Young Professionals Briefing: Navigating Increasing Tensions Between China and Taiwan

Tuesday, January 11, 2022
Patrick Lin/Getty Images

Research Fellow, Council on Foreign Relations

Senior Fellow and Codirector, East Asia Program, and Director, China Program, Stimson Center


President, Museum of Chinese in America; CFR Member

Young Professionals Briefing Series and Asia Program

Panelists discuss the state of China-Taiwan relations, U.S. interests in the Taiwan Strait, and the potential for increased tensions to escalate into open conflict.

The CFR Young Professionals Briefing Series provides an opportunity for those early in their careers to engage with CFR. The briefings feature remarks by experts on critical global issues and lessons learned in their careers. These events are intended for individuals who have completed their undergraduate studies and have not yet reached the age of thirty to be eligible for CFR term membership.

LAFOLLETTE: Welcome, everyone. Good evening. Thank you for being with us here for this session of the Young Professionals Briefing Series, and also happy new year to you all. For those of you who have joined us before, welcome back, and for those who are new to this program, welcome. We hope to see you many more times in the future.

Now, you are all here and part of this program because you were recommended to us by a CFR member. Now, before we begin our wonderful discussion, we want to show you a short CFR video. I promise, it’s a quick two-and-a-half minute video that, in a nutshell, kind of shows you what the Council does and highlights some of our work in 2021.

Now, if you’re not quite sure what CFR does, I want you to pay particular attention to this because, hopefully, you’ll get a sense of what the Council is and what we do from this video. So back over to August.

(A video presentation is shown.)

LAFOLLETTE: Thank you. I hope you enjoyed that video.

Now, before I turn it over to our wonderful presider, I have two things, quickly, I want to highlight for you all—for this group. The first thing is we’ve just begun—we’re very excited about this—we’ve just begun a newsletter for this group, the Young Professionals. The first one was sent yesterday to you all by email—we hope you got it—and each virtual newsletter will feature upcoming Young Professional Briefings such as this one. It will feature some past events and it will provide some relevant and new CFR resources that we really hope you’ll find interesting and useful in your personal and professional lives.

The second thing is as part of my introduction of our wonderful presider, Nancy Yao Maasbach, I want to say a few words about CFR’s International Affairs Fellowship Program, which we refer to as the IAF.

Now, Nancy, our presider for this evening, is currently president of the Museum of Chinese in America. She’s a CFR member and she’s a former CFR colleague of mine, and I miss working with you, Nancy.

But she is also a former IAF in Japan. Now, if you’ve never heard of this program, please take a look online. We just chatted you a link so you can take a look at more details about it. But it’s really a wonderful program and it’s meant for professionals such as you all. It’s a one-year fellowship the Council offers for early to mid-career professionals, and it comes with a pretty nice stipend as well, and it’s a chance to experience the other side of foreign policy.

So what this means is those who are in academia or in the private sector get to spend a year in government, and vice versa for those coming from government work in a scholarly atmosphere such as a think tank or a university. So it’s kind of to see the other side of how foreign policy is thought of and public policy is made, et cetera.

So, as I mentioned, Nancy was an IAF in Japan. So we do have some international ones, although during the pandemic they were put on hold. But we really hope they come back very soon. But there’s several of these fellowships each year and the Council helps to place you in either government or in academia or think tank.

So it’s really a wonderful program, and as I said, you can click on the link in the chat box for more information about eligibility requirements, deadlines for applying, et cetera. And it’s quite successful. We have some really well known alumni such as Condoleezza Rice and Samantha Power and, of course, you, Nancy.

So I hope Nancy can attest to the fact of how wonderful this program is. So I encourage you to take a look and see if it’s something you’re interested in applying for.

So thank you, again, for joining us this evening and thank you to our two panelists for giving us their time this evening to speak to us about this really important topic, and thank you again to Nancy for moderating. I hope you all enjoy tonight’s discussion, and I turn it over to you, Nancy. Thank you, everyone.

MAASBACH: Stacey, you are wonderful and I wish I could still be there for so many reasons. But good evening, everyone, and thanks to everyone who helped arrange this meeting—Connor, Sam, and August on the back end—and welcome to everyone, all one hundred and eighty-seven of you on this call.

I just want to reiterate how amazing the IAF opportunity is whether it’s in Japan, in Canada or India, hopefully, when the world comes back, or domestically in—you know, at an agency that you might not have experience with. It’s really an eye opener, and it’s—if you want to be a serial policy entrepreneur type person it’s perfect for you. And the job will always—the day job will always be there for you. In fact, you might get a better one.

So just that’s my plug for that program, and if anyone on the call really does—is thinking about Japan, you know, feel free to reach out to me. I’m happy to do that. And I just also want to reiterate that this is a space where, you know, we really are figuring things out together. And I do appreciate everyone who’s taken time out to join the call, in particular on the topic that we have today, “Navigating Increasing Tensions Between China and Taiwan,” I think one of the most confusing, nuanced policy issues that currently exists despite the fact that everyone considers it a global flashpoint.

But we do have two of the best people here to talk with us about this, and how we’ll run this is just have a, you know, brief conversation with David and with Yun and then open it up for Q&A at 5:30. So as I’m chatting with David and Yun, please, you know, think about your questions. I’ll try to bundle them so they can be a little bit more coherent in our conversation, and then we’ll open up the conversation to questions from the audience.

