Preserving Peace and Democracy in Taiwan

Preserving Peace and Democracy in Taiwan

Taiwan/Republic of China flag
November 01, 2023

by Victoria Djou
Special Report 23-4, November 2023
This publication is only available online.

In Brief

  • The January 2024 Taiwanese presidential election will help to determine the trajectory of Taiwan’s democracy in the face of long-standing tensions with China.
  • Current president of the People’s Republic of China (PRC), Xi Jinping, has made it clear that he desires to reunite China as a unipolar power in Asia, which would have far-reaching effects on the global supply chain and international relations and on the lives of Taiwanese citizens.
  • If Taiwan wants to maintain long-term peace—and its democracy—it must draw closer to other nations and form new partnerships with neighboring countries that have a mutual interest in restraining Xi and the PRC.



As the 2024 Taiwanese presidential election approaches, the party that takes power will affect the trajectory of Taiwan. After eight years under the leadership of Tsai Ing-wen of the Democratic Progressive Party (DPP), voters will come to the ballot box with serious China-Taiwan tensions weighing on their minds. For the center-right opposition Kuomintang (KMT) party, the election is a choice between war and peace, while for the incumbent DPP, the choice is one between “democracy and autocracy.”1 The KMT argues that friendly relations with China would best protect Taiwan from war, while the DPP argues for protection through partnerships with like-minded countries. This paper seeks to explain the background behind the China-Taiwan conflict and the present situation in advance of the 2024 election.

While promises of eventual unification with China might buy more time to maintain Taiwan’s status quo, such promises do not guarantee peace. The danger of trusting the current president of the People’s Republic of China (PRC) and general secretary for the Chinese Communist Party (CCP), Xi Jinping, outweighs the hope for peace. Xi’s desire for a united, powerful China has become the centerpiece of his presidency, and he has focused the PRC on the goal of complete reunification with Taiwan by any means necessary.

The PRC’s recent aggressive domination over Hong Kong demonstrates both a willingness to forcefully silence resistance and the broken promises of the “one country, two systems” concept. The situation in Hong Kong illustrates that reunification with the PRC will not guarantee peace or democracy. The success of the PRC’s continued assaults on Hong Kong’s waning democracy necessitates that Taiwan face the realities of a potential invasion by the PRC in the near future. While surveys show that most Taiwanese citizens prefer the status quo, as time goes by, they will bear increasing pressure to choose how they will confront the PRC. If Taiwan wants to maintain peace for the long term—and its democracy—it must strengthen itself by drawing closer to other nations and forming new partnerships with neighboring countries that have a mutual interest in restraining the PRC. Thus far, the fostering of official and unofficial diplomatic relations, scientific diplomacy and investment ties overseas have dominated Taiwan’s response to the PRC. Democratic allies must support Taiwan’s efforts to protect free shipping lanes in the South China Sea and in the Taiwan Strait, to preserve its vital semiconductor industry and to maintain peace in the Indo-Pacific. Through unity with like-minded nations that are also seeking to deter Xi and the CCP, Taiwan seeks to deter an invasion and to maintain its democracy. 

Historical Background: China and Taiwan

To understand China’s motivation for reunification, one must first understand the period from 1839 to 1949 that the Chinese call the “Century of Humiliation.” For hundreds of years, China served as Asia’s unipolar power, subjugating the region and collecting tribute from vassal states. At the zenith of the Qing Dynasty’s glory in the late 18th century, China invaded and imposed control over Tibet, Xinjiang, Mongolia and Taiwan.2 However, the arrival of Westerners—beginning during Europe’s Age of Exploration, starting in the 18th century—posed a serious challenge to China’s centric power. Defeat in the First Opium War (1839–1842) resulted in the first of a series of “unequal treaties” imposed on China by the West that demanded conditions such as large indemnities and concession of Hong Kong to the British.3 Roughly 50 years later, following defeat in the First Sino-Japanese War (1894–1895), the Treaty of Shimonoseki forced the Qing Dynasty to relinquish control of the island of Taiwan (previously called “Formosa” by Dutch traders) to Japan.4 

