Hi, China Watchers. This week we probe the impact of Chinese military threats against Taiwan on the island’s foreign business community and unpack the misogynistic subtext of China’s antipathy toward House Speaker Nancy Pelosi. We’ll also decode President Xi Jinping’s outreach to the Chinese diaspora and profile a timely book that warns that Washington must practice an artful balance of “deterrence and reassurance” to prevent conflict across the Taiwan Strait.
Let’s get to it. —Phelim
U.S. companies with Taiwan-based operations are panicking about the impact of possible Chinese military aggression toward the self-governing island.
Fortune 500 companies and small and medium enterprises alike are seeking the advice of corporate security experts to develop contingency plans to protect staff and assets if conflict erupts across the Taiwan Strait. The corporate nightmare: that a war could result in the loss or seizure of assets in Taiwan.
That anxiety reflects concerns that potential Chinese military action against Taiwan — fueled by the surge in military intimidation linked to House Speaker NANCY PELOSI’s visit this week — is already posing a threat to the island’s long-term economic viability.
“I have seven fortune 500 companies asking me to pre-plan and build an outline of triggers for them to start moving people, infrastructure, and assets [outside of Taiwan]. That’s real. It’s happening,” said DALE BUCKNER, chief executive officer of international security firm Global Guardian. “There are some companies that are taking this very seriously [because] they don’t want to happen what just happened in Russia where they lost billions of dollars’ worth of assets, both financial and hard, so they are already looking to disperse people and assets [to other countries.”
Ukraine invasion feeds fears. Buckner wouldn’t reveal the names of those companies due to contractual restrictions. But he says that corporate interest in such contingency planning has surged in the wake of Russia’s Ukraine invasion.
“[We’ve had] an unprecedented surge in requests following the start of conflict in Ukraine — basically, while we’ve consistently said there’s no direct impact or ‘trigger’ in terms of increased Taiwan war risk, the ‘Ukraine effect’ has made companies vastly more aware of and sensitive to geopolitical risk,” ANDREW GILHOLM, director of analysis on China and Korea at Control Risks, told China Watcher in a statement. “Client leadership are basically saying ‘OK, we didn’t really see this coming, what else could turn our world upside down!?’ and the first thing they think of is the Greater China/North Asia region.”
Foreign corporations aren’t alone in readying for the worst. War fears prompted the island’s most famous cultural attraction, the National Palace Museum, to initiate “wartime response” preparations earlier this month. They include safety precautions for staff as well as measures to safeguard and, if necessary, evacuate the museum’s treasures.
The Taiwanese government says it’s unaware of any foreign corporate concerns over the safety of their Taiwan operations. “We have not received any information on this matter. Taiwan remains a safe, stable, and reliable partner for doing business,” a spokesperson for the Taipei Economic and Cultural Representative office in Washington, D.C. told China Watcher in a statement.
The American Chamber of Commerce in Taiwan declined to comment; the European Chamber of Commerce Taiwan didn’t respond to a request for comment.
Pelosi visit incites backlash. Corporate concerns have soared amid Chinese saber-rattling over Pelosi’s visit. Within hours of the speaker’s arrival on the island, the Chinese military responded with violations of Taiwan’s air defense identification zone and the announcement of live fire military drills around the island from today until Sunday. That looks like a dress rehearsal for an eventual blockade of the island, or worse, and has seriously spooked business executives with Taiwan-based operations.
“The level of C-suite angst at the moment within the supply chain of which Taiwan is pretty much at the center globally — I personally have not seen it this high in my professional career,” said RUPERT J. HAMMOND-CHAMBERS, president of the Washington, D.C.-based US-Taiwan Business Council. “The catalyst for that anxiety is the ever-present threat from China.”
Multiple corporate metrics of the potential for conflict across the Strait provide cold comfort. The German financial services firm Allianz gave Taiwan an A1 “low risk for enterprise” rating in its country risk assessment in February, but warned of an “increasingly tense (geo) political relationship with mainland China.”
