintang), which seeks a more moderate approach to cross-strait relations, the current ruling Democratic Progressive Party (DPP) has consistently made "resisting China" a core policy. Following Xi Jinping's speech on January 2, 2019, commemorating the 40th anniversary of the "Message to Compatriots in Taiwan," and Beijing's forceful response to the anti-extradition bill protests in Hong Kong, public opinion in Taiwan against the Chinese authorities has intensified. This has further strengthened the anti-China policies adopted by the DPP government.

Therefore, amidst the full-scale competition between the US and China, Taiwan stands almost entirely with the US and actively participates in the front lines of China containment, including the US-led Indo-Pacific Strategy. Emphasizing not only the "Indo-Pacific Strategy" but also the "alliance of democratic values" is rooted in this situation.

2) Strengthening Defense Capabilities

The strengthening of defense and military capabilities is known as the "Porcupine Strategy," which is similar in strategic meaning to the logic of asymmetric warfare. It is akin to a porcupine using its quills to threaten and deter enemies. The Trump administration announced last year that it would sell seven major weapons systems to Taiwan, including torpedoes, cruise missiles, and drones, enabling Taiwan to become like a porcupine, difficult to attack and even possessing counterattack capabilities. In March of this year, David Ochmanek, a former Deputy Assistant Secretary of Defense, stated in an interview that it would be difficult for the US to rescue Taiwan if a war broke out between the two sides. He argued that Taiwan must increase its defensive weapons to buy time for US assistance. In other words, by strengthening its military capabilities, Taiwan can enhance its confidence in self-defense and increase the willingness of its allies to provide substantive cooperative defense. Simultaneously, this will also enhance Taiwan's negotiating power in diplomacy and its opportunities to participate on the international stage.

Taiwan has not only expanded its procurement of various weapons systems from abroad but has also continuously developed new domestic weapons, including indigenous fighter jets and submarines. In recent years, Taiwan has successfully developed indigenous offensive weapons such as the HF-2E cruise missile, the Air Force's Wan Chien air-to-ground cruise missile, and the Navy's HF-3 supersonic anti-ship missile. These indigenous weapon developments have allowed Taiwan to add "multi-dimensional defense, multi-layered deterrence and annihilation, sustained defense capabilities, and focused breakthroughs" to its defense concept starting in 2021, in addition to its original policy of "robust defense and layered deterrence." Furthermore, according to the "Assessment Report on the Political and Military Development of the CCP in 2020" by Taiwan's National Defense Security Research Institute, China's military threats against Taiwan have, conversely, led to positive outcomes for Taiwan in terms of long-term defense systems, weapon procurement, and substantive alliance relationships. For example, in the joint statement of the US-Japan summit in April, President Biden and Prime Minister Suga emphasized the importance of stability in the Taiwan Strait. They also stressed that both the US and Japan oppose any attempt to change the status quo in the East China Sea and South China Sea or threaten regional security through force or coercion in the Taiwan Strait. Concurrently, they urged Taiwan to internally reconsider the importance of national defense and review its military service and defense systems.

3) Building a Globally Indispensable "Industry" as a "Pillar of National Defense"

During the Trump administration, US-China technological competition was at the forefront of their rivalry. The Biden administration is also forming advanced technology alliances with its allies to curb China's rapid growth. Recently, with the rapid increase in demand for semiconductor chips due to the spread of COVID-19 and various fields such as AI, 5G, AIoT, electric vehicles, high-speed computing, and cryptocurrency mining, supply has been unable to keep up with demand. Consequently, the semiconductor production capabilities of Taiwan and South Korea have garnered global attention and become a key focus for developed countries. In particular, Taiwan's TSMC has not only solidified its leading position in the semiconductor industry with its high-end chip manufacturing capabilities but has also played a role in enhancing Taiwan's influence on the world.

Many international media outlets report that without Taiwan, the key industries of various countries would be disrupted. The shortage of semiconductor chips became particularly evident during the COVID-19 pandemic. Therefore, if TSMC's production lines were to halt, global industries would inevitably cease, and the repercussions would be immense. This is why the US, Japan, and the European Union countries are seeking assurances regarding the security of semiconductor chip supply from Taiwan. Of course, many think tank scholars analyze that as China's advanced industries are currently caught in the US's trap, China's intention to control Taiwan's semiconductor industry will intensify. There are numerous analyses suggesting that if China decides to retake Taiwan militarily, its first action would be to attempt to control Taiwan's semiconductors. Naturally, the Taiwanese government is well aware of this and is therefore expanding support for the semiconductor industry while striving to elevate Taiwan's semiconductor industry to a globally indispensable position. This strategy aims to link Taiwan's industrial development with global industrial development, highlighting the threat Taiwan faces from China as a global issue, thereby securing Taiwan's security. In fact, the Taiwanese government's full support for domestic COVID-19 vaccine manufacturing over the past year or so stems from a similar logic.