Repeated defeats by foreign powers—combined with internal governance failures—weakened the Qing Dynasty, bringing about its collapse in 1912 and leading to a brutal civil war between the KMT, led by the warlord Chiang Kai-shek, and Mao Zedong’s CCP. The KMT was originally founded in 1894 by Sun Yat-sen to overthrow the constitutional monarchy that had briefly ruled after the demise of the Qing Dynasty. Educated briefly in Hawaii and then in British-ruled Hong Kong, Sun Yat-sen would become a revolutionary and political philosopher with dreams of bringing democracy to China.5 Roughly three decades later, inspired by the success of the 1917 Russian Revolution, revolutionaries Li Dazhao and Chen Duxiu founded the CCP in 1921 with the hopes of bringing the ideas of Marxism and Leninism to China.6 After the Qing Dynasty’s downfall, regional warlords jockeyed for control of China. Under the First United Front, the CCP and KMT joined forces to defeat the regional warlords and to unite China. The coalition was fraught from the start, however, as neither side trusted the other and only begrudgingly collaborated under the leadership of Sun. With Sun’s death in 1925, the alliance crumbled. Chiang Kai-shek assumed leadership of the KMT, and the KMT began ruthlessly purging communists within China.7 In the immediate aftermath of Japan’s invasion of China in 1937, the KMT and CCP again agreed to unite, forming a Second United Front to fight the Japanese.8 The alliance, built on unstable grounds, collapsed once again in 1941 as the KMT began diverting its resources to fight the CCP rather than the Japanese. After Japan’s surrender in 1945, the civil war resumed. Despite having more guns and more manpower, the KMT lost battle after battle, eventually retreating to the island of Taiwan. The CCP then solidified control over mainland China and, after declaring victory, founded the PRC in 1949.

The turbulent path to the formation of the PRC and the government of the Republic of China (ROC) in Taiwan colors cross-strait tensions today. During the Century of Humiliation, repeated outside intrusion accompanied internal deterioration as the Chinese people suffered from famine and poverty and the government faced the resulting civil unrest. The Century of Humiliation harks back to a time when Chinese power on the global stage sharply declined. From its height as the unipolar power to becoming the “sick man of Asia,” the Century of Humiliation remains a wound in Chinese history that Xi has set out to rectify. According to Xi, Taiwan must be reunited with China for the Chinese people to make a full recovery.

Today, China states that it desires a peaceful reunification with Taiwan under the auspices of “one country, two systems.” The origins of “one country, two systems” can be traced to the words of Mao Zedong: on the condition that Taiwan unites with China, “all the military and political power and the power of appointing officials may be delegated to the Taiwan authorities.”9 While China claims to honor the idea of “one country, two systems,” the 2020 national security law imposed by China on Hong Kong suggests otherwise.10 To this end, China uses both soft and hard power to demonstrate to the world that it will not accept any form of Taiwanese independence.

The Path to Reunification

At the time of Xi’s inauguration in 2012, Western leaders hoped that he would lead the PRC to democracy. Unfortunately, Xi had a very different vision in mind, one that would return the PRC to personalistic rule, bent on restoring the former centric power of China. Central to Xi’s grandiose dreams is the reunification of the PRC and Taiwan. Xi’s consolidation of power has provided him the means to enforce his expansionist vision of China as the country rapidly reabsorbs Hong Kong and places ever-increasing pressure on Taiwan.

Xi Jinping’s Consolidation of Power: The Waning Power of the Politburo 

Xi has steadily reshaped both the PRC and the CCP to suit his goals. His consolidation of control allows him to use force even if the economic and diplomatic costs of an invasion outweigh the benefits. War with Taiwan will have far-reaching consequences, harming both domestic and international markets and further alienating the West from the PRC. While rectifying the PRC’s historical wound would yield personal and political clout for Xi, the long-term economic costs imposed by estranging other countries could be severe. However, a “closing window of opportunity” could push the PRC to invade under less-than-optimal conditions.11 If the PRC felt the future opportunity to reunify was disappearing, this could be enough to prompt an invasion. Moreover, a loyalist circle helps a leader to tailor the facts to fit his vision. For example, Mao Zedong, the first president of the PRC, under the Anti-Rightist campaign, sentenced thousands of party members, critics and artists to execution or hard labor.12 As a result, few government officials and civilians dared to voice any negative sentiments about the two disastrous policies that followed: the Great Leap Forward and the Cultural Revolution. The policies would backtrack China economically, trigger a famine that killed millions and eventually lead to the deaths of thousands of innocent Chinese civilians. Surrounded by loyalists, and in a system that incentivized corruption, the CCP lacked a feedback system. The lessons from Mao demonstrate the dangers of a party that has been purged of critics. 

