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The power struggle between the United States of America and the People's Republic of China (PRC) for global supremacy is coming to a head. The small island of Taiwan - officially the "Republic of China" - represents the "tipping point" in this area of conflict, which could turn open hostility into a war between the two superpowers. For the PRC, Taiwan is a self-evident part of its own state; the USA treats Taiwan just as naturally as an independent state that belongs to its sphere of influence and which must be defended at all costs. With Russia's invasion of Ukraine, it has become clear how quickly such tensions can escalate into war. It is to be expected that, in order to defend its global supremacy, the USA will deploy the same Western alliance against China that it has put in place against Russia. In other words: If we have been engaged in some kind of "indirect war" against Russia since 2022, a similar if not worse scenario is in store if the conflict between the PRC and the USA assumes a military dimension. If the war over Ukraine has already hit Europe hard, a military confrontation between the two superpowers over Taiwan would shake Europe politically and, above all, economically. Europe has for a long time regarded itself as having a neutral stance to the USA and the PRC - this political classification would be shattered overnight. If the supply from the PRC dried up and the sales markets there were to disappear, this would drive Europe to the brink of economic ruin. Moreover, Taiwan's failure as the world's largest contract manufacturer of computer chips would have devastating effects on the global economy. This topical and explosive book analyses the background and draws possible scenarios for the future.
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Preface
Fundamental confrontation China versus USA
Who will lead the world into the future?
Situation similar to before WWI
Taiwan, Province of China
Taiwan like "the small village of indomitable Gauls"
The dwarf-giant
One of the fastest ageing societies
Taiwan: world's chip metropolis
USA arms Taiwan against China
Escalation since 2022
First of October 2049
G2 at all levels
The Hague denies China's sovereignty in the region
The Thucydides Trap
International institutions
International law
Multilateralism has had its day
A new world order
No one has declared World War III
The UN - pawn of the superpowers
Genesis of the UN
Basis for a better world
China joins the Security Council
The Security Council
The veto trap
Acid test: Korean War
The joint US/UN war
China versus US/UN pact
Longest war on earth
Vietnam followed Korea
The culture war
Germany maintains almost neutral stance
The tenacious "dual system"
Global competition between social systems
Europe looks out primarily for itself
China and the APEC-states
Rivalry over world order
Universal Declaration of Human Rights
Instrumentalising human rights
Economic and techno-war
The humbling experience
Economic warfare has long been in full swing
US stock markets without China
China's path to cutting-edge technology
Social Scoring for a better population
China forges ahead with cryptocurrencies
The world owes China six trillion dollars
"Geopolitical" lending – a déjà vu?
The new Silk Road
The Chinese dream
Ancient east-west trade route
The German term "Silk Road"
The scepticism of others
Gigantic project of the century
China's charm offensive in the West
Italy at the helm
The giant empire and the dwarf states of Europe
The world's strongest economy
Europe's anti-Silk Road
Military competition
US soldiers expect war soon
US military decline
China's military doctrine: Western Pacific
17+1
Missiles against China – and back
The world is re-arming
Killer robots on the march
Arms race in space
Cyber War on the Internet
From blackout to cyberattacks
China, Russia and North Korea most active
US prepares for cyber war
State cyber armies on the rise
Is China attacking with spy chips?
WannaCry – warning to the digital society
Stuxnet attack on industry
Governments accuse national hackers
No hack without North Korea?
Largest hacker attack on the USA in the 2020 crisis
Petrol emergency 2021
Let us meet again in 2049
Goal: squaring the circle
China not "new Eastern Bloc"
About the authors
Jamal Qaiser
Dr. Horst Walther
Books published by Diplomatic Council
References and Notes
"The twenty-first century will mark the end of the era of Western domination [...] The pandemic could thus mark the start of the Asian century [...] The new world order may paradoxically even be a more democratic one [...] China does not want to export its model. It can live with a multipolar world. The dawning of the Asian century does not necessarily have to be uncomfortable for the West or the rest of the world."
Kishore Mahbubani
Former President of the United Nations Security Council
Note: In this book, the word 'China' is used as the designation for the People's Republic of China (PRC), unless explicitly stated otherwise. In the following, the word "Taiwan" refers to the archipelago, which is officially called "Republic of China", often abbreviated as "R.O.C." for "Republic of China".
