BALANCING INDEPENDENCE AND INFLUENCE: TAIWAN STRAIT'S GEOPOLITICAL CHALLENGE

Taiwan is situated in Eastern Asia, bordered by the Taiwan Strait and the South China Sea, along with China's southeastern coast, among other regions. The island has a coastline that extends approximately 1,566.3 km. Originally based in Mainland China before and during World War II, the Republic of China (ROC) government retreated to Taiwan in 1949 after the Chinese Communist Party (CCP) won the Chinese Civil War and established the People's Republic of China (PRC) in mainland China. Since then, the effective jurisdiction of the ROC has been limited to Taiwan, Penghu, Kinmen, Matsu, and smaller islands.

Upon the Japanese defeat in the World War II in 1945, as per the Republic of China (ROC) government position, Taiwan and Penghu were handed back to ROC as a province under its sovereignty, despite the lack of consensus among Allied Powers over the position. Since the People's Republic of China's establishment in 1949, the PRC has also claimed Taiwan as a province and has refused to establish diplomatic relations with Taiwan. The PRC has additionally not ruled out the use of force in the pursuit of unification. The ROC maintained its claim of being the sole legitimate representative of China and its territory until 1991 when it ceased to regard the CCP as a rebellious group and recognized its jurisdiction over mainland China.

The global response to tensions in the Taiwan Strait varies, yet there is a shared recognition of the importance of constructive dialogue and diplomacy in pursuing a peaceful resolution. With the persistent risk of proxy conflicts between Taiwan and mainland China, Taiwan faces the challenging task of maintaining its de facto independence while navigating China's growing economic and military influence.

Predicting whether tensions between China and Taiwan will escalate is complex and depends on several factors, both regional and global. However, several indicators suggest the potential for tensions to rise in the future:

China’s Ambitions: China views Taiwan as a breakaway province and has consistently stated its intent to achieve reunification, using force if necessary. As China's military and economic power grows, so does its capacity to exert pressure on Taiwan.

U.S. Involvement: The U.S. continues to support Taiwan through arms sales and diplomatic backing, viewing the island as a key player in the Indo-Pacific region's security. This has led to a more confrontational stance from Beijing, which sees U.S. involvement as an infringement on its sovereignty.

Regional Military Activity: Increased military exercises and naval maneuvers by both China and Taiwan, as well as military flyovers by the People’s Liberation Army, point to escalating tensions. Any miscalculation in these maneuver could trigger direct conflict.

Economic Pressures: Taiwan is a critical player in global tech supply chains, particularly in semiconductors. This economic importance increases the stakes for both China and the West, which could lead to more aggressive posturing by all parties.

Domestic Pressures in China: Internal challenges, such as economic slowdowns or political pressures, could prompt Chinese leadership to take a more assertive stance on Taiwan to rally domestic support.

While tensions may not escalate into open conflict in the short term, the situation remains highly volatile. The presence of strong diplomatic channels and international efforts at de-escalation are crucial to managing future developments.

The international responses to the Cross-Strait tensions between China and Taiwan are complex and diverse. While some nations maintain a neutral stance, others openly support Taiwan's autonomy, advocating for the recognition of its rights. Additionally, several countries have bolstered their military presence in the region as a show of deterrence and solidarity with Taiwan. Diplomatic efforts are also ongoing, aiming to foster dialogue and negotiations between China and Taiwan to de-escalate tensions and work toward a peaceful resolution. Overall, the global reactions to the Cross-Strait tensions underscore the recognition of the potential risks posed by a significant Chinese military action against Taiwan and highlight the critical importance of preserving peace and stability in the region.

The PRC has officially proposed "one country, two systems" as a model for unification, though this has been rejected by the Taiwanese government. Within Taiwan, major political contention has been between parties favouring eventual Chinese unification and promoting a Pan-Chinese identity. It refers to a sense of shared cultural, ethnic, or national identity among people of Chinese descent, regardless of their geographic origin (Mainland China, Taiwan, Hong Kong, Macau, or overseas Chinese communities).

This identity encompasses the idea of unity based on common heritage, language, traditions, and cultural values, even though individuals might have different political views, affiliations, or regional identities. Contrasted with those aspiring to formal international recognition and promoting a Taiwanese identity, though both sides have moderated their positions to broaden their appeal in the 21st century.