Before Xi’s rise, China’s elite Politburo members often checked central power. Due to family and historical claims, many Politburo members’ personal clout afforded them a powerful voice in governmental decisions. Xi’s 2012 anti-corruption campaigns silenced that voice by ousting senior government officials and allowing Xi to cleanse the political scene of criticism. Courts found nearly 1.5 million government officials guilty of corruption-related charges; the guilty included generals, members of the party’s Central Committee and other senior officials.13 Among those arrested were senior politicians Bo Xilai and Zhou Yongkang, two significant potential challengers to Xi’s authority. New appointees, such as He Weidong, architect of the provocative military drills following former U.S. Speaker of the House Nancy Pelosi’s visit to Taiwan, all fall squarely in Xi’s camp. Extending greater control over the party created the conditions for Xi’s unprecedented third term and amendments to the CCP constitution to “resolutely oppose and constrain Taiwanese independence.”14 Restoring Taiwan to China would be the crown jewel of Xi’s presidency—and it is a goal he specifically cited during a speech at the 19th Party Congress in 2017.15 His expansion of control and power allows him to pursue an aggressive foreign policy strategy even under poor conditions.

China’s Assertiveness in Hong Kong 

Xi laid out his intention to reunite Taiwan with China in his speech for the Chinese Communist Party’s 100th anniversary in 2021. Opening the speech, Xi highlighted the “intense humiliation” that Chinese civilization suffered following the 19th century Opium Wars,  promising, “We will never allow any foreign force to bully, oppress, or subjugate us.”16 In contrast to the Century of Humiliation, Xi paints Mao and the Communist Party as the heroes of China. Highlighting that China has become a technologically and economically advanced country through the efforts of the CCP, and specifically referencing Taiwan as a part of this advancement, Xi promised that “realizing China’s complete reunification is a historic mission.”17 Whether Taiwan peacefully elects to join China or China takes Taiwan by force, Xi has made the subjugation of Taiwan to Chinese rule a personal mission. 

The PRC’s swift and aggressive reinstitution of control over Hong Kong demonstrates a willingness to forcefully subvert democratic institutions to achieve reunification. Following the conclusion of the First Opium War, Hong Kong formally came under British rule. As the 20th century ended and colonialism retreated, the Sino-British Joint Declaration of 1984 laid out the terms for Hong Kong’s return to the PRC. The declaration stipulated that “Hong Kong’s previous capitalist system and life-style shall remain unchanged for 50 years.”18 Although the declaration required the preservation of civil freedoms and limited voting rights, the PRC quickly worked to curtail both after resuming control. Xi’s 2012 effort to impose a new “patriotic education” and his 2014 move to restrict electoral candidates to a pool of those approved by the CCP exemplify efforts to exert greater control over Hong Kong.19 

On 30 June 2020, the PRC subverted the Hong Kong legislature and forcefully enacted the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region, commonly referred to as the national security law. This law enables the CCP to establish a security force in Hong Kong that can arrest anyone under the broad auspices of subversion, secession, terrorism or collusion with foreign powers.20 PRC-sponsored police forces brutally enforced mass arrests of protestors, activists and journalists. Silencing voices of criticism highlights Xi’s resolve to solidify his authority in Hong Kong. After violating the terms of the Sino-British Joint Declaration, but supposedly continuing to follow the idea of “one country, two systems,” Xi expects Taiwan to follow Hong Kong’s example. 

Mounting Pressure on Taiwan: Disinformation Campaigns and Military Drills 

To weaken Taiwan, the PRC has continually increased the severity and frequency of disinformation campaigns—the release of false information to intentionally mislead and deceive people—against the country.21 The following incidents highlight just a few of China’s disinformation campaigns in Taiwan. 

