China–Taiwan Unfinished Business

The historical roots of this conflict—though politically significant—now serve as a smokescreen for what is the real, tangible prize: TSMC.

While Cross-Straits relations between China and Taiwan are deeply rooted in the “unresolved” Chinese Civil War, the stakes today far exceed this historical conflict. Taiwan’s modern strategic importance lies in its unparalleled role in global technology and its near-monopoly in advanced semiconductor foundry manufacturing through Taiwan Semiconductor Manufacturing Company (TSMC).

China’s claim of sovereignty over Taiwan has historically been framed as an extension of its unfinished civil war. However, this political rationale is now eclipsed by the immense strategic value of TSMC. In today’s geopolitical and technological landscape, controlling TSMC is increasingly a driving force behind China’s push for “unification” with Taiwan.

Decades of Chinese assertions that Taiwan is inherently part of China resemble an Orwellian narrative—repeated so often that it is presented as truth. Yet, Taiwan’s history contradicts this claim. Taiwan has not been a part of mainland China for 130 years, and has a limited and inconsistent direct historical connection to China. What began as a justification tied to resolving the civil war has evolved into a modern strategic imperative centered on TSMC as the ultimate prize.

Since the Taiwan Relations Act was put in place in 1979, the U.S.-Taiwan relationship has operated under a policy of strategic ambiguity. However, China's rise as a global competitor and the critical strategic value of TSMC make preventing a Chinese invasion of Taiwan an unambiguous priority. Such a conflict would have devastating global economic consequences, leaving no room for ambiguity in addressing this threat.

Lessons from the Russia-Ukraine Conflict

The Russia-Ukraine conflict provides lessons that are highly relevant to countering the threat posed by China against Taiwan. Vladimir Putin’s expectation of a swift military victory and a limited response from the U.S. and Europe proved to be miscalculations, leading to a prolonged conflict and economic isolation. Similarly, to deter Chinese military aggression, Taiwan must establish a more robust defense posture that convinces Beijing the risks of a failed invasion and the associated costs are unacceptably high.

The most effective way to avoid war is to establish a strong deterrent, convincing the aggressor that any military aggression is likely to fail. As highlighted in my post Taiwan is Arrakis, creating this deterrent lies in Taiwan aggressively embracing AI-centric autonomous weapons systems and partnering with defense technology companies. Like cyberwarfare, these systems can level the playing field.

The war in Ukraine demonstrates the effectiveness of such tactics. The future of defense rests on software-centric, lower-cost autonomous weapons that can empower smaller nations to leverage technology for a stronger defense against larger militaries.

The Role of the United States and it Allies

Concurrent to Taiwan bolstering its defense posture, the U.S and its allies should engage in a diplomatic effort that sends a clear message: any act of aggression by China toward Taiwan will provoke a strong backlash, much like the response to Russia’s invasion of Ukraine, along with significant economic costs. This groundwork is essential for signaling to Beijing the risks of pursuing military action.

The U.S. should lead a narrative shift, emphasizing that China’s intentions are less about resolving unfinished business from the Chinese Civil War and more about a strategic power grab to control the world’s most critical technology asset—TSMC. This is not a mere internal political issue for China but a broader challenge to international stability and technological sovereignty.

Unfortunately, any such effort is undermined by inconsistent rhetoric, such as President Trump’s inaccurate assertion that “Taiwan took our chip business away” and the threat of imposing tariffs on semiconductor imports from Taiwan. Such statements weaken the broader effort to counter Chinese aggression and complicate the already delicate task of rallying allies.

Although it is early in the new Trump administration, time is of the essence. Trump’s national security team, in coordination with the President, must avoid these offhand remarks about trade that send mixed signals to China. Instead, the administration needs to adopt a strategic, consistent approach to Taiwan relations to safeguard long-term U.S. interests.

As with many of Trump’s statements, it is often more revealing to observe his actions rather than his words. The National Security team assembled includes prominent China hawks in key positions, which provides a more reliable indication of the administration’s stance on Taiwan and China. Furthermore, it is highly unlikely that Trump would pursue policies that increase the risk of a Chinese invasion of Taiwan—an event that would bring significant damage to the U.S. economy and weaken American influence in the Asia-Pacific region.

Concerns over semiconductor tariffs are also likely overstated. U.S. companies dominate semiconductor imports, and such remarks likely aim to promote domestic advanced semiconductor manufacturing. While this is a sound strategic goal, it will take years to achieve. In the meantime, U.S. reliance on TSMC for advanced semiconductor production will remain unchanged in the medium term.

