China Panics After America Reaches A Private Agreement With Taiwan

( On Wednesday, it was announced that the Biden administration plans to strengthen economic ties with Taiwan.

The Chinese Communist Party has long held that Taiwan, a democratically governed island, is part of the mainland and should be returned to China. This move to strengthen relations with Taipei comes when China is increasing its threats of military action against Taiwan.

The New U.S.-Taiwan Initiative on 21st-Century Trade outlines initiatives that hope to increase agricultural cooperation, take action on climate change, and work together on the shared global challenges.

Clark Packard, a Cato Institute research fellow, said the arrangement would serve as a buttress against China’s aggression.

Beijing dislikes this new trade pact, as expected. The People’s Liberation Army has initiated a “readiness patrol” near Taiwan’s sea and airspace in response to Taiwan and the United States’ alleged “collusion.” In February of this year, China conducted a similar incursion into Taiwan’s airspace during Russia’s invasion of Ukraine.

To avoid sending the wrong message to Taiwan separatists, China’s Commerce Ministry spokesperson Gao Feng said on Thursday that the United States should be cautious in its trade and economic relations with Taiwan. A state-controlled Chinese magazine published a three-stage battle plan depicting the invasion of Taiwan in the summer of 2012.

Professor Thomas Duesterberg of the Hudson Institute is skeptical that the trade agreement will effectively tamp down China’s muscularity.

According to Packard, the fact that the United States has increased trade and investment with Taiwan will not deter China from taking Taiwan.

In addition to foreign policy considerations, the United States is interested in the trade agreement for economic reasons. Taiwan is expected to dominate the semiconductor sector.

GM halted production at an Indiana pickup truck plant after Ford halted and cut production at eight of its North American factories in February due to chip supply issues.

“I’ve never seen anything like” the semiconductor shortage, Tesla CEO Elon Musk said last year. He noted that microcontroller chips are the most challenging part of his supply chain.

It’s clear that the U.S. would benefit from a cozy arrangement with Taiwan.

The Chinese economy is in a state of flux as well. Although China’s GDP has grown at an average of 10.1 percent per year since the introduction of free-market reforms in 1978, the World Bank says that China’s economy is suffering from sluggish labor force growth, declining productivity, and low investment returns. In 2022, economic growth is expected to fall to 5.0 percent from 8.1 percent in 2021.