Quickly, you should have seen their bios. Don’t want to spend too much time, but we really have two people who can talk to this issue. What I love about Yun’s background is that she’s been in other think tanks. She’s at the Stimson Center. She was at Brookings. Also, her education and academics background is both in the U.S. and in China. I think that’s really important when we think about the Taiwan issue and as she thinks about U.S.-China relations, China’s foreign policy, and so happy that you can join us today. She’s currently the senior fellow and co-director of the China East Asia program at Stimson.

David is your go-to expert at the Council on this topic as well as defense and security, political history and theory at the Council. Also, just incredible experience having also—I love the on-the-ground experience as a Princeton in Asia fellow. He was in Hangzhou and I really think that that always benefits the conversation when we’re thinking about the U.S.-China relationship having, you know, had on-the-ground experience there. But he was also recently at the American Institute in Taiwan, as many of you are probably familiar with that organization—a leading think tank—looking at the Taiwan issue and many others.

Both have the credentials that you would think that they might have on the academic, experience, and resume side. So I won’t respell those out.

But to David and Yun, thank you for joining, and I have to ask the question that I struggle with so much. You know, I was a research associate at the Council in the early ’90s. This was the same conversation we were having then and it’s the same conversation we’re looking—it was a flashpoint then. It was Lee Kuan Yew instead of Tsai Ing-wen going to sit down and Cornell inviting him to speak. It, you know, constantly talks about identity issues, but we’ve actually moved an entire generation of people, right? So an entire generation of young people have now grown into what is now predominantly either Mandarin and Taiwanese speaking, you know, 22 million, you know, Taiwan—people on Taiwan. And we’re dealing and grappling with the same issues, although the stakes seem to be much higher now than ever before.

So I’m going to start with a little bit of a bizarre question. I really am curious about what—how you might both respond, and I’ll start with David and then Yun. So we get, really, sort of high on the, you know, military security, what’s going to happen, what side is U.S. going to be on. But I’m wondering, a little bit more nuanced, what are the two most significant issues that you think are not getting broken down enough in the conversation around Taiwan? You know, because we go so high into the—you know, the policy, you know, the rhetoric of the security issues and the military, but what do you think is really missing or do people not understand about the Taiwan issue that is just not talked enough about?

And, you know, you can just start with one if you can say that, you know, pretty succinctly, you know, and two if you feel like you really have a second one. David, what do you think?

SACKS: Well, that’s a really tough first question. (Laughs.) But I think that maybe something, and I wonder if Yun agrees with this, but I think something that always struck me from being on the mainland and talking to Chinese, you know, people and various interlocutors is that even when you talk to somebody that we would consider, like, a very liberal Chinese person, the view on Taiwan is almost always the same. And so whereas we find, like, if you really engage with a Chinese person and ask about maybe other elements of Chinese foreign policy or Chinese economic policy, you’ll get a range of views—it’s, obviously, not monolithic—on China—you know, 1.3 (billion), 1.4 billion people.

But you talk to somebody in the countryside or somebody in the city, somebody who’s educated, uneducated, you almost always get the party line on Taiwan. And so I think that’s something that maybe we don’t appreciate as much. We think that maybe Chinese people will come around to accepting that Taiwan is a de facto independent country that’s been ruled, you know, independently and that the CCP has never ruled over, right.

But I think maybe something that we don’t appreciate as much is that there really isn’t a lot of division on the mainland regarding Taiwan and that it’s pretty dogmatic and inflexible. But I know that Yun studies that aspect a lot more than I do. So I wonder if she has the same observation.

MAASBACH: Yeah, I appreciate that, David.

Yun, what do you think?

SUN: I agree with David and I would like to push the argument a little bit further. So, yes, he’s—you’re absolutely right. In China, there is no other narrative about Taiwan, that unification is the only option and Taiwan is part of China. As someone who was educated in the system, this lie has been, basically, ingrained in your education from K through—from the age of six to whenever you graduate from school. So that is true.

But it has to—back to the question that why there is no other narrative, the simple answer, of course, is that, well, the party wants to instill just one position. But I think there’s also another reality that I think people don’t quite talk too much about here is that Beijing really does not see an option other than unification, that the independence of Taiwan, as much as we see it as a fact or as a de facto reality, it’s not an option for Beijing and for the Chinese Communist Party because there’s the issue of the regime legitimacy. It’s a(n) issue of the legitimacy of Xi Jinping. It is not only—it goes way beyond the issue of credibility of his leadership. It goes to whether he is legitimate as the paramount leader of China.

So for—in terms of China’s domestic politics, there’s no room to tolerate other options on Taiwan. Which is why, as in coming to the strategic issues, this point is particularly important, because we consider a conflict over Taiwan as a contest of military power, as a contest of capacity, whether we have the overwhelming or the dominant capacity to win in a military conflict with China.