  • September 2018: Bloggers posted fake videos and photos claiming that Taiwanese diplomats failed to rescue Taiwanese tourists in Japan following a typhoon while China sent buses to rescue its own citizens. Later, the Japanese government confirmed that China had sent no buses.22
  • August 2022: During former U.S. Speaker of the House Nancy Pelosi’s visit to Taiwan, hacked TV monitors in 7-Eleven convenience stores displayed “Warmonger Pelosi, get out of Taiwan” on screens.23 Government websites and systems were temporarily blocked.24
  • April 2023: Forged documents on social media sites claimed that the Taiwanese government donated money to the Hudson Institute in exchange for an award for President Tsai Ing-wen.25 

Propagation of false information by exploiting the hypercompetitive nature of the Taiwanese press and the anonymity of social media platforms allows the PRC to sow confusion, while disrupted access to government sites creates the illusion of weak and vulnerable infrastructure, harming Taiwanese citizens’ perceptions of their government. The PRC uses disinformation to abate trust in the Taiwanese government and to instill a sense of fragility and defeatism that weakens Taiwanese unity. The PRC then uses the fear and anxiety generated to harm Taiwanese morale and to posture Taiwan for reunification.

Accompanying the information war on Taiwan, the PRC routinely demonstrates its military strength and determination. Waves of disinformation aim to pressure Taiwan to reunite with the PRC, but, should such attempts continue to fail, China would not hesitate to use physical force. In August 2022, China engaged in live-fire drills, ballistic missile launches and simulated air and sea attacks against the island.26 In April 2023, in sync with Tsai and then U.S. Speaker of the House Kevin McCarthy’s meeting, the People’s Liberation Army (PLA) Eastern Theater Command declared on social media, “Even a bit of China cannot be left behind!” Shortly after, Chinese frigates and destroyers practiced short-range assault and long-range deterrence while J-16 and J-10C aircraft carried out live ammunition combat drills.27 On 10 April 2023, the final day of these exercises, the Beijing Daily reported that the PLA engaged in “Joint Sword” (联合利剑) exercises to warn against Taiwan declaring independence.28 The maneuvers practiced cutting off access to seas east of Taiwan while destroyers carried out blockade simulations. The Taiwan Ministry of National Defense reported a record-high number of PLA aircraft around Taiwan, exceeding the previous high set in August 2022.29 Compared with the Taiwan Strait Crisis of 1995–1996, the exercises in 2022 and 2023 drew closer to the main island of Taiwan and infringed on Japan’s and the Philippines’ exclusive economic zones (EEZs).30 Thus, we see that the PRC uses its military power to bolster the narrative it spreads through false information online: the PRC is strong, Taiwan is weak; therefore, Taiwan should submit to the PRC rather than fight a losing battle.

What Do the Taiwanese Think about a Prospective Invasion?

While news of Chinese aggression toward Taiwan is not new, an increasing number of Taiwanese citizens desire to move toward independence and to identify themselves as distinct from China. Based on a 2022 study from the Election Study Center at the National Chengchi University, most Taiwanese citizens either wished to maintain the status quo indefinitely or to maintain the status quo for now, and then decide what to do sometime in the future. From 2018 to 2022, however, the number of Taiwanese who wanted to maintain the status quo while moving toward independence increased by 9.3 percent.31 Between 1995 and 2022, only 1.0 to 3.2 percent desired unification as soon as possible, and the number of respondents who wanted to maintain the status quo but move toward unification decreased from 19.4 percent to 6.0 percent.32 Besides changing opinions on Taiwan’s relationship with China, data also show that, in 2022, 63.3 percent of respondents selected having a distinctly Taiwanese identity compared with only 17.6 percent of respondents in 1992.33 Opinions on unification and Taiwanese identity changed dramatically from 1992 to 2022. While the PRC maintains that it seeks a peaceful reunification with Taiwan, increased PRC aggression influences opinions on the future of the island and how the people on the island self-identify.