For years now, the political tensions between the USA and China have been undeniable. To be more precise, the situation has been coming to a head for years. The reason for this is simple: the People's Republic of China is no longer prepared to unquestioningly accept the United States of America's claim to the role of the one and only true superpower. China is fighting its own way to the top. The battle for global supremacy has already begun and further escalation is in the offing over the next few years.
This battle takes place at many levels, geopolitically, militarily, economically, technologically, logistically – in many regions on earth and increasingly also in space. This is basically nothing new, although it is no less threatening.
Russia's invasion of Ukraine has now made it clear just how quickly such tensions can surmount to a violent confrontation and ultimately to war. It has further become clear that the USA is not content with the role of spectator, but is intervening militarily in an extremely active way, involving its European allies in the conflict as a matter of course. The delivery of heavy weapons from the Federal Republic of Germany for use against Russian troops is an example of the direct and comprehensive participation of the West in the proxy war between Russia and the USA in Ukraine.
It is to be expected that the USA will also use the same alliance against China that it has put in place against Russia, should this seem sensible and opportune to maintain or expand its own global dominance. In other words, if we have been engaged in some kind of "indirect war" against Russia since February 2022, a similar scenario is pending when the China-US conflict takes on a military dimension. There are many indications that the conflict over the comparatively small island has the potential to degenerate into a proxy war between the United States and the People's Republic, at worst even into a Third World War.
Fundamental confrontation China versus USA
In order to assess this impending development, one must analyse the fundamental confrontation between the USA and China. This is exactly what this book deals with. The "battle for Taiwan" is merely the spearhead of a clash between Earth's only true superpower at present and an ascending superpower that wants to advance to the forefront.
When and to what extent the conflict between China and the USA in Taiwan or possibly elsewhere on earth – or in the struggle for supremacy in space – will escalate militarily, can hardly be predicted. However, the period within which this is to be expected seems to be pre-programmed: before 2049.
China will celebrate on 1 October 2049. Exactly 100 years earlier, Mao Zedong had proclaimed the People's Republic of China. His successor Xi Jinping 1 is determined to bring the country, which is one of the oldest advanced civilisations of humankind (written records of Chinese culture date back 3,500 years), to the top of the world by then.
This plan to make communist China the "superpower number 1" by 2049 is essentially hindered by "only" one other country: the United States of America, today's "superpower number 1". A competition for global supremacy has evolved, from which no other country – even in Europe – can escape. The struggle for the top takes place at all levels: politically, economically, technologically and possibly also militarily. And it takes place everywhere and on all paths: on land (with the states of Europe as a "pawn"), at sea and under the sea, in the air and increasingly in a kind of space race.
At 9,596,960 km2 (China) and 9,833,517 km2 (USA), both countries are roughly the same size, but the gross national product as a measure of the size and importance of the USA is about 50 percent higher than that of China (14.34 trillion) at 21.43 trillion dollars. With its 1.4 billion inhabitants, China is about four times superior to the USA (328 million) in terms of population. However, the rivalry between the two superpowers is less about numbers and more about influence and dominance – far beyond their own country.
Who will lead the world into the future?
The question is who will lead the world into the future. Since a "peaceful settlement" can probably be precluded, it is not an exaggeration to speak of a new "Cold War" between China and the USA. Basically, we can only hope that this war will actually remain "cold" – and not lead to a battle for Taiwan. It may be recalled that the last Cold War between the Western bloc, led by the United States, on the one hand, and the Eastern bloc, led by the Soviet Union, on the other hand, was several times close to destroying half or even the whole world, bearing in mind the nuclear destruction potential of both sides. The United States of America has clearly won this power struggle "USA versus USSR" (some say, for the time being). The Soviet bloc has basically imploded, it has disintegrated from within (attempting a "comeback" since 2022) – thus leaving the USA as the victorious power. This does not at all mean that the USA will emerge victorious against China in the "battle for the world" – or even just for the small island of Taiwan. The "Cold War 2.0" has already begun.