But for China the mindset is completely different. It’s a war or it’s a contest of national will. It’s about who is willing to die for this or who is willing to shed their blood for this, and which is why that for the Chinese when they consider the scenario of a Taiwan conflict, capacity, of course, is important but I think the Chinese also rely on the fact or what they pursue—what they perceive to be the fact that the Chinese are willing to die for Taiwan and how many Americans are willing to die for Taiwan. So when it gets to that—yeah, when it gets to that, I think it’s a big area of disagreement or big area that we don’t normally talk about here.

MAASBACH: You know, and that’s a great segue because as we have followed and probably many people on the call, you know, since the beginning of this new year, Taiwan has passed an extra $8.6 billion in a defense budget. You know, Taiwan has said curb—to China, curb your military adventurism. There’s a lot of strong language that’s been emitted. However, we really haven’t seen it in the domestic U.S. coverage scene very much. Obviously, we’re distracted for a thousand reasons. But if this is a major potential, as you suggest, Yun, will you die for the democratic survival of a(n) independent Taiwan—you, U.S. soldier—and yet we have no real concept or priority around understanding this part of the situation and why it’s such a critical policy issue.

I wonder, on the flip side, David and Yun, if what is the most disconnected concept in the U.S. political understanding about the Taiwan issue? What would you put the weight on? If you could say everyone in Congress needs to have a crash course on the Taiwan issue, what do you think that crash course would be? What would be the main issue that you’d want to go over there?

SACKS: Well, I think that it’s—because you said Congress, so I’ll just go on that. You know, I think that there is a worrying shift in Congress to, number one, asserting the U.S. interest in keeping Taiwan separate from the mainland. Some congressmen have been explicit in kind of voicing that as a U.S. interest and also in saying, well, we should recognize Taiwan as an independent country. You know, call it what it is. Rip the Band-Aid off and just say, you’re a sovereign country and we’re going to have an embassy in Taipei.

And I think that’s very dangerous because, really, what you have to go back to is you have to understand that this is really a part of the Chinese civil war that the CCP does not believe is finished, right. This is a legacy issue of the Chinese civil war and, you know, as Xi Jinping has been increasingly explicit, you cannot, you know, declare the rejuvenation of the Chinese nation until it is territorially—until it has its territorial integrity restored and, to him, that includes Taiwan.

So, to me, saying that we will keep Taiwan away from China or that we will recognize Taiwan as an independent country is very dangerous and that’s not something that we should be doing in Congress or the executive branch.

So I think we have, essentially, the best that we could hope for now, which is a very robust but unofficial relationship with Taiwan. I think that the framework that we have in place right now allows us to achieve all of the things on our substantive agenda whether that’s trade talks, working together to address global issues, et cetera.

But I would tone back the symbolism that we see a lot in Congress and the executive branch kind of going for. I think that actually deep down Tsai Ing-wen and the other leaders of Taiwan who are pragmatic and who understand the consequences know that this is actually quite dangerous, but they’re not going to necessarily say that out loud or have the ability to turn down these (Western ?) offers.

But I think that deep down they know that that those types of moves are destabilizing. So I would kind of urge those in Congress and the executive branch to maintain the current framework that has served us well for four decades. I do think that we need to do a lot more to increase our deterrence in the region and I’ve articulated ideas to do so.

But in terms of the political framework, I do think that it’s important that we maintain the status quo there.

MAASBACH: Thank you. That’s great. Thank you so much, David.

Yun, what are your thoughts on what you would—what would you give lecture one? What would lecture one be?

SUN: I agree with David. I think the Congress, certainly, has gone faster and further than the executive branch is willing to on the issue of Taiwan. And then Congress is not monolithic. We hear the voice from the far right. We also hear the voice from far left. So it’s not just one voice.

But I think the congressional policy does offer the administration some space, some room, for deniability, because people could say, well, this is Congress. This has not translated into or this does not represent the U.S. government’s current policy. So I think the view of the Congress, certainly, has impact. But it also allows the administration to have some room for flexibility.

And the executive branch, I will say that its policy is to primarily strategic ambiguity so, basically, refusing the idea of strategic clarity that I know that Richard and Dave have—David has—have written eloquently about. For the Congress, I think the—it really comes to the point that we—if we really want to support Taiwan independence we need to put our feet where our mouth is and if we really want to go that far we have to ask ourselves the question that are we willing to fight a war for Taiwan and are we willing to send our troops to defend the island against a Chinese invasion, knowing that the Taiwan Strait is only less than a hundred miles and Taiwan is thousands of miles away from our homeland.

So supporting independence of Taiwan, apparently, is overtly—is overly provocative. But it doesn’t mean that we don’t have things that we could do substantively to support Taiwan, and I think that’s what the administration and a lot of the congressional legislations are really pushing for, which is to strengthen Taiwan’s capacity, to substantively enhance the relationship between U.S. and Taiwan without giving it a diplomatic title or diplomatic normalization or diplomatic recognition.

So I will say that in this case substance matters more than rhetoric, you know, so the focusing on the rhetorical terms that we would use on Taiwan, I think, is more important to use the concrete policy measures and policy actions to support Taiwan.

SACKS: And if I could just add briefly.


SACKS: I mean, I think that some would argue, well, in the case of Taiwan, you know, substance is substance—I’m sorry, that symbolism is substance, right, that, essentially, symbolism is important for this relationship as a measure of deterrence for the mainland.

