China and Taiwan: The situation is complex

The entire history of Taiwan, China, and US-China relations will split into “before Pelosi” and “after Pelosi”

Interview with Alexei Maslov, Director of the Institute of Asian and African Studies, Lomonosov Moscow State University

After the Speaker of the US House of Representatives Nancy Pelosi visited Taiwan, the social networks were promising World War III daily. But nothing of the sort happened. Moreover, it turned out that the forecasts of “network hawks”, both Russian and Chinese, divert from the essence of the matter.

Corr.: If we assume that China succeeded in its military operation in Taiwan and that the issue of the island’s disputed status is resolved, what would that mean for China and for the world?

Alexei Maslov: Let’s understand what is the meaning of “succeeded in its military operation”. What is a success here? Apparently, China does not want militarily “success”. It wants Taiwan itself to realize its mistakes one way or another.

If China wanted to attack Taiwan, it would have done so. Maybe now. Or right after Pelosi’s departure.

China wants to force peace on Taiwan using military means. And that’s what all these exercises and firing of missiles around Taiwan, over Taiwan, is done for – to make the citizens there realize that when missiles fly over your heads, life becomes a nightmare.

Note that right now China’s main countermeasures are aimed against Taiwan, not against the United States.

This is the first point. China will do everything it can to make Taiwan, as they say, realize its mistake and return to a normal negotiation process.

Now, let’s discuss what this means. Generally speaking, China has long articulated what it proposes to Taiwan: “One country, two systems.” This was working well until the recent crisis in Hong Kong. I think this is what has damped the enthusiasm of many people and made them reconsider history.

And the idea itself is really a very sensible one – that for some period of time (in the case of Macao and Hong Kong, for 50 years) a transitional status is maintained.

This means that, as in the case of Hong Kong, the region retains its administrative, financial and legal system. That is, mainly local courts work there and there is a certain period of adaptation. Theoretically, the regions are so close that there will be no problem.

But reality has shown that Hong Kong’s experience cannot be applied to Taiwan. There is a huge number of citizens in Taiwan who do not want to join the contemporary People’s Republic of China (PRC). And this has nothing to do with the economy.

It has to do with the fact that people live in a different information space. In China, as you know, much information and many search engines are blocked, and in Hong Kong, like in Taiwan, people use other sources of information.

As a consequence, a different mentality is forming. And because this has been going on for decades, we are talking about Chinese people who think very differently.

The Chinese people who live in the United States, in Taiwan, and in China are people who think in different categories. They care about China, they consider themselves Chinese, but China for them is a different kind of life. This is the main problem that arises with respect to Taiwan.

If we take economic politics, Taiwan may generally benefit from being part of the PRC, because so far many Taiwanese companies, like Asus and Acer, have either operated in the PRC or exported their products through the PRC.

The PRC, of course, gives more access to the world through the banking system and through its lobbying. Therefore, many Taiwanese companies, which are about a dozen thousand in China, have already adapted to the PRC requirements. These are joint ventures and, in general, Taiwanese have been invited to work with China in every way possible.

So from the economic point of view, it is, of course, not bad. But in this case, Taiwan loses its independence. Today it lives on three types of services: first of all, financial services (Taiwan is a financial hub). This is the same story as with Hong Kong, and now, apparently, the financial hub component is being taken away from Hong Kong to create the Greater Bay Area, where Hong Kong, Macau and Guangdong Province form a kind of joint agglomeration. That is, Hong Kong in this case loses its service and financial status, and there is the same danger for Taiwan.

Second, Taiwan lives on microchip production, and in this case, this is the most important issue, given that just China does not want to destroy the production of microchips in Taiwan and make it entirely Chinese. In this case, China takes control of probably fifty percent of the world’s microchip production, and this is a very serious story, it probably makes sense to talk about it separately.

In addition, Taiwan is a producer of high-quality industrial products. For example, it is a special kind of steel construction – steel rebar. Not the kind of rebar that is usually used to hang a shelf, but the kind that supports bridges, and giant structures. This is very well developed in Taiwan, and Taiwanese products are among the highest quality in the world. They also produce machine tools and equipment for the steel industry and rolling mills, competing in this respect with the Swiss and Italian ones. Taiwanese machine tools are also available in Russia.

