Is Being the World’s Dominant Chip Supplier a Blessing or Curse to Taiwan? | Zooming In China

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hello everyone welcome to zooming in china i’m simone gao in january 2019 xi jinping delivered its most important taiwan policy speech in the six years since he came to power she declared that unification with taiwan is one of the most important parts of the great rejuvenation of the chinese nation in fact taiwan must unite with china and china would not kick the can down the road forever did he imply that if a peaceful unification is not achievable china would take over taiwan during his lifetime and under his leadership now the whole world is depending on taiwan for chips how has this impacted america’s determination to protect taiwan i had these discussions with robert hammond chambers president of the u.s taiwan business council take a listen thank you rupert for joining zumi in china today thank you simone it’s it’s my pleasure always

okay let’s talk about tsmc in the context of the cross-strait relations recently i’ve heard an argument that if china occupied taiwan the whole world would be paralyzed because i mean if beijing decided to cut off the chip production from tsmc is this an overstatement well i think what it speaks to is the importance of taiwan in the semiconductor ecosystem simone i mean you identified tsmc and of course tsmc is arguably the most important semiconductor company in the world now given its technology particularly at the highest levels and its relationship with the global technology community if taiwan was severed if the island’s semiconductor manufacturing was severed from the global economy yes it would have ramifications across the world not just for supply chains which were seeing fact perhaps as an example and the tightness of supply in this in the auto industry uh you can magnify that across the entire global economy manufacturing would be impacted equity markets would be impacted and so on so yes it would it would have ramifications way beyond just the taiwan straight right right and i think that tsmc has really changed the cross uh straight uh relations quite a bit so the question is how much has tsmc changed america’s resolve to protect type one well i i i know you want to put it in the context of tsmc the company but i would continue to come back to the taiwan semiconductor ecosystem for of course tsmc is at the center of taiwan’s semiconductor community but there are many many companies that make up taiwan’s strength as a manufacturing base for chip manufacturing and and for uh for partnering with the rest of the world in this space how has it changed the calculation for the united states well it’s strengthened it there are many different issues about why taiwan is and will remain a critical partner for the united states for japan for the australians for the british and others globally of which its technology importance is a key feature and of course at the core of that is the semiconductor miracle that has grown on the island since the 1980s

right uh you know the recent news is tsmc is planning to build several more chip making factories in arizona beyond the one currently planned u.s domestic manufacturers such as intel is also planning on building factories in the area as is samsung and the biden administration is preparing to spend tens of billions of dollars to support domestic chip manufacturing so how significant it is this trend to the u.s and also to taiwan will this make uh tsmc and the rest of the you know taiwan’s semiconductor industry less significant strategically in the future actually i think simone it’s quite the opposite i think that tsmc and the semiconductor community from taiwan is only becoming more relevant more important for the considerations of american politicians and leaders the investment and commitment that tsmc is making here in the united states it’s huge at the highest technology levels five nanometer the possibility that as the arizona investment expands over time we may see three nanometer production and even higher as time progresses speaks volumes to how important tsmc places the importance tsmc places on its relationship with its american partners and customers as well as geostrategically the importance of the u.s taiwan relations what we’re seeing which is an excellent development is more balanced less less less focus only on one place for high in manufacturing particularly taiwan and more balance between taiwan and the united states for higher manufacturing that’s good for geostrategic politics it’s also good business and allows tsmc and the taiwan technology community to engage and service its global customers and partners which is a favorable outcome

okay that makes sense let’s talk about xi jinping uh do you think xi jinping has decided to take over taiwan within his lifetime well certainly xi jinping has made very clear that he has every intention of pressuring taiwan to accept a a uh to accept a political relationship with beijing with china along beijing’s lines that of course is at the core of the one china principle what is the one china principle the one china principle is there is only one china the people’s republic of china communist china of which taiwan is a part well taiwan isn’t a communist country it’s a it’s a flourishing democracy so for taiwan to uh accept the terms that mr uh she is is demanding is to accept that the democracy that taiwan has built on the island will go away and it will be replaced by authority authoritarian communist party rule from beijing well has as mr as mr xi settled that he will accomplish this only time will tell but he’s certainly demanding it at the moment in january 2019 in a speech regarding type 1 xi jinping said that taiwan must unite with china and the party will not kick the can down the road forever so if he has decided to take over taiwan within his lifetime what do you think would be a good window for him well who could know what the right timing is for china to undertake some sort of action my response to your question is that i think the chinese should be very wary of any action that undermines peace and security in the taiwan strait whether the gray zone activities that they have been pursuing of late the saltying of aircraft in taiwan’s adiz south of the island between taiwan and the philippines or other gray zone activities that limit and restrict taiwan’s ability to engage other countries in the world these all under all these actions undermine confidence in china’s role as a a responsible player in the global community um moving forward um you know certainly china’s best play is to act peacefully and magnanimously towards taiwan and seek cooperation and not confrontation