Taiwan’s experience under martial law also influences Taiwanese citizens’ view of a prospective invasion and their identity. Following its exile to Taiwan, the KMT enacted martial law to solidify its authoritarian control over the island. Between 1949 and 1992, the government arrested, imprisoned and executed thousands of innocent civilians; today, this period is referred to as the White Terror.34 On 28 February 1947, Nationalist forces massacred thousands of Taiwanese for peacefully protesting the KMT government. The event represents the struggle and immense courage of the ordinary citizens who paved the path to democracy. The memories of suffering and hardship continue to ring in the ears of the Taiwanese who today remember the sacrifices made in their quest for democracy. Enduring martial law did not last forever, but neither can Taiwan hide from China forever. The uneasy road to democracy remains a powerful memory for the people of Taiwan, playing a significant role in the modern Taiwanese identity that favors democracy over autocracy. As the Taiwanese distinguish themselves from the PRC, maintaining the status quo will grow increasingly difficult. 

Taiwan’s Diplomatic Defense: Formal Diplomatic Relations

As China’s hostility grows, Taiwan must strengthen its diplomatic relations with other nations that are facing similar pressure from China’s expanding influence. While most countries officially recognize the PRC, only a handful recognize Taiwan. Thirteen countries currently maintain diplomatic relations with Taiwan: the Marshall Islands, Nauru, Palau, Tuvalu, Eswatini, the Holy See, Belize, Guatemala, Haiti, Paraguay, Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines.35 In 1998, the Taiwanese government created a $240 million aid fund for Central American allies, demonstrating Taiwan’s longstanding commitment to Central American countries.36 The fund aims to encourage Central American countries to continue recognizing Taiwan and illustrates Taiwan’s attempts to stay relevant on the global stage. In March 2023, however, Honduras decided to recognize the PRC over Taiwan. Honduras had asked Taiwan for roughly $2.45 billion to fund hospital and dam construction projects in exchange for remaining allies with Taiwan. When Taiwan refused, the two nations severed ties. Shortly after, Honduras signed a deal with Sinohydro, a Chinese company with $300 million in PRC financing, to construct a new hydroelectric dam.37 Economically and militarily, China could easily crush Taiwan; to maintain its sovereignty, Taiwan needs the support of allies. 

U.S.-Taiwanese Relations 

Maintaining an informal relationship with the United States and other informal allies is integral to Taiwan’s defense. Unfortunately for Taiwan, losing allies to the PRC over lucrative trade deals or low-interest loans is nothing new. Taiwan recognizes that choosing to exclude China for the sake of Taiwan is not a pragmatic choice for most countries; upsetting China can have profound consequences. However, countries such as the United States continue to support Taiwan through unofficial means. After the strengthening of U.S.-China relations under President Jimmy Carter in the late 1970s, Congress also moved to ensure unofficial U.S.-Taiwan ties through the Taiwan Relations Act (1979). The Taiwan Relations Act aims to “preserve and promote extensive, close, and friendly commercial, cultural, and other relations between the people of the United States and the people in Taiwan.”38 The legislation outlines Washington’s policy of strategic ambiguity toward Taiwan, aiming to avoid defining the extent to which the United States will intervene in the event of war over the island. 

Under strategic ambiguity, organizations such as the American Institute in Taiwan (AIT), a nongovernmental organization mandated by the Taiwan Relations Act, conduct informal diplomatic relations with Taiwan. Much like an embassy, AIT provides consular and citizenship services. In the last few years, the U.S. government approved multimillion-dollar weapons sales to Taiwan and continues to rely on Taiwanese companies to produce the semiconductors used in advanced military hardware. Educational programs such as the Fulbright U.S. Student Program and the U.S.-Taiwan Education Initiative further strengthen U.S.-Taiwan relations. While the United States does not provide any official support to Taiwan, these educational programs, the commitment of American organizations and strong business ties between the United States and Taiwan are critical to Taiwan’s future. 