3. Challenges Facing Taiwan in Cross-Strait Relations

1) Dual Risks Arising from Over-reliance on the United States

As mentioned earlier, Taiwan is currently in a "two-level games" situation, both domestically and internationally, in cross-strait relations, and has adopted "bandwagoning with the US and countering China" as its primary choice. However, this exposes it to two risks. Firstly, China is increasing its pressure. In particular, official media outlets, including the People's Daily, along with the Chinese Ministry of Foreign Affairs and the Taiwan Affairs Office of the State Council, criticize the DPP government for seeking independence by relying on the US and worshipping Western ways. They even criticize Taiwan for attempting to achieve independence by exploiting the pandemic situation. Furthermore, after the recent outbreak of local infections in Taiwan, Beijing's displeasure was evident when Taiwan rejected China's vaccine aid while accepting vaccines from Japan and the US.

The current triangular relationship among the US, China, and Taiwan forms a kind of cyclical structure. China is using strong pressure to prevent Taiwan from leaning towards the US, while Taiwan, in order to protect itself, is compelled to move closer to the US and Japan. However, this creates another risk, essentially "putting all eggs in one basket," a lack of risk-hedging measures. In recent years, as US-China competition has intensified, the US has passed legislation such as the "Taiwan Travel Act," the "TAIPEI Act," and the "National Defense Authorization Act," and has expanded arms sales to Taiwan both quantitatively and qualitatively. Taiwan has been invited to joint military exercises and participated in the Pacific Amphibious Leaders Symposium (PALS). However, whether the US has made firm commitments to Taiwan remains a subject of debate within Taiwan's political circles. What will Taiwan do if the US and China reach an agreement and both sides adopt a stance of "strategic retreat"? Thus, adopting a stance of excessive bandwagoning with the US and confrontation with China can lead to another set of risks.

2) China's Increasingly Intense Dual Strategy of "Punishment and Reward"

China has consistently employed a dual strategy of "punishment and reward" towards Taiwan. During the DPP's tenure, China's unilateral actions, characterized by intensified punishment and increased rewards, have become more pronounced. This dual strategy places greater pressure on Taiwan.

① In terms of punishment, it primarily targets the Taiwanese government, including blocking its access to the international stage and military actions. In recent years, China has continuously pressured Taiwan's diplomatic allies to sever ties and has obstructed Taiwan's participation in international organizations and conferences. Militarily, Chinese military aircraft and warships frequently patrol around Taiwan, and aircraft frequently cross into Taiwan's southwestern Air Defense Identification Zone (ADIZ) and the median line of the Taiwan Strait. This is aimed not only at Taiwan but also at the US and Japan, and crossing the median line of the Taiwan Strait places a significant burden on Taiwan's air defense.

② In terms of reward, it primarily targets the Taiwanese people, guided by Xi Jinping's concept of "economic and social integration." This involves attracting Taiwanese businesses and talent to invest and work in China through various preferential policies and continuously strengthening influence over Taiwan by leveraging close cross-strait economic exchanges. The reward strategy is a "unilateral act" as it completely bypasses and incapacitates the Taiwanese government. Furthermore, through various forms of united front tactics, propaganda, and cognitive warfare, China engages in "hybrid warfare" to disrupt Taiwan's domestic politics and social operations.

3) Intensified Domestic Political Competition and Division

Cross-strait relations are the most divisive policy agenda among Taiwanese political parties and among the public. It is also the arena where political disputes are most intense. Consequently, it has become almost a zero-sum game with no room for compromise between the two sides. Disputes between political parties have arisen not only in political and economic dimensions but also recently over the procurement of COVID-19 vaccines. The issue at stake was whether Taiwan should purchase the German BNT vaccine, represented by Shanghai's Fosun Pharma Group. With the ruling party championing an "anti-China" stance, the Taiwan Affairs Office of the State Council even offered to assist in the vaccine negotiations between Taiwan and Fosun Pharma. Taiwan's response was negative, but the opposition party's demand for swift vaccine imports, arguing that "life is in the hands of heaven," has led to continuous debate. Regardless of Beijing's underlying intentions behind this move, heated debates have erupted between the central and local governments in Taiwan, among political parties, and among the public. Thus, it is difficult for Taiwanese society to reach a consensus on the cross-strait relations agenda, and facing China's pressure, these debates and internal conflicts will continue. While Taiwan would struggle to counter China even if united, a divided Taiwan would be even less able to do so.

