Why Taiwan Matters: Clarifying American Interests and What’s at Stake for the United States

Why Taiwan Matters: Clarifying American Interests and What’s at Stake for the United States

By John Q. Bolton and Derik R. Zitelman

Introduction

            Amidst the myriad of issues surrounding the United States’ China policy and U.S.-China competition, Taiwan often devolves into a policy football, an object fallen prey to larger geopolitical forces. Calls to make an explicit security guarantee for Taiwan, maintain the status quo, or even abandon the Island cannot exist apart from U.S.-China competition.[1] While reducing a vibrant island of 23 million into a policy point may be an invariable fact of statecraft, Taiwan is not merely an entry on the balance of power ledger. In fact, Taiwan’s democratic example and economic power supersede the regional balance of power. Simple Cold War analogies cannot frame American interests in Taiwan vis-a-vis China in light of U.S.-China trade and bilateral competition.[2] To guide U.S. policy we seek clarify the American interest in Taiwan and how such interest should factor in U.S.-China statecraft, especially over the next critical decade.[3]

To answer this puzzle, we first explore the historical context of Taiwan within U.S.-China relations before offering an assessment of American interests regarding Taiwan. We conclude that Taiwan’s geopolitical position and trade with the United States, while important, are not critical to American interests in East Asia. However, Taiwan’s status as a vibrant democracy is important and, potentially, vital to the United States. Specifically, we assess that nature of a potential Taiwanese transition to either independence or Mainland China (PRC) control will determine the degree of American interest. Should the Island succumb to PRC force, whether overt or subterfuge, coercion of Taiwan would irrevocably damage American interests due to the gross violation of norms. Conversely, should the Island willingly (however unlikely) rejoin the PRC, such a peaceful transition would not damage American interests, though it would improve China’s economic and military position in the region at the expense of American (and allied) freedom of action. Meanwhile, Taiwan’s disputed sovereignty (the status quo) is most advantageous to the United States.

“The United States acknowledges that all Chinese on either side of the Taiwan Strait maintain there is but one China and that Taiwan is a part of China. The United States Government does not challenge that position.”

– 1972 Shanghai Communiqué.

Complicated History Informs Current Policy

U.S. policy, China’s view of Taiwan, and Taiwan’s unique status derive from a fraught and complicated history. During WWII, the United States supported Chiang Kai Shek’s Kuomintang Party (KMT). Though Mao Tse Tung’s Chinese Communists (CCP) hosted an American delegation, American aid went to the KMT, only to be curtailed once President Truman lost faith in Chiang’s ability to secure a post-war peace or even a viable government.[4] After the CCP victory, the KMT fled to Taiwan where Mao’s nascent PRC could not reach, certainly not while the American Navy patrolled the East China Sea. Mao’s entry into the Korean War ended simmering hopes of U.S.-PRC rapprochement. Partly to prevent a cross-strait war and forestall Chiang’s aggression, the United States signed a military alliance with Taiwan in 1954 amidst Mao’s shelling of Taiwanese islands off the Mainland coast (some of which Taiwan still retains).

After Nixon’s 1972 “opening” of China split the Sino-Soviet bloc, the subsequent “Three Communiqués” established the modern U.S.-PRC relationship. The U.S. acknowledged there is “One China,” represented by the Mainland PRC (making Taiwan unrecognized) in all international bodies, removed military forces from Taiwan, and abrogated the U.S.-Taiwan defense treaty.[5] The United States took no position on PRC-Taiwan reconciliation or Taiwan’s international status or sovereignty, an intentionally ambiguous position that amounts to tacit, if limited, support for the Island. The One-China Policy largely remains U.S. policy.

U.S.-Taiwan relations are governed by the Taiwan Relations Act (TRA), passed by Congress after President Carter began normalizing U.S.-PRC relations in 1978, a process not completed until the early 2000s. The TRA conditioned normalization on cross-Strait peace, warning that the use of force against Taiwan would be of “grave concern to the United States.” Additionally, the United States retains the right (but does not guarantee) to “resist any force or coercion that would jeopardize Taiwan.” Last, the TRA institutionalized America’s “unofficial, cultural, and social” relationship with Taiwan, limiting official contact but creating the American Institute in Taiwan as a de facto embassy.[6] President Reagan’s 1982 “Six Assurances” added to the TRA and promised “no set date for ending arms sales.”[7] Originally issued as diplomatic cables, Congress formalized the Assurances in 2016.