But I think they would say that, well, we could do both. It’s not one or the other, right. We can do symbolic things to show our support for Taiwan while pursuing a robust agenda. But I actually think if you look at kind of the recent history of U.S.-Taiwan relations, I do think the substance has suffered a little bit because of the priority that we’ve placed on symbolism and even some in Taipei at points have prioritized that as well.

If you look at the economic aspect of the relationship, which, to me, is really below its potential, you know, we have something called the Trade and Investment Framework Agreement, or TIFA. That was not held at all during the Trump administration. The Biden administration has held TIFA talks but, clearly, I think there’s scope for a full bilateral free trade agreement between the United States and Taiwan.

But we’re not moving that forward. That’s something that Taiwan wants. That’s something that I would argue is in our interest with our ninth largest trading partner. But we’re not pushing that ball forward. Instead, we’re focusing on, you know, political moves that, essentially, you know, make the front page or are splashed around in Beijing and Taipei but don’t really, you know, bring the relationship to a new level substantively.

So I do think that this is a constant tension in the U.S.-Taiwan relationship. Of course, you started off by talking about the Lee Teng-hui visit and what was happening in the ’90s, so this is not new. But I do think that we need to be focusing more on substance, and we don’t necessarily have the same cushion that we had before where we can kind of relax and just pursue these symbolic measures.

MAASBACH: (Inaudible)—

SUN: Just to—

MAASBACH: Yeah, go ahead.

SUN: Can I follow up on that? Yeah, I think it depends on what we are trying to symbolize and also what level of actions we’re willing to take, right. If you think about, for example, the analogy of Ukraine, if the ultimate symbol is we accept Ukraine into NATO, then there is going to be severe consequences. But below that threshold, there are other symbolic measures that we can take and also a lot of this—well, substantive measures that we can take to express our support.

So symbols are not cost free, and we need to calculate—and I believe the administration has calculated—the costs and benefits of each symbolic moves and see if it’s, ultimately, in Taiwan’s interest to pursue certain gestures.

SACKS: And there is a cost, right. There’s almost always a cost. For instance, when we invited Taiwan to the Summit for Democracy—I mean, I think we should have invited Taiwan. It, clearly, is a thriving democracy that should have been there. But then, you know, China flipped one of Taiwan’s diplomatic allies right after the fact.

So there is a pattern of the U.S. and Taiwan visibly upgrading their relationship and then China doing something to show its displeasure, and Taiwan is, generally, the one that bears the cost of that. So I agree with you and it is something that we have to think about, obviously, and we have to think as well, you know, is the cost that Taiwan will have to bear for this worth it.

MAASBACH: And this will be my final question. So, audience members, please prepare your questions before we open it up.

You know, diplomatic ties—obviously, we recognized the Republic of China until 1971 until it switched over, and now Nicaragua just being—sort of dropping off in the recognition of ROC in December. Now only fourteen diplomatic allies exist for Taiwan.

I think the difference between what was happening in the ’90s with Lee Teng-hui and that situation is we’ve been so preoccupied with China’s exponential economic growth and modernization, right, in the last twenty, twenty-five years. And so now we’re in a different situation than we were, you know, in the last twenty, twenty-five years where the U.S.-China relationship is at its most fraught.

So this is a variable that we have not factored in because it’s sort of unprecedented in modern U.S.-China-Taiwan relations. So a lot of people are saying this is the most tense period. This is the major flashpoint. And so can you share with us a little bit about the variable of the U.S.-China relationship being at its worst, as many people, pundits, have expressed, how does that factor in more dangerously or not in this whole Taiwan, you know, flashpoint issue?

SACKS: Well, I think you’re absolutely right. I mean, I think that is a new variable and that does kind of increase the tensions that we’re talking about, and I do think that when you think about kind of this relationship we always have to think about it as a triangle between the U.S., China, and Taiwan because, you know, any move that the United States makes toward Taiwan or China it affects the other and cross-strait relations invariably, you know, affect the United States as well.

So I think we need to always keep in mind the three-way nature of this relationship, and what I mean by that as well is that United States has always played kind of a role of when China, you know, was too aggressive towards Taiwan it would kind of shift towards Taiwan a little bit. In the Taiwan Strait crisis it had the aircraft carriers that it positioned to show China to kind of stop escalating and knock it off. And then when Chen Shui-bian was flirting with a referendum and, really, kind of courting a crisis, President George W. Bush, with Wen Jiabao right next to him, you know, warned Chen Shui-bian publicly and then, you know, kind of tried to defuse that crisis as well.

And so as U.S.-China relations take a turn, I mean, I do think that the U.S. is not really as able to play that role anymore. So if there is a crisis between, you know, China and Taiwan, given how bad U.S.-China relations are I don’t think that the U.S. could play that kind of mediator role of trying to defuse a crisis. I think it’d be much, much harder to kind of thread that needle.

MAASBACH: I think—yeah. Yun, do you agree?

SUN: I agree, and I’ll put it even more bluntly. I’ll just say that with great power competition or strategic competition, however you frame it, the strategic value of Taiwan as an asset for the United States just increased exponentially, that if in the past we had a—we had a policy of, well, basically, we want to keep the status quo, I think now that policy has become even more imperative and more important for us because, honestly, what’s in it for us if China achieves this unification and then turns around to compete with the United States for supremacy?