So you have to understand that if China takes this part of the market, it is very profitable for it, and, well, Taiwan will lose its independence.

Finally, the third point, and probably the most important, has to do with politics and education. Today, education in Taiwan is entirely Western. Taiwanese are very happy to go abroad to study, they are willing to pay for it. Many courses are taught in English. That’s not to say that Taiwanese education is the highest quality in Asia. The best, of course, is in Singapore and Hong Kong. Japan is very good. But Taiwanese education is of very high quality, so Taiwanese specialists have no problem getting this education and can work in any country in the world. If the PRC comes, they will have standard Chinese education, when it doesn’t matter what you study, from mathematics to engineering, you have adaptation courses on Marxism-Leninism, on patriotism, and so on. This is, of course, a serious change.

In this respect, I think the PRC has made a number of flaws, I won’t say mistakes. China has so convinced itself that Taiwan is ready to join the PRC and it is only a matter of time, that it has failed to be flexible. The idea of one China, which is actually very correct because it is historically grounded, turned out to be an idea that slowed itself down.

China failed to adapt quickly after the Hong Kong events: The “umbrella revolution” in 2014 and the well-known events of 2018-2019, which partly continue today. China has not been able to adapt the model, and that is the biggest problem in the interaction with Taiwan – inflexibility.

Corr: You say war is not the main topic. But when Russia won the second Chechen war, it meant that the country is more or less stable, which was not so clear before, that you can build relations with it, trust it, invest in it and so on. At the same time, a source of instability that can be used to harm the state ceased to exist. If the Taiwan issue is solved, China will get the same thing, isn’t it? It will strengthen its image as the strongest power and a source of instability will be removed.

Alexei Maslov: I would even expand the situation. The fact is that China has been saying for decades that the question of Taiwan is an issue of domestic Chinese politics, that is, relations between the center and the province; there is no need to interfere in this process; China will sort it out by itself. The USA brought the conflict to the international level. It happened a long time ago. And when that happened, the PRC kept saying “don’t interfere, we’ll sort it out ourselves.” China claimed that the conflict was internal, but in fact, it had a huge international overtone, and because of this, the country could not make a normal system of interaction with the region. I will remind you of the events that preceded the current situation in Taiwan, to clarify why things are so complicated.

From 1949 until almost the mid-1980s, Taiwan was always preparing for China to launch military action. It was only after Chiang Kai-shek’s death, after the situation had been settled, that Taiwan lifted martial law. The economy began to develop, and very successfully. It was the classic scheme of state capitalism that had once been worked out for China. For that China that Taiwan left. And in that respect, Taiwan considered itself the successor of the Chinese Republic, the one that had arisen in 1911 in the territory of Greater China and that had moved to Taiwan. Not only the flag and the ministries moved, but also the concept of development. That is, Taiwan, where the state plays a key role, is being incorporated into the big capitalist world, and up to a certain point, this system was very successful.

Let me remind you that the 1970s, 1980s, even 1990s were the heyday of the Taiwanese economy. Many investors came to Taiwan, and the country itself actively invested in the People’s Republic of China. The latter could not say anything against this, because they had nothing to offer at that moment, they were not developed, they could not present their ideas.

In 1976 the Cultural Revolution had just ended, China was economically unattractive, while Taiwan was the opposite. And so when China became attractive, when the opening of China began, it automatically began to think that Taiwan, Hong Kong, and many other territories would gradually merge into China, that China as a big amoeba would pull them into itself and everything would be fine. But Taiwan had become a part of the global economy, the global system. I’ll remind you that since 1971, all but a dozen countries in the world have recognized Taiwan as part of China.

But apparently, Taiwan liked it, because on the one hand it acts independently, and controls its financial and administrative system, but on the other hand, it is part of China. This suspended status satisfied many people. And it turns out that since the 1970s (and it’s been fifty years) Taiwan has been in limbo that no one wanted to solve. The USA did just one simple thing: they brought the domestic conflict to the international level, while China was not ready for this and considered this conflict as a part of internal negotiation.