Situation similar to before WWI
The American scientist John Mearsheimer compares the current situation in his book The Tragedy of Great Power Politics2 with the situation before the First World War. At that time, Germany rose economically and politically. At an early stage, this was regarded by Great Britain, the then dominant superpower, as a threat to be addressed militarily.
In fact, there are astonishing parallels to the initial situation, but hopefully not in the subsequent course of the conclusions. On the penultimate page of his work, Mearsheimer warns:
"Neither Wilhelmine Germany, nor imperial Japan, nor Nazi Germany, nor the Soviet Union had nearly as much latent power as the United States had during their confrontations. But if China were to become a giant Hong Kong, it would probably have somewhere on the order of four times as much latent power as the United States does, allowing China to gain a decisive military advantage over the United States."
Accordingly, US Secretary of State Anthony J. Blinken stated in his inaugural speech in March 2021: "China is the only country with the economic, diplomatic, military, and technological power to seriously challenge the stable and open international system – all the rules, values, and relationships that make the world work the way we want it to, because it ultimately serves the interests and reflects the values of the American people.
Our relationship with China will be competitive when it should be, collaborative when it can be, and adversarial when it must be."3
His words echoed a warning from Richard Nixon, who cautioned in his memoirs that the USA should "devote itself to China, promote and develop it in the coming decades, even while it was developing its strength and potential as a nation. Otherwise, one day we would be faced with the most remarkable adversary in the history of the world".4
This book does not purport to be exhaustive. It explicitly does not include the millennia-old, advanced civilisation, originated in today's Henan province under the Xia Dynasty (approx. 2000 BC) and which produced the first pictograms on oracle bones as precursors of today's Chinese characters. It does not shed light on the myth of the three primeval emperors: Fuxi, Shennong and finally the Yellow Emperor Huang Di as the actual creator of culture, nor does it shed light on the 16 earthly and heavenly emperors who preceded them. This book does not include the written records of Chinese culture dating back more than 3,500 years. Nor is it about the Empire, nor about the Mao Revolution and the founding of the People's Republic of China in 1949.
Rather, this book is entirely devoted to the dispute between the People's Republic of China and the United States of America – using Taiwan as an example, but also going far beyond it. Historical references are only made to the extent that they appear to be of immediate importance for today's and, above all, for future development. This applies in particular to the intensified multilateralism after 1945 and the decline of this form of interstate communication in the last ten or more years.
This book deliberately focuses on the analysis of the present geopolitical situation, the economic, technological, social and military options of the present People's Republic of China in the struggle for supremacy with the United States of America and the presumed prospects up to 2049.
Jamal Qaiser, Dr. Horst Walther
Taiwan is the name known around the world, but in fact the small island state with an area of only 36,179 km2 – roughly the size of Baden-Württemberg – in the western Pacific officially calls itself the Republic of China. In Austria and Switzerland, it bears the official name Republic of China in Taiwan. Taiwanese authorities also use the name Taiwan in texts addressed to international audiences, and auxiliary structures such as 'Republic of China on Taiwan 'or' Republic of China (Taiwan)'. Goods produced on the island often bear the designation of origin "Made in Taiwan, R.O.C." (whereby R.O.C. stands for Republic of China) or "Made in Taiwan".
However the island republic, which consists of the main island of Taiwan (99 percent of the land area) and a few small islands, is only recognised as a diplomatic state by a handful of countries in East Asia.
This is directly related to the so-called one-China policy. The term describes the political premise of the People's Republic of China that there is only one China, namely , the PRC itself. This "only China" includes, in addition to the mainland China controlled by the People's Republic, Macao and Hong Kong as well as Taiwan. All states wishing to maintain diplomatic relations with the People's Republic of China must recognise this premise. The People's Republic of China regards adherence to this one-China policy as a prerequisite for peaceful reunification.
Taiwan like "the small village of indomitable Gauls"
But in this scenario Taiwan is somewhat reminiscent of the comic series "Asterix & Obelix", in which it is well known that not "all Gauls" submitted to the Romans, but "a small village of indomitable Gauls" resisted – just as Taiwan is by no means willing to submit to the People's Republic of China.