However, President Trump’s comments have had some tangible impact, particularly his call for Taiwan to increase its defense spending and prioritize boosting its military capabilities. Taiwan’s President Lai Ching-te has responded by committing to greater investments in the U.S. and proposing a “special budget” to raise Taiwan’s defense spending to over 3% of GDP.

A Historical Perspective on China-Taiwan Relations

Although China and the Chinese Communist Party (CCP) may never acknowledge the historical realities that undermine their claim to Taiwan, in fact the historical connection that Russia claims with Ukraine in the ongoing Russia-Ukraine conflict is far more substantive than China’s claims over Taiwan. The historical realities reflect that Taiwan has, for much of its history, been an autonomous entity outside of China's control.

By the fall of 1949, the Kuomintang’s (KMT) retreat to Taiwan was nearly complete, coinciding with the proclamation of the People’s Republic of China (PRC) on October 1, 1949, in Beijing. Yet, from the perspectives of both the CCP and KMT leader Generalissimo Chiang Kai-shek, this retreat did not mark the end of the Chinese Civil War. Chiang saw Taiwan as a temporary refuge, a staging ground for regrouping and eventually retaking the mainland. Conversely, the CCP viewed the KMT's continued presence in Taiwan as unfinished business—a perception that persists today.

For the CCP, the original goal of achieving a formal end to the Chinese Civil War and reunification was arguably less about territorial disputes and more about politically and militarily defeating the Nationalist forces. However, these historical roots, while politically significant, now act as a smokescreen for the real, tangible prize: TSMC.

Taiwan's Historical Autonomy

The history of Taiwan’s relationship with China undermines the CCP’s sovereignty claims. The island has been part of China for only a portion of its long history. When the Dutch arrived in 1624, they found little or no evidence of Ming Dynasty (1368–1644) administration. Taiwan, then called Formosa, was under Dutch control until 1662, when Ming Dynasty forces, fleeing the recently established Manchu-led Qing Dynasty, sought refuge on the island and defeated the Dutch.

The Qing Dynasty eventually seized control of Taiwan and annexed the island in 1683, but Taiwan only became a formal province in 1887, just eight years before its cession to Japan in 1895 following the First Sino-Japanese War. Even during Qing rule, Taiwan’s connection to China was tenuous, as the island experienced frequent rebellions, reflecting resistance to Manchu authority. Since its cession to Japan, Taiwan has not been part of China for the past 130 years.

Particularly noteworthy is that for much of its early history (1928–1943), the CCP recognized Taiwan as distinct from China. In a 1937 interview featured in Edgar Snow’s Red Star Over China, Mao Zedong stated - “we will extend them (the Koreans) our enthusiastic help in their struggle for independence. The same thing applies for Taiwan.”

It was only after the 1943 Cairo Declaration, where Allied leaders Franklin Roosevelt, Winston Churchill, and Chiang Kai-shek agreed that Taiwan would be returned to China—that the CCP reversed its stance and adopted the Nationalist position on Taiwan.

Taiwan’s Evolving Identity and CCP Frustrations

For native Taiwanese, their unique identity and historical experiences have long set them apart from mainland China. After World War II, when Chiang Kai-shek’s Nationalist forces took control of Taiwan, tensions emerged between native Taiwanese and mainlanders, referred to as "Wai-sheng-ren" (people from outside the province). This divide shaped Taiwan’s evolving sense of identity and its future political trajectory.

In recent decades, Taiwan’s political identity has shifted significantly. The pro-independence Democratic Progressive Party (DPP) has replaced the KMT as the dominant political force. This shift has left Beijing increasingly frustrated, raising the likelihood of military aggression. For Xi Jinping, reunification with Taiwan is seen as a cornerstone of his political legacy.

Following Russia's invasion of Ukraine, concerns about a similar move by China against Taiwan have grown. Xi has emphasized modernizing China’s military by 2027, potentially setting the stage for an invasion.

However, unlike Russia, China wields substantially greater economic power, making any counterstrategy more complex. Addressing China’s economic leverage and its unyielding assertion that Taiwan is an internal matter will require careful diplomatic efforts and long-term strategic planning. The goal must be to convince Beijing that the economic, military, and diplomatic costs of aggression against Taiwan would far outweigh any potential gains.