Taiwan cuts ties with big brother China – UCA News

Wary of Beijing’s eagerness to bring the island under its control, Taiwan is reducing China’s leverage

Taiwan cuts ties with big brother China – UCA News
Taiwan cuts ties with big brother China

A man wearing a face mask with an image of China’s President Xi Jinping joins other human rights activists as they protest in Taipei against the 2022 Beijing Olympic Games to mark Human Rights Day on Dec. 10. (Photo: AFP)

During the recent Tokyo Olympics, you could sense the heat picking up in relations between China and Taiwan as an error from a Japanese television presenter ignited an unforeseen political dispute.

The official Olympics name for Taiwan was to be “Chinese Taipei” (whatever that means), but the female presenter called it “Taiwan,” the name by which the little island facing the mainland is known globally.

President Tsai Ing-wen, as well as many Taiwanese living in Japan, rejoiced like they had won a streak of gold medals, but it was a mere slip of the tongue. Tsai went as far as thanking Japan for being a good neighbor. China, on the other hand, labeled it a “dirty trick” on the part of Tokyo.Donate to UCA News with a small contribution of your choice

Sure, this little victory on the international arena seemed only short-lasting, but what was sizzling under the coals was a much wider strategic battle on the part of Taiwan to cut ties — and not just on the name calling — as much as achievable with its big brother.

For example, to prevent sensitive technologies from slipping into the hands of China, Taiwanese regulators are now planning to block domestic tech companies from selling off their affiliates or other assets on the mainland.

The law currently under revision will require Taiwanese companies to seek approval if they plan to sell or dispose of any of their assets to their Chinese counterparts, when up to this point it would have been enough for a Taiwanese business to simply notify the authorities of similar transactions.

China has never hesitated to use the threat of force to bring democratic Taiwan under its rule

Taiwanese companies’ investments in China, including setting up subsidiaries, will therefore need approval from the Taiwan Investment Commission.

As a major hub in the global chip supply chain, Taiwan is planning ahead to protect its assets.

China has never hesitated to use the threat of force to bring democratic Taiwan under its rule. In a recent report, Taiwan’s Defense Ministry cited over 500 “intrusions” by Chinese warplanes into its southwestern air defense space, and that was only in a time span of a year.

As part of the same self-protection strategy, a recent announcement sounded quite unusual — the creation of a US$7 billion semiconductor manufacturing facility in the prefecture of Kyushu in Japan. Taiwan Semiconductor Manufacturing Company (TSMC) and Sony will collaborate to build this factory in Kumamoto that will go into operation in 2024.Related News-‘We are a country’: Taiwanese embrace their identityThe Vatican-China pact and Taiwan’s diplomatic isolationChina warns Taiwan firms against ‘backing independence’China ‘hunting Taiwanese abroad through deportation’

Sony is investing $500 million but the real muscle of the project comes from TSMC itself. The goal of the plant is the production of 22 and 28 nanometer semiconductors, those older-generation chips that make up the lion’s share of the current global chip crisis. But why not simply build the plant in Taiwan, where the labor costs (and not only those) are significantly lower than in Japan?

The reality is that TSMC is in a mad rush to diversify its manufacturing base outside of Taiwan as soon as possible. That’s the same reason it announced a major new manufacturing facility in Arizona, whose cheap land and availability of skilled labor make it a perfect destination.

There is no hiding that Taiwan feels under threat from China. TSMC is fully aware of the political reality of the moment and is preparing a plan to further relocate its production base, diversify risk and reduce the leverage that China would have in using TSMC as a pawn in a geopolitical battle.

As part of this tug of war, human capital is an asset to be cherished and at all costs not to be shared with the enemy

But is not just electronics companies that are looking for relocation. In the textile and shoemaking industry, a new trend has been picking up speed in recent years — moving operations far away from the Chinese mainland.

Southeast Asia has so far been a preferred solution, especially Vietnam. For example, Taiwanese garment companies Eclat and Makalot produce almost half their total output in Vietnam.

As part of this tug of war, human capital is an asset to be cherished and at all costs not to be shared with the enemy. The Taiwanese administration has been screening professionals leaving the island. Eager to maintain its lead in the semiconductor business in the years to come, Taiwanese recruitment companies make sure that no local engineer applies for a job in China.

The radical move to prevent a brain drain of tech talent to the mainland is a clear sign that any project seeking reunification with Beijing will be resisted. And every head counts.

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