The BlackRock Investment Institute earlier this month rated “U.S.-China Strategic competition,” including “military action to accelerate reunification with Taiwan” as sixth out of the world’s 10 most serious geopolitical risks. “The risk will increase as the decade wears on,” the Institute advised.
Slow motion exodus. U.S. companies in Taiwan are taking proactive measures to insulate themselves from that risk by beginning the process of relocating infrastructure — including production facilities — and personnel to safer locations in the region.
“We have manufacturers that can simply build a new manufacturing facility in South Korea or Japan or in the Philippines and some are doing that [while] some are moving those manufacturing facilities to Europe or the United States,” Buckner said. “I don’t think that you’re seeing boatloads of materials leave the island or people evacuating at scale — this will be a very drip-drip slow over time transition that won’t be noticeable unless there is some level of attack or blockade of some kind.”
But corporate insecurities over potential Chinese aggression pose a threat to Taiwan’s economic viability. And that reflects a deliberate strategy that renders multiple benefits for Beijing. “It’s inherently in the interest of the PRC to maintain a high shrill tone with Taiwan to dampen the interest of companies to invest in Taiwan,” Hammond-Chambers said. “That reduces the attractiveness of Taiwan as an investment location and raises the attractiveness of China as an economic partner to offset that.”
Can Washington help? There are multiple initiatives in the U.S. legislative pipeline designed to bolster Taiwan’s military defense capabilities. They include Sen. BOB MENENDEZ’s (D-N.J.) Taiwan Policy Act of 2022 and Rep. AMI BERA’s (D-Calif.), Taiwan Peace and Stability Act. But there are no similar initiatives to insulate Taiwan’s economy from the impact of Chinese military intimidation on foreign investor confidence.
“A [U.S.-Taiwan] bilateral trade agreement would smooth out some of the significant areas of economic disruption … [and provide] a framework and template for other friends and allies to do the same including the Japanese and the Aussies,” Hammond-Chambers said. “The problem we’re running into here is that there’s just no appetite on the left or right for trade agreements. It’s not a Taiwan issue, it’s a trade issue.”
—PELOSI’S TAIWAN TRIP PROMPTS PLA PIQUE: Speaker Pelosi ignored Beijing’s literally fiery rhetoric and arrived in Taiwan on Tuesday and safely flew out on Wednesday. During her visit, she met with Taiwan’s President TSAI ING-WEN and Taiwanese lawmakers.
The Chinese military responded with violations of Taiwan’s air defense identification zone and an announcement of extensive military drills that will surround the island for several days. That prompted the foreign ministers of the G7 to issue a statement Wednesday accusing China of “ increasing tensions and destabilizing the region.” Pelosi stood firm. “Our delegation came here to deliver an unequivocal message: America stands with Taiwan,” she said Wednesday.
But Pelosi will return to a muddled mess in Washington, bracketed by dire warnings from journalists and China experts about the long-term damage that her visit may have inflicted and rare GOP lawmaker applause for thumbing her nose at Beijing, your host wrote Tuesday.
What may linger longest is how the Biden administration’s fumbling of the public narrative for Pelosi’s trip bolstered the Chinese government’s depiction of her journey as an inflammatory escalation in U.S. engagement with Taiwan.
Read the full piece here.
—BIDEN: CHINA SHOULD JOIN NUCLEAR TALKS: President JOE BIDEN on Monday urged the Chinese government to join international talks aimed at reducing nuclear weapon arsenals. China should “engage in talks that will reduce the risk of miscalculation and address destabilizing military dynamics,” Biden said on the occasion of the 10th Review Conference of the Treaty on the Non-Proliferation of Nuclear Weapons.
The Pentagon estimated in November that China will likely have “at least” 1,000 deliverable nuclear warheads by 2030, a massive expansion in a stockpile estimated at about 200 warheads in 2020.
Biden’s call coincided with the publication of satellite photos that “appear to confirm China is strengthening its nuclear testing capability,” Asia-Nikkei reported Monday. Chinese Foreign Ministry spokesperson HUA CHUNYING on Tuesday dismissed Biden’s offer as a tactic to “deflect blame and distract attention.”
