Life is normal in Taiwan, and that’s a remarkable thing. People are going to work, eating in restaurants, and attending packed concerts and baseball games just as they did before COVID-19 struck. Taiwanese can also head off on holiday to the Pacific island nation of Palau via a special travel bubble. They are doing all this while enjoying economic growth of 2.98% last year, whereas most nations slipped into recession, and Taiwan is expected to grow by well over 4% this year.
The authorities have done an excellent job in handling COVID-19. Taiwan, despite its proximity to China, has recorded fewer than 1,100 cases, almost all imported, and just 10 deaths. Taiwanese have good reason to feel proud, even a little smug. However, this success masks a lack of urgency in addressing key issues other than the pandemic, especially in light of Taiwan’s precarious geopolitical position.
The most obvious is national defense, as increasingly belligerent warnings and actions from China toward Taiwan, which it claims as part of its territory, have raised the possibilities of an attack. Two high-ranking U.S. admirals also recently stated that a Chinese attack on Taiwan, which would likely involve an attempted invasion, was probable within the next six years.
China has expanded its navy in recent years, including with amphibious landing craft; sailed its aircraft carrier flotilla around Taiwan; and frequently sends military aircraft past the median line of the Taiwan Strait, previously considered a red line. The latter is an attempt to wear down the planes and personnel of Taiwan’s smaller air force by making them scramble to intercept Chinese planes, an example of gray-zone warfare that utilizes indirect provocative measures against an opponent.
Recent events underscore this precarious state of affairs. On March 22, two Taiwanese F-5 fighters collided during a training flight, resulting in the death of one pilot and the disappearance and likely death of a second. This followed several fatal Taiwanese military mishaps last year that involved helicopters, F-5, and F-16 fighters. On March 26, 20 Chinese military aircraft crossed the median line into Taiwan’s air defense identification zone (ADIZ), after which Taiwan announced the following week that it would no longer send air force planes to intercept each Chinese incursion into Taiwan’s ADIZ—but instead track them with missile systems.
The United States and Japan have also become increasingly vocal about the threat to Taiwan from China. Last year, Taiwan’s foreign minister, Joseph Wu, repeatedly warned of an attack from China, calling for an international alliance and appealing for help from countries like Australia. However, in Taiwan itself, there seems to be a lack of urgency that contrasts sharply with Wu’s tone on the international stage.
Taiwan has made several major arms deals with the United States in the last few years, including for fighter jets, battle tanks, cruise missiles, and drones. However, there is an expectation among both the Taiwanese public and many politicians that the United States, as Taiwan’s unofficial ally and protector, would intervene during a Chinese invasion. But the deliberate U.S. strategic ambiguity around Taiwan means that Taipei can’t rely on a guarantee of U.S. aid—and Washington will be far more likely to commit to more definite measures if Taiwan looks prepared to fight fiercely for its own freedom.
Taiwan faces a vast numerical disadvantage in ships, airplanes, submarines, and soldiers against China. While it’s difficult to evaluate the quality of Chinese forces, given the lack of military openness in the country, the state of Taiwan’s own forces does not bode well. Fending off an invasion is not guaranteed. If Chinese forces actually land, the public needs to be able to assist the military and mount a resistance. This would require well-trained conscripts and a reserve force—both major problems for Taiwan right now.
The government has adamantly refused to expand the length of conscription, which is only four months, or to draft women. There is a large reservist force, at least on paper, but there are serious problems with training, logistics, and mobilization. The government has agreed to reform the reservist system, but this will be undertaken as a two-year trial starting from 2022. This trial would involve a mere 3,000 out of 770,000 reserve members.
When it comes to the professional military, the picture is not any better. There are significant problems in many areas, including weapons supply and maintenance, training, and morale. The recent fatal military accidents have been a striking indicator of these problems. Among the public, enthusiasm for military service, whether enlisting voluntarily or as a conscript, is notably low. Attempts to maintain an all-volunteer military have floundered, and there is a struggle to attract enough recruits. There is also a general lack of appreciation of the extent of China’s threat, as well as a lack of desire to make sacrifices to defend Taiwan.
The conscription period is only four months, which is much shorter than in South Korea or Singapore, where enlistment lasts roughly 20 months. Taiwan’s short conscription period means conscripts are provided only with basic training, which has been criticized since conscripts do not actually get to serve in actual combat units.
Political considerations complicate matters—as national defense is not exactly popular with the electorate, which means there is little gain politically in tackling pressing deficiencies. As a result, increasing the conscription period is considered almost impossible. The public and politicians alike would rather talk about successes than be honest about critical failings.
The authorities have also not made much effort to educate or prepare the public for a potential military conflict. This is a stark contrast with Israel or South Korea—or even other countries under much less threat. For instance, Sweden issued a booklet to all households in 2018 on what to do during an invasion by an enemy nation, including taking part in the country’s “total defense.” Finland regularly educates its citizens about what war would look like.
