Taiwan is at once one of the most vexing political situations on the globe and one of the most important to the world of technology.
But few people understand how it got to be either. And understanding that is essential to understanding what might happen next and how that matters a LOT for the technology industry.
Let’s help you Know a Little More about Taiwan.
Featuring Tom Merritt.
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Episode transcript:
Taiwan is at once one of the most vexing political situations on the globe and one of the most important to the world of technology.
But few people understand how it got to be either. And understanding that is essential to understanding what might happen next and how that matters a LOT for the technology industry.
Let’s help you Know a Little More about Taiwan.
This is not going to be a Dan Carlin-style dive into the history of Taiwan. If you know that history consider this a refresher. But for those of you who know little about the island, consider this an excellent starting point to understanding it. And for all of you, I don’t think understanding it is likely to get less important in the coming years. Because it’s one of the places on Earth where it’s conceivable to see a war involving China and the US. AND it’s one of the most important places in the world for building technology. Chips are in everything these days and the chips are made mostly by companies from Taiwan.
Let’s start with the where.
Taiwan is 168 islands including the Penghu islands but it is mostly one main island with the three main cities, Taipei, Tainan and Taichung. It’s about the size of Vermont. Or Albania.
It is located partway between the Philippines and South Korea, but very close to mainland China. It is 160 kilometers off the coast of southeastern China. About the distance from Dublin to Belfast. You could not fit Ireland between Taiwan and the mainland.
OK so why it’s important is both the tech industry, which we’ll get to later AND the dispute over it.
Let’s start with the dispute over what Taiwan thinks it is and what China thinks it is. Because Taiwan thinks it is China. This is one of the most common confusions I hear from people.
Taiwan’s government officially calls the country, the Republic of China. Well that’s odd, you might say. Isn’t there already a Republic of China? Yes. The People’s Republic of China. That’s the one most people think of as China. The one with its capital in Beijing. Both the People’s Republic of China and the Republic of China, which is on Taiwan, consider themselves the legitimate successor to the Republic founded in China on January 1, 1912 after the overthrow of the Qing dynasty. Where they differ is that Taiwan considers itself the true continuation of that republic and the People’s Republic of China says that republic ended in 1949 and was replaced by the People’s Republic.
So what Taiwan is, depends on who you ask? The People’s Republic of China – to oversimplify– says Taiwan is a breakaway province that is part of the People’s Republic. Eventually it needs to stop denying that fact, cooperate with the central government and unify with the mainland. Hence China’s strong objections to calling Taiwan a country, or having full diplomatic relations with it. The US wouldn’t want anyone having diplomatic relations with Texas, or Hawaii. The Uk doesn’t let Scotland go have separate diplomatic relations with other countries.
Meanwhile, the government of Taiwan still considers itself the rightful ruler of all of China. Hence its insistence on officially calling itself Republic of China.
And so you get weird situations like letting Taiwanese athletes compete separately at the Olympics, but only if they call themselves Chinese Taipei and use the Olympic flag.
There are other similar arrangements. For example England, Scotland, and Wales, all part of the UK, compete in World Cup competition as separate teams. The difference being that they are not all calling themselves the true UK.
I bring it up to illustrate the point the People’s Republic of China is making. If Taiwan is just a province of China, then it’s not odd to let it compete separately in things. So call it under a provincial name, and throw Chinese at the front just so people are clear. Taiwan goes along with this so its athletes can compete separately and they consider themselves China as well, so why not call them Chinese Taipei. It’s WAY more complicated than that but you get the gist and it kind of helps illustrate how seriously these countries take the “on paper” meanings of this dispute.
One thing the two countries agree on is that the Republic of China started in 1912.
Sun Yat-sen was the the founder and first provisional president. He is honored by both the People’s Republic of China and the Republic of China on Taiwan for ending the rule of China’s imperial dynasties. But it didn’t result in stability right away. China’s political history in the 1920s and 1930s is full of disputes between the Nationalist Party – aka the Kuomintang and the Communist Party. Sometimes those disputes became battles. The two parties teamed up in World War II to fight their common enemies, but never fully unified. The People’s Republic of China consider the Republican era to have ended on October 1, 1949 with the proclamation of the People’s Republic of China. The Republic of China in Taiwan, disagrees.
So that’s where the Republic of China and the People’s Republic of China come from.
Let’s talk a little about Taiwan and how it became part of China in the first place.