Nancy Pelosi’s visit to Taiwan, August 2, 2022
Chinese Foreign Ministry

Corr: The USA kind of started with White e2-e4, and China, so to say, plays Black. How could it win or at least draw the game?

Alexei Maslov: You have to understand what Pelosi’s visit is all about. Today the whole history of Taiwan, China, and US-China relations will be divided into “before Pelosi” and “after Pelosi.” It doesn’t matter what she said or what she did there.

One can understand this only if one realizes that it is all built into a very big US concept. The idea is a very elegant one. Around the beginning of 2015-2016, the USA began to realize that it was losing control over entire regions of the globe. This is primarily control of information, production, and financial flows. The USA does not need territory, it is not a country that conquerors territory. It is a country that controls information and financial flows.

It is during this period that China begins to implement its new model of development, which is associated primarily with the fact that it is moving from the status of a world’s factory to the production of world meanings. Since 2013, China has been offering notions of a single destiny of humanity, the economic program “One Belt One Road”, complementing this with producing high-quality IT products. It is beginning to encroach into an area that has always been controlled by the United States. The PRC is producing a large number of supercomputers and is ahead of the United States. The Republic is putting super-technologies into service. That is, China is beginning to create its own macroeconomic region, which is connected with the PRC not even with investments, but precisely with technology.

And it is quite active in penetrating into Central Asia, Southeast Asia, and the ASEAN countries. It is beginning to work with countries that do not seem to be big friends of China, such as India, for example. And by the way, Russia was not the key link here. Russia, rather, is a great military partner.

The USA for almost a decade, formally starting with Obama – actively, of course, during the times of Trump and then Biden – has been trying to either negotiate or intimidate China to return its development system to the old model. Roughly speaking, it wanted that China used US standards for its development: World Trade Organization, World Bank Group, and trade systems.

In fact, China is developing its own parallel system: the electronic yuan, the Asian Infrastructure Investment Bank. It is actively working with the SCO, the BRICS. The BRICS is creating a new development bank.

China is creating an alternative reality, which, on the one hand, does not contradict the US reality and, on the other hand, logically simply supersedes it.

And then, after it became clear that the USA cannot reach an agreement with China, that this is not just the idea of the individual Chinese political leader Xi Jinping, but a long-term game, the USA has drastically changed its strategy. And note, that this change coincides with the moment when it became clear that Xi Jinping can stay in office indefinitely, as long as he is healthy enough.

The current US strategy is to create an anti-Chinese contour around the PRC, that is, a number of countries that must literally hate China. This includes Australia, New Zealand, Japan, of course, – a traditional problem, South Korea. Secondly, to resume a number of conflicts that have historically existed but have been dormant.

Recal the armed clashes between India and China on the border last year, the year before, and the renewed conflict with Japan over the Senkaku Islands – Diaoyu in Chinese. And finally, the crisis in Taiwan.

Before that, there was the accusation that China had violated human rights in Xinjiang. This, too, was very painful for China. Naturally, the Hong Kong problem.

That is, in three or four years, China was surrounded by hotbeds of tension.

All this coincides with the plan to slow China down economically, because it cannot develop at a high rate forever. Thus, the Taiwan issue and Pelosi’s visit are another blow to the PRC’s sustainability, because this country does not like to make choices. It develops according to a plan.

And China is now being forced to make a choice. Either respond harshly to the crisis in Taiwan, and then it will be the aggressor, and many countries will probably turn away from it. China is good as formidable and large, but not an aggressive state. Or it will not respond, and then it will be a weak power.

Speaking of which, if we look at Chinese blogs, we see that they mostly demand a tough response from the Chinese leadership. But the blogger is not always a big politician; more often he is just a small politician and does not understand the complexity of the situation.

Within China, what is called a public discussion of the Taiwan situation has begun. And this discussion is very tough.

Pelosi’s visit is just part of a very big system to reshape the world that the US is proposing.

The US pursued a preemptive tactic. China had hoped – this was, in my view, a miscalculation – that just because it is so deeply embedded in the US economic system, nothing would happen. That the countries would still try to take advantage of each other and quarrel in politics but develop mutual economic ties.