Indeed, the island republic of Taiwan, which includes the smaller islands of Penghu, Kinmen and Matsu, holds a special status. The controversy over Taiwan's political status is a consequence of the Chinese civil war and the subsequent division of China into the two present-day self-governing units of the People's Republic of China (PRC; commonly known as 'China') and the Republic of China (ROC; commonly known as 'Taiwan'). 5
The question is whether Taiwan should remain in the PRC as a de facto separate, self-governing territory, whether it should become part of the PRC under the 'one country, two systems' concept, whether a de jure independent Taiwanese state should be established, whether it should unite with mainland China under the government of the PRC, or whether it should unite with mainland China under an alternative political arrangement. The status of Taiwan is simply undefined, apart from the fact that all the opponents involved have so far declared their support for a "One-China policy", i.e. a status quo, also called strategic ambiguity.67 Any shake-up of this ambiguity can spark a serious military conflict between the two superpowers. Taiwan relies entirely on US security guarantees. For the goodwill of this island republic, the United States did not have to advertise for long.
The dwarf-giant
The population of around 23.5 million people is as small as the island is manageable. But geopolitically and economically, Taiwan is a giant: as one of the most important suppliers of electronic chips to the global economy and as a bone of contention between the People's Republic of China and the United States of America. As a non-recognised underdog, Taiwan cannot become a member of the United Nations. It is necessary to take a look at history to understand how Taiwan became "the indomitable village".
The Republic of China was proclaimed after the Xinhai Revolution (named after the year Xinhai in the Chinese Lunisolar calendar from 30 January 1911 to 17 February 1912) in Mainland China on 1 January 1912 in Nanjing. The revolution began in the autumn of 1911 and ended with the renunciation of the throne by the six-year-old Emperor Puyi on 12 February 1912. The first Chinese Republic was founded on 1 January 1912. The end of the reign of the last Manchu emperor Puyi from the Qing Dynasty marked the end of the more than 2100-year-old Chinese Empire, which had existed since 221 B.C. over many dynasties. Both the Republic of China on the island of Taiwan and the People's Republic of China on the mainland regard themselves as the legitimate successors to the Xinhai Revolution.
The island of Taiwan, under Chinese rule from 1683 to 1895 and under the rule of the Japanese Empire from 1895 to 1945, did not fall to the Republic of China until the end of World War II. In 1949, after the defeat in the 22-year civil war against the Communist Party and the establishment of the People's Republic of China on the mainland, the government, elites and armed forces of the Republic of China withdrew to the island of Taiwan. There, the state party Kuomintang, led by Chiang Kai-shek, established a one-party rule lasting several decades, while maintaining the state of emergency. The second half of the twentieth century was characterised by high economic growth, and towards the end of the 1980s the Kuomintang initiated a gradual democratisation. According to various democratic scales, the Republic of China is now one of the most democratic states in Asia, alongside Japan, comparable to Germany and Switzerland.8
Even after the proclamation of the People's Republic of China in 1949, the government of the Republic of China initially represented the Chinese state at the United Nations and was a permanent member of the UN Security Council. However, as a result of the People's Republic's one-China policy, more and more states broke off their diplomatic relations with the Republic of China, which was forced to surrender its membership of the United Nations to the People's Republic in 1971 by UN Resolution 2758. With the Taiwan Relations Act, the United States of America also broke off its relations with the Republic of China, i.e. with Taiwan, pro forma, after the USA had established official diplomatic ties with the People's Republic of China under President Jimmy Carter on 1 January 1979. Since then, however, the USA has never made a secret of the fact that its political sympathy lies with the democratic republic, not with the communist People's Republic.
One of the fastest ageing societies
Taiwan's population grew from seven to 23 million between 1950 and 2015, significantly more than in the People's Republic of China. But the situation has now changed: the population growth rate is now only 0.2 percent annually. The average age is around 40 years. The birth rate in 2016 was one of the lowest in the world, with 1.12 children per woman (comparative figures for other Asian countries in 2015: Hong Kong 1.20, South Korea 1.24, Singapore 1.24, Japan 1.46). Taiwan is therefore one of the fastest ageing societies in the world. By 2050, the average age could rise to 56, which – as in other ageing societies – is likely to pose a major challenge to pension and healthcare systems.