The smaller Penghu islands off the coast of the main China were often under mainland sway, the larger island though was somewhat independent. In 1622 the Europeans arrived, first the Dutch, then the Spanish. The Dutch called it Ilha Formosa or “the beautiful island” which was shortened to Formosa, which became the European name for the island. The Chinese didn’t like the idea of the Europeans getting too involved there. So it was finally annexed by China’s Qing Dynasty in 1683. There were attempted invasions over the next couple of centuries by Japan and the French, but Taiwan remained in Chinese control for a good two centuries. Then at the end of the war between China and Japan in 1895, Taiwan was ceded to the Japanese Empire, where it remained until the end of World War II.
So it was loosely affiliated with China until the late 1600s, then solidly part of China for a couple centuries, then occupied by the Japanese for 50 years. So it made sense in 1945 that it would go back to China.
In July 1945, The US, UK and China agreed to the Potsdam Declaration. Among its many provisions was that the islands of Taiwan would be restored to China.
On August 15, 1945 Japan’s Emperor accepted the terms of the Potsdam declaration and on October 25, 1945, Japan surrendered. After the surrender of Japan, Japan’s governor-general of Taiwan signed papers handing over administration of the island to General Chen Yi – a Nationalist– of the Republic of China.
One technicality, nowhere did Japan confirm in writing they were giving up their claim to Taiwan. There was no cause for concern on that in reality but it was a detail that needed to be taken care of. An i to be dotted. A t to be crossed. There were a lot of those. For example Japan technically remained at war, even after the surrender. Not something the matter in practice but you kind of wanted everyone to be clear on the point right? There were some official treaties in the works to nail down all those technical details.
Problem was while the paperwork was getting drawn up, China was having a civil war.
The Communists led by Mao Zedong an and the nationalists led by Chiang Kai-shek no longer united by an external foe, started battling for control of the country. And while the allies had been doing all the paper work with the Nationalist, the communists started winning the civil war. Mao felt confident enough to proclaim the People’s Republic of China as a replacement for the Republic on October 1, 1949 and by December 7, Chiang and the nationalists evacuated their army to Taiwan and set up a capital in Taipei. About 2 million Chinese people and soldiers made the move to Taiwan.
Meanwhile there were all those little things that hadn’t been taken care of regarding the end of the war with Japan, like compensation and rebuilding and oh actually declaring the war over.
So the Treaty of San Francisco was created to wrap up all those details and was signed by Japan on September 8, 1951. Among its many provisions, Japan formally renounced its claim to Taiwan.
Great. Except, China didn’t sign it. Because by that time there were two governments claiming to represent China, Mao’s on the mainland and Chiang’s in Taiwan. Chiang had held strong in Taiwan and with US support continued to claim to be the rightful government of China. There was some recent experience with supporting exile governments. An exile government of France had held out in England and recently been restored. So there was some feeling the same might happen in China.
Meanwhile the USSR wanted to support its communist comrades, and argued that Mao had won and so should be recognised as the legitimate government.
And meanwhile Japan just wanted China, any China, to sign something declaring the war over.
To solve that, on April 28, 1952, Japan and the Nationalist Republic of China government on Taiwan, signed the Treaty of Taipei, formally ending the war between Japan and the Republic of China in Taiwan. Not the mainland. But it was enough to satisfy Japan.
And there’s another little wrinkle to this. Back during the war in 1942– when everybody was on better terms, Soon Tse-vung, who’s sister was married to Sun Yat-sen- the man who founded the first Republic of China in 1912, signed a document along with Soviet diplomat Maxim Litvinov and US President Roosevelt and UK Prime Minister Churchill, which later became the basis of the United Nations Declaration. That document gave those four countries a special position in the formation of the UN. And so, the US, UK, Soviet Union and US were guaranteed to be on the UN’s permanent security council.
When the UN was founded in 1945, China got its seat. The civil war was just heating up and Mao hadn’t proclaimed the People’s Republic, so Chiang got the seat.
There was some talk about dual representation maybe but that ended in 1949 when the People’s Republic of China was founded and Chiang moved to Taiwan. So Chiang held on to it. And until 1971, Taiwan’s government held China’s seat at the UN.
It was a perilous situation though. Both countries strenuously called for there to be just One China. With the US and USSR facing off with nuclear weapons at the height of the cold war, it seemed unwise for a huge communist country like China to have no seat at the biggest diplomatic table in the world. It was counterproductive to world stability.
All countries wanted a better solution to this. I’m way oversimplifying her of course but that’s the general situation that led to US president Nixon secretly sending National Security Adviser Henry Kissinger to China’s Premier (under Mao) Zhou Enlai. He was often seen as the successor to Mao, and his ally Deng Xiaoping went on to govern China in the 1980s. In a talk between Zhou and Kissinger on July 9, 1971, Kissinger made clear that “we are not advocating a `two Chinas’ solution or a `one China, one Taiwan’ solution.” Zhou said “the prospect for a solution and the establishment of diplomatic relations between our two countries is hopeful”
That was good progress. Way to go Hank.
