The Economic & Diplomatic Fallout!

Koushik Das

Aug 22

The Russia-Ukraine War has started changing the diplomatic equations and economic situation across the globe. It is not at all desirable that any such situation should arise in the Indo-Pacific Region, too, in the near future. However, the situation is becoming increasingly alarming in this region.

On July 28, 2023, the US unveiled a Taiwan weapons aid package worth up to USD 345 million, with the Congress authorising up to USD 1 billion worth of Presidential Drawdown Authority weapons aid for the island nation (located at the junction of the East and South China Seas in the northwestern Pacific Ocean) in the 2023 budget. In addition to arms and military equipment, the Pentagon has also decided to provide training support to the Armed Forces of Taiwan.

The Joe Biden Administration made an announcement in this regard immediately after the visit of the US Secretary of State and Secretary of Treasury to China. As expected, the US' move has angered China because the announcement strongly rejects the sovereignty claims of the Asian giant. Incidentally, Nancy Patricia Pelosi, the then Speaker of the US House of Representatives, visited Taiwan in August 2022, ignoring China's warning. Since then, Beijing has increased military activities in the Taiwan Strait and also in the China Sea. China has further violated the airspace of the island nation on a number of occasions. The Chinese activities have affected commercial flight and shipping services in the region.

Time and again, the Kuomintang (KMT) or the Chinese Nationalist Party (CNP, a major political outfit in the Republic of China, initially formed on the Chinese mainland and then in Taiwan in 1949) has claimed that Taiwan has a historical connection with the largest nation in Asia. Based on this claim, China wants to make the island nation as its integral part.

The problem is, if China is able to take full control of Taiwan, then the geopolitical landscape of the region shall completely change. Such a development shall create troubles for anti-China countries, like Japan, the Philippines, Australia and the US, as their interests are involved in the South China Sea. The US is worried, as it is not just a military issue, but also a diplomatic issue for Washington DC. It shall also dent the US' image as the most powerful nation in the world.

Furthermore, such a move would badly hit the global economy. The computer chips that help run everything from mobile phones, laptops and electronic items to cars are largely manufactured in Taiwan. If China manages to take political control of Taiwan, then Beijing will also get an opportunity to control one of the world's most important industries. China shall also destroy Democracy in Taiwan, and the island nation shall become the next Hong Kong.

India, too, is worried about the Taiwan crisis, as the South Asian nation uses the South China Sea for more than half of its trade in the Indo-Pacific Region. Any geopolitical changes in the region shall also affect India's trade ties with Taiwan that have been on the rise for the past few years. In terms of geopolitics, India will come under pressure to join the war against China as a member of the QUAD, a strategic security dialogue between Australia, India, Japan and the US that is maintained by talks between four member-countries. And if India joins the war, China shall certainly choose the Himalayan region to retaliate. Hence, New Delhi is closely monitoring the Taiwan crisis.