US-China trade war: Looming conflicts, grave consequences
Taiwan, situated along the first island chain plays a vital role in the worldwide ICT supply chain, but is also the weakest link from a geopolitical perspective
Analyzing the major changes in the IoT era based on the observations and meticulous collection of figures
The frontline of the US-China trade war actually lies along the first island chain in East Asia where IT powerhouses Japan, Korea and Taiwan are key members. The US is imposing extra tariffs on Chinese imports, sending many manufacturers scrambling to relocate their production from China to ASEAN, South India, Taiwan and even the US. The US-China disputes are turning businesses into trade refugees.
The US relies heavily on Japan, Korea and Taiwan to contain China. But will Japan, Taiwan and Korea, all of whom now boast their own cutting-edge technologies, completely submit themselves to the US, or will they have their own hidden agendas devised to please both superpowers? The predicaments and strategies of Japan, Korea and Taiwan – scrutinized from an Asian perspective – may serve as lessons that other emerging countries can learn from.
The China government’s Made in China 2025 initiative puts semiconductor above all else. The trade deficit in semiconductor – which amounted to US$227.4 billion in 2018 – is a key issue that China has to tackle. China accounted for nearly half of the consumption in the worldwide semiconductor market in 2018. However, none of the world’s top 15 semiconductor firms are from China. Huawei, Lenovo, BBK and Xiaomi together purchased US$60 billion worth of semiconductors, securing their positions among the top-10 buyers. If US firms cut their supply, these Chinese vendors’ hands will be tied. That is also why the US government is using semiconductor as a way to counter China’s expansion.
China is anxious to catch up while the US is making every effort to block China’s expansion. Much to the surprise of Asian companies and governments, who were focused on their own business, the Trump administration launched a trade war against China in the summer of 2018. Underneath the US government’s attempt to narrow the trade deficit with China by imposing 25% tariffs on US$200 billion in Chinese imports is a strategic move to build up a high trade barrier and control the export of US patents, technologies, materials and equipment, using them as weapons in the war against China.
Of course, China will not sit still but rather it is attempting to drum up support from neighboring East Asian tech powers including Taiwan, Japan and Korea. With their leading-edge manufacturing industries including the semiconductor sector, Taiwan, Japan and Korea face a dilemma in terms of their choices of market, and they have even become buffer zones in the US-China conflicts in terms of technology, economy and politics. Similar to the Russo-Japanese War (1904-1905) in Manchuria and the Korean War (1950-1953), where two great powers engaged in battles on the fields of neighboring countries, history is repeating itself now only in a different form of war. The US-China fight at the expense of Japan, Korea and Taiwan, with the latter two smaller countries being the first to bear the brunt of their trade spat. Countries often have to deal with political conflicts simply because of their geographical locations. For the past century, such situations have come and gone like the monsoon season, reshuffling international relations again and again.