Strategy Insights Ep 97: Dethrone America? Beijing Makes Its Move！

Good morning, ladies and gentlemen. Welcome to Professor Ming's Strategic Insights. In recent years, the Chinese, the Communist Chinese, has been chanting a slogan, We, China is rising. We, China is rising under the leadership of Chinese Communist Party. And that's the things they've been saying for several years. And some even go as far as to saying that we're powerful enough to challenge the U.S. global hegemony. Well, that may not be the official status, but actually that's what they have in their minds. So under that line of thinking, then the incorporation or annexation of Taiwan is a natural step. The question is, in order to incorporate Taiwan or annex Taiwan, will they resort to the use of military forces? Well, the answer is maybe, maybe not. Well, this is a very hot issue. So many people talk about this. Mr. Ray Dalio, the founder of the Bridgewater Associates, made some very interesting observations about the questions. Let me begin with some of his observations. He argues that in the past, in history, in ancient history, when an empire rises, when they rise, they always resort to things like establishing overseas bases, such as naval bases, or colonization, or direct occupation of a foreign land, and things like that. And as Dalio sees it, well, that China may not copy what they did before. That means China may rise by embarking on a very different path. They may copy or they may recreate a modern type of a modern model of what they call a tributary system. That means the powerful may not incorporate or may not invade the weak, but asking the weak to submit to or bow to its authority, ask and make the weaker neighbors to entering into its tributary system by way of a trade, diplomatic pressure, military intimidation, some kind of mild punishment, and things like that. And to Taiwan, Dalio continues, that communist China or Beijing may not resort to military forces, no military operations. It's probably more like by way of diplomatic pressure or economic leverage, military intimidation, psychological warfare, or political infiltration, and things like that. And then they try to reduce the room for options for both Washington and Taipei. So in Dalio's view, that's more likely to happen to Taiwan. That is to say, in the semi-US competition, Taiwan is the flesh spot, and Taiwan's semiconductor industry is the flesh spot of the flesh spot. Taiwan occupies a pivotal spot of global supply chain of the most advanced chips. Once Beijing is powerful to hint that they are capable of influencing or hindering the supply chain, it may cause us a crisis in the global markets and also in AI industries globally. Beijing doesn't even have to exercise any actual pressure. It will be effective as long as the market believes it will happen. Then it happens. Dalio even believes that in the future, Beijing may frequently apply to this kind of so-called tributary system type of pressure to test the bottom line of the United States and to weaken the United States' ability to contain China and to push the Taiwan issue developed toward the direction more favorable to Beijing. That's basically what they have in mind. If the United States is not willing to or is not ready to enter into a war with Beijing, then Beijing may be able to change the status quo of the region step by step without actually resorting to military force. That means a war may not begin by a fire of the gun, but rather by a series of concessions. I must say that although Dalio is a financier in Wall Street, he does have very insightful observations about the trilateral relations among Beijing, Washington, and Taipei. So his observations are quite penetrating. We do witness a sharp increase, or at least an obvious increase, about the so-called gray zone tactics against Taiwan. For instance, we have seen an increasing number of the so-called military patrol of combat readiness. We see a lot of harassment by Beijing's coastal guards or by Beijing's fishing boats, and even by more and more military drills surrounding Taiwan. And things like these occur more and more frequently. For instance, in early June, actually on June the 6th, Beijing sent out three of its coastal guard vessels, big ships from more than 6,000 tons to 10,000 tons, big ships, to patrol the waters of the northeastern part of Taiwan, actually somewhere between Taiwan and the Ryukyu Islands. That little did Beijing know that this act of theirs invited very strong repercussions from countries like the UK, France, and Germany. The representative offices in Taipei of these three countries, UK and France and Germany, they issued a joint declaration condemning the act of Beijing, expressing their deep concern about the matter, and condemning Beijing of violating or sabotaging the regional stability and the safety of navigation. Furthermore, the American Institute in Taiwan, so-called AIT, also issued a statement condemning Beijing of sabotaging or ruining the stability of the region, emphasizing that the waters in question have been under Taiwan's management peacefully for over 70 years. So that statement is almost a direct recognition of Taiwan's jurisdiction of the waters in question, countering Beijing's intention to internalize Taiwan and the neighboring waters. My conclusion is simple. Dalio does have some insightful observations about the issue, and Beijing does increase its gray zone tactics against Taiwan, and these tactics against Taiwan aims not only at Taiwan, but also at United States global hegemony. And that's all for today. I hope you like today's program, and please share it with your friends, and subscribe to our program, and do remember to click the icon bell. And that's all for today. I'll see you next time.