Taiwan’s 2024 presidential election does not simply signal a change in leadership. It represents a pivotal moment in the island’s assertion of its political identity and its strategic importance on the international stage. The elevation of Vice President Lai Ching-te to the presidency, in open defiance of Beijing’s stern warnings, broadcasts Taiwan’s resolve and its people’s steadfast commitment to democracy.

U.S.-Taiwan Relationship

As a leading democracy and technological powerhouse, Taiwan is a key U.S. partner in the Indo-Pacific. Although the United States does not have formal diplomatic relations with Taiwan, they maintain a robust unofficial relationship. The U.S. and Taiwan share similar values, deep commercial and economic ties, and strong people-to-people connections, forming the bedrock of their friendship and driving expanded U.S. engagement with Taiwan. Through the American Institute in Taiwan (AIT), a non-governmental organization mandated by the Taiwan Relations Act to manage the United States' unofficial relations with Taiwan, cooperation continue to grow. Taiwan has become a crucial U.S. partner in trade and investment, health, semiconductor and other critical supply chains, investment screening, science and technology, education, and promoting democratic values.

The United States' approach to Taiwan has remained consistent across decades and administrations. The United States has a longstanding One-China policy, which is guided by the Taiwan Relations Act, the three U.S.-China Joint Communiques, and the Six Assurances. Consistent with the Taiwan Relations Act, the United States makes available defense articles and services as necessary to enable Taiwan to maintain a sufficient self-defense capability and the capacity to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of Taiwan.

It is imperative that policy discourse transcends a one-dimensional view and acknowledges the multifaceted nature of Taiwan’s role in the world. This role is defined not just by Taiwan’s geopolitical significance, but also by its cultural uniqueness, technological prowess and democratic values. These attributes are not mere footnotes in the narrative of great power competition. They are central to understanding the island’s place in a rapidly changing world and the various paths it may pursue.

Taiwan’s dominion over a significant portion of the global semiconductor industry is a case in point, underscoring its strategic economic influence. The island’s near-monopolistic command over certain parts of the semiconductor supply chain is not simply a matter of market dynamics it is a critical pillar in the global economy. Any significant interruption in Taiwan’s semiconductor supply chain would have far-reaching consequences, potentially precipitating cascading failures across numerous industries worldwide.

Unlike other commodities, where supply can be diversified or replaced by alternative sources, Taiwan’s semiconductor production is irreplaceable in the short term. Other nations building their domestic production would face protracted timelines and would likely struggle to match Taiwan’s quality standards.

In the context of escalating US-China strategic competition, Taiwan often emerges as a focal point of potential conflict, a perception amplified by Western narratives. The Western portrayal of the presidential election — which simplistically casts the Democratic Progressive Party’s plurality victory as a defeat for Beijing — has the unintended consequence of alienating those in Taiwan who did not support the incumbent party.

Comments made by President Donald Trump during his first term in office indicating that US commitment to Taiwan could wane with changes in US leadership might drive segments of the Taiwanese population to view rapprochement with China as a more stable option. In navigating these complex dynamics, the United States and Western allies need to engage with Taiwan in a manner that transcends the binary of conflict versus abandonment.

A binary perspective—viewing the world in stark, opposing terms—is an inadequate and overly simplistic framework for understanding the complexities of U.S.-China competition. This approach not only obscures the nuances of their rivalry but also misguides analyses of how their strategic interactions are likely to unfold, particularly in Southeast Asia, where regional dynamics are highly intricate and shaped by multiple actors with diverse interests. One of the most intellectually lazy and misleading ways to characterize U.S.- China competition is to label it as "a new Cold War." While this framing may appear convenient due to certain superficial parallels with the U.S.-Soviet rivalry of the 20th century—such as geopolitical tensions, military buildups, and ideological differences—it ultimately distorts the true nature of contemporary U.S.-China relations.

Unlike the Cold War, which was marked by a nearly total economic and political decoupling between two ideologically opposed superpowers, the U.S. and China today are interdependent, particularly in trade, finance, and technological innovation. Their competition does not operate within a rigid, bipolar structure but rather within a fluid, multipolar global system, where middle powers and regional actors, especially in Southeast Asia, play crucial roles in shaping outcomes.

As of March 2025, President Donald Trump's administration has adopted a multifaceted approach toward Taiwan, characterized by economic negotiations, defense considerations, and complex diplomatic interactions.

Economic Engagement and Tensions

TSMC's U.S. Investment: Taiwan Semiconductor Manufacturing Company (TSMC) has announced a substantial $100 billion investment to construct five new fabrication plants in Arizona. This initiative aims to diversify semiconductor manufacturing geographically, enhancing both U.S. economic interests and national security by reducing reliance on Taiwan for critical chip production.