Scientific Diplomacy 

To bolster both formal and informal ties, Taiwan strategically shares its scientific achievements with allies. Science diplomacy generally includes three key goals: the facilitation of international scientific collaboration, the use of science to advance diplomatic objectives and the use of scientific advice to inform diplomatic responses.39 

In March 2023, Taiwan signed an agreement with Germany designed to enhance cooperation in fields such as artificial intelligence, semiconductors and hydrogen energy.40 This agreement both initiated collaboration on scientific projects and strengthened friendly relations between Germany and Taiwan. Additionally, Taiwan’s Ministry of Science and Technology and Poland’s National Center for Research and Development signed an agreement to create joint research programs and hold conferences.41 Most recently, on 22 May 2023, the U.S.-Taiwan Science and Technology Cooperation Dialogue convened in Taipei. Participants, including the National Science Foundation, National Institute of Standards and Technology and the National Oceanic and Atmospheric Administration, discussed scientific issues of importance to the United States and Taiwan, developing further collaboration between scientists in the countries.42 The meeting stimulated discussions on semiconductor research, biotechnology, cancer research, research integrity and security. This scientific diplomacy bolsters Taiwan’s international standing and provides an alternative means for important unofficial relations.

Overseas Legislation and Investment

In addition to scientific diplomacy, Taiwan seeks to strengthen its informal ties and presence through legislation such as President Tsai’s New Southbound Policy, introduced in 2016. Rather than asking countries to risk being blacklisted by China for recognizing Taiwan, President Tsai shifted Taiwan’s goal to forming mutual partnerships. The New Southbound Policy aims to leverage Taiwan’s assets to enhance “regional integration” with countries in the Association of Southeast Asian Nations (ASEAN), South Asian states, Australia and New Zealand.43 As part of the policy, Taiwan promotes projects in fields such as agriculture, health care, tourism, disaster prevention, e-commerce, infrastructure and education.44 The New Southbound Policy demonstrates Taiwan’s desire to increase its presence in the Indo-Pacific and to forge as many relationships as possible. The focus on South Asian nations is key because these nations are best positioned geographically to aid Taiwan in the event of an invasion; support from Taiwan’s South Asian neighbors could reach Taiwan faster than support coming from mainland Europe or North America. 

Accompanying new legislation, overseas investment supports Taiwan’s goal of building strong partnerships with countries other than the PRC. In the late 20th century, Taiwanese investments in China played a large role in China’s rapid industrial growth. However, in the face of increased Chinese aggression, that investment has since “declined by 10.4 percent year on year in the first quarter of 2023.”45 In 2022, Taiwanese investment in China decreased by nearly 14 percent, and Taiwanese companies pulled nearly $3.6 billion from China.46 Aside from the pandemic’s impact, decelerated investment follows a longer declining trend: between 2018 and 2019, Taiwanese investment in China fell by more than 50 percent, while overseas investment excluding China rose 240 percent, equating to $6.9 billion.47 Seeking to expand outside of Taiwan, firms like the Taiwan Semiconductor Manufacturing Company (TSMC) have shifted investment to Japan and to the United States. Most recently, TSMC signed a deal with Germany to build an $11 billion chip plant, its first in Europe.48 With production scheduled to begin at the end of 2027 and the EU aiming to double its share in the semiconductor market, Europe is also taking steps to draw closer to Taiwan49 as Taiwan builds stronger economic ties. 

Importance of Taiwan

Today, Taiwan carries outsized geopolitical and economic importance to the Indo-Pacific region, but Western powers did not always see it that way. In former Secretary of State Dean Acheson’s 1950 speech to the National Press Club, he specifically excluded Taiwan from the U.S. “defense perimeter.”50 Maintaining that the Truman administration wanted to abstain from involvement in the Chinese Civil War, Acheson’s speech revoked American military protection of Taiwan. In the 73 years since, however, both China and Taiwan have rapidly modernized, and their economic strength—both China’s manufacturing and large market and Taiwan’s specialization in semiconductor manufacturing—has caused the U.S. position on Taiwan to shift to a supportive role. Despite its small size, protecting Taiwan is key to maintaining free shipping routes, preserving access to the semiconductors that power the modern world and ensuring overall security in the Indo-Pacific.