So at the minimum, to have the Taiwan issue ongoing, to have—to keep the Taiwan issue alive will keep China distracted and bogged down with its coastal—at least its near coastal defense instead of its bigger ambition for the region or even global ambition.

So from that perspective, I would say that the great power competition has brought about a tectonic change to the context of the Taiwan—of the Taiwan issue and I think the Chinese understand that very accurately. That’s why they feel that the pressure on the Taiwan issue is increasing, not because—not because anything changed on China’s part but because the U.S. perception of Taiwan as a strategic asset has enhanced or strengthened.

MAASBACH: Yeah. I have fears coursing through my body right now. But this is—this is so great. Let’s open it up to the audience. I already see three great questions. Sam or Connor, would you please provide a question?

OPERATOR: Thank you so much.

(Gives queuing instructions.)

Our first question will be from Raphaëlle Soffie.

Q: Hi. Thank you very much for that really great talk so far. I really enjoyed it.

I was hoping you could talk a little bit more about the evolving relationship between Russia and China and whether or not you’re seeing any kind of coordinated effort on sort of Russia with Ukraine, China with Taiwan, as there is this emerging Russia-China axis, something that Nixon in 1972 very much tried to target. So I was wondering if you could talk a little bit more about that. Thank you.

SUN: I’d be happy to start. I think for China and Russia we call it a collusion, right. We think that China and Russia have already coordinated their moves, that Russia will go after Ukraine and when U.S. is distracted with Europe then China will take actions to take over Taiwan.

I don’t think that is the case. I don’t think that’s what has happened, because in terms of the level of trust between China and Russia, there’s this very famous Chinese saying that they use to describe their relationship with Russia, which is China and Russia can share sufferings but not happiness, which says a lot about the depths of the relationship, that in terms of their, what they—what the Chinese and the Russians call the strategic alignment rather than alliance, I think the most important point here is this relationship does not have a component of mutual defense.

So when Russia engages in the—for example, back in 2014, in Ukraine, China was not coming to—was not coming to Russia’s defense. And at the same time, the Russians are equally worried that a conflict over Taiwan between U.S. and China is going to drag Russia somehow into the conflict and that Russia is unwilling to carry the water for the Chinese either.

So I think in this case the collusion or the collaboration portion of the China-Russia relations mostly reflects in their alignment of their postures, their articulation of political support for each other’s position—the economic support that China is willing to lend Russia when Russia is put under severe Western financial and trade sanctions and, last but not least, joint military exercises in—for example, in regions close to Russia or, in this case, South China Sea for China.

So I would say that short of mutual defense, I would ask the question that what is the real threat to the United States from the China-Russia collusion. What material damage does it do to the U.S. military posture or U.S. military planning?

Well, if we believe that China is going to use the Ukraine opportunity to take over Taiwan, that’s a different question. That means that the U.S. will be faced with a two-front war problem. But do we assess that likelihood, that scenario, as likely, I think that’s a different matter.

MAASBACH: Thank you.

SUN: Turn it over to David.

MAASBACH: David, did you want to respond to that or can I pull another one?

SACKS: You can go for the next one.

MAASBACH: Yeah. Let’s pull another one just so we can get all the questions in. Ryan Johnson from the—Sam or Connor?

OPERATOR: Our next question will be Ryan Johnson.

Q: Hello. Thanks for the great remarks. My name is Ryan Johnson from the Center for New American Security.

So I’ve heard quite a bit on the talks of U.S.-China-Taiwan relations from a symbolic lens. But I was hoping you could talk about from a more physical technological standpoint, obviously, with Taiwan and its semiconductor manufacturing capacity, its, you know, preeminence in the world and how that factors into the calculus of U.S. foreign policy and navigating the waters with China and the potential of invading Taiwan. Thank you.

MAASBACH: David, do you want to tackle that one?

SACKS: Yeah. So, I mean, this has become a very prominent topic, especially over the last two years as we’re all focused on supply chain security and we all know how much the TSMC chips kind of power every gadget we use in every aspect of our lives.

But I do think that there are elements of this that are kind of overplayed a little bit and I think that there’s a danger to, for instance, reducing China’s desire for Taiwan to TSMC, to saying that, well, you know, China will invade Taiwan because then it’ll capture TSMC, it’ll become a huge semiconductor powerhouse, and then it can sanction the U.S. or stop sales.

But I think that, you know, like I said earlier, you know, China wanted Taiwan well before semiconductors were even a thing, and even if TSMC ceased to exist China would still want Taiwan. So I don’t really see TSMC actually driving China’s decision-making process or its calculus in any way.

But to the other part of your question, I mean, obviously, the TSMC’s role in global semiconductors is a major concern for the United States, not only the potential for TSMC to sell China chips but then help fuel its military modernization. We’ve put sanctions on the sale of TSMC chips to certain Chinese entities but also securing our supply of semiconductors because we don’t have fabrication in the United States.

So now, of course, TSMC is building a major facility in Arizona. TSMC is also now building a fab in Japan. Again, these won’t be—my understanding is they won’t be cutting-edge facilities so the most advanced semiconductors in the world they want to—they want to remain on Taiwan for various reasons. But that still helps us kind of diversify away from chips produced on the island.