Population forecasts for 2060 range between 17.3 and 19.7 million; that would be about as many inhabitants as Taiwan had in the early 1980s. According to these forecasts, the working-age population (15-64 years) will fall from 17.2 million to 9.6 million between 2022 and 2060, while the number of pensioners (over 64 years) will rise from 3.2 million to 7.2 million.
The dramatic development of the demographic pyramid is also due to the fact that the island state has pursued a restrictive immigration policy for a long time since 1949. It was only after democratisation in the early 1990s that immigration to Taiwan gradually increased. Between 1992 and 2015, the number of non-Taiwanese citizens living in Taiwan increased from about 44,400 (about 0.2 percent of the total population) to 637,800 (about 2.8 percent).
The government of President Tsai Ing-wen, who was elected in 2016, presented the New Southbound Policy, which was intended to intensify relations with 18 Southeast Asian countries, including the ASEAN countries, Australia, New Zealand and India, and from there facilitate immigration to Taiwan. On the one hand, this seemed inevitable in view of the demographic situation, but on the other hand, like any offensive migration policy, it led to political and social disputes within the country – all the more so since it is already felt to be "crowded" in Taiwan. The Republic of China has the second highest population density in the world after Bangladesh, with about 640 inhabitants per square kilometre. Due to the high mountainous terrain in Taiwan, the population is concentrated in the western plains as well as in the north of the island around the capital Taipei. The urbanisation rate is correspondingly high there, with an increasing concentration on the agglomeration in the capital Taipei. Further settlements are located around Taichung and Tainan along the west coast to the southern port city and the second largest metropolis of Kaohsiung. Around 75 percent of the population lives in the cities.
Taiwan: world's chip metropolis
Taiwan's significance goes far beyond its historical development or geographical location; this is mainly related to a company, the Taiwan Semiconductor Manufacturing Company (TSMC, Chinese).9
Founded in 1987 in Hsinchu, TSMC is today the third largest semiconductor manufacturer in the world, after Intel and Samsung, and the world's third largest independent contract manufacturer for semiconductor products, a so-called foundry. This is the term used to describe operators of chip factories that produce microelectronics on behalf of other companies that do not have their own semiconductor manufacturing facilities.
If you look at TSMC's customer list, you can see the enormous importance of Taiwan's Foundry for the global economy: AMD, Apple, Qualcomm, Nvidia and Broadcom are just a few of TSMC's customers. In other words, if semiconductor production in Taiwan ever comes to a standstill, half of the world will also be at a standstill, because the chips "made in Taiwan" are contained in almost all electronic products around the globe. Cars, machines, systems, smartphones, desktop computers, servers – without Taiwan, hardly anything works anymore.
TSMC Chairman Mark Liu made it clear in 2022: "No one can control TSMC by force. If you use military force or an invasion, the TSMC factory will no longer be operational. As such a sophisticated manufacturing facility, it relies on real-time connections with the outside world, with Europe, Japan and the USA, from materials to chemicals and spare parts to technical software and diagnostics." Liu compared a potential conflict in Taiwan to Russia's invasion of Ukraine, saying that while the two conflicts were very different, the economic impact on other countries was similar.10
The increasing electronification, computerisation and digitisation of virtually all economic sectors and areas of life in all industrialised nations – and not only there – has created an unhealthy dependence on the controversial and in the future possibly contested island state, which could plunge large parts of the world into chaos in the event of an armed conflict or even a war around the island.
For this reason, it is entirely justified to call Taiwan 'the most dangerous island in the world'. It poses the risk of a military escalation of the dispute between the USA and the People's Republic of China, with potentially devastating consequences for economies around the globe. And there is much to suggest that the confrontation between the absolute superpower claim of the USA and the equally absolute claim of the PRC to the island in the struggle for Taiwan will escalate.
USA arms Taiwan against China
The United States' military deal with Taiwan in the summer of 2019 seemed like a resounding slap in the face to the People's Republic of China: the USA sold 66 F-16 fighter jets to Taiwan. The arms deal, worth a total of eight billion dollars (equivalent to 7.2 billion euros), included 75 engines and other systems in addition to the fighter jets. The US government classified the multi-billion-dollar military deal as in line with the "historic relationship" between the USA and China.
