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Why China-Taiwan Relations Are So Tense

US China conflict over Taiwan

Introduction

The semiconductor industry was put into the unexpected limelight in 2021 when chip shortages initially forced the shutdown of vehicle production lines. The focus grew when certain high-tech and consumer electronics businesses started to report chip shortages or expressed worries about supply chains.

Everyone can clearly see that we live in a world dominated by semiconductors, the small chips that power several automotive features, including blind-spot detection, seat adjustment, and interior Illumination

Relations between Washington and Beijing are strained as a result of the rising tensions brought on by the visit of Nancy Pelosi, the speaker of the US House of Representatives.

What would occur if China annexed Taiwan?

Some scholars claim that if China conquers Taiwan, the former will gain more independence to expand its strength throughout the western Pacific.

Furthermore, China may put the American military outposts in jeopardy if this takeover occurs, especially those on the island regions.

China, however, disputes any bad intentions and insists that its goals are wholly benign. But President Xi Jinping of China declared that “reunification with Taiwan must be realized” and that if necessary, the force will be used to achieve this goal.

Simply put, the dragon views the island country as a renegade province that the latter seeks to subdue.

What is the US’s role in the conflict between China and Taiwan?

Washington has a history of strategic ambiguity, to the point where it might use force to intervene if China invaded Taiwan. The One-China policy, which recognizes only one Chinese government, based in Beijing, and has formal links with Beijing rather than Taipei, is adhered to by this country in its official capacity. It has, however, also promised to give Taiwan protective armaments and emphasized that any invasion by China would be of great concern.

Taiwan is the largest supplier of semiconductor chips in the world

A significant portion of Taiwan’s IT sector is made up of the semiconductor industry, which includes IC manufacture, design, and packing. Taiwan plays a significant role in the semiconductor industry’s worldwide supply chain.

Additionally, its contract manufacturers represented more than 60% of the entire income generated by semiconductors worldwide in 2021.

Around 20% of the world’s semiconductor market, or US$115 billion, was accounted for by Taiwan. Taiwanese businesses control 50% of the global market in some industries, such as foundry operations, with Taiwan Semiconductor Manufacturing Company (TSMC) dominating the foundry industry.

Taiwan manufactures essential semiconductors and electronic equipment and controls 10% of the world’s shipping container capacity, holding a crucial role in the global supply chain.

Technology companies from Taiwan control the majority of the world’s capacity for producing semiconductors, including cutting-edge and effective chips. The largest contract chip manufacturer in the world, Taiwan Semiconductor Manufacturing Co Ltd (TSMC), is now investing in a new $12 billion facility in Arizona.

India’s role in the entire scenario

India has its own limitations, therefore it won’t participate more politically in Taiwan unless the situation is dire. Since the beginning, India has adhered to a “One China” policy; yet, India must recognize that Taiwan is the main center of the American Indo-Pacific strategy. In the bigger picture of limiting China, it does play a significant supporting role.

Our links now extend beyond commerce to include educational possibilities for Indians who wish to learn Chinese and follow Chinese trends.

Global Impact

The COVID-19 epidemic and China’s zero-COVID policy have already caused unprecedented amounts of disruption in supply chains throughout the world since 2020.

Due to trade and supply route restrictions brought on by the Russia-Ukraine war, shipping prices have increased.

A blockage or delay in semiconductor chip exports might be one of the numerous effects of a confrontation between China and Taiwan. This would have an impact on several global businesses, including manufacturing, internet communications technology (ICT), and research and development.

The Taiwan Strait is one of the busiest shipping lanes in the world, helping the transport of technology and natural gas supplies to international markets.

A butterfly effect might result in hyperinflation, job losses when factories stop operating, and recessionary economies.

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