4) Hostility Between the Peoples of Taiwan and China

In recent years, hostility between the peoples of Taiwan and China has been on the rise, in addition to the confrontation between their governments. Particularly over the past two years, with the US-China trade war, the anti-extradition bill protests in Hong Kong, the Taiwanese presidential election, and the outbreak of the COVID-19 pandemic, the positions of the people of Taiwan and China have become severely divided. Especially among the youth, the clash between Taiwan's "natural independence" (천연독), which inherently supports independence, and China's "natural unification" (자연통), which yearns for national unification, as well as the confrontation between anti-China and anti-Taiwan sentiments, occurs almost daily on various major internet sites in Taiwan and China. In fact, Taiwan must pay special attention to the recent surge of nationalism within China. It must also be vigilant against the CCP using the outpouring of emotions as an outlet for US-China relations or internal economic and social crises. Furthermore, it is crucial to distinguish between the "Chinese Communist Party" and the "Chinese people" and to win the hearts and minds of the Chinese populace. The Chinese people must be made to understand that democratic systems can be implemented in the Chinese world and that democracy is a viable way of life for them to choose. Moreover, this will be the best way to protect Taiwan's security.

4. Conclusion

Although the competition between the US and China is comprehensive, we still need to clearly distinguish its essence. We also need to clarify the proportion of cooperation, competition, and confrontation within the strategies and tactics of both the US and China. US-China strategic competition is long-term. If we must strategically lean towards the US, we must act more meticulously and flexibly in tactical aspects, and finding space for risk avoidance is crucial. The stalemate formed over the past four years since the DPP came to power, coupled with the catalyst of the pandemic, has transformed the current cross-strait relations from a matter of improvement to one of crisis management. The current political agenda of the CCP focuses on the smooth hosting of the "100th anniversary of the CCP," the "Winter Olympics," and the "20th Party Congress." During this period, "concentrating efforts on one's own affairs" will be paramount. They will not rashly act against Taiwan. However, the situation after the 20th Party Congress in the autumn of 2022 is unpredictable.

Xi Jinping's will is naturally paramount in China's domestic and foreign policy decisions. In recent years, there have been widespread rumors in the international community about Xi Jinping losing power, mainly citing the US-China trade war, the novel coronavirus, various domestic economic and social issues, and the counterattacks of political rivals due to excessive anti-corruption efforts. However, it is crucial to understand that while these events have affected Xi Jinping's authority, his power has only become more consolidated over time. Although Xi Jinping faced much criticism at the beginning of the pandemic, as the situations in Europe, the US, and India worsened, the CCP activated its internal propaganda mechanism to strengthen Xi Jinping's leadership role and promote the superiority of its system. As US-China confrontation intensifies, the possibility of Xi Jinping securing another term at the 20th Party Congress will likely increase. There is no doubt that with power concentrated in Xi Jinping, no one can challenge him. Taiwan's best course of action will be risk avoidance and delaying tactics. It is about patiently waiting for the post-Xi Jinping era. ■

■ Author: Wang Hsin-Hsien) Director and Distinguished Professor, Graduate Institute of East Asian Studies, National Chengchi University, Taiwan. He received his Ph.D. from the Graduate Institute of East Asian Studies at National Chengchi University in 2002 and was a visiting scholar at UC Berkeley, University of Tokyo, and Waseda University. His main research areas include comparative politics, international relations, China studies, and cross-strait relations. His recent research includes "Between A Rock and A Hard Place: How Small and Medium Countries Respond to the Competing Great Powers in Asia-Pacific Region," "Building a Hyper-Stability Structure: The Mechanisms of Social Stability Maintenance in Xi’s China," and "Hobbling Big Brother: Top-Level Design and Local Discretion in China’s Social Credit System." He has published approximately 60 academic papers in major domestic and international academic journals.

■ Managed and Edited by: Baek Jin-kyung EAI Research Director

Inquiries: 02 2277 1683 (ext. 209) j.baek@eai.or.kr