But, you know, when the administration talks about working with Taiwan on supply chain security, right, that’s all code for discussing semiconductors and TSMC. So, clearly, this is a big push of ours, as it should be. But I think that there’s now a tendency to kind of overplay how this factors into Chinese calculations or U.S. strategic calculations.

Yes, it’s one element. But I don’t think it’s driving behavior either in Beijing or Washington with the broader question of, you know, first, whether to attack Taiwan and then whether the United States should come to Taiwan’s defense.

MAASBACH: Yeah, that’s great. And why don’t we take another question, Sam? I like this alternating because we have a lot of questions in the queue.

OPERATOR: Our next question will be from Nick Ackert.

Q: Hi. Good evening, and thank you so much for your comments. My name is Nick Ackert and I’m a third-year Ph.D. candidate with the security studies program at MIT, and my question is related to deterrence and the military imbalance in the Taiwan Strait.

So Taiwan allocates about 2 percent of its GDP to its armed forces, and many analysts have argued, either rightly or wrongly, that Taiwan should more credibly signal its commitment to defending itself by increasing its defense spending to resemble one of the Baltic states, which has a 5 (percent) to 6 percent spending point in order to deter Russia.

And my question is for—what’s your take on the domestic debate over this policy in Taiwan, and if it were to be implemented what would China’s reaction be? And in the bigger picture, can Taiwan continue to enhance its defense capabilities without inadvertently creating some kind of a closing window of opportunity that Beijing perceives? Thank you both.

SUN: I’d be happy to give that a try. I think the fact is, if we look at the imbalance of military power or military capacity between Taiwan and mainland China, it is not a gap that Taiwan can fill. So Taiwan could increase the percentage of its GDP contribution towards its defense spending but it’s simply not going to catch up to what mainland China has to spend and the type of military modernization efforts that mainland is putting into the Taiwan issue.

So I think for some in Taiwan this question is kind of a null question because no matter what you do you’re not going to catch up with mainland. But there is a counter argument to that, which is that maybe you will not be able to catch up to the mainland but you still can develop asymmetrical capability to deter China and to impose costs to China’s potential invasion plan and to make such costs so prohibitively high that China or mainland—well, mainland China, in this case, will reconsider its decision and to recalculate the costs and the benefit of what it has to do.

I think it is from that angle, from the cost imposition angle, that the—Taiwan’s defense spending is discussed repeatedly as a key area where more efforts could be made either by Taiwan or jointly by Taiwan and the United States to deter the potential provocative military actions from the mainland.

So I would say that the key word here, one, is the asymmetrical capability. The second one is the cost imposition. But it’s not a—it’s not a deterrence based on parity. It’s more of a deterrence based on the cost imposition potential of the type of capability that Taiwan is encouraged to develop.

SACKS: That’s—if I could just—if I could just add a couple of points on that. I mean, I think that you’re absolutely, you know, right that Taiwan’s defense spending is below what it should be. Given that it faces an existential threat that is only a hundred miles away, it should be above 2 percent of GDP.

I also think it can allocate its resources more wisely away from legacy platforms and towards the asymmetric ones that Yun discussed that are more mobile and lethal and more difficult for the Chinese to figure out ways to counter and defeat.

But equally important, I think, is for Taiwan to have a reserve force that is able to, essentially, conduct guerrilla warfare and make it really difficult for China to not only, you know, invade and occupy Taiwan but to hold Taiwan, which is China’s objective. And we now see Taiwan shifting in that direction and publicizing a lot of moves that it’s making to ensure that it has a ready and legitimate reserve force, which has been a major issue.

So, yeah, to Yun’s points, Taiwan is never going to be able to match China ship for ship or, you know, fighter jet for fighter jet, but it doesn’t need to. It only has to ensure that it can prevent a PLA landing on Taiwan, in the end of the day, and I think that that is something that’s achievable. Taiwan needs to spend more. It needs to prioritize its defense. But I wouldn’t be fatalistic about it and say that all is lost.

In terms of the final part of your question, how might China react to Taiwan spending more, and I would simply say that China’s spending dwarfs Taiwan’s. Its military modernization has been focused above all else on preparing for a Taiwan invasion scenario. It has hundreds of ballistic missiles arrayed opposite Taiwan that are intended to target Taiwan’s critical infrastructure during a conflict.

So China is, I think, driving these dynamics, and if it wants Taiwan to spend less on its defense then it should draw down its missiles and its capabilities in the Taiwan Strait, and that’s, frankly, the U.S. position, that China’s military spending is what’s driving this. I think it’s also a legitimate question how China might react to the U.S. selling Taiwan things like, for instance, F-35s or other platforms that we haven’t sold to date.

I think if we chose to really sell something that might alter the balance in a meaningful way we would see a very strong Chinese reaction. That’s not to say that we shouldn’t do it. But that’s something that we need to consider.

MAASBACH: The queue is getting longer. I think the military security spending and the defense spending is getting folks more inclined to ask more questions. Another question, Jae Jang. Sam, if we can release his question.


Q: Hi. Thank you both for your time presenting today. My name is Jae.

