US-China Relations Reach A Breaking Point
Playing with fire or targeted geopolitics?
Before jumping into the US-China situation, the Japanese automaker Honda has paused production at several plants in China and Japan over a shortage of chips. These are chips linked to the Nexperia crisis, signaling that global chip supplies are still in limbo. The brief Chinese ban on Nexperia exports is still being felt across the globe.
Taiwan Troubles
Back to US-China…
The US has just approved an $11.1 billion arms package for Taiwan, its largest ever sale for the island nation. The package covers eight types of arms, including the High Mobility Artillery Rocket Systems (HIMARS), which are also operational in Ukraine. China has responded as expected, telling Washington to halt its latest deal and respect the “one China” principle.
Except, what makes this moment so critical is that China just collided with Japan over Taiwan. And not over a deal Tokyo inked with Taipei, but rather a remark that Japan’s new prime minister, Sanae Takaichi, made about defending Taiwan. This has erupted into a full-blown fight, as China bans Japanese seafood imports, and 1,900 flights from China to Japan in December have been cancelled as Beijing tells its citizens to avoid Japan.
If a simple remark can ignite a firestorm, what about the largest defense deal ever signed?
China’s Response
All eyes are on China. Because China has to make its next decision carefully. There are no easy options.
If officials in Beijing view the latest US-Taiwan deal as crossing a red line, the world could be brought back to where it was in October when the situation exploded, and the dangerous “export license” for rare earths was floated. China could issue a clear ultimatum to the US: stop the defense deal with Taiwan or else.
And that “or else” may take the form of new probes into US companies, limits on critical exports, or a bigger phase out of US technology. This latter part is already occurring, albeit in a grey way, as China reportedly limits how many Nvidia chips its companies can buy even as the US restarts advanced chip exports.
Such a move would trigger a new showdown between the US and China, disrupting the global economy and the fragile peace that was inked on the sidelines of the APEC Summit in South Korea in November.
However, if China is prepared to look over the latest arms deal between the US and Taiwan, it sends all the wrong signals. Why did China swing at Japan over Taiwan but restrain itself with America? At a moment when Beijing is trying to position itself as America’s equal in the world, this is the wrong optics. It means China is still cautious of Washington, giving the US the upper hand and freedom to “get away” with what Japan could not. In tandem with all this, China swung at Japan over Taiwan to send a message about foreign powers getting involved in Taiwan. Yet here, America has just inked its largest defense deal in history with the island-nation, and China stays mute? China created a certain perception after Liberation Day and the October tussle. It is fragile and could collapse with the wrong move.
Controlled Fighting
While China must calculate, the US has already calculated.
It is no coincidence that such a deal was unveiled as China-Japan tensions rise over Taiwan. While reports suggest that Tokyo is frustrated at America’s reluctance to step in as the situation with China worsens, the latest US-Taiwan deal could be an answer to Japan’s desires.
The US has either calculated that this agreement will not stir up the pot. Or that if it does, the storm can be controlled.
Either way, geopolitical calculations are becoming more fragile by the week. The ground that these calculations stand on is weakening and fracturing. The US and China are effectively playing a game of chicken with each other, with assumptions that may no longer apply.
As US-China relations face their biggest test since November, China faces its biggest test in years. Will Beijing take on anybody over Taiwan? Or for China, does size still matter?
ABISHUR PRAKASH AKA. MR. GEOPOLITICS
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