—NASA SLAMS CHINA’S SPACE ROCKET SAFETY: The uncontrolled reentry of a Chinese rocket booster on Saturday — scattering debris across parts of Indonesia and Malaysia — drew harsh words from NASA. “The People’s Republic of China did not share specific trajectory information as their Long March 5B rocket fell back to Earth. All spacefaring nations should follow established best practices, and do their part to share this type of information in advance,” NASA administrator BILL NELSON tweeted on Saturday.
“The accusations by the US official … are neither professional nor fact-based,” Chinese Foreign Ministry spokesperson ZHAO LIJIAN said Monday.
—CHINA’S LIVE FIRE DRILLS RATTLE JAPAN: Tokyo is concerned that China’s upcoming live fire military exercises may stray into Japanese waters. “The maritime areas announced by the Chinese side as those to be used for military exercises … overlaps with Japan’s exclusive economic zone,” Japan’s chief cabinet secretary HIROKAZU MATSUNOtold reporters Wednesday.
Beijing dismissed that concern. “China does not accept the notion of so-called ‘Japanese EEZ,’” the Foreign Ministry’s Hua responded.
—SWITZERLAND WARNS OF TAIWAN INVASION SANCTIONS: The Swiss government will impose sanctions on China on an order of magnitude more punishing than Switzerland’s sanctions on Russia if Beijing tries to invade Taiwan. “Sanctions in the case of China would be far more drastic because the economic relations are much more important,” MARIE-GABRIELLE INEICHEN-FLEISCH, Switzerland’s State Secretariat for Economic Affairs director told the Neue Zuercher Zeitung newspaper on Saturday.
How serious that threat is remains in question. U.S. lawmakers have criticized Swiss officials for foot-dragging in their efforts to track and seize the assets of Russian entities subject to the international sanctions regime imposed following the invasion of Ukraine.
—CHINA’S ‘RESTRAIN PELOSI’ MISOGYNISTIC MESSAGING: Nancy Pelosi is a longtime target of Chinese government invective for her outspoken support for human rights and democracy in China. On China’s heavily-policed Internet, Pelosi is routinely referred to in negative gender stereotypes including “the American Old Lady” or worse, “the Old Witch,” reported What’s On Weibo’s MANYA KOETSE on Sunday.
Chinese firebrand nationalist HU XIJIN, former editor-in-chief of Chinese state media outlet Global Times, tapped that misogynistic framing by tweeting for Biden to “restrain and punish” the country’s third highest elected official. Vice Foreign Minister XIE FENG used similar language in a late Tuesday night démarche to U.S. ambassador to China, NICHOLAS BURNS. Xie accused the Biden administration of not “restraining Pelosi’s willful behavior and stopping her retrogressive and perverse acts.”
“I am sure that Hu Xijin would have found some way to criticize any Speaker who went to Taiwan, be they male, female, nonbinary, etc., but the tweet seeks to project power in a very particular way,” said GINA TAM, assistant professor of East Asian history at Trinity University in San Antonio, Texas. “It threatens her with violence in a way that reflects the misogynistic logic that women who step out of line in whatever way — in this case, doing something that threatens the PRC’s perceived or real power on the world stage — deserves punishment.”
Pelosi signaled agreement with that assessment. “They didn’t say anything when the men came,” she said in Taipei on Wednesday, in reference to an all-male congressional delegation to the island in April that included LINDSEY GRAHAM (R-S.C.) and BOB MENENDEZ (D-N.J.).
—XI MOOTS OVERSEAS CHINESE INFLUENCE PUSH: President Xi wants to recruit members of the ethnic Chinese diaspora to support his “national rejuvenation” drive, a vague blend of policy goals including poverty reduction and increased military power. “Xi stressed efforts to truly unite all the sons and daughters of the Chinese nation from different political parties, ethnic groups, social strata and groups, as well as those with different beliefs and living in different social systems,” Xinhua reported Saturday.
Xi linked that effort to the ruling Chinese Communist Party’s United Front, CCP shorthand for domestic and foreign influence operations. MAO ZEDONG described the United Front as one of the CCP’s “three magic weapons” alongside party building and armed struggle.