It turned out that the USA is likely to be willing to lower the quality of economic and political relations, all the more so for the sake of regaining its control over world flows.

This, in fact, is the point of Pelosi’s visit. And the United States, realizing that it can no longer keep China in its sphere of influence, has taken the first step. It has chosen the preemptive tactic.

Corr.: Does the USA take big risks?

Alexei Maslov: It risks more than it would if they did not, because it is clear that China will never be in the US sphere of influence again in the next hundred years. On the contrary, the main idea of China is to build its own economic reality, its own macroeconomic, after all, macro-political region.

The USA understands that it has failed to drive a wedge between China and Russia. It has not succeeded in completely crushing China’s development model, although much has been done to achieve this. For example, you know about the blocking of so many Chinese companies: Huawei, ZTE and many others.

But these are all small things.

Now the United States has taken some tough measures, knowing that this will also lower the quality of life in the United States. After all, Chinese goods flow there. This will also create big problems in Europe and around the world. The contemporary world was created by trade and interconnection, not by war.

Probably the USA has failed to propose to the world any other model. In other words, it wants to solve its obvious problem at the expense of others.

Corr.: Beijing’s decision to suspend climate consultations with Washington, cutting off military-to-military ties – they say that the US military has been unable to get in touch with the Chinese for quite a number of days – is this a strong or an “average” measure?

Alexei Maslov: I think that China is now trying, strange as it may seem, to act with the USA in a very soft way. Look: no specific, harsh measures against US goods or companies have been taken yet. The climate issues were discussed during the online meeting between Biden and Xi Jinping. They should have been discussed at several conferences this fall, but they were probably taken off the agenda. It is an important issue, but still not a key issue for global development.

The second point is that the Sanctions have been imposed against Pelosi personally. Where does this lead to? It doesn’t really go anywhere. It’s no big deal. Pelosi won’t be worried. It is unlikely, at least not that I am aware of, that Pelosi or her family has invested in China or cooperated with Chinese companies, unlike the families of Biden and Trump.

Finally, the fact that the USA military cannot allegedly come into touch with the Chinese military to discuss the situation. So what? On August 7 or 8, the first part of the exercise should be over. China has nothing to discuss with the USA in this regard. So this is not yet a countermeasure – this is an attempt to see whether the USA will hustle, whether they will keep the window of negotiation open or whether they will shut down and continue to exert pressure on China.

China, I think, is also offended by the following thing. During the talks between Biden and Xi Jinping, the US side hinted several times that it was Pelosi’s initiative whether to fly or not to fly to Taiwan. That is, the White House avoided making a principled decision. It must have seemed to many that the White House did not support Pelosi’s visit. But we see that’s not the case. And, what’s more, the USS Ronald Reagan, an aircraft carrier, is in the waters of the Gulf of Taiwan. Even the third government official in the USA, which Pelosi is, has no right to give orders for an aircraft carrier to arrive at one point or another.

So a principled political decision was made after all. And China now realizes that it has just been deceived. Biden said one thing – it was, in fact, a cover, he may have been securing his position: what if China still responds harshly, including, for example, landing Pelosi’s plane. In any case, there were agreements within the United States. There was no split between the elites. This means that the US has worked out its line to drive China into a corner and humiliate it.

Corr: To what extent can this be a blow to Xi Jinping and his group? How will it change the elite internal political balance in China?

Alexei Maslov: We need to understand that the things that are often communicated about China’s elites – about members of the Communist Youth League of China or Chinese “red princes”, for example – are nothing else than unprofessional nonsense, in my opinion. This is mostly a repeating of various Western publications, which our bloggers, among others, are trying to reproduce, without understanding how China works.

This should be treated very carefully. Moreover, such incorrect views carry a very great danger, because they do not give us a normal understanding of how Chinese elites are organized and which of them we should communicate with. It is clear that Xi Jinping is the legitimate leader of China, but many issues are handled through other clan or regional elite channels. This means that the proposed concepts are wrong and extremely dangerous.

