The Taiwan issue lies at the core of US-China relations. The future of cross-strait relations will have a significant impact on peace and stability in the Asia-Pacific and the world. In the past two decades, when US-China relations were smooth, cross-strait relations usually moved in a positive direction. Conversely, when US-China relations became less stable, cross-strait relations also became difficult. As long as China believes that the United States is supporting Taiwan’s independence, China will inevitably stand ready to react strongly. China’s strong reaction to the visit of then-House Speaker Nancy Pelosi in 2022 is evidence of this fact.

Immediately after Pelosi’s visit, ASEAN states issued a Foreign Ministers’ Statement expressing their concerns and calling for “maximum restraint.” Most ASEAN states have a huge stake in the Taiwan Strait, not only because China is their largest export market or import source, but also because of people to people exchanges, trade, and investment activities with Taiwan, including a large presence of foreign laborers.

After Pelosi’s visit in Taiwan in August 2022 and China’s extensive military drills in the Taiwan Strait, fears of supply chain disruption have emerged among Taiwan’s trade partners, including ASEAN states, Japan, and Europe. An increasing number of companies have urged their suppliers or contract manufacturers in Taiwan to consider a “Taiwan + 1” strategy to extend supply chains outside Taiwan with the objective of achieving de-risking.

A particular aspect of supply chain disruption which has received much attention is that of Taiwan’s leading role as a semiconductor manufacturer. It has been suggested that this serves as a “Silicon Shield” and could act as a strong deterrent to China. However, some have drawn the opposite conclusion, arguing that control over the strategic industry serves as an incentive for invasion.

The report suggests that, as international supply chains shift and the security situation around Taiwan develops, the ‘Silicon Shield’ may not protect Taiwan from a Chinese attack. Focus must instead lie on self-restraint and constructive dialogue, to ease tensions across the Taiwan Strait and maintain the status quo. The report makes several recommendations to this end.

Resume cross-strait dialogues to avoid escalating tensions in the Taiwan Strait

• Taipei and Beijing should both send positive signals to resume dialogues, possibly starting with the resumption of tourism or the exchange of degree students.
• The United States can play an important role in encouraging dialogue while reassuring both parties that it does not intend to take any action that would force a change in the status quo.
• Regional states like Singapore and South Korea may consider creating a platform for cross-strait conversations and encouraging self-restraint.

Ensure correct understanding of Taiwanese support for the status quo and Lowest interests in independence, and explore an innovative theory to replace the 1992 Consensus

• China should recognise the Taiwanese public’s low interest in seeking independence, and the two sides should consider exploring approaches to maintaining a “permanent status quo.”
• China needs to better understand the evolving sentiment in Taiwan, particularly the rejection of independence following developments since the 1992 Consensus and China’s broken promise of “One Country, Two System” in Hong Kong.
• The new majority in the Legislative Yuan should set up a special committee to review domestic views on independence and host policy debates aimed at gradually finding a consensus on how to maintain the status quo, which reflects the will of the Taiwanese people.
• Scholars should conduct surveys of the one million Southeast Asian nationals – migrant workers, foreign spouses, and international students – in Taiwan to understand their views of the issue of independence, status quo, and unification, to underscore the stake that ASEAN countries have in peace and stability in the Taiwan Strait.

Increase joint efforts to deter Chinese use of force and assist Taiwan’s meaningful international participation

• Countries and groupings, such as the QUAD, G7, OECD, and EU, should work to deter China from conducting a military invasion of Taiwan by warning China of the extremely high costs of unilateral change to the status quo.
• Countries and international organisations sharing common interests with Taiwan should assist it in joining public health or economic organisations or mechanisms. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) members should deter political interference in assessing new members’ applications.