i don’t think if that’s very likely let’s talk about president biden biden said one of the main reasons for america to withdraw from afghanistan is because america wants to focus on china and his current strategy regarding china has three components competition cooperation and confrontation i was thinking would there ever be a scenario where you know in this post pandemic era in the face of a possible hard landing of the u.s economy america would need china more than before and in that case what would it mean for taiwan well i think that the the issue of economic instability whether in the united states or quite frankly simone in china is certainly one that analysts should consider about the ability to manage stable relations between china and the united states the two the world’s two largest economies that has to be a consideration but i believe here in the united states that the overall attitude towards china is one now steeped in confrontation and once steeped in pushing back on china’s behavior regionally and globally whether it’s military militarily or economically so it’s hard even in your scenario where the united states may be experiencing some economic challenges to imagine that that would curb america’s willingness to uh um to compromise on other areas of american national interest in fact i would imagine that that would probably strengthen america’s willingness not to be perceived as vulnerable in that moment and as a consequence be taken advantage of and i think that’s true for china as well if i had a concern frankly about u.s china relations moving forward in respect to the united states i think it’s probably over climate change cooperation and the extent to which american domestic politics may undermine broader american national interest as uh the left wing of the american democratic party push for some sort of climate accommodation with china that comes at the expense of all the other american national interests taiwan certainly being high on those priority lists but economic issues technology issues and so on

interesting last question what is your evaluation of the biden administration’s china policy so far i i have been impressed with the continuity that the biden administration has pursued in respect to the shift that mr trump made in 2017 when he was elected and that has been most welcome parochially for us on taiwan policy uh the biden administration through both the selection of top-notch personnel kurt campbell dan crittenbrink eli ratner there are certainly many others worthy of note but those are three who i would identify right off the bat as well as the pursuit of policies that consistently keep us national interest at the forefront keep pressure on china to live up to its obligations and to act as a responsible player in the global economy and a responsible economic partner to the united states has all been most welcome perhaps seymour you noted yesterday ambassador thai at the united states trade representative office gave a speech at the center for strategic and international studies in which he framed a trade policy that looks very similar to the one that mr trump and his colleagues pursued for us here at the u.s taiwan business council we welcome that and i would also note that while mr trump and his colleagues did not see fit to engage taiwan bilaterally on economic matters for fear that it might disrupt u.s china trade relations mr biden has in fact proceeded and a trade and investment framework agreement meeting was hosted this past summer and it did not have a negative impact on u.s china economic engagement my point to you is we can do important economic bilateral trade issues with taiwan and with china at the same time

interesting okay robert these are all my questions do you have anything else to add no simone i i think uh i love all of your questions i particularly like the last one i i did want to note for you that that uh i think it’s interesting now we’re looking at the the parliament in taiwan has just started its autumn early winter session running through to the lunar new year um you’ll note within uh the life you end session this autumn there are two important uh defense pieces of defense legislation their regular defense budget which again you’re seeing a significant increase in spending by the taiwan government and then we for the second year in a row we’re seeing a special defense budget for taiwan this one to focus in on capabilities that will deter the kind of adventurism that you were asking about in respect to the chinese um increased production of domestically produced missiles uh a naval aircraft that would complicate pla planning so my point to you simply is is that the sense of urgency on taiwan over the threat from china is very real and the us has been attempting to encourage taiwan to be more aggressive and to lean into this issue more and we’re seeing that now from the psy government and the dpp right from the last administration the trump administration i’ve heard from the senior office officers from the trump administration that their strategy is to let more countries to invest in taiwan so they have more tighter economic ties with taiwan and if china one is becoming you know so important to so many countries then taiwan would have more protection uh do you think the biden administration is also um you know adapting that strategy simone i love that point that you’re raising 100 the broader uh and deeper the economic relations taiwan has with the rest of the world the more the rest of the world is vested in ensuring of peace and security in the taiwan strait the way i like to describe it is there is so much more permission to invade to to engage taiwan today than there was in 2015-2016 when the focus was always on china getting along well with china and and the focus on taiwan was for taiwan to be quiet taiwan not to cause a problem tai want to keep the low profile now what you have is an assessment of taiwan based on the merits of taiwan of the relationship with taiwan and that has really opened things up economically of course that’s also been driven the last several years by the importance of the technology supply chain and taiwan’s role within it and of course as you astutely noted in several of your earlier questions the semiconductor industry simone is just such a critical piece of the global economy and who’s the most important country in the world in the semiconductor industry now in partnership with the united states and that’s taiwan those are the two most important countries that play in the semiconductor space i’m not suggesting there aren’t other important countries there are like japan holland for example but the two most important are the united states and taiwan right right and yes i just feel the dynamics of taiwan the u.s taiwan relations is different now which is which is awesome all right thank you robert um really appreciate you joining zumi in china today simone it’s always my pleasure thank you so much you take care you too that’s all for today thanks for watching zoom in china chat please like share subscribe and donate to this program if you like my content and also head over to my new membership website at zooming in tv you can get video audio formats of my shows full transcripts and in-depth reports available only to members i will also do live q a with members on the website just five dollars a month or fifty dollars a year please check it out thanks again i’m simon gao and i’ll see you next time

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