The Real Issue of the Confrontation Between America and China on Taiwan Is Written in 4 Letters

China will probably wait until America is no longer dependent on TSMC before acting.

The 20th century was marked by the Cold War between the United States and the USSR. Throughout the second half of the 1900s, these two giants clashed over who would dominate the world. More than that, it was two ideologies that opposed each other. On one side, the capitalist ideal of the Americans, and on the other, the communist ideal of the Soviets.

America finally triumphed at the end of the 1980s, and capitalism spread across the world.

Only one great world power seems to have resisted so far: China. Of course, China has not remained with the dogmatic doctrines of communism. To grow and lift the population out of poverty, the Chinese Communist Party has had to adapt. China has integrated capitalism into its egalitarian model to create wealth that the government then takes care of distributing better.

The next decades will be marked by the America-China rivalry

The 21st century will be marked by the rivalry between America and China. This is now a certainty. Both countries want the same thing: to be the world's leading power, with all the advantages that this brings.

This rivalry is giving rise to a new cold war that will determine the geopolitical and economic environment for the 21st century. If everyone agrees on this point, opinions differ on the form this rivalry will take. Will the America-China war be cold or hot? Hot in case of a confrontation over Taiwan? Cold with the growing rivalry for economic leadership?

Over the past week, Joe Biden and Xi Jinping have spoken at length on the phone to show that the lines of communication have not yet been completely severed. But as many expected, this exchange did not lead to any concrete progress.

Former US Treasury Secretary Hank Paulson recently told an economic forum in Singapore how worried he was about the current situation between the two giants:

“The world is headed for a very dangerous place if China and the United States cannot stabilize their relationship.”

During his speech at the economic forum, Hank Paulson concluded by saying that the decoupling of the two economies would cause a global crisis.

A great separation will take place between America and China

Not everyone shares this strong position. Far from it. I think that America and China have no interest in going to war. We are in the 21st century, a century where nobody wants to die anymore. The only way to avoid a confrontation between the two giants is precisely a decoupling. Great separation between America and China.

When one observes the interdependence of the two economies and in particular the dependence of the United States on Chinese Tech and the dependence of the United States on Chinese exports, this seems quite simply impossible. This road to the great separation will be long and full of pitfalls. It will bring its share of tensions and its share of financial, economic, and diplomatic crises. Despite everything, it is the only road that exists.

Two ideologies, two political models, dictatorship versus democracy, and two opposed economic models are at glance.

Some thought that with the rapid adoption of capitalism, China would emerge from its communist, or rather socialist, model. The recent turn taken by Xi Jinping has belied all expectations. China is not a capitalist country. It is an egalitarian country, as I explained in the preamble, which uses capitalism to create wealth that will have to be better distributed in the years to come.

In this cold war which delivers us every day its rebounds, we learned last week that the American athletes would be allowed to participate in the Olympic Games of Beijing in 2022, but that there would be no diplomatic representation. America also repeated that it would block all Chinese investments in “sensitive” activities and more and more activities are considered sensitive by the White House.

Taiwan is just a pretext. The real issue is TSMC and America's independence in semiconductors

So the great separation is well underway. The last big stumbling block, and it is not the least, is Taiwan.

China claims Taiwan as its own. America defends Taiwan's desire for independence, even making it a red line that Xi Jinping must not cross at present. Nevertheless, you would be wrong to think that for the United States Taiwan is a political problem.

America has done nothing, for example, about the brutal takeover of Hong Kong and the stifling of local democracy. In the future, it seems unlikely, despite all the statements of the American authorities, that America will take up arms against the Chinese takeover of Taiwan. No American soldier will die for Taiwan in my opinion.

The real problem of Taiwan for the USA is written in four letters: TSMC.

TSMC is the semiconductor producer, on which American manufacturers still largely depend. In the second half of 2020, TSMC accounted for more than 50% of global semiconductor production. Even worse, TSMC is practically the only company in the sector that knows how to manufacture the latest generation of electronic chips. The ones we already find everywhere in our lives, and whose use is bound to grow even more in the future.

At the time of writing, experts estimate that TSMC is between eighteen months and two years ahead of its competitors such as Samsung in the semiconductor field. In a high-tech industry like this, that's an eternity.

Behind the battle between America and China over Taiwan, the real issue is the control of TSMC.

The best strategy for China with Taiwan is probably to wait until America becomes self-sufficient in semiconductors

For China, a better strategy would be to wait until the United States becomes autonomous in semiconductors, as it has become in oil. When this happens, and all of America's actions are now moving in this direction, China will be able to accelerate its strategy of taking control of Taiwan.

America will be outraged, but America will not take up arms as long as its strategic interests are preserved. China will therefore probably play for time with Taiwan before finally achieving its goals when the great separation is effective.

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