What is the real situation? As many believed, if Xi Jinping showed weakness, he would not be reelected at the congress or there would be some criticism that would lead to social unrest and uprisings. Of course, that’s not the case. If we look closely, including at regional publications, and analyze regional blogs, which discuss the situation very seriously … You have to understand that China, of course, is a very tough country. But if you criticize not politics, but economics, this is quite acceptable.

We have quite many consultations with our Chinese partners and consultations on the interbank and political sectors. So in principle, we know quite well, even if not publicly, the balance of power in China as a whole. I think that Xi Jinping or, more precisely, the current situation will be criticized at the congress; the PRC leader will have to answer at least three unpleasant questions.

The first question is the situation with Taiwan and the sharp decline in the quality of US-China relations. For China, of course, this is an issue of both finances and the political “coziness” of living in this world.

The second point is the overall noticeable slowdown in China’s economy, including a slowdown in a number of sectors, and stagnation in the economy of some regions, such as northeast China, which is adjacent to Russia.

A strange situation with the success or failure of the One Belt One Road initiative: huge investments, the return on them is unclear, and this fact of economic slowdown has an objective explanation – the coronavirus pandemic, the general slowdown in global trade. Taken together, all of this is not good for China.

Finally, the third point is obviously the growing crisis of the banking sector in China, related to the allocation of huge loans, the credit indebtedness of both regions to China and the population to the banks. There have been recent speeches that individually are not very dangerous, but they create several negative pictures. Xi Jinping will obviously focus on strengthening the ideological model, and in this case this is correct because China’s economic model has already been exhausted. Now they need to strengthen China’s unity. Xi Jinping will probably have to admit that China is amidst an “uncomfortable situation,” and this, oddly enough, is a continuation of the country’s development.

Great countries are simply disliked, feared, and often hated. Xi Jinping will probably put it in calmer terms. And he will still have to formulate the notion of strategic partners, and not because China now assigns the status of strategic partners to virtually all partners. And when we rejoice that Russia is China’s strategic partner, that’s great, but they also have the United States as a strategic partner, and India, and some other states.

This means that China will have to understand with whom it is building a new global order, a new global reality. And then it will be clear what all of China’s strength and resources are now spent on. If China again stops at the position of, as they like to say, win-win, mutual benefit, it turns out that its main trading partners – Europe, Japan, the United States – are its main political opponents, that is, the political structure of China is challenged. It is not very serious today, it is not dangerous, but the Chinese Communist Party will have to communicate that the geostrategic reality has changed, and the PRC will also have to conduct its restructuring.

A pictorial view of Fort Zeelandia and the town of Anping (Tainan) on the island of Formosa (present-day Taiwan) in the 1660s

Corr.: Which groups oppose Xi Jinping and may strengthen their influence in the new situation?

Alexei Maslov: I don’t think any groups will get stronger, but we need to be clear: first, there are the influential southern Chinese clans – the ones who control industry in Fujian, in Guangdong. They have always worked very closely with Western companies and, in fact, all of their major supplies were shipped to the United States. This is how they acquire their industrial growth.

They are generally focused on working with Western markets. That is where, let me remind you, the microprocessor and computer manufacturers including Apple factories are located. This is why, of course, these companies do not want any serious confrontation with the United States. And we see, for example, that South Chinese bloggers, essentially sort of electronic media, are very, very careful about the current conflict and say that it has to be stopped immediately. They continue to regard the USA as an ideological enemy, but propose to maintain economic relations because otherwise – we have to admit it – ninety percent of South Chinese companies and clans will have to change their entire development model. The Beijing factions, the Anhui faction, the Shandong faction are quite tough and believe that, on the contrary, it is necessary to solve the Taiwan issue: they are tired that China is always staying in the shadows, and they believe that it must accept the fact that it has to face certain problems – without this, it is really impossible to restore its role and influence in the world.

So there are several factions opposing Xi Jinping, I think. Incidentally, there is a faction around not the most powerful leader, Chinese Prime Minister Li Keqiang, who has repeatedly spoken about the need to strengthen the economic model of development. He is trying in every way to separate political friction from the economy. Technically, that is what his status allows him to do. But given that his position seems to be getting stronger lately, we understand that there are some people who think that China needs to focus on internal development, for example, to reconstruct a number of large commodity projects, to get less involved in conflicts with the United States.