The People's Republic of China called it a "serious violation" of agreements and a "serious interference in China's internal affairs". After all, Beijing regards the island state of Taiwan as a renegade province that will one day be reunited with the mainland – by military force if necessary.
The military support by the USA could therefore only be understood as a provocation. However, this was no longer big news in 2019. Taiwan had already acquired an F-16 fleet in 1992 and has modernised it several times over the years. The USA is committed to Taiwan's defence capability.
The seriousness of this self-imposed duty became clear in 2022 when it became known that the USA was planning to continue supporting Taiwan with 60 anti-ship missiles and 100 air-to-air missiles worth a total of 1.1 billion dollars.11 But the USA is not the only nation preparing for the struggle in the region. In 2022, Japan announced that it would deploy 1,000 long-range cruise missiles that could reach the coasts of mainland China and North Korea with a range of 1,000 km. Japan's pacifist constitution allows the military to use it only for self-defence, but the country has increased its military spending sharply over the years.12
Escalation since 2022
In fact, the situation has worsened dramatically since 2022. In the summer of 2022, while the USA was in the throes of a proxy war with Russia over Ukraine, 82-year-old Nancy Pelosi, the chair of the US House of Representatives, visited Taiwan. It was the highest-ranking visit from the United States to Taiwan in a quarter of a century. Her landing on the island was geopolitically considered to be extremely significant, underlining "the unwavering commitment of the United States to supporting living democracy in Taiwan". And further: "America's solidarity with the 23 million people in Taiwan is more important today than ever, as the world faces a choice between autocracy and democracy. Our talks with the Taiwanese leadership will focus on reaffirming our support for our partner and promoting our common interests, including the promotion of a free and open Indo-Pacific region".13
It was an open challenge to the People's Republic of China, although Pelosi, like US President Joe Biden, stressed that the USA would continue to adhere to the One China doctrine. However, every political observer inevitably asked himself the question: how much longer?
Beijing responded immediately with "targeted military actions". The Ministry of Defence said: "The Chinese People's Liberation Army is on high alert and will respond with a series of targeted military actions." The Chinese Foreign Ministry said: "The visit of Pelosi threatens peace and stability in the Strait of Taiwan. The visit also seriously undermines the political foundations of China-USA relations. And clearly: "He who plays with fire will die in it" was in the official announcement of the People's Republic of China on the Pelosi visit. 14 In fact, shortly before Pelosi landed, the People's Republic had Chinese warships sail through the Taiwan Strait, the strait that separates the island from the mainland, flying over them with fighter jets. China declared six areas around Taiwan to be manoeuvring zones, some of which overlapped Taiwanese territorial waters. All this was only a demonstration of power, not the prelude to a war around the island, but it was virtually unparalleled in terms of clarity. "If the USA continues on this wrong path, we will take energetic and resolute measures to secure our sovereignty and territorial integrity," a foreign office spokesperson said.15
The chair of the US House of Representatives also made it very clear that the United States would be leading the way. In a meeting with Taiwan's President Tsai Ing-wen, Nancy Pelosi said that she and her delegation had travelled to Taiwan "to make it clear that we will not give up our commitment to Taiwan". The visit was also to signal "we are proud of our constant friendship".
Referring to the threats made by the Communist leadership in Beijing against Taiwan, Pelosi said: "More than ever, American solidarity is crucial. Today, the world is faced with a choice between democracy and autocracy," and praised Taiwan as "one of the world's freest societies". 16
It was certainly not a declaration of war, but it became clear that the USA would be willing to go to war with China to defend Taiwan. In 2022, these words were reminiscent, not only from a European perspective, of the US military intervention in Ukraine after the European country was invaded by Russia. In Ukraine, the United States of America has only supported the country indirectly – with heavy weapons, the training of the Ukrainian army, logistical assistance, support for military reconnaissance, for example via satellites, and the strengthening of the North Atlantic Military Alliance NATO – but the USA will probably intervene directly in the struggle for Taiwan. In 2022, the US armed forces declared that they "continue to fly, sail on the sea, and operate where international law permits". This also includes "normal flying over and passing through the Taiwan Strait".17