And on July 15, 1971 President Nixon announced he would visit the People’s Republic of China the following year. Remember that Nixon’s US has been fighting a proxy war against China in Vietnam. This is a huge shocking announcement.
Then, on October 25, 1971 a coalition of Soviet bloc and non-aligned countries, along with the UK and France, voted to give the People’s Republic of China the UN seat in place of Taiwan. The vote was initiated by Albania – you know Albania, the one about as big as Taiwan–
The US acted upset. But Nixon already said he would go to China. And he did. February 21st, 1972, US President Nixon began a 7 day visit to three cities in China, including a meeting with Chairman Mao Zedong. Mao told Nixon, “I believe our old friend Chiang Kai-shek would not approve of this”.
US TV audiences get a new look at China and we got the phrase “Only Nixon could go to China.”
The visit changed things for Taiwan too and got us closer to the odd situation we’re in now. The meetings resulted in the Shanghai Communique. The US acknowledged that “all Chinese on either side of the Taiwan Strait maintain there is but one China” but for now to set aside the “crucial question obstructing the normalization of relations.” Clever little diplomatic sidestep that let them be friends or at least friendlier, with both Chinas.
In fact, the US maintained formal relations with the Republic of China in Taiwan until 1979.
Because in 1978 China’s Communist Party really sweetened the deal. It declared that China was in a united front with the US, Japan and Western Europe against the Soviet Union. It supported US operations in communist Afghanistan against the USSR-supported regime there, and China conducted a military expedition against the US’s old nemesis Vietnam. China did all that.
So what are you going to do? On January 1st, 1979, US President Jimmy Carter and Zhou’s old friend Chairman Deng Xiaopeng issued the Joint Communiqué on the Establishment of Diplomatic Relations. This ended US recognition of the Republic of China in Taiwan and established formal relations with the People’s Republic of China. It also ended the Mutual Defense Treaty with the government on Taiwan.
So the US just up and abandoned Taiwan? No.
Not everybody was pleased with the President just ending the defense pact with Taiwan.
You see, the Mutual Defense Treaty with Taiwan had been passed by the Senate in 1954, and the Senate, particularly Senator Barry Goldwater, figured they were the only ones who could undo that. So Senator Goldwater brought a case to the Supreme Court as Goldwater v. Carter. But the court basically said our name’s Paul this is between y’all.
It issued a dismissal based on the fact that the case was a political matter not a judicial one and would not rule on it. The legislative and executive branches need to work this out amongst themselves. In fact, Justice Powell wrote in a concurrence that if the Senate had issued a resolution objecting to the dissolution then it would become a matter for the courts. The Senate had drafted a resolution but did not vote on it.
So that’s what the US Congress did. It went to work on making some laws. And on April 10, 1979, the US enacted the Taiwan Relations Act.
It defined how the US sees Taiwan separately from the People’s Republic of China and has shakily guided international relations around the two countries for decades.
The act refers to the “governing authorities of Taiwan” avoiding the whole issue of who gets called Republic of China. It did not restore diplomatic relations with Taiwan nor did it recognise its government. Doing either of those would have undone the last decade of warming relations instantly.
So no, we will not recognise Taiwan’s government. Instead the Act said Taiwan would be treated under U.S. laws the same as “foreign countries, nations, states, governments, or similar entities”. And the American Institute in Taiwan will not at all be an embassy but it can do anything embassies do. And all agreements made with Taiwan’s Republic of China before 1979 stay in effect with the governing authorities of Taiwan. Except the mutual defense pact.
Which you’re probably thinking was Senator Goldwater’s whole sticking point right? Yes. So here’s what the Act did do. It said “the United States will make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability”, and “shall maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or social or economic system, of the people on Taiwan”
In other words, don’t call it a country, but treat it like a country, don’t call it an embassy but use it like an embassy and don’t call it a defense pact, but make sure Taiwan is defended.
And crucially through all of this, never once has the US recognized the People’s Republic of China’s sovereignty over Taiwan.
This approach has been called Strategic Ambiguity.
And it worked. Sort of. It still pissed off China. China’s official position is that the Taiwan Relations Act is “an unwarranted intrusion by the United States into the internal affairs of China.” Deng Xiaopeng viewed the US as insincere. A feeling carried on and amplified by subsequent leaders. And over the years, the PRC drifted away from being united with the US against the USSR to aligning with developing nations.