Control of Shipping and Trading Routes

Taiwan is key to safeguarding the freedom of navigation in the Taiwan Strait and South China Sea. The Taiwan Strait connects Asian manufacturing hubs to markets in the United States, Japan, Europe and South Korea, handling close to 50 percent of the world’s container fleet and 88 percent of the largest container ships in 2022.51 Taiwan itself produces 80 percent of the world’s laptops and motherboards, 60 percent of network devices and 70 percent of all functional textiles.52 China’s highly disruptive military exercises around Taiwan in response to Pelosi’s visit in August 2022 demonstrate the risks to commerce through the strait. The live-fire exercises and submarine drills conducted by China disrupted shipping routes, denying ships and aircraft safe travel in six zones near Taiwan.53 Control of Taiwan would not only give China a stranglehold on shipping through the strait but would also expand its influence over shipping routes that pass through the South China Sea. As evidenced by the COVID-19 pandemic, disruptions to shipping processes can have cascading effects, requiring months or years to resolve and causing untold damage to global commerce.

Semiconductor Industry

Taiwan’s dominant semiconductor industry plays a critical role in the global supply chain for modern electronics. From smartphones to F-35 fighters to radar systems, the need for semiconductors is ubiquitous. According to TrendForce, a Taiwan-based research institute, Taiwan produced 65 percent of the world’s semiconductors in 2021, accounting for roughly $61.5 billion in foundry revenue.54 The semiconductor industry is vital to Taiwan’s economy, contributing up to 15 percent of the nation’s gross domestic product, with TSMC alone employing around 70,000 people and giving Taiwan outsized influence in the global economy.55 

The growth of Taiwan’s semiconductor industry required international collaboration to create a functioning global supply chain. Based on the current structure of the global supply chain, attempting to replicate the chip supply chain without Taiwan would be extremely costly and inefficient, requiring years to accomplish.56 It would be extremely difficult for other nations to collaboratively and quickly re-create a single company that could handle the entire semiconductor manufacturing process.57 

In 2022, the U.S. government passed the CHIPS and Science Act, providing “$52.7 billion for American semiconductor research, development, manufacturing, and workforce development.”58 As such, companies like TSMC have an interest in investing in new plants in countries like the United States that offer generous subsidies. In 2020, TSMC signed a multibillion-dollar deal to start a semiconductor plant in Arizona, demonstrating Washington’s recognition of the risks of concentrating such a vital manufacturing sector in a single nation—particularly one under direct threat from a U.S. adversary. However, production at the Arizona plant faces difficulties due to a lack of specialist workers.59 Without Taiwan, electronics manufacturers could face crippling semiconductor shortages, leading to a snowball effect across multiple industries, including the weapons manufacturing industry—the products of which are vital to Taiwan’s continued deterrence of Chinese aggression.

Strategic Security in the Indo-Pacific 

If China seized control of Taiwan, it would further embolden its military aggression in the South China Sea. The CCP contends that historical evidence—ranging from maps to pottery pieces—supports its claim to all territory within the “nine-dash line” (Figure 1). Ignoring contradicting maps and historical artifacts from protesting countries, China submitted these claims to the United Nations in 2009, based on a map from 1947. Upon closer inspection, it becomes clear that the dashes on the 2009 map moved closer to the coasts of Southeast Asian nations than those on the original 1947 map. Should the nations of the world choose to recognize the 1947 nine-dash line, China’s territory would be even more expansive than currently recognized.

nine dash line
China's "nine-dash line," as submitted to the United Nations Commission on the Limits of the Continental Shelf, 7 May 2009.

In 2013, China acted on these claims and began constructing artificial islands on atolls, reefs and shoals in the South China Sea. Despite repeated statements by the Chinese government that it had no intention of militarizing these artificial islands, China’s construction projects on the islands have since demonstrated otherwise.60 Based on satellite imagery, China installed military airstrips and antiaircraft and antimissile systems on seven islands it built in the South China Sea.61 In addition to close-in weapon systems, China built defense fortifications and, on some islands, towers with targeting radar.62 These fortifications on the artificial islands demonstrate China’s intentions to enforce its claims to the nine-dash line and to expand its presence in the South China Sea. 