For half a century, U.S. “strategic ambiguity” contributed to regional peace by deterring Taiwan from making its independence explicit and forestalling PRC military action. Within ambiguity, however, the United States varied its support to Taiwan as a part of balancing its relationship with the PRC, from varying the type and quantity of arms sales in response to PRC actions, to allowing more interaction between American and Taiwanese officials. For example, in 1994 the Clinton Administration loosened restrictions for U.S.-Taiwan interaction and endorsed Taiwan’s participation in some international (non-state) organizations.[8] However, Clinton also issued the “Three No’s” in 1998: no support for Taiwanese independence, no two Chinas, and no support for Taiwan’s membership in state-based organizations.

Taiwan’s Status

Though the TRA aimed to cushion American derecognition, Taiwan has struggled to maintain relationships with other states, a challenge exacerbated with China’s rise. The resulting absurdity forces 23 million Taiwanese to trade, travel, and negotiate without the privileges of statehood, using “Chinese Taipei” at the Olympics for example.[9] Taiwan is effectively a permanent, island-bound diaspora (albeit a wealthy one). PRC policy treats Taiwan as a province (PRC maps depict Taiwan as such – though Taiwan likewise shows Mainland China as part of its territory) whose inevitable return is a strictly domestic issue. The PRC Foreign Minister calls Taiwan’s supposedly inevitable return part of the “arc of history” and any declaration of U.S. support for Taiwan a “red line.” PRC President Xi Jinping calls reunification with Taiwan part of China’s “rejuvenation.”[10]

Since its 1949 founding, the PRC has considered reunification of Taiwan under its control as an uncompromisable objective, a raison d’etre. Until the 2000s, Beijing’s stance toward Taiwan was largely rhetorical. However, modern China’s capacity to inflict economic, military, and indeed cultural harm on Taiwan is very real. Beijing increasingly sees itself safer in a world fundamentally different from order(s) built by the West.[11] Even within its 2000s-era softening of trade and travel policies, Beijing has long “sought to isolate Taipei internationally” using diplomatic and economic means to entice small states to abandon Taipei for Beijing as it did with El Salvador, the Dominican Republic, and Panama using large-scale investment/infrastructure packages as leverage.[12] Beijing even coerced global airlines to display Taiwan as part of the Mainland.[13] China also condemns organizations that allow (or even acknowledge) Taiwan to participate as it did by scolding Canada when the Halifax Security Forum presented Taiwan President Tsai Ing-Wen an award.[14] The result of U.S. derecognition in 1979 and the modern PRC dissuasion campaign is that Taiwan has diplomatic relations with only 14 of 193 UN states (just one in Africa).[15] PRC campaigns to coerce Latin American states to shift recognition from Taiwan to China have been particularly effective, with three states switching since 2018.[16]

Figure 1. Global Recognition of Taiwan[17]

U.S.-PRC-Taiwan Relations

Xi Jinping’s 2012 ascension to leadership of the PRC culminated a drastic shift in U.S.-PRC-Taiwan relations. Whereas U.S. diplomacy previously largely consisted of deterring Taiwan from asserting impudence, the United States is now squarely focused on deterring China from aggressive action. Exemplifying PRC resolve and confidence in its military power, Xi’s 2018 military strategy re-committed to the “return of Taiwan” while, dropping “peacefully” as a condition.

Since 2012, cross-strait tensions have increased due to three factors: 1) the rise of PRC Han Nationalism; 2) Taiwan’s 2016 election of Tsai Ing-wen (Democratic Progressive Party); 3) the Trump Administration’s increase of arms sales and official contact with Taiwan. Though Xi’s use of nationalism largely derives from the CCP’s existential need for domestic stability, Taiwan provides the PRC a focusing lodestone and useful exogenous symbol of China’s historical abuse by “imperialists.” Xi and the CCP handily use Taiwan’s loss to justify CCP oppression.[18] According to analysts, Xi’s call for a “rejuvenation of the Chinese nation” implies returning Taiwan to the PRC by 2049.[19] PRC sand-dredgers, maritime militia, and aircraft have increasingly encroached into Taiwanese waters and airspace in an effect to exhaust and potentially develop intelligence on Taiwanese capabilities.[20] Beijing saw, correctly, President Trump’s support to Taiwan, including speaking with President Tsai in 2016, as the United States deliberately violating long-standing policy and escalating tensions. Trump also revoked prohibitions on high-level interaction, increased U.S. Navy transits of the Taiwan Strait, and sold Taiwan billions in arms, including F-16 fighters and ships. The Biden Administration has largely continued Trump-era policies, inviting Taiwan’s de facto ambassador to his inauguration, conducting senior-level visits, and sending non-official delegations, while also promising to “support Taiwan in line with longstanding commitments.”[21] Indeed, Biden and Secretary of State Blinken’s explicit statements in support of Taiwan exceed previous Administrations while also inviting Taiwan to Biden’s Summit of Democracies as a full-fledged (state) participant.

