Trade War

Newsletter 197 - January 21, 2024

Welcome to the 197th edition of Trade War.

China announces GDP grew 5.2% last year but others put it at 1.5%. Premier Li Qiang address to the World Economic Forum describes China’s economy as like ‘undulating’ Alps. But speech offers little reassurance to CEOs.

Youth joblessness numbers published again after hiatus. Aging migrant workers lack pensions and insurance. China’s population falls for a second year. And demographic decline could lead to exported excess capacity.

Survey shows only 3% of Taiwanese identify as primarily Chinese. Xi Jinping says officials must work harder to win hearts and minds. And a look at the reasons why a China invasion and occupation of Taiwan wouldn’t be easy.

• A wave of Chinese emigration floods world

• China was the largest foreign spender at Trump properties, report shows.

And check out the map below to see Taiwan’s 12 remaining diplomatic partners, following the loss of island nation Nauru—then read my commentary explaining why Taiwan matters for Montana and what we are doing at the Mansfield Center’s China program.

Vanishing diplomatic allies

Just days after the successful presidential election, a win for Taiwanese democracy, the self-ruling island lost a diplomatic ally when Nauru announced it was switching recognition to China, reducing the number of countries with official ties to Taiwan to just twelve.

“The government of Nauru, a Pacific Island of 13,000 people, on Monday became the latest to cut ties with the democratically-ruled island in favor of China. Taiwan’s diminishing diplomatic clout means it has fewer friends that can take up issues on its behalf in international forums like the United Nations, where it lacks a seat,” reports Bloomberg News.

Of the dozen countries that still have diplomatic relations with Taiwan, Guatemala has the biggest economy, with a GDP of $95 billion in 2022. Check out the map below to see what other countries are the diplomatic holdouts. (Tuvalu could be next to break ties with Taiwan, according to a report by The Australian.)

Why Taiwan matters to Montana

“From spy balloons and banning TikTok to concern over purchases of agricultural land, Montanans have been paying attention to China. After last Saturday’s presidential election in Taiwan that saw Beijing’s nemesis the Democratic Progressive Party (DPP) win once again, tensions are sure to flare. Montanans, like everyone else, should be watching what happens next closely,” I write for the Missoulian.

• “We are telling the international community that between democracy and authoritarianism, we will stand on the side of democracy,” the 64-year-old future President Lai Ching-te said in a victory speech in Taipei, together with his vice president Hsiao Bi-khim. “Only the people of Taiwan have the right to choose their own president,” he added, referring to efforts by China to interfere in the election through both threats and disinformation. This shared commitment to democracy reinforces the importance of Taiwan to Montana, and why the Mansfield Center works to ensure Montanans — and others across the U.S. — have the information they need to better understand and navigate this important part of the world.

  Lai, the candidate that Beijing least wanted to win (calling him a “troublemaker” and an “instigator of war”) would have preferred the Kuomintang (KMT), the party that has advocated for a closer relations with China. Even though Lai extended an olive branch calling for “exchanges and cooperation with China,” don’t expect tensions to lower in the Taiwan Strait.

  Following the election, U.S. Secretary of State Antony Blinken congratulated Lai and heralded Taiwan for its “robust democratic system.” And Washington sent a bipartisan delegation of former government officials including former national security advisor Stephen J. Hadley and former deputy secretary of state James B. Steinberg to Taiwan, where they met with outgoing President Tsai Ying-wen along with Lai and Hsiao.

  Beijing “firmly opposes any U.S. interference in Taiwan,” and Blinken’s congratulations send a “wrong signal,” the Chinese foreign ministry warned. While some have predicted the prospect of a war that would involve the U.S., within just the next few years, more likely is the continuation of what Taiwan expert and Atlantic Council Global China Hub nonresident fellow Lev Nachman has called an “icy peace.”

  Facing deep global tensions, and not just related to Taiwan Strait, our mandate at the Mansfield Center to promote a “global exchange of perspectives, ideas, and solutions” is even more important. We have recently launched a program with Taiwan, home to one of the most vibrant and free societies in Asia, that will allow Montana high school and university students to study Mandarin both at the University of Montana in Missoula, where we are based, and in Taipei.

  Recognizing that engaging with other countries is critical to national and economic security, Mike Mansfield was a lifelong proponent of a better relationship with China. He made numerous visits to the country, including leading the first congressional delegation to China in 1972 — just after former president Richard Nixon. Our center is working to develop opportunities for Montanans to explore language and cultural cooperation with Chinese universities that would allow more young people from each country to learn about each other. Such efforts will help reduce tensions between our nations, making for a safer world. At the same time, this will allow Montana students to better engage in the global economy.

  As then-DPP advisor Hsiao said to me after another historic win by her party in the year 2000, now is not the time to “open the champagne bottles or cut the cake.” Instead we must get on with the sometimes difficult work of trying to build stronger connections between Americans and Chinese, Taiwanese, and other people’s from around the world.

• Dexter Tiff Roberts is director of China affairs at the Maureen and Mike Mansfield Center at the University of Montana.