Managed rivalry across the Taiwan Strait

In the recent summit between United States President Donald Trump and Chinese President Xi Jinping on Taiwan issues, both leaders focused on managing a possible escalation of the conflict instead of working toward a resolution of their respective positions, and thus turned the high-profile meeting into a manifestation of their rivalry in East Asia. In order to prevent danger, the rivalry has been put on a leash, yet the basic contradictions have remained unchanged.

Trump had two goals: to show that the US is a credible power in the Indo-Pacific region and to avoid complicating his economic agenda by getting into a confrontation. In contrast, Xi had one main goal at the summit: to reaffirm the “One China” principle and to show that Beijing is able to manage the Taiwan issue. The two leaders have opposite views, and both of them tried to convey a sense of peace to the public. Washington views Taiwan as a test case for deterring an attack and upholding its commitment to its allies, while China views Taiwan as a part of its territory that should be reunited with the mainland as soon as possible. In sum, the summit contained the conflict but did not solve it.

The apparent détente between Trump and Xi is short of being truly noteworthy. In great power politics, a lull in hostilities does not necessarily translate into a diminution of conflict, since both sides may be temporarily constrained by considerations of the costs of escalation. A particular flash point, like Taiwan, can become a symbol of broader national resolve and prestige, with Taiwan becoming a test case of a country’s commitment to its national interests, with Taiwanese autonomy being seen to challenge China’s national integrity, while US hesitation to come to Taiwan’s defense could weaken extended deterrence to other allies in the region.

But dangers for all concerned remain. To be sure, a military buildup by Taiwan with US arms sales has been justified as enhanced self-defense. But Beijing believes this to be a militarization of the Taiwan issue by Washington. Beijing’s repeated military exercises around Taiwan provoke great anxiety and deep distrust in the Taiwanese population, leading to greater reliance on protection from outside powers, fueling in turn the Taiwan issue as a regional and global security problem requiring the support of outside powers for its own self-defense. The security dilemma is manifested in its most intense form.

The issue is complicated by each side’s political messaging. On the one hand, Xi’s commitment to reunification as nonnegotiable makes room for little compromise. Meanwhile, Trump’s commitment to a “peaceful” resolution to the Taiwan Strait crisis without concrete guarantees to that end appears to be nothing more than strategic ambiguity, or indecision. For Taiwan’s Democratic Progressive Party (DPP), increased military spending and closer ties to Washington will always be politically justifiable only insofar as they can prove that they are strengthening Taiwan’s defenses in the face of mounting Chinese coercion, while at the same time resisting attempts by Beijing to drive a wedge between the Taiwanese opposition and the government by portraying any dialogue whatsoever with the DPP as proof of its own increasing isolation. The Kuomintang, for its part, will portray engagement with the mainland as a pragmatic, rational policy aimed at bringing about peaceful reunification, but it can quickly be cast as a weakening of Taiwan’s sovereignty if it becomes too accommodating to Beijing.

The value to the world economy of this third sector of Taiwan’s development—the semiconductor industry—is greater than its size might suggest. Not only are semiconductor plants in Taiwan highly advanced, but they are also located at the hub of global supply chains. Semiconductors are critical to the functioning of modern electronics: as more and more functions are taken on by microchips, dependence on the industry has risen dramatically. This area of Taiwan’s economy is so valuable to its other two sectors—and, more importantly, is why its potential capture by China is of such great concern to Washington, which is right to urge both Beijing and Taipei to accept Taiwan’s semiconductor industry as being outside the scope of their disputes and to work together to resist efforts by either side to politicize it.

The path forward must be practical. The US should avoid using Taiwan as a bargaining chip in trade diplomacy. China should reduce provocative military signaling and build confidence through restraint. Taiwan must strengthen resilience through economic diversification and asymmetric defence. Asean should promote crisis-management mechanisms, while Japan and Australia can support stability by combining deterrence and diplomacy.

In short, the Trump–Xi summit was not a breakthrough; it was a pause. We must keep an eye on future developments to determine whether the rivalry will continue to be managed or escalate. The Taiwan dispute has turned into a test case for both sides’ strategies, and for now, it remains a strategic prize and a flash point in the region. The rivalry will continue as long as issues of sovereignty, deterrence, technology, and prestige remain intertwined.

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Simon Hutagalung is a retired Indonesian foreign ministry official. The opinions expressed in this article are his own.