Taiwan, the Powder Keg — The Greatest Flashpoint

From tariffs on goods to dominance over technology. The US-China struggle climbed steadily into invisible territory. Semiconductors, communication standards, artificial intelligence. Yet as you trace this contest over technology, you notice that every thread is tied together in a single place.

An island floating in the Pacific, roughly the size of Kyushu. Taiwan. The politics surrounding the principle of one China, the military standoff across the Taiwan Strait, and an industry that produces almost all of the world’s most advanced semiconductors. Every spark of economics and security gathers on this small island. Why is Taiwan called the world’s greatest risk? Let us untangle its structure.

One China — A Tightrope of Words

The story begins with diplomacy half a century ago. The Shanghai Communique exchanged during Nixon’s 1972 visit to China, and the normalization of US-China relations in 1979. It was then that the two countries faced the thorny problem of Taiwan.

Beijing’s People’s Republic of China insists that Taiwan is part of China, and that there is only one China. Without accepting this stance of one China, diplomatic relations would be impossible. So the United States chose its words with great care. The US would recognize the People’s Republic of China as the sole legal government of China. At the same time, regarding China’s position that Taiwan is part of China, it chose to express that it would acknowledge it.

Recognize and acknowledge. In some languages the two look almost identical, but in the world of diplomacy their weight is utterly different. To recognize is to affirm that something is so. To acknowledge is merely to be aware that such a claim exists. The United States did not actively affirm that Taiwan belonged to China; it noted that Beijing said so. It deliberately chose that delicate footing.

A Standoff of Power Across the Strait

Behind the tightrope of words, actual power has collided. That tension appeared most vividly in the events of the mid-1990s.

In 1995, Taiwan’s President Lee Teng-hui was invited to give a lecture at his alma mater, Cornell University in the United States, and made the visit a reality. Beijing reacted strongly to this visit, in which he spoke to the world about Taiwan’s democratization. It would never permit Taiwan to act as an independent presence in the international community. China repeatedly conducted missile-launch exercises in the waters near Taiwan, and tension in the strait surged. This was the Third Taiwan Strait Crisis.

In response, the United States dispatched two carrier strike groups to the surrounding waters. By displaying overwhelming military power, it sought to calm the situation. The Chinese navy of that era did not yet have the strength to push back against it head-on. The sight of US carriers deploying serenely vividly demonstrated the reality of power in the Pacific.

But a quarter century has passed since then. The scenery of the strait is said to have changed dramatically. Backed by economic power, China expanded its navy and modernized its missile forces. In particular, the buildup of anti-ship missiles that target enemy vessels from afar means that the waters are no longer ones where carriers can approach freely as they once did, many experts argue. The scales of power have moved slowly, but surely.

The Silicon Shield — Semiconductors, a New Vital Point

It is not the military alone that makes Taiwan the world’s greatest powder keg. There is one more element, unique to the modern age. Semiconductors.

Smartphones, data centers, artificial intelligence, the latest weapons. At the heart of every device that drives modern society lies a semiconductor chip. And the place that manufactures the most cutting-edge of these chips in the world is Taiwan’s semiconductor industry, centered on the Taiwanese company TSMC. Taiwan is reported to produce roughly sixty percent of the world’s semiconductors, and when it comes to the most advanced chips, as much as about ninety percent.

In other words, if a contingency were to occur in Taiwan and this production stopped, the damage would not end with Taiwan alone. The United States, China, and industries around the world would take a direct hit to the heart. That is precisely why the idea of the silicon shield was born. Because Taiwan’s semiconductors are too indispensable to the world economy, that very fact becomes a deterrent against armed conflict, so the reasoning goes. No one wants to destroy this island, because to destroy it is to wound oneself.

Why Is It the World’s Greatest Risk?

The three layers we have examined so far, the principle in words, the military balance of the strait, and semiconductors as the vital point of the economy, fold together at the single point that is Taiwan. This is precisely why Taiwan is called the world’s greatest risk.

Politically, the principle of one China continues to generate a tension that permits not even the slightest change to the status quo. Militarily, as the balance of power shifts, there is concern that an accidental clash could occur at any time. And economically, because the world’s supply chains depend on this island, turmoil here could set off a chain reaction on a global scale. It is a structure in which the three risks amplify one another.

The hundred-year story of the US and China began with hopes of the open door, passed through alliance and enmity, and advanced toward the gamble of engagement and the contest for technological supremacy. All of those sparks now intersect upon this island the size of Kyushu. Facing this flashpoint, will the two great powers head toward a clash? Or will they find a path that avoids catastrophe? The story arrives at last at its final question. Where is the world headed?