The Taiwanese increasingly support reducing ties to the Mainland. 2019 surveys revealed Taiwanese identity surpassing Chinese cultural ties, though the split runs starkly along age and party lines.[22] Importantly, the Taiwanese increasingly view “One Country, Two Systems” as unrealistic given PRC actions in Hong Kong and Xinjiang. When asked to rate trust with China, Taiwanese respondents averaged just two out of ten.[23]

However, Taiwan’s embrace of self-identify has not been met by commensurate increases in its defenses. Taiwan’s military remains ill-prepared to defend the Island (though its air force and navy are better equipped) as conscription ended in 2012 and recruitment has lagged since.[24] It is troubling that Taiwanese identity has risen concurrently with decreasing military readiness even as PRC coercive action and military power grows. This presents a moral hazard for U.S. policy because an American security guarantee could implicitly encourage a weaker, more reckless Taiwan.[25]

This may already be the case. The Tsai government’s failure to meet enlistment goals, reticence to expand conscription, and several high-profile military accidents, reveal a lackadaisical attitude toward China and/or a presumption of a U.S. security guarantee.[26] Consequently, an explicit embrace of Taiwan or even a marginal promise to defend the Island could engender reckless behavior, as occurred in the 1950s.[27] Nor is a small commitment of force to Taiwan likely to change PRC calculus. According to scholar Oriana Mastro, China must already consider U.S. or Japanese involvement in its Taiwan plans.[28] Should the PRC leadership decide to take a gamble against Taiwan, they would have to account for external forces. Thus, a token U.S. force, far from acting as a “tripwire,” is more likely to imperil allied options by creating a force in need of rescue, a moral hazard that discourages an effective Taiwanese defense, and causes over-expectations of U.S. support.[29] Ultimately, buck-passing is a major concern for a partner 7,000 miles from U.S. shores. In the end, the United States cannot care more about Taiwan’s security than the Taiwanese.[30]

American Interests

The United States faces a toxic asymmetry of interests in Taiwan along with contradictory and escalatory pressures. Juxtaposed against the PRC’s techno-authoritarianism, Taiwan provides a proximate, and culturally similar counterpoint to PRC propaganda that depicts democracy as unable to deliver sustainable growth.[31] China’s combination of military strength, economic weight, and global ambition threatens American interests because the PRC offers an apt counter to the American-led liberal order by offering a non-Western model that (potentially) demonstrates that democratic processes and open markets are not prerequisites to economic growth. Whether U.S.-PRC competition stems from ideological or geopolitics, policymakers must consider the robust U.S.-PRC ideological divide.[32] China can (and has) discredit American influence not only through supporting authoritarian governments but also skewing “global standards for trade and investment in its favor to the disadvantage of its competitors.”[33] In this model, China’s success is implicitly America’s loss. Accordingly, U.S. policymakers must consider ideology, especially regarding the US-PRC-Taiwan nexus.

Regarding Taiwan, American interests fall into two categories: geo-economic and normative credibility. To inform our assessment we first consider the implications of a PRC-controlled Taiwan.[34] The nature of potential PRC control ranges from minimal control (“One Country, Two Systems”) to subjugation, with Hong Kong as an ironic example of both. Considering the geopolitical value of Taiwan is useful because doing so illuminates when the United States would consider Taiwan worth fighting over.

Rather than having to consider a rear-area threat, a PRC-controlled Taiwan would serve as a forward base, extending the PRC’s aircraft and missile ranges another 150 nautical miles. This would enable PRC interdiction of air and sea routes in the East China Sea and increase China’s ability to strike targets in Japan or Guam. Conversely, U.S. and allied forces would be pushed further afield, with their bases under threat of PRC missile attack. However, while Taiwan offers a platform to project power onto the Chinese Mainland, placing forces on the Island makes them exceedingly vulnerable absent aerospace dominance. Economically, taking Taiwan would give Beijing control over its 5th largest trading partner ($154 billion).[35]  Beijing would also gain access to high-tech industry, including world-class semiconductor factories, adding to its considerable industrial base. Though Taiwan’s impressive GDP ($600 billion) would drop under PRC control, the degree of cut largely depends on how Beijing gains the Island. A mutual reconciliation would minimally affect GDP whereas conflict could destroy Taiwan’s industrial base.

