Asian affairs expert and author Gordon Chang joined Closing Bell to discuss the root of recent tensions between the U.S. and China over Taiwan, a key source for all-important semiconductor chips.

Closing Bell

Taiwan at the Center of Flaring Tensions Between U.S. and China

Welcome back to cheddar. News is closing bell. Everyone hold tensions between the US and china flaring over the democratically governed Taiwan following the provocative trip to the island by House Speaker Nancy Pelosi which infuriated china's Communist Party or china responding with missile tests and live fire drills, threatening the fragile peace in the region whose significance has only increased due to its status as a key source of semiconductors. Well, joining me now is Gordon, chang asian affairs expert and author of the coming collapse of china. Gordon? It's great to have you on the show. Talk to me about the root of these tensions and why semiconductors are so important. Semiconductors are important because there's one company in Taiwan that makes 92% of the world's made to order chips which are the most important ones and that is TSMC Taiwan semiconductor manufacturing company. But you know kristen there's you know, we focus in on on the china's attempts to take over Taiwan but we've got to remember that at this moment. There are chinese troops deep into indian controlled territory in ladakh in the Himalayas. Um chinese vessels are trying to pry second thomas shoal from the Philippines and south china sea and then in the east china sea in recent weeks chinese vessels have been loitering in Japan's territorial waters around the Senkakus china's been engaging in some very dangerous aerial maneuvers almost brought down in Australia and P eight reconnaissance craft. This is china that is extremely dangerous right now and it's not just Taiwan. Okay, so let's let's go back to Speaker Pelosi's trip. Gordon? You've got such great insight here. Why was it such an issue to china that Speaker Pelosi went to the region. I think it's because they felt they could intimidate the biden administration, especially after biden's july 20 comments to reporters that the pentagon did not think it was a good idea. We can measure chinese propaganda. But after that comment it sounded more ominous. We have a more frequent propaganda releases. Beijing felt that they could get some headway here. Um but you know, Speaker Pelosi had to go because if she didn't, she would have emboldened and legitimized the worst elements in the chinese political system by showing everybody else that they could intimidate the United States and then we'd be in an even more dangerous dynamic. So it's good that she went, I don't think that it's provocative in the sense that, you know, one democracy should have the right to