Seeing India-China ties through Taiwan

Despite multiple ongoing crises around the world, the political future of Taiwan remains of critical global importance. The victory of Lai Ching-te (or William Lai) of the Democratic Progressive Party (DPP) in last week’s presidential elections — on a platform critical of the People’s Republic of China — was welcomed by the United States (US) and other western capitals. But the extension of DPP rule was moderated somewhat by the party’s losses to the more Beijing-friendly Kuomintang (KMT) in legislative polls.

Taiwan’s political status will inevitably be a zero-sum matter in the intensifying global competition between China and the US. For Beijing, Taiwan is a reminder of the unfinished project of national unification by the People’s Liberation Army (PLA). Taiwan’s very existence as a thriving democracy, with a per capita Gross Domestic Product (GDP) of $34,000 (more than twice mainland China’s), undermines the Communist Party’s claims of providing the only viable political and economic model to govern the Chinese people. Furthermore, a forceful unification of Taiwan by China would push US military power decisively out of what is referred to as the “First Island Chain”, confirming Beijing’s primacy in the western Pacific.

China’s paramount leader Xi Jinping has escalated rhetoric around the prospect of Taiwan’s reunification, including in recent speeches. The PLA has begun preparing for hostilities across the Taiwan Strait, with military exercises now regularly occurring to Taiwan’s east. Beijing’s imposition of a national security law on Hong Kong in 2020 also set back the prospects of Taiwan retaining administrative or economic autonomy in the event of a peaceful reunification.

The US understands Taiwan’s importance all too well. As it initiated engagement with Beijing in the 1970s, the US ensured deliberate ambiguity in its “One China Policy”, which gave it latitude to continue engagement with Taiwan. At the time, such ambiguity suited China perfectly, although it soon made attempts to test Washington’s commitment. During the 1990s, the US intervened to prevent an escalation in tensions in the Taiwan Strait. Today, despite divisive domestic debates over US support for Ukraine and Israel, there is growing appreciation across the American political spectrum for Taiwan. The immediate strategic and economic repercussions are apparent, even if sometimes simplistically rendered in the form of specific concerns about Taiwan’s world-class semiconductor industry.

Taiwan’s outgoing president Tsai Ing-wen worked assiduously over her two terms to shift Taiwanese public thinking about the prospects of unification with China. She avoided loose talk about independence but worked to make Taiwan’s politics more resilient and improve its military preparedness. Victory by Lai will further consolidate Tsai’s legacy. Internationally, Tsai strengthened relations with key constituencies in the US, Japan, and Europe. But recent years have also witnessed diplomatic setbacks for Taiwan, with the government in Taipei now recognised diplomatically by less than a dozen other countries.

India’s cooperation with Taiwan has traditionally been tepid. Politically, the government in Taipei was not necessarily a natural ally in India’s own attempts at countering Chinese aggression given its own historical claims. Nor did India enjoy a track record of diplomatic or military engagement with Taiwan. Taiwan’s military forces and intelligence agencies were also, by virtue of their history, heavily politicised, raising questions about their effectiveness.

That said, engagement between New Delhi and Taipei over the past three decades has created new opportunities. Economic and trade relations have grown steadily. In the 1990s, India set up a de facto embassy in Taipei, and Taiwan reciprocated with an economic and cultural office in New Delhi. Subsequent Taiwan Economic and Cultural Centers have been established in Chennai and, more recently, in Mumbai. Taiwanese companies have been investing in and establishing factories in India. Following difficulties with China due to the boundary dispute and coronavirus pandemic, Indian entities are slowly exploring possibilities in Taiwan for Chinese language training and think tank and educational exchanges.

Yet for India, the struggle over Taiwan’s status has very real consequences. An obvious reason is economic. Conflict in the Taiwan Strait would hinder Indian commerce with the dynamic economies of northeast Asia. It would also disrupt supply chains in a manner that would make the Ukraine war appear minor. A recent Bloomberg economics assessment suggested that a Chinese invasion of Taiwan that drew in the US would set back the global economy by 10.2% in the first year. The same assessment suggests that India’s economy would suffer more (8-9%) than even the US (6-7%). Meanwhile, a Chinese blockade of Taiwan, which some believe represents a more realistic possibility, would come at a cost of 5% of global GDP.

But the strategic consequences of a Taiwan conflict could prove as catastrophic as the economic situation for India. China’s forceful reunification with Taiwan would dramatically increase the probability of a unipolar Asia. New Delhi realises that a multipolar world — which it seeks in order to facilitate its own rise — is impossible without a multipolar Asia. As long as Chinese hegemony in the broader Indo-Pacific can be expected to have adverse consequences for India’s rise and ambitions, Taiwan’s future will remain of critical importance for New Delhi.