This island-building infringes on territory claimed by Vietnam, the Philippines, Indonesia, Malaysia and Japan. In 2016, the Philippines filed a case against China in the Permanent Court of Arbitration in The Hague in the Netherlands, an international court established by the First International Peace Conference in 1899. The court ruled that China’s historic claims to the islands inside the “nine-dash line” had no legal foundation and that its activities infringed on the Philippines’ sovereignty.63 

Establishing sovereignty over these artificial islands would allow China to extend its maritime rights, thereby controlling a greater portion of the South China Sea. According to international law upheld by the United Nations, maritime rights give a nation legal jurisdiction over the territorial sea, seabed and airspace. For any given territory, international law grants nations the ability to “establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles.”64 Unsurprisingly, the PRC refuses to respect the decision of The Hague. Xinhua, China’s state-run media agency, wrote that it was illegal and void since it showed “NO RESPECT FOR HISTORICAL FACTS.”65 The fact is, however, that the PRC has invaded countries’ EEZs (including the Philippines’), and it cannot legally receive full maritime privileges for its actions on these so-called islands. The PRC’s island-building both threatens security in the region and challenges the stability of the international order.

For these reasons, nations similarly threatened by China’s expansive claims have a stake in protecting Taiwan. To preserve free shipping lanes, the semiconductor industry and security in the Indo-Pacific, other countries must continue their support for Taiwan. Unity among those countries standing with Taiwan will protect the integrity of its democracy and the peace that currently exists. 


The United States and its partners balance multiple international challenges, including cross-strait tensions between the PRC and Taiwan. Agreeing to the PRC’s demands for reunification may appear to be the simplest solution to prevent the PRC from starting a war over Taiwan, but it comes at a huge cost both for the people of Taiwan and for global stability. Preserving the integrity of Taiwan’s healthy, vibrant democracy is in the best interest of the United States and its partners; as the January 2024 election in Taiwan approaches, both the PRC and Taiwan’s allies anxiously await the outcome. 

Acquiescing to Xi’s demands by reuniting with the PRC does not guarantee long-term peace and will certainly mean the end of Taiwan’s democracy. China, under Xi, has an expressed desire to recover the dominance and glory it once held as Asia’s unipolar power. As demonstrated by the crackdown on Hong Kong, China will not respect the framework of “one country, two systems”; instead, it will hardhandedly impose its values and curb civil freedoms. Only by strengthening diplomatic relations among Taiwan, the West and China’s other regional adversaries can both peace and democracy survive in Taiwan.

★  ★  ★  ★

Victoria Djou is from Honolulu, Hawaii, and is the 2023 summer intern for Education & Programs at AUSA. She is a junior at the University of Virginia, majoring in Foreign Affairs with a Chinese minor. She is currently studying abroad in Taiwan at National Chengchi University.


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  2. John Keay, China: A History (New York: Basic Books, 2009), 437.
  3. “Treaty of Nanjing, 1842,” University of Southern California US-China Institute,
  4. “Treaty of Shimonoseki, 1895,” University of Southern California US-China Institute,
  5. Keay, China, 497.
  6. Keay, China, 505.
  7. Keay, China, 508.
  8. Harold M. Tanner, China: A History (Indianapolis: Hackett Publishing Company, 2009), 170.
  9. A Policy of ‘One Country, Two Systems’ on Taiwan,” Ministry of Foreign Affairs of the People’s Republic of China. 
  10. “Hong Kong National Security Law: What Is It and Is It Worrying?” British Broadcasting Station, 28 June 2022.
  11. Dale Copeland, The Origins of Major War (New York: Cornell University Press, 2000).
  12. Tanner, China, 193–234.
  13. Alexandra Flol-Mahon, “Xi Jinping’s Anti-Corruption Campaign: The Hidden Motives of a Modern Day Mao,” Foreign Policy Research Institute, 17 August 2018. 
  14. Helen Davidson, “Xi Jinping’s Party Purge Prompts Fears of Greater Taiwan Invasion Risk,” Guardian, 24 October 2023. 
  15. “Full Text of Xi Jinping’s Report at 19th CPC National Congress,” China Daily, 4 November 2017.
  16. “Full Text of Xi Jinping’s Speech on the CCP’s 100th Anniversary,” Nikkei Asia, 1 July 2021. 
  17. “Full Text of Xi Jinping’s Speech.”
  18. Joint Declaration on the Question of Hong Kong,” United Nations Treaty Series Online, registration no. 23391, 1984.
  19. Lindsay Maizland, “Hong Kong’s Freedoms: What China Promised and How It’s Cracking Down,” Council on Foreign Relations, 19 May 2022. 
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