In the last week, the China-Taiwan-US saga has skyrocketed. Let’s find out what is going on in this saga and how this will affect India.
What’s Happening?
So the story began when Nancy Pelosi, the US House Speaker, visited Taiwan. China was not very happy with this news and retaliated by announcing military manoeuvres around Taiwan.
But the question is if Taiwan is an independent country and not a part of China, why did China retaliate?
Historically, Taiwan was a part of China. But in 1949, Chiang Kai-Shek and its troops fled to Taiwan from China, and they were the ones to establish the Taiwanese democracy. But China still believes that Taiwan is part of China and wants to acquire it by hook or crook.
China’s ‘Anti-Secession Law’ Against Taiwan
In 2005, China came up with an Anti-Secession Law, which claimed that Taiwan is a part of China. And if at any point Taiwan declares itself as an independent country, then China shall deploy all peaceful measures to protect China’s sovereignty.
And this is the time when China is taking slow steps to take over Taiwan. It is easy to do so because Taiwan’s armed forces are nothing in front of China.
As you can see, China is way stronger than Taiwan. And if it decides to invade Taiwan now, then there is no means that Taiwan could protect itself without support.
Here comes the plot twist!
The little island country Taiwan has been backed by the giant United States. And this has upset China even more. So, there could be a situation where the two powerful nuclear superpowers might end up in a war because of Taiwan. But that’s too early to predict. Let’s get back to where we were.
What Is So Special About Taiwan That the US and China Are Ready to Go Against Each Other?
So, Taiwan is not an ordinary island. It is a hub of resources, and the world largely depends on it.
Let’s find out how.
- The Trillion Dollar ‘South China Sea’.
This is one of the reasons why China wants to acquire Taiwan. So, small island countries are situated on the south side of China. These islands are Indonesia, Malaysia, the Philippines, Taiwan, and Vietnam.
This side of China is affluent in natural resources.
One-third of global shipments pass through the South China Sea, which amounts to 3.37 trillion dollars in trade as of 2016! Yes, that’s huge.
The sea has around 11 billion barrels of crude oil and 190 trillion cubic feet of natural gas.
Not just that, China is so keen to acquire the South China Sea that it has built a massive artificial island named as Subi Reef of 3,200 acres to gain a foothold in the South China Sea.
So, if Taiwan becomes a part of China, they will naturally have a hold on most of these natural resources and will have the upper hand over the entire world.
- Taiwan is a Semiconductor Hub
As we all know, semiconductors are used in all the gadgets we use these days, and Taiwan is the manufacturing hub of semiconductors. It is indeed the most crucial component for most of the industries in the world, without which they won’t be able to survive.
Throughout the world, 65% of semiconductors are manufactured in Taiwan.
How Will This Situation Affect India?
If China successfully acquires Taiwan, they might hike the prices of semiconductors just as they had done for solar components because they had a monopoly. According to a report published by Bloomberg, Tongwei, and LONGi, the Chinese producers of solar components have hiked rates by 15% in two months as of 27th July 2022.
Similarly, if China gets hold of Taiwan, then they might also play the monopolistic game with semiconductors, proving to be a huge setback for India and the world.
That’s it for today. I hope you found this newsletter interesting. Don’t forget to share this with your friends.
