By Hatakeyama Tetsuro
An international symposium (sponsored by the Asian Affairs Research Council) was held in Tokyo on Nov. 18 to discuss the economic security of Japan and Taiwan amid the U.S.-China conflict. Japanese and Taiwanese experts discussed Taiwan’s participation in the Trans-Pacific Partnership (TPP) as well as actions to reorganize the supply chain.
The U.S. is taking actions to decouple from China its supply chain for semiconductors and other products from an economic security perspective. U.S.-China relations have deteriorated due to the Trump administration’s imposing huge sanctions on China, China’s retaliatory tariffs, and sanctions on Chinese telecommunications giant Huawei. There are no signs of improvement under the Biden administration.
Mainichi editorial board member Bando Kenji said that the Nov. 16 online summit meeting between U.S. President Joe Biden and Chinese leader Xi Jinping ended without the two countries moving closer, commenting that “the two countries may not be able to build a stable relationship until they can control their conflict.” Ito Shingo (Senior Economist, Institute for International Economic Studies) said that “the economic conflict has worsened under the Biden administration,” citing China’s enactment of the “Anti-Foreign Sanctions Law” in June 2021. The law stipulates countermeasures against foreign sanctions. Ito pointed out that the U.S.-China conflict and the spread of COVID-19 have increased the momentum for companies in Japan and Taiwan to review their supply chains.
The presence of Taiwan, the location of Taiwan Semiconductor Manufacturing Company (TSMC), is growing as companies review supply chains. TSMC is the world’s largest contract manufacturer of semiconductors. Sato Yukihito (Chief Senior Researcher of the Inter-disciplinary Studies Center, Institute of Developing Economies) pointed out that TSMC became a global contractor and grew by specializing in contract production whereas in the Japanese semiconductor industry, each company is responsible for all processes such as design and production. Sato discussed the current situation where there is competition for Taiwan’s semiconductor technology due to the global shortage of semiconductors amid the COVID-19 pandemic.
Wang Jiann-Chyuan (Vice President of Chung-Hua Institution for Economic Research) discussed future risks for Taiwan, saying, “We are trying to find a way to work with both the U.S. and China amid their conflict, but we may become caught between the two sides in the end.”
In September 2021, China and Taiwan applied for membership in the TPP, in which 11 countries including Japan participate. The TPP has a high level of trade liberalization and the conditions for membership are strict. China has many issues to be resolved, such as preferential treatment for state-owned enterprises. Bando said, “At the moment, I don’t think China will properly follow the rules ” and acknowledged that Taiwan is closer to satisfying membership requirements. Wang expressed concern that “Taiwan will lose its international competitiveness if it cannot join the TPP.” Wang also expressed hopes for Japan’s cooperation and U.S. participation in the TPP, saying that political factors such as China’s pressure would be an obstacle [to Taiwan’s participation]. Ito said, “The participation of China and Taiwan will contribute to economic development in the region and efficiency of supply chains. By properly conducting accession procedures and negotiations, we will disseminate high-level international rules throughout East Asia.” Ito pointed out that “it is important to mitigate the risk of countries getting caught between the U.S. and China.”