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Welcome back from the holidays, Swampians. January is a time to think about the biggest economic and political questions of the coming year, and how they may play out. One of the top issues on my list is Taiwan. Always a hot button between the US and China, Taiwanese independence was thrust further into the spotlight, after Nancy Pelosi’s controversial visit to the island and Joe Biden’s statements about the US willingness to defend Taiwan militarily against any Chinese invasion.

While I admire the president’s unequivocal support of a longtime ally, I’m going to come clean and say that I feel very nervous about the US position on Taiwan. I wouldn’t want my own son to have to go into a hot war to defend the island. This is a tiny, Asian country that has done almost nothing to bolster its own military position. It used to be part of China and probably will be again at some point. That’s simply the truth of the matter. The US relationship to the nation (like so many relationships abroad) reflects a postwar moment in time that has long since ended as the continent has become richer and more developed. China has become the clear regional leader and is now vying with the US for global leadership in many areas (see my column today on the rise of the petroyuan and what it could mean for energy markets and the dollar). 

Let me be clear — I don’t think we are going to see any Chinese moves on the island in the short term. China has its own debt troubles and Covid outbreak to deal with right now. But a US foreign policy that pretends that America can and would simply go straight into a hot war in the South China Sea with or without help from its Asian allies is worse than a bluff — it’s a dangerous denial of the reality that the US is no longer the dominant power in Asia. To continue this denialism it is to flirt with total disaster.

For starters, what does the end game of a military defence of Taiwan look like? Not pretty. There’s no way China backs down from this one. And other Asian nations that have to live with China in their backyard are unlikely to want to take sides. Most are hedging their economic bets between the US and China, hoping to find a way to live in between the giants until a new world order emerges. (This is making countries like Australia, which is being forced on to something close to a war footing, very nervous).

I’m hoping that this year will bring less talk about any possible military ventures in Taiwan, and more facts about supply chain vulnerabilities in a decoupling world. (I’m a big of the bipartisan bill put forward recently by Senator Marco Rubio and Representative Ro Khanna to require cabinet-level agencies to identify supply chain weaknesses). It’s absurd that the US is doing anything to raise the stakes at a time when we have yet to even understand the economic ramifications of, say, a South China Sea blockade.

Beyond this, I’d agree with Chas Freeman’s recent piece arguing that the US must find a way to support a new Asian security architecture without having to “lead or dominate” it. While I wouldn’t want to the US to abandon Taiwan completely, I am for moving away from their semiconductor industry, supporting Taiwanese immigration to the US, and finding ways to engage that don’t raise the possibility of war with China. The question is how to tip-toe away from the current rhetoric around Taiwan without making allies feel that the US has pulled another Afghanistan, or emboldened Russia in its war on Ukraine. Ed, any thoughts there?

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  •  I am not much of a Royals watcher, but I did see the Netflix series Harry and Meghan as part of my holiday respite (which involved a lot of spacing out in front of the TV). I came away from it being much more pro-Meghan. She’s clearly smart, tough, and entrepreneurial — all admirable characteristics in my mind. Harry got incredibly lucky to find her — and an exit strategy. To Americans, self-promotion is always a plus. If you don’t put yourself forward, who will? To Britons, especially upper class ones, it seems to be a minus, and I think that’s about the embedded class structures that work to keep people in their boxes. I love that Meghan, with her Hollywood connections and media savvy, found a way to outproduce the royal family, who seemed just so stiff and irrelevant by comparison. Note to Britons: save your tax revenue and just put celebrities on the tabloid covers.

  • Totally agree with Rep. Ro Khanna that the US must once again become a manufacturing powerhouse, as he wrote in this recent Foreign Affairs piece.

  • And for investors and market watchers, this Michael Howell piece in the FT, on how the Fed has begun stealth quantitative easing again, is worth a close read.

Edward Luce response

Rana, I certainly don’t want a US war with China over Taiwan or anything else — that should be taken as read. Any such clash would end the world as we know it. But the US cannot afford to give China carte blanche in how it treats the renegade island. Yet it should also avoid going to the other extreme.

In my view the Biden administration has gone too far in identifying China as an enemy and pursuing an undeclared policy of China containment á la George Kennan with the USSR. Four times Biden has said the US would come to Taiwan’s defence and four times his staff have had to issue clarifications that US policy has not changed. That policy, of strategic ambiguity, is more than half a century old and should remain Washington’s position. In essence it accepts that there is one China but reserves the right to provide Taiwan with the means to defend itself if China tries to resolve the matter through force.

Congress’s appropriation last month of $10bn in new US military assistance for Taiwan risks significantly increasing the tensions and may deepen paranoia in Beijing that the US is shifting towards a two-China policy. That would be a grave error. The only balm for such potentially fateful misunderstandings is more engagement, more dialogue, and sustained diplomacy. I want to see a lot more of that from the Biden administration, including a full-blown Biden-Xi Jinping summit following their relatively good-natured bilateral in Bali in November.

As regards the Harry and Meghan documentary, I haven’t watched it and doubt I will bother. All I would say is that I fully empathise with anyone’s desire to get out of the royal family: it is a stifling and rigid life in which you essentially forfeit your right to free speech. I have far less sympathy for Meghan and Harry’s entry into the Kardashian’s. If Netflix gave me $90mn to make a documentary, I imagine it would be persuasive. Anyway, that’s my royal commentary quota exhausted for the next 12 months. For the next six weeks I’ll be on leave to work on my forthcoming biography of Zbigniew Brzezinski. Our colleagues Peter Spiegel, Gideon Rachman and Richard Waters are kindly filling in for me. Happy 2023 to all Swampians.

Your feedback

And now a word from our Swampians . . .

In response to  “Rubio has it wrong on TikTok”:
“Every US social media platform is denied access to China through various machinations and rulemaking. Run businesses like diplomacy (ie, with reciprocity as the guiding principle). Take the example of Chinese equities where tough action brought China to heel (remains to be seen if they will comply in the long term).” — Reader Bounded Rationality

“We always hear about social media platforms collecting people’s data, but let’s be clear: the data they are collecting is nothing that people don’t give up voluntarily. in the case of TikTok, it’s what someone’s favourite pop stars are, and what sort of comedy they like. Doubtless, some smart AI can make something out of this, but I hardly think it constitutes a serious national security risk.” — Reader Richardinho

Your feedback

We'd love to hear from you. You can email the team on swampnotes@ft.com, contact Ed on edward.luce@ft.com and Rana on rana.foroohar@ft.com, and follow them on Twitter at @RanaForoohar and @EdwardGLuce. We may feature an excerpt of your response in the next newsletter

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Letter in response to this article:

Taiwan ‘has never been a part of communist China’/From Kelly Wu-chiao Hsieh, Representative, Taipei Representative Office in the United Kingdom, London SW1, UK

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