I work for a senior Republican in the Congress and have a, you know, particular focus and interest in the financial and capital markets’ relationship between China and the United States. Not that we have to get really technical in the weeds but, you know, my kind of question—you know, I see the development of China’s domestic economy and how that’s transformed in the last few decades and, you know, look with interest at sort of what I could characterize as a bifurcation of different systems, whether that’s on, you know, the global payment side between financial institutions or even the way that many Chinese consumers pay for things and are increasingly able to do that on a regional basis. So I just would be curious to get your take on what you think a potential bifurcation of the financial systems, the capital market systems, between the two countries could change the relationship. Thank you.

MAASBACH: David, do you want to tackle that one first?

SACKS: I wasn’t really expecting something about that. I mean, I don’t know if the question is about how it would impact cross-strait relations or U.S.-Taiwan relations. But, clearly, you know, China is trying to push out the digital RMB and there’s talks about China coordinating with Russia so that it could have its own, you know, financial clearing system if Russia is barred from SWIFT if it takes action over Ukraine.

So I think that, clearly, China, and, to an extent, Russia, are trying to insulate themselves from U.S. sanctions and trying to, you know, lessen the potential blow that that would deal to their economies if we were to really seriously sanction them over something like Taiwan. I think that the broader thing that I would address is that a lot of our kind of deterrence strategy is premised on showing China that it would pay an unacceptable economic price if it were to attack Taiwan and we’re revealing what we would do to Russia if it invaded Ukraine. We would, I believe, do something similar to China if it were to attack Taiwan.

So China’s going to kind of internalize all of this and figure out how it can get around that so that if it does feel like it needs to take action against Taiwan it wouldn’t necessarily jeopardize its economic growth and prosperity.

So I just think that as from the U.S. perspective we have to always keep in mind, though, what are the economic penalties that we could levy on China to really shift its calculus and can we even do that. Maybe that’s something Yun can get into. But, you know, I wonder to what extent that would actually change Xi Jinping’s decision-making even if he knew that they would have to bear a very severe cost economically and financially for using force against Taiwan.

SUN: I’ll just say that if the cost of taking over Taiwan is just economic and financial sanctions the Chinese will do it tomorrow morning because for them that—well, remember that this is such a—this is such a profound anxiety and profound vulnerability on the part of Beijing.

So, for them, if there is just a monetary tag to the invasion of Taiwan they will consider it as a slap on the wrist, that there’s no economic sanctions that will prevent China from a particular—a potential invasion of Taiwan if that is the only cost.

I think the only thing that’s stopping them from launching such an invasion is a potential U.S. military intervention and anything short of that I don’t believe it is sufficient to really stop them. But if we are talking about a decoupling between U.S. and China and the bifurcation of the international financial system, I think that’s going to happen regardless of what is happening to Taiwan.

And, in particular, I would say the Chinese—the RMB, internationalize it—well, they call it the globalization of RMB—to use the Chinese currency as a premier transaction currency for trading, for example, between China and Russia and a couple of China’s neighboring countries is well underway.

So just like the cyberspace, we’re looking at, basically, a division of the world into two, I think in the financial section—financial sector, we, potentially, will see that as well. Thank you.

MAASBACH: Sam, can we get the next question? I think we have time for probably two or three more at most.

OPERATOR: Excellent. Our next question is from Emma MacMullan.

Q: Great. Thank you. This is very timely. So I’m Emma MacMullan. I actually lead the cyber fusion team at Capital One. So, unsurprisingly, this will be a cyber question.

So as we weigh the threat of a potential invasion of Taiwan, how would you characterize that threat landscape in the cyberspace, in particular, for them? So we’ve previously talked about Russia. Ukraine has often been a testing ground for cyberattacks, particularly against critical infrastructure, you know, potentially seeing if they could use that to pave the way for a potential invasion.

We’ve seen a lot of attacks against Taiwan in the academic and tech sector for cyber. But what do you think of increasing attacks against critical infrastructure as a strong indicator of potentially escalating risk of an invasion?

SUN: I can give it a try and see what David has to add to it. We have seen reports about the internet or the cyber army of the PLA targeting Taiwanese—well, so far, for a lot of the evidence that we have seen is mostly what we call psychological warfare or the informational warfare, that they try to create information—fake information—in the Taiwanese society through cyber masses, mostly the—what they call the internet army, to create fake information to sway the Taiwanese public opinion, and I will say so far that’s the most that me, as a scholar who does not have access to classified information, has to share.

In terms of the targeting of the Taiwanese critical infrastructure, I think the answer to that question will be speculative at its best, just like when we speculate, well, if China is targeting the United States what would they go after, whether the cyberattack on the critical infrastructure of the United States will be seen as under the declaring—under a war threshold.

But, on the other hand, I’d also like to point out that in terms of U.S. cyber capability—and I wonder whether David would agree—that we have the ability to assist Taiwan in this regard. To the extent that the U.S. is still—well, I believe that the U.S. is still the most powerful cyber player in the cybersecurity realm, I do think that this is an area that if we do identify that Taiwan is vulnerable, then more cooperation and more even capacity building will be required to help Taiwan to mitigate its vulnerability. Thank you.

