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When the chips are down, look to Japan

18 September 2021

9:00 AM

18 September 2021

9:00 AM

The worldwide silicon chip crisis is a national security problem, not just a commercial inconvenience that has closed production lines from autos to mobile phones and computers – the building blocks of modern life. Taiwan’s semiconductor dominance poses risks to the global economy (and defence capabilities) amid China’s geopolitical aggression and a major chip shortage. This prompted last month’s first-ever bilateral security talks, initiated by Japanese Prime Minister Yoshihide Suga, between Japan’s ruling Liberal Democratic party and Taiwan’s Democratic Progressive party. Involving a deal for Taiwan’s world-leading chip-maker to set up in Japan and for the two nations to collaborate on the chip supply chain, it cut across China’s frustrated ambition (hindered by US embargoes) to dominate the silicon chip industry. This ‘unofficial’ virtual meeting, a device to get around the requirement that Taiwan cannot be officially recognised as an independent nation by countries with diplomatic ties with China, resulted in the inevitable angry and threatening response from Beijing. A government spokesman demanded that ‘the Japan side immediately correct such mistakes and retract inappropriate speeches…. China firmly opposes all forms of official interactions with Taiwan which is an inalienable part of China’s territory’. And the Global Times warned, ‘Taking risks on the Taiwan question is tantamount to provoking a war’.

This belligerence coincided with Japanese defence forces being joined by its Quad partners, Australia, India and the US, in naval exercises in the Philippine Sea and with European warships visiting the region (with a British aircraft carrier exercising with Japanese ships south of Okinawa and close to Taiwan) to counter China’s increasingly aggressive stance.  And last month, as Japanese media reported favourably, a virtual meeting of senior Quad officials discussed the importance of ‘peace and security’ in the Taiwan Strait preparatory to the coming Quad heads of government summit.

The realisation has only recently emerged in the West of the security concerns involved in being so dependent on chips from the island democracy that is under continual threat from China (with one journal seriously questioning whether China might invade Taiwan for its chips). Bloomberg’s backgrounding of this crisis notes, ‘Semiconductors made from silicon wafers mounted with billions of microscopic transistors are the basic component of modern digital life and the building blocks of innovation for the future. They are arguably one of the world’s most important industries, with sales of $412 billion last year; scale that up to the electronics industry that depends on chips, and it’s worth some $5.2 trillion globally’. And Bloomberg puts Taiwan, which is responsible for 70 per cent of world chips manufactured to order and the focus of next-generation chip-making, in the front line of Chinese enmity.

Japanese support for Taiwan is a crucial element in its survival at a time when US reliability as an ally is under question following the chaotic withdrawal from Afghanistan. This was four months after April’s US-Japan leaders’ summit where President Biden and Prime Minister Suga called out China for its behaviour, raising concerns about human rights issues, maritime challenges across the region and economic coercion imposed on trading partners. More importantly, the latest ANU East Asia Forum notes that they then made the first reference to Taiwan in statements from such meetings for almost half a century (since Japan and China formalised diplomatic recognition) by stressing ‘the importance of peace and stability across the Taiwan Strait’. Japan similarly referred to ‘peace and stability’ across the Taiwan Strait in its joint statement with the EU in May, in the Japan-Australia 2+2 joint statement and the Carbis Bay G7 communique in June, while Japan’s latest Defence White Paper included an increased focus on Taiwan.

Suga’s status as a lame-duck prime minister will not diminish the effectiveness of his ‘free and open Indo-Pacific’ mantra at this month’s Quad leaders meeting in Washington, nor the significance of Japan’s support for Taiwan, which as Formosa had been a Japanese colony for fifty years until its return to China on Japan’s second world war defeat. Suga’s replacement next month by another member of the long-time ruling party is unlikely to involve any change in Japan’s increasingly pro-Taiwan stance. While his party’s old guard, with a focus on self-interest, sees China as an economic partner not to be riled on issues like democracy in Hong Kong, human rights for minorities, or the status of Taiwan, the  new generation are said to be ‘increasingly uncomfortable with a Beijing that makes increasing demands on partners and also poses a growing security threat’.

Two months ago when deputy PM Taro Aso told the Diet that a military crisis across the Taiwan Strait would threaten Japan’s survival and that Japan would need to consider helping to defend Taiwan in the case of an attack by China, he was reflecting the ‘support Taiwan’ views of a generation of those in their forties and fifties who are calling for more lawmaker-to-lawmaker talks that skirt around the formal prohibition of the ‘One China’ policy but nevertheless have created the current Chinese anger. There is also support for Taiwan joining the current version of the Trans Pacific Partnership trade deal. Overall, most Japanese academic observers agree that throughout the political spectrum, support for Taiwan has markedly increased. The ANU’s East Asia Forum reckons that this trend is not just within the political class: a poll by the Nikkei Shimbun newspaper soon after the Biden–Suga summit in April showed that nearly three-quarters of respondents supported Japan’s engagement for the stability of the Taiwan Strait.

As Sheila Smith of the Council on Foreign Relations wrote last week, there are, nevertheless, potentially grave consequences of Tokyo’s decision-making on Taiwan. Not only does China remain one of Japan’s largest trading partners, but the regional military balance around Japan has been shifting in China’s favour. While many experts argue that China has little to gain from a direct attack on Taiwan, Smith notes that outgoing US Indo-Pacific commander Admiral Philip Davidson recently told Congress that he thought China would be able to launch such an attack within the next six years. However, she sees Chinese pressure on Taiwan more in the form of grey-zone tactics or as cyberattacks, both creating unprecedented challenges to Taiwan’s economic vitality and territorial integrity.

But if Japan is prepared to cop a blast from Beijing by meeting ‘unofficially’ with Taiwan to protect themselves from the perceived threat from China, why doesn’t Australia do likewise? We’re already on the receiving end of 14 Chinese grievances that are ‘poisoning bilateral relations’. So let’s add another one that both reinforces a matter of principle by joining Japan in supporting Taiwanese democracy against China’s threats and at the same time looking after a valued trading partner– and a vital source of the silicon chips on which the modern world depends.

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