Last year, when I made this point on social media, a government minister contacted me privately with links to student pamphlets that use comics to describe military issues. This does not seem very reassuring, though perhaps the authorities are confident that childhood school lessons are adequate for adult Taiwanese during an actual war.
Beyond the military threat, there are severe economic risks. Early in March, “freedom pineapples” became a popular topic after China banned imports of the fruit from Taiwan supposedly for biosafety reasons but which was likely meant to be punitive in the same way Australian goods have also been blocked. Almost immediately, Taiwanese authorities called on the public to buy up domestic pineapples, which they did, while Japan and Australia also bought orders. In a sense, Taiwan seemingly turned a trade blow into a psychological victory.
But this also served to underscore how much Taiwan depends on China since about 95% of pineapple exports were to China. China (including Hong Kong) is also the largest market for Taiwanese agricultural exports, accounting for more than 30% of trade in 2019. Taiwanese state-backed agricultural exporters were criticized by the opposition for failing to diversify Taiwan’s agricultural exports.
Beyond agriculture, China (including Hong Kong) is also the top destination for Taiwan’s exports, accounting for more than 43% in 2020, while Taiwan’s second-biggest export market, the United States, accounted for nearly 15%. In total trade, China (including Hong Kong) is also Taiwan’s largest partner, accounting for more than 34% in 2020. In comparison, the United States is Taiwan’s second-largest partner at 13%, while Japan is third at almost 11%.
In an attempt to reduce this dependency, Taiwanese President Tsai Ing-wen unveiled the New Southbound Policy (NSP) after coming into office in 2016. The NSP is intended to boost trade and economic ties with Southeast Asia and South Asian countries as well as Australia and New Zealand. On paper, it sounds like a decent idea, but in practice the NSP has faltered in recent years to the point where Taiwan’s trade with those countries actually decreased by 3% year-on-year in 2020, which followed a year-on-year fall in 2019 by more than 4%.
Taiwan saw record-high exports of more than US$345 billion in 2020, driven by high demand for electronic products and components due to a pandemic-driven increase in remote working and online schooling. As a result, Taiwan Semiconductor Manufacturing Co. (TSMC) has become a global name—especially for U.S. think tanks. As the world’s leading semiconductor foundry, accounting for more than 50% of global total foundry value, TSMC makes up a vital part of Taiwan’s economy and the global tech supply chain. Chip shortages in the auto industry in particular have highlighted the importance of TSMC, with even Germany appealing to Taiwan to supply more chips.
However, this has underscored a dangerous global dependence on Taiwan, due to the region’s geopolitical tensions. As a result, U.S. President Joe Biden and Japanese Prime Minister Yoshihide Suga are set to discuss creating supply chains for chips that would avoid relying on Taiwan when the two leaders meet on April 16. In addition, Intel recently announced plans to build two chip plants in the United States and set up a foundry division that would build chips for competitors, which if completed would see it go head-to-head with TSMC. This dependence on semiconductors is not ideal for Taiwan, and there is a strong need to diversify its economy—not just for competitiveness reasons.
This comes as Taiwan unveiled a reshoring campaign in 2019 to attract Taiwanese firms in China to come back and set up operations. While this has attracted more than US$41 billion in investments as of March, there are concerns about shortages in labor, electricity, and water.
The latter is especially acute as Taiwan is undergoing a drought due to a dry 2020 that saw sparse rain and no typhoons. The water shortage means industrial production might be affected as factories are subject to water reductions. Already, Hsinchu, where a major science park and TSMC are located, is having to obtain additional water from a neighboring county while other regions face water restrictions.
While the authorities have taken steps such as dredging silt from reservoirs and incorporating emergency wells, they have resisted raising prices, which are among the cheapest in the world, leading to excessive usage as well as a reluctance to utilize more efficient water management methods. There are also concerns over the supply of electricity, with some pundits arguing that the government’s stated intention of ending nuclear power, which supplied 12% of the island’s energy in 2019, should be reversed.
These are not new problems. Water and power scarcity, as well as land, labor, and talent shortages, goes back for years, but not much headway has been made in addressing these areas. As TSMC’s semiconductor manufacturing becomes more advanced and its production, as well as that of smaller domestic rivals, increases in volume, its water and electricity usage has also gone up significantly. However, with first-quarter GDP growth expected to be strong and exports still surging, it is hard to see Taiwan moving away from its current economic balance.
At a time when much of the world is still suffering terribly from the pandemic while Taiwanese are enjoying a lockdown-free society and thriving economy, Taiwan should be trying to make much-needed revamps in vital areas such as national defense and the economy as well as others. Taiwan deserves credit for how it has handled COVID-19—but the government cannot look to coast on this success forever.