But the US has not backed off of the strategic ambiguity of the TRA.
It reaffirmed the TRA with a nonbonding-resolution in the 1990s, a Congressional Research Service Report in 2007, and a concurrent resolution in May 2016.
And for its part Taiwan has pursued its own strategic ambiguity. You’d think it would have declared itself an independent country but it hasn’t. never declared its independence. In its early days this made sense. You don’t declare independence from something that doesn’t exist. In Chiang Kai-shek’s view, his was the legitimate government of China. There was nothing to declare independence from,
However since the US recognition of the People’s Republic of China, Taiwan’s insistence on this point–the one china policy– has lessened. If it ever abandoned that policy, theoretically Taiwan could just declare itself Taiwan, not China, and seek recognition from world governments.
China would not be OK with that.
Worried about the rising possibility of Taiwan admitting reality, China passed a law on March 14, 2005, restating that there is only one China, Taiwan is part of it, it’s illegal for Taiwan to secede from China, all means to peaceful reunification should be pursued, that under unification, Taiwan would get a lot of autonomy, BUT if Taiwan declares itself independent, or is taken over by another country, OR if all possibility of peaceful unification is lost, China will take non-peaceful actions. The law also states if it does go “non-peaceful” it must do so while protecting Taiwanese civilians and foreigners as much as possible, as well as Taiwanese interests in the PRC. Pay attention to that last. Because that includes Foxconn and TSMC plants.
Yeah about that. Why are so many Taiwanese companies operating in China.
Relations between Taiwan and China cooled off quite a bit in the 1990s and the two decided to ignore their diplomatic differences and focus on economic ties. By 2002, China was Taiwan’s largest market for export.
China hosts around 4,200 Taiwanese enterprises and more than 240,000 Taiwanese work in China. This dependence on China’s economy has been described as a blessing and a curse. On the one hand it has made Taiwan dependent on China, which gives the People’s Republic leverage over it. On the other hand, close economic ties make military intervention more costly.
Taiwan’s economic success is largely down to tech. The Taiwan Semiconductor Manufacturing Co. or TSMC founded in 1987 has a market cap equal to 90% of Taiwan’s GDP. It is in the top 10 largest companies in the world by Market Cap and a bigger semiconductor manufacturer than Intel or Samsung.
TSMC’s customers include Apple, Qualcomm, Nvidia, Broadcomm, AMD, Ampere, Microsoft, MediaTek and Sony. It makes about 60% of the world’s semiconductors.
Other major tech companies headquartered in Taiwan include Acer and Asus which make devices like Phones, laptops, PCs and more. And Foxconn- which also lists on the stock market as Hon Hai, and is famous for assembling Apple products in its mainland China-based factories, but also makes products for Microsoft, Amazon, Google and Huawei with factories located in Brazil, India, Vietnam and all over Southeast Asia.
Taiwan makes the most important part of arguably the most important devices for the world’s economy.
OK that’s not even a very deep look at Taiwan but it’s still a lot, so let’s summarize.
Taiwan’s current government originated on mainland China as one side of a civil war. Taiwan operates under the fading narrative that it is the true government of China. Only 12 countries, mostly in Micronesia and the Caribbean, have full diplomatic relations with Taiwan.
However it’s de facto treated like a country by the US and others but not fully recognised, as a way to placate mainland China which asserts that Taiwan is just a breakaway province that needs to be reunified.
Since the 1990s, economic interests have superseded diplomatic disagreements to the benefit of pretty much everybody. China got Taiwanese investments. The US got a cheap place to buy parts and assemble electronics. And Taiwan became dominant in the chip industry.
Not to oversimplify the country’s economy but Taiwan is the engine that drives chipmaking. If Taiwan’s companies suddenly disappeared, it would be a LOT harder to make electronics ANYWHERE in the world.
And the US has been able to pull off a magic trick keeping mainland China happy while sheltering Taiwan.
BUT the “strategic ambiguity” is beginning to wear thin. A stricter regime in China is pressing the issue more and is less placated by economic benefits.
From here, you need experts in international relations to explain things to you. But hopefully you have a good grip on the basics with which to understand what’s going on.
In other words, I hope you Know a Little More about Taiwan.
CREDITS
Know A Little More is researched, written and hosted by me, Tom Merritt. Editing and production provided by Anthony Lemos in conjunction with Will Sattelberg and Dog and Pony Show Audio. It’s issued under a Creative Commons Share Attribution 4.0 International License.
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