Xi’s interest in garnering overseas Chinese support may reflect CCP concerns of a potential challenge to its monopoly on power. Overseas Chinese played decisive roles in toppling the PRC’s predecessors, the Qing Dynasty and the Republic of China.
“Xi is trying to unite overseas Chinese so he can lower [their] threat,” said AUSTIN WANG, assistant professor of political science at the University of Nevada, Las Vegas. But in an era of rampant anti-Asian hate crimes, Xi’s outreach may be harmful. “This sort of rhetoric … will give more of an excuse for people who are already predisposed against ethnic Chinese to target them more,” IAN CHONG, a political scientist at the National University of Singapore, told China Watcher.
Bloomberg: “Chinese Government Asked TikTok for Stealth Propaganda Account”
Caixin: “In Depth: What’s Behind China’s Mortgage Strikes?”
Foreign Policy: “A Shrinking China Can’t Overtake America”
—BLINKEN’S ASIA-AFRICA ADVENTURE: Secretary of State ANTONY BLINKEN is in Phnom Penh, Cambodia today and tomorrow attending a trio of ASEAN-related meetings. Chinese Foreign Ministry spokesperson HUA CHUNYING said Monday that Chinese Foreign Minister WANG YI will also be there, but won’t have a bilateral with Blinken, suggesting lingering blowback from Pelosi’s Taiwan trip. Blinken will then travel to the Philippines, South Africa, Democratic Republic of Congo and Rwanda.
The Book: US-China-Taiwan in the Age of Trump and Biden
The Author:DEAN CHEN is an associate professor of political science at Ramapo College of New Jersey’s School of Humanities and Global Studies.
What is the most important takeaway from your book?
Heightened competition between the United States and the PRC reflects not just a structural transformation in the prevailing international balance of power but also a significant shift in the U.S. strategic lenses from a liberal internationalist perspective toward a U.S.-centric nationalist (or “Jacksonian”) orientation. That stance has driven Washington’s more confrontational approach toward Beijing and a much-bolstered support of Taipei by both the DONALD TRUMP and Joe Biden administrations. Biden’s presidency has partially reverted the multilateralist strategic stance of the pre-Trump era, but strong nationalist forces and hardened China sentiments unleashed by Trump constrain the Biden administration from returning to the pre-Trump PRC engagement era.
What was the most surprising thing you learned while researching and writing this book?
The malleability of the U.S. strategic ambiguity/One-China policy framework. BILL CLINTON, GEORGE W. BUSH, and BARACK OBAMA consistently revealed their cautious attitudes towards Taiwan, acknowledging sensitivity to the Chinese sense of national sovereignty. Both Trump and Biden adjusted the One-China policy to better accommodate elevated U.S.-Taiwan relations, especially with their formal inclusion of President RONALD REAGAN’s Six Assurances into the One-China policy description, which previously only included the Taiwan Relations Act and the Three U.S.-PRC Joint Communiqués. That has given the U.S. more elasticity to deepen Washington’s security, political and economic ties with Taiwan, without abandoning America’s longstanding position on the Taiwan Strait.
What does your book tell us about the trajectory and future of U.S.-China relations?
The future trajectory for U.S.-PRC relations will likely remain competitive and adversarial, without major changes or reforms taken on the part of Xi Jinping’s China — which has become increasingly autocratic and belligerent. Maintenance of peace and stability across the Taiwan Strait is becoming more of a challenge as China becomes more powerful, nationalistic, and more inclined to unilaterally upset the status-quo. The wisdom, political acumen, and crisis-management abilities of leaders from Taipei, Washington, and Beijing will be put to test on a more frequent basis.
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Thanks to: Ben Pauker, Matt Kaminski, digital producer Andrew Howard, Nicolle Liu, and editor John Yearwood.
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Correction: Last week’s edition of China Watcher misstated Rep. Ami Bera’s party affiliation. He is a Democrat. It also misspelled the last name of Kharis Templeman.
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