Proposed Tariffs on Taiwanese Chips: Despite TSMC's significant investment, President Trump is contemplating imposing tariffs of up to 100% on Taiwanese semiconductor imports. Such measures could extend to electronic devices incorporating these chips, potentially affecting products like iPhones. Experts caution that these tariffs might escalate costs for technology companies and consumers without effectively repatriating manufacturing jobs to the U.S.

Defense and Security Policies

U.S. Defense Commitment: During his 2024 presidential campaign, Trump expressed reservations about committing U.S. military forces to Taiwan's defense in the event of a Chinese invasion. He suggested that Taiwan should increase its defense spending to 10% of its GDP and compensate the U.S. for any protective measures, likening the relationship to an insurance arrangement.

Potential Economic Sanctions: Trump indicated that if China were to take military action against Taiwan, his administration would respond by imposing substantial additional tariffs on Chinese goods, ranging from 150% to 200%, rather than engaging in direct military intervention.

Diplomatic Developments

Cabinet Appointments Influencing Taiwan Relations: President Trump's nomination of Senator Marco Rubio as Secretary of State underscores a potential shift in U.S.-Taiwan relations. Rubio has historically advocated for strong U.S.-Taiwan ties, having met with Taiwanese leaders and consistently emphasized the importance of the Taiwan Relations Act.

Taiwan's Stance on Technology Transfer: In light of TSMC's planned U.S. expansion, Taiwan has pledged to retain its most advanced semiconductor technologies domestically, addressing national security concerns and ensuring that critical technological processes remain under Taiwanese control.

In summary, the Trump administration's policies toward Taiwan in 2025 reflect a complex interplay of economic initiatives, defense strategies, and diplomatic considerations, all set against the backdrop of evolving U.S.-China relations.

Southeast Asian nations do not view U.S.-China relations as a zero-sum game. They seek to engage both powers in ways that maximize their own national interests, rather than being forced into exclusive alignments. The region is not a passive battleground but an active participant in shaping the rules of engagement, leveraging its strategic importance to extract economic benefits, security assurances, and diplomatic flexibility from both Washington and Beijing.

Reducing U.S.-China competition to a simplistic "new Cold War" narrative fails to capture its complexity, interconnectedness, and the agency of smaller states in shaping the global order. This framing does more harm than good, leading to misguided policies and rigid assumptions that do not reflect the realities of contemporary geopolitics.

Taiwan’s significance extends beyond its economic importance. As the sole democracy in the Chinese cultural sphere, Taiwan stands as a living rejection of the Chinese Communist Party’s narrative that democracy is an alien construct unsuited to Chinese civilization. Taiwan’s vibrant democracy is a testament to the compatibility of democratic governance with Chinese cultural values, challenging the Chinese Communist Party’s assertion and offering a different model of Chinese society and politics.

Yet the global perception of Taiwan is often overshadowed by the spectra of a potential Chinese military incursion. Despite the Democratic Progressive Party’s re-election and the tensions such an event suggests, cross-strait relations may not be as precarious as they appear. The Pentagon’s annual report on China’s military capabilities suggests China is not yet primed for large-scale military operations.

Views of Taiwan through the binary lens of being either a constant flashpoint or a fully sovereign state indistinct from any other nation are overly simplistic.

Taiwan’s unique situation warrants a nuanced approach that recognizes both its geopolitical sensitivity and its basic value. Taiwan is not a strategic pawn or a prospective theatre of war it is an island nation with a profound influence on global commerce and the only traditional Mandarin-speaking democracy.

"One country, two systems" is a constitutional principle of the People's Republic of China (PRC) describing the governance of the special administrative regions of Hong Kong and Macau. Deng Xiaoping developed the one country, two systems concept. This constitutional principle was formulated in the early 1980s during negotiations over Hong Kong between China and the United Kingdom. It provided that there would be only one China, but that these regions could retain their own economic and administrative systems, while the rest of mainland China uses the socialism with Chinese characteristics system. Under the principle, each of the two regions could continue to have its governmental system, and legal, economic and financial affairs, including trade relations with foreign countries, all of which are independent from those of the mainland. The PRC has also proposed to apply the principle in the unification it aims for with Taiwan.

However, since 2020, as a result of the passage of the National Security Law by Hong Kong on 30 June of the same year, the United States and the United Kingdom condemned the Chinese government for seriously breaching the principle.