Corr.: How can the Taiwan crisis affect the situation around Ukraine? Putin and Xi Jinping probably discussed something before the start of the special operation. How might this changed situation affect Russia?

Alexei Maslov: First of all, to be honest, I don’t think there were any agreements between Putin and Xi Jinping. I can only assume that Russia, represented by Putin, most likely informed China about possible changes in Ukraine, but I don’t think that a full-scale military operation was mentioned. Therefore, one should also understand China’s confusion here, especially in the first few weeks, when it limited itself to very abstract statements that any conflicts should be resolved peacefully and diplomatically, and so on. To a large extent, by the way, China relied on Russian policy. I will remind you that for a long time Russia said that the Ukrainian question could not have a military solution. But, as we understand, the situation has changed quite dramatically. I think that China is watching Ukraine extremely closely now, and not just because it is believed to be studying military experience.

It is, of course, studying military experience. It is studying world reaction, which is, we will see now, an extremely important thing for China. We understand that in today’s world, there cannot be complete isolation, and not because someone really likes Russia and someone really dislikes Russia. But because one of the largest exporters of natural resources in the world cannot be isolated without losses for other countries. And the whole situation is very different from that with Iran.

Many have said that Iran was isolated in a similar way as Russia for decades and ended up in a very, very bad situation at the very beginning and that it will be the same with Russia.

The world situation has changed. Iran was indeed in a difficult situation, but today there are several areas of industry in this country that are among the world-leading. For example, mechanical engineering. Large machine tools and equipment, the equipment for the production and repair of gas turbines, are among the most advanced in Iran, because the country has been able to identify key points for itself and start producing this. I think that this should be kept in mind.

There is the second very important point. When they said, “Now Russia is starting an operation in Ukraine, let’s start an operation in Taiwan, and China starts an operation in Taiwan, and, well, they agreed with each other.” First of all, we don’t see any synchronization, and again, the analysts who talked a lot about this just didn’t understand how China acts. China is not in sync with anyone – that is its political culture. And what is more, it is now obvious that in connection with the situation in Taiwan, the USA is switching, of course, to the Asian region.

This is very bad for Europe because it will be left alone with its problem. It is now losing many assets and money by supplying weapons, not to mention the gas and oil problems. The USA has managed to create a huge hotbed of tension. And it was not created in Ukraine or Russia only, but in the whole of Europe. The euro is going down, Europe is becoming totally dependent on US support. And here the US elites have achieved their goal – they have created a system of control in Europe and a whole series of conflicts. Look: the Kosovo crisis, which will have continuation most probably, the crisis in Moldova is unfolding now. It will go on and on and on.

The US has now switched to Asia, and this is certainly no longer a Taiwan-China conflict either. There are a number of countries involved. For example, Japan, South Korea are extremely concerned – everything is happening next to them. North Korea has expressed full support for the Chinese position. North Korea, let me remind you, has missiles that can fly more or less. They are extremely concerned in Indonesia, which is in close proximity [to the zone of tension].

So there could be a hotbed of tension in Asia, also created by the Americans.

And last but not least, here is literally what is happening before our eyes, the sudden intensification of the Arab-Israeli conflict. It is possible that this could develop into another hotbed of tension.

And so the world will be covered by these sores, the USA will be above the fray, regulating, controlling, and so on.

If the politicians of countries like Russia, China, Iran, by the way, and Ukraine, understand what situation they are being dragged into, they will have to negotiate among themselves, otherwise, the global world order that we know now cease to exist – there will be an absolute collapse of the financial, economic and political system. And then it will not be a war in its purest form, as we understand it, it will be a hybrid war, which will disrupt lifestyle and social systems for a decade, and then we will have another decade to recover. It is possible that the UN, the general necessity and sustainability of this organization, and all international institutions will also come under attack. We are now on the verge that if there are no sensible politicians, the current world system will be demolished.

The conversation was led by Yuri Vysokov

This interview was published in The Essence of Time newspaper, Issue 494 on August 11, 2022.

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