The digital gadgets you use every day and power modern life, from phones, computers, to cars and industrial machinery, could see prices soar to all-time highs. This scenario is possible if one of the “cold wars” the world is experiencing breaks out: that of China and Taiwan, to which the United States could also join if it decides to choose to defend the island.
Currently, in recent days, Taiwan’s Defense Ministry said that more than a dozen aircraft of the chinese air force have crossed the median line of the straits of the island nation in the last 24 hours. In addition, US officials have visited the island.
The reason, China threatens an invasion or attack the island, under the argument of creating “one China” that includes Taiwan. If it comes to pass, according to internationalists, this could cause even stronger economic effects than those left by the conflict in Ukraine.
The key fact that explains the magnitude of the matter is that Taiwan, an island nation 180 km east of China, is currently the world’s largest manufacturer of semiconductors, which are the chips necessary for the production of technological artifacts such as those mentioned above. Its participation in the chip market is 65%, that is, it concentrates more than half of world production; this is followed by South Korea, with 18%; China, with 5% and another 12 percent.
To further calculate its power in this industry, the Taiwan Semiconductor Manufacturing Company alone controls half of the world market for the sector and accounts for 72% of US imports in this sector. But the data continues. There are others that are even more alarming, and they are those given by the Argentine researcher and writer, Ignacio Montes.
“The global effects of a military conflict between China, Taiwan and the United States would be serious. This, because the United States produces 24% of global GDP, China between 14% and 16%; but if we add the allies of the North American country, those of the West, this reaches 32% or 34%. In turn, China has absolute predominance in what has to do with global trade.
40% of international trade passes through the China Sea and 70% of the East Asian country’s merchandise circulates, that would be the disputed area,” Montes details. With this in mind, according to the expert, “if China then decides to confront the West in warfare, it would see that flow of money and goods cut off, and as a consequence, the entire global economy, which depends on these geographical cooperation, would be drastically impacted on a global scale.” global”.
This means that, to the economic problems derived from the pandemic, the supply crisis, the tight monetary policy and the war between Russia and Ukraine, one more crisis for the economy and global stability could be added. For example, in 2022 alone, the war in Ukraine it cost the global economy more than $1.6 trillion, according to the German Institute for Economic Studies.
But without a doubt, analysts say, this would represent a greater cost for the world, since it is about three nations in dispute, two of them major world powers. His war could create new problems, but also exacerbate existing ones, such as the supply crisis that is punishing, among other sectors, the aforementioned semiconductors, which has been affected by transportation problems caused by the restrictions on covid.
With the triangular war between China, Taiwan and the United States, the situation would no longer be one of delays in the distribution of chips, but of shortages, because the factories that produce them could be destroyed by an invasion. “Taiwan became a world factory during the cold war. The Taiwanese make the most advanced and sophisticated microchips, no one else knows how to make them, not even China,” explained Camilo Defelipe Villa, a specialist in Chinese economics at the Faculty of Political Science and International Relations at the Javeriana University.
Defelipe is emphatic in saying that “whoever has control over Taiwan has control over the current core of the global economy”, also in stating that this “could trigger the third world war”. An invasion of Taiwan would mean losing the United States its biggest supplier of chips and diminishing its won presence in Asia.
But how likely is it that this is a reality, that China, Taiwan and the US will face each other? “I think that China and the United States are going to continue in these games of tension and demonstrations of forces. This, because if the war in Ukraine destabilized the economy, one of this magnitude would lead to total collapse, since China is the world’s factory, it produces everything from manufacturing to technology. That is why Taiwan is the 23rd economy by GDP.
