Friday Bites: Tsai to Cali, CHIPS Act China Guardrails, Matsu Back on the Menu?

Ed Kuperman—President Tsai Ing-wen to Visit California

Taiwan’s Overseas Community Affairs Council confirmed Thursday that President Tsai would be traveling to California to meet Speaker McCarthy as part of a larger trip to greet Central American diplomatic allies and Taiwanese living abroad. Tsai’s decision to shelve McCarthy’s Taipei getaway is primarily aimed at the PRC: Taiwanese analysts believe that the next official American visit could provoke an “aggressive Chinese military response.” 

Taiwan’s relationship with the US and the PRC is more complicated than McCarthy would prefer it to be. Military, diplomatic, and people-to-people exchanges between the US and Taiwan are at an all-time high, yet there are signs Taiwan would rather “take things slow.” Styling itself the “Ukraine of East Asia,” the Taiwanese know a Sino-American conflict would leave their island in ruins. US military support is appreciated on the island, but only to the extent it safeguards Taiwanese autonomy and buttresses its democratically elected leadership — which is amid a historic shakeup. 

Over the past two years, Taiwanese politics have been viewed through the lens of “great-power competition” by US and PRC observers, threatening an international “one-China” consensus, distracting from policy issues, and shifting Taiwan’s domestic political discourse. Both US and PRC leaders have “weaponized” Taiwan for political gain. In 2021, the PRC banned Taiwanese pineapple exports to remind rural farmers of their reliance on Chinese consumption. Months later, during Taiwanese deliberations on banning American pork imports, the Biden administration strategically gifted millions of vaccines. The US and the PRC have entered a new era of “ping-pong diplomacy” (乒乓外交) — where Taiwan is the table. When Speaker Pelosi visited in August, the Chinese hit back with export sanctions — unsurprisingly, the Taiwanese taxpayer ended up footing the billion-dollar bill.

Then in the 2022 midterm elections, President Tsai’s ruling Democratic Progressive Party (DPP) suffered some serious losses. The DPP lost its mayoral race in Taipei to Chiang Kai-Shek’s great-grandson and failed to win a majority of legislative seats in any of Taiwan’s thirteen counties. Soon after, DPP President Tsai Ying-wen resigned as party chair.

The recent elections do not signal the end of DPP governance or rapprochement with the PRC. Opinion polls show that polarization over Taiwan’s identity has trended toward a new consensus in recent years, with nearly fifty percent rejecting both independence and reunification with China. The alternative? A play-it-safe mentality called “permanent continuation of the status quo” (永遠保持現狀). Voters elected local officials not to send a signal to the US and PRC; instead they prioritized candidate track records and changes to COVID, economic, and clean-energy policy. President Tsai’s resignation as party chair was an admission of responsibility — indeed, she hand-picked the DPP’s panel of candidates — with an eye toward better performance in the (more important) 2024 presidential elections. President Tsai’s trip to California will confirm that under her administration, Taiwan will do what it can to avert war in the Indo-Pacific. McCarthy has kept the possibility of a future visit to Taipei alive, saying, “China can’t tell me where or when to go.” Perhaps Taiwan can.

David Talbot—Historial Echoes of CHIPS Act China Guardrails

Arrian Ebrahimi’s March 2 article posted earlier this week on ChinaTalk on the CHIPS Act’s China guardrails offers interesting insights into the domestic politics of US investment restrictions and, in doing so, helps direct our attention to the industry-level battlegrounds that will play a defining role in the US-China economic relationship in the coming years.

Historical precedent confirms the challenge facing advocates of a comprehensive outbound investment screening mechanism. The Burke-Hartke Act — a controversial proposal backed by the AFL-CIO in the early 1970s — is the last time such sweeping outbound investment restrictions came under serious consideration. The bill, which also proposed sweeping limits on imports through sliding door quotas, sought to enact strict restrictions on capital and technology outflows in an effort to sustain US postwar industrial dominance — a proposal justified as falling within the responsibilities of the New Deal regulatory state and which aligned with 1960s capitals controls imposed for balance of payments purposes. Yet contrary to its sponsors’ intentions, the act’s radical and wide-ranging proposals catalyzed the development of new cross-sectoral corporate trade coalitions by helping bridge longstanding differences between domestic and internationally oriented industries. The lobbying infrastructure and networks created in response provided the political firepower that drove the major market opening agreements of the 1980s and early 1990s — even as single-industry protectionism grew in response to the sharp surge in domestic import penetration.

As Ebrahimi and Feng’s analysis makes clear, the CHIPS Act offered a more viable pathway for officials seeking to impose outbound investment restrictions by (1) singling out a specific industry, (2) linking them to incentives, and (3) shifting the playfield to the executive branch, which is widely considered by political scientists to be less susceptible to lobbying than Congress. This industry-by-industry — or even company-by-company (e.g. TikTok) — approach is going to become a hallmark of US policy in the years ahead, as China hawks square off with firms that remain interested in accessing China’s domestic market and benefiting from its manufacturing prowess.

Nicholas—Matsu Is Back!

While the world was busy having an infarction over a Chinese spy balloon and other UFOs, something else flew over — well, under — the radar: the Matsu Islands (馬祖列島) lost internet access for nearly a month.

On February 2, a fishing boat damaged the Taiwan-Matsu Second Submarine Cable (台馬第二海纜), which links Donyin Island (東引島) and Taiwan. Communications were rerouted to the Taiwan-Matsu Third Submarine Cable (台馬第三海纜) — but then on February 8, a Chinese cargo ship damaged that one as well.

Internet was provided to essential services on the island via a high-power microwave broadcast from Taiwan, and it wasn’t until March 6 that residents were able to access mobile and broadband internet, after Chunghwa Telecom completed the expansion of the microwave broadcaster ahead of schedule. The undersea cables have yet to be repaired.

Given everything informing today’s geopolitical backdrop, it’s just hard not to be suspicious. Indeed, the locations of undersea cables are publicly available. Elisabeth Braw notes in Foreign Policy that incidents involving damage to Matsu cables are “disproportionately frequent,” and since “undersea cables have a diameter of 17-21 millimeters (roughly the size of a garden hose), it would require an unbelievable amount of bad luck to accidentally damage them as often as Chinese vessels do — let alone to take out two in a row.” Su Tzu-yun ‪蘇紫雲, a research fellow at the Institute for National Defense and Security Research, a Taipei-based think tank, recently told The Associated Press that “we can’t rule out that China destroyed these on purpose.”

A large-scale PRC amphibious invasion of Taiwan would be nothing short of horrific — as we’ve covered on ChinaTalk — but mishaps like these make one wonder about other scenarios. What if, for example, the PRC launched a limited invasion of only the Dongsha Islands (東沙群島), or captured Jinmen (金門島) or Matsu, both mere miles off the PRC coastline? That kind of incrementalism would test the resolve of the US and its Indo-Pacific allies in more nuanced but equally important ways.