The tensions between the United States and the Republic of China seem to be growing every day. The reports recently indicated that US House of Speaker Nancy Pelosi would be visiting Taiwan. This single visit has assumed a lot of importance in international relations. China has issued repeated warnings about the implications of this visit, which, let’s be real, after Russia’s invasion, could just be anything.
The talks on China - and by talks I mean individual countries' show of strength - are reducing the number of steps either country can take. For the U.S., China is obviously the bigger threat, not just to their economy but also to their position in the world order. China is the country that has a lot of money and that can get away with artificially controlling its exchange rate, that can do things the world over and still not receive a big slap on the wrist by Uncle Sam.
Taiwan is different because it holds a very strategic value for the industries of the United States. As the largest manufacturer of Semiconductor Chips, Taiwan clearly is valuable to ensure that the US does not slip into recession, which it might anyways, without any input from Taiwan.
And what is the biggest weapon for the United States. Many might say it is the arsenal of nukes and advanced weaponry in their possession. Yes, sure. But it is the USD that holds the key to US domination
Overall, I think the world goes into a recession and the economic fallout of this recession will necessitate a political realignment. Ofcourse, it all depends on how quickly countries can move forward. Intel is clearly America’s best bet in terms of enabling the semiconductor industry, but Intel doesn’t even have a foundry just yet. It has the funding and will probably get more concessions and tax cuts, but it is going to be some time before Intel actually can even think of competing with TSMC or China. And let’s not forget India which has also seen an opportunity and wants to seize it for itself.
Overall, the global economy is moving to a protectionist regime, one that will see a division of allies. India plays a crucial part in all of this as it hangs in the balance between the US and Russia. The issue for India would obviously be its close geographic proximity to China and the immediate danger therein.
It will be interesting to see how far India can go in terms of enabling its stature in the world politics. But it will be equally interesting to see how far China goes in terms of rising up to the challenge and competing with the world on semiconductor chip manufacturing.
I’m very interested in knowing what will happen on a global scale, because our lives are very short and the 100 years is nothing but a drop in the desert.
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