            Conversely, sober analysis shows that Taiwan trade is not vital to the American economy, certainly not compared to U.S.-PRC bilateral trade. Taiwan is the United States’ 10th largest trading partner ($85 billion), a paltry sum against American trade with China ($635 billion) or Canada and Mexico ($500 billion each).[36] Decoupling the world’s largest economies and trading partners for Taiwan’s sake would be self-destructive, and access to Taiwan is not essential to American power projection. Nor is the Island critical for projecting military force. Though Taiwan provides a platform for striking the Mainland, that same proximity makes it vulnerable to attack. Consequently, Taiwan’s importance differs relatively: to the United States, Taiwan is a critical link, if replaceable, in the 1st Island Chain, while to the PRC the Island “corks” China’s ability to project power in the East China Sea.

Despite greatly improved PLA military capabilities, retaking Taiwan by force remains a risky gamble that would entail isolating 23 million Taiwanese while launching the largest air and amphibious assault in history across 80 miles of open ocean in the face of likely unified Western, if not global, opposition.[37] However, the Chinese invasion threat is growing. To maintain cross-strait deterrence, U.S. planners must implement effective, specific, and timely deterrent measures (including new military systems) put into place across the spectrum of conflict.[38] The reason is simple: a war in the Strait would devastate Taiwan and, potentially, the larger region to say nothing of the economic costs and the aforementioned American normative interests surrounding Tawain.[39] Even a limited conflict could envelop states producing nearly 15% of global GDP while spurring bear markets globally.

According to Walter Lippman, a nation’s security exists “to the extent it does not have to sacrifice core values to avoid war.” A corollary is that a state is not secure when its core values are threatened. Statesmanship, of course, is the art of balancing challenges and threats while deciding what is truly a “core value.” Such is the case in the Taiwan Strait, where the United States not only faces its most serious competitor in a generation, but where a small democracy is imperiled by a larger, threatening authoritarian neighbor, making specious sovereignty claims.[40]

            Therein lies the rub: though pure self-interest reveals that Taiwan’s political alignment or control is not vital for the United States, how that alignment comes about is. Had the PRC controlled Taiwan since 1949 as it does Hainan Island, U.S. interests would not be at stake. However, a PRC attempt to forcibly retake the heretofore independent Island is such a significant breach of international norms as to become a vital American interest. The United States has a stake in ensuring the Island’s unique status. Indeed, during the Cold War the United States did not consider democratic solidarity a distraction to maintaining a favorable balance of power but rather a means of doing so.[41]

The loss of Taiwan to PRC military action would have a detrimental effect on American credibility and global values-based policies, thus striking at the core of the U.S.-PRC ideological competition.[42] Therefore, the manner of any potential Taiwanese transition is of vital interest to the United States. PRC escalation without an affirmative U.S. response would drastically upset the regional order in a manner contrary to American interests, perhaps even causing abrogation of American alliances with Japan and South Korea. An uncontested PRC military attack on Taiwan would send chills throughout Southeast Asia and throw cold water on any American coalition-building. Of course, this interest is conditional. Should Taiwan unilaterally declare independence or otherwise explicitly provoke China, American support would be less assured. Likewise, a mutual (if unimaginable) PRC-Taiwan reconciliation would not negatively impact American strategic interests.

Conclusion – A bad, but tolerable status quo

Bad as it is, keeping the awful status quo is the only reasonable forecast as solutions may be unreachable for generations.[43] Despite PRC claims – and growing capabilities – the critical trend lines favor Taiwan. Its people view themselves as independent and the Island’s economic heft and leadership have helped secure its place in the world, particularly when contrasted with China’s directed economy and bi-lateral coercion. Moreover, there is increasing evidence that the region is becoming hostile to China’s coercion and diplomatic bullying, ranging from Australia’s trade war with the PRC to Japan’s calls for Taiwan’s defense to growing regional antipathy toward China.[44] Likewise, regional powers such as the Philippines, Brunei, Malaysia, and longtime PRC adversary Vietnam, are becoming more vocal about opposing PRC actions in the South China Sea and embracing calls for regional solutions along with increased military exercises with the United States, Japan, and Australia.[45] These regional responses have come concurrently with the deployment of British, German, and French naval forces to East Asia.[46]

