coming into the 21st century, the USA as blinked when its own interests were at stake. In the view of some Chinese planners and tacticians, America & Americans are worn from wars in Iraq and Afghanistan. They see that the United States as having little unity politically is disturbed by the COVID-19 pandemic, and is unlikely to risk American lives for something as abstract as a chip factory.
When China on the offensive over the past 20 years, the percived American response has been on paper protests. In 2012, China occupied the Scarborough Shoal taking control of it via the Philippines. China was not ready to confront the United States with military force at that period, imagine if the American government of the day had a carrier strike group near those shoals? Could that have stopped China’s military construction in the area? Instead, Washington blinked limiting itself to strong words. Now, the nearby Islands have new Chinese bases that have a surface to air missiles & fighter jets, changing the dynamics of the western Pacific. So any future need for the United States to control the air space in that area will face opposition & heavy losses.
Till now, Hong Kong, whilst part of China, had guarantees of freedom of speech, assembly, and the press & media. China has now invoked the same oppressive limits on the right of free speech, and assembly, the press now has muzzled the rest of China. There is no more the United States can do except express concern even now having removed the city’s special trade status. China seems undeterred. Sneering that any response would make Hong Kong & its residents poorer, and possibly more compliant that trade lost to other states is the price of asserting dominion over Hong Kong, One it can bear.
after China moved on to Hong Kong, Chinese Premier Li Keqiang missed out on the word “peaceful” in referring to Beijing’s desire to “reunify” with Taiwan, a policy change?
The lack of an effective American response to these events has shown Chinese leadership that the United States is unwilling to forcefully engage in Asian affairs. This will embolden China’s next move.
China’s Goals and Options
China’s goal in the mid-term is to secure a steady supply of chips. To respond to the United States sanctions and closing Huawei’s access to Taiwan’s most advanced chip foundries, the Chinese Communist Party is likely thinking through its next moves. China may wish to avoid any escalation by talking to the United States and either accepting the restrictions as they currently are, with a promise that they will go no further, or negotiating to restore Huawei’s access to TSMC by accepting other restrictions elsewhere. Or Beijing may seek to negotiate with or coerce Taipei (or both) in order to allow China sole access to TSMC and so block chip exports to the United States, thereby securing China’s own supply while crippling American industry. Or China might start working to ensure that TSMC foundries will not be used by either Huawei or the USA through some sort of sabotage campaign, or even a direct attack. While this may seem unlikely, China’shas become more aggressive and more risk-tolerant as the COVID-19 pandemic, which began in Wuhan, stirs and angers the world.
A rebalance, with a restoration of Huawei’s access to TSMC’s foundry, may simply require negotiating some form of the trade deal or agreeing to restrictions on the sale of Huawei networking gear (34 per cent of its revenue ). If achievable, this kind of deal would let the Huawei consumer and enterprise businesses (66 per cent of its revenue) survive and thrive. However, it requires the Chinese to back down. the climax having passed.