SACKS: Just very briefly. I mean, I think that what Yun said is completely right, which is that these attacks are already occurring during, quote, “peacetime,” and that China is doing political disinformation, especially around the election cycle in Taiwan, trying to influence the vote and get candidates who they believe are more inclined to Beijing’s position on cross-strait relations, to get them elected and to hurt candidates who they view as more pro-independence.

So these attacks are already occurring, and if you talk to Taiwanese officials they will tell you, you know, how many attacks they see on a daily basis. In terms of war time, I mean, I think that we should assume that China will launch massive cyberattacks against Taiwan to try to soften it up before a potential invasion and I think that this raises a broader question, which is something that is under studied, I think—you know, getting back to Nancy’s first question of the night, which is Taiwan’s resilience during a potential Chinese attack.

Taiwan is an island that imports almost all of its energy. You know, it is vulnerable to cyberattacks and I think that there is a question that we have to deal with, which is, you know, how do we keep the lights on in Taiwan if there is a massive cyberattack or a Chinese quarantine of the island. How do we get energy there? How do we get food there? And those are major logistical issues we have to think through if we’re going to be talking about a defense of Taiwan because there is the question of, well, how long can Taiwan last on its own if China, you know, doesn’t allow any ships into Taiwan’s ports so it can’t import food or energy.

MAASBACH: Yeah. Thank you.

Ester, you had a last question. Sam, if we can ask Ester for that.

Q: Hi, everyone. My name is Ester Fang. Thank you, again, to both our speakers for joining us tonight. I know you must have busy schedules.

So my question is inspired by what Yun was saying earlier in the night about willpower, and I think what I’m really curious about what you and David both think is if the Taiwanese people have the willpower to even engage in war. I think oftentimes in these D.C. circles we talk a lot about America and China and the American Army and the Chinese army, but we never really address if the Taiwanese people care about this issue as much as we do.

I’ve heard from family members and friends that live in Taiwan that this really isn’t a main concern. It’s definitely something that they worry about but it’s not something that’s keeping them up at night. Most people don’t think that there will be a war. So I was wondering if either of you could speak more on if there was a war if the Taiwanese people would fight for a long time or kind of just acquiesce after a few months.

MAASBACH: Yun, what do you think?

SUN: I think that is a great question and I think there are a—there is a politically correct answer and that there is also an honest answer, because I think for after, basically, seven decades of being separated from the mainland and also seven decades of peace, I think there is a sense in Taiwan that war is not going to happen. It’s like in South Korea that you have this fatigue about North Korea’s threat, that it happens every other day, that in the end you just become less convinced that it’s going to—it’s going to happen.

And also in Taiwanese society there also have been questions—and I have talked to Taiwanese officials and interlocutors about this—about whether the Taiwanese population really generates a strong enough armed force to really put up a fight. And I think this is an issue that even officials in Taiwan have privately raised, is that, well, that might be a question.

But I think, on the other hand, it also should be recognized that the government is taking measures to address that question. So the public opinion and the attitude towards defending Taiwan, I think, it’s also shifting in the island. So, ultimately, I would say that if we talk about the will, the mainland, I would say, probably still has a stronger will than Taiwan in terms of an armed conflict or a war, but I wouldn’t discount the Taiwanese population’s will to put up a fight in this case.

But then again, still coming back to the military parity issue or the question that we discussed earlier, I don’t think people expect Taiwan to be able to independently defeat mainland in the event of an invasion. So whether Taiwanese population will have the will is an important question but it’s unlikely to determine the outcome of the war if there is going to be one. So in that sense, I think this is an important question but it’s probably not the most critical factors that will affect the outcome of the potential conflict. Thank you.

SACKS: Just one thing that—

MAASBACH: David, you’ve got forty-five seconds. Yes.

SACKS: Yeah. Just very briefly. I mean, I’m confident that Taiwan’s military will fight. It’s a professional fighting force with people who have volunteered and dedicated their lives to defending Taiwan. If you meet Taiwan’s military officers, they are professional and the senior ranks have served for, you know, three-plus decades and they’ve been focused their entire career on one problem, which is China and on fighting the Chinese if they have to.

So I believe that they—you know, we shouldn’t question their dedication, and now it is even—it is starker than ever what will happen the day after China lands on Taiwan and takes over and occupies Taiwan, and I think the Hong Kong, which we haven’t really gotten into in this panel so far, but I think what has happened in Hong Kong is really a game changer on Taiwan and has really forced a lot of people to think critically about what will happen if they’re ruled by the PRC and, therefore, logically, how do we prevent that from happening.

MAASBACH: And if anyone has seen the Legislative Yuan, most recently they were throwing pig guts and water balloons, and in terms of will it seems like they’ll fight to the end in some—at least in that scenario.

We did sixty minutes on one of the most complicated policy issues and I’ve learned a great deal. I hope everyone else has as well. Thank you so much for all of the participants today. Thank you so much to David Sacks and Yun Sun. And also, this video and this transcript will be up on the CFR website. And everyone stay safe. Stay well.

Thank you, Stacey, Connor, Sam, and August, for arranging this gathering. And don’t forget, look at the CFR site for information about the IAF Fellowship and also if you want to see who else was on this call who made up the audience.

Thank you, everyone, and good night.


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