So, what course should American Taiwan policy chart? Critics of the Biden Administration’s “Democracy Agenda” rightfully point out, democracy is a continuum rather than a binary choice between authoritarianism and liberalism.[47] But as detailed, Taiwan is economically important (if not crucial) to American trade in the region and offers the best political counterpoint to the PRC. More broadly, supporting an isolated democracy from external threats is implicitly beneficial to the normative standards the United States supports. From a power standpoint, the United States has nearly always opposed regional spheres in favor of openness (even as it often pursued its own sphere).[48]

And what of the PRC response to increased American and allied support to Taiwan? Though the diplomatic, military, and economic noose may be tightening, the PRC campaign against Taiwan will likely remain a long-term proposition centered on coercing Taiwanese capitulation through exhaustion rather than one of military action. Despite some analysts calling China “newly assertive,” the PRC response to Trump-era arms sales was akin to previous incidents, as was its response to the recently announced sales by the Biden Administration.[49]  However, these demonstrations were not accompanied by other actions beyond limited sanctions. In effect, U.S. policy has simply been made clear but not any different than what Beijing assumed. Likewise, it does not appear that Beijing will respond to U.S. or Western criticism or limited support to Taiwan with more than rhetorical condemnation or military demonstrations for the time being, especially given recent Australian and Japanese actions in support of Taiwan and the Biden Administration’s clearly stated intent to “pivot,” finally, to the Pacific 10 years after then-Secretary of State Hillary Clinton called for such a reorientation of U.S. foreign policy.

Indeed, given Taiwan’s position in Chinese policy, it pays Beijing’s leaders to be hawkish toward Taiwan even if taking no military action. Nevertheless, China’s sometimes schizophrenic dual identity as a growing state and an aggrieved victim of the West causes it to see Taiwan existentially.[50] In a desperate (or exceedingly cynical) bid, the PRC may succumb to the “Taiwan temptation” and use force against the Island to complete Xi’s “rejuvenation” or quell dissent.[51] Given the low “audience costs” PRC leaders face, we can attribute at least some of Xi’s rhetoric to hyperbole, meant to rouse support without having to face accountability.[52]

Maintaining the status quo, however, does not imply American Policy is static. Effective cross-Strait deterrence remains precarious and increasingly dependent on credible American force projection capabilities in the region.[53] In short: “American capabilities need to change, not policy.”[54] Maintaining the status quo is only a surface-level continuity. Below the waterline it requires skillful diplomacy, enhanced military capabilities, and private signaling to the PRC – similar to the “adroit and vigilant application of counterforce” advocated by George Kennan 70 years ago. Whether American statecraft can walk the difficult line between competition, deterrence, and war remains an open-ended question.[55]

Recommendations

First, the United States must continue its long-delayed “pivot” to the Pacific – finally doing what over a decade of strategic documents and policymaker statements endorsed.[56] Re-orienting U.S. foreign policy to the Pacific along with concurrent strengthening of U.S. military power would not only match actions to rhetoric but ensure U.S. forces have regional specialization and familiarity with ports, airports, and allied and partnered militaries across the region. Second, current arms sales are not sufficient as they occur sporadically and have centered on high-profile systems largely irrelevant to Taiwan’s needs, such as tanks, while lacking adequate quantities of missile defense systems like THAAD, Patriot, and AEGIS.[57] Systems should clearly be defensive in nature to avoid provoking an escalatory security dilemma with the PRC but must also integrate into Taiwan’s mobilization and response systems.[58] Given the PRC’s major advantage in firepower and military reach, arms sales have limited utility, especially if Taiwan buys the wrong equipment.

However, there is great room for improving how the world sees Taiwan and its economic importance. Therefore, our third recommendation centers on improving how the world views Taiwan and its economic importance. Should U.S., Japanese, Australian, and European Union efforts help the world see Taiwan as a hold-out against an aggressive next-door enemy rather than a breakaway province, the likelihood of other states punishing the PRC economically and diplomatically will increase. Moreover, leveraging PRC diplomatic and economic actions against Taiwan into a cohesive messaging campaign that illustrates the abusive nature of working with the PRC can serve both Taiwan and U.S./Allied interests. In short, it benefits the United States for the world to see Taiwan as a state.

Most delicately, the United States must convey consequences of any threatening PRC action, using specific statements, military maneuvers, or sanctions, rather than general denouncements. Local commanders (and Washington) must accept the risk of provoking a Chinese response while enforcing international law and norms, whether assisting the regional coast guards or military Freedom of Navigation Operations. This willingness to accept risk derives from a continued need for American presence in the Western Pacific. American leaders must not confuse public statements for private signaling – both are needed. Whether the American diplomatic and national security enterprises can conduct such an adroit application of statecraft remains an open-ended question.