With an increasingly assertive China flexing its political and military muscle on Taiwan, the threat of a conflict looms large on the island. Taiwan, a vital global chip-manufacturing hub, holds strategic importance for the US, setting the stage for a potential US-China confrontation with profound global economic implications. Futurists present three scenarios exploring the future of this geopolitical flashpoint.

Taipei Economic and Cultural Representative Office (TECRO), also known as Taipei Economic and Cultural Office (TECO), Taipei Representative Office (TRO) or Taipei Mission, is an alternative diplomatic institution, serving as a de facto embassy to exercise the foreign affairs/consular services in specific countries which have established formal diplomatic relations with the People's Republic of China (PRC).

The PRC denies the legitimacy of the ROC as a sovereign state and claims the ROC-controlled territories as an integral part of its territory. An exclusive mandate, namely the One-China policy, requires that any country wishing to establish a diplomatic relationship with the PRC must first sever any formal relationship with the ROC. According to The Fletcher Forum of World Affairs, "non-recognition of the Taiwanese government is a prerequisite for conducting formal diplomatic relations with the PRC—in effect forcing other governments to choose between Beijing and Taipei." The Fletcher Forum of World Affairs is the student-managed foreign policy journal at The Fletcher School of Law and Diplomacy. Founded in 1975 and published biannually, As a result, these countries only allow the ROC to establish representative offices instead of a fully-fledged embassy or consulate to conduct practical bilateral relations without granting full diplomatic recognition.

Taiwan- Sri Lanka Economic Relations

Sri Lanka is Taiwan's 63rd-largest trading destination. Bilateral trade between Sri Lanka and Taiwan recorded US$319 million in 2023, which is a decrease of 22.5% compared to 2022. Taiwan's exports to Sri Lanka reached US$258 million, decreasing 24.16%, whereas Taiwan's imports from Sri Lanka amounted to US$61 million, increasing 14.56%.

At present, investments made by Taiwanese companies in Sri Lanka total around US$7 million. The main sectors of investment include the textile industry, garment manufacturing, food manufacturing, and transportation facilities manufacturing and repairing.

Conclusion

The China-Taiwan conflict is a multifaceted issue, shaped by China's increasing economic and military strength, along with divergent views on sovereignty. This dispute is particularly perilous, with tensions likely to persist well into the 21st century. Geographical proximity adds complexity, and their historical relationship has been fraught with conflict, hostility, and distrust. Current geopolitical tensions between China and Taiwan carry the risk of escalating into armed conflict, jeopardizing the stability and security of neighboring nations and the Indo Pacific region in particular.

The United States has significantly influenced the dynamics between Taiwan and China through military assistance, arms trade, and various forms of support. Despite enduring tensions, diplomatic relations remain stable, with the U.S. maintaining a delicate balance between its support for Taiwan and its broader geopolitical interests. The future of Taiwan-China relations remains uncertain, with possible outcomes including the continuation of Taiwan's de facto autonomy, reunification with mainland China, a peaceful resolution, or deeper economic integration.

The geopolitical consequences of the Taiwan-China relationship are substantial, as fragile diplomatic ties could potentially lead to a major crisis, endangering regional security. While Taiwan is not a central focus of Sri Lanka’s foreign policy, strengthening economic and trade relations with Taiwan could offer Sri Lanka new opportunities for growth, investment, and technological advancement. However, such engagement must be carefully balanced with Sri Lanka’s diplomatic commitments to China.

In this vast global arena, it is essential for us, as smaller players, to remain observant and vigilant, maintaining constant awareness and keeping our radars on 24/7. This would be our best strategy to navigate and respond to the complexities of international relations.

Air Chief Marshal Gagan Bulathsinghala RWP RSP VSV USP MPhil MSc FIM ndc psc.

President Association of Retired Flag Rank Officers

Senior Fellow South Asia Foresight Network

Formerly Commander Sri Lanka Air Force, Ambassador to Afghanistan

Bibliography

https://www.hoover.org/research/divided-china-problem-conflict-avoidance-and resolution. https://www.futuresplatform.com/blog/scenarios-taiwan-china-relations-conflict https://eastasiaforum.org/2024/03/13/understanding-taiwan-beyond-geopolitics/

https://www.europarl.europa.eu European Parliamentary Research Service Author: Gisela Grieger Members' Research Service PE 635.606 March 2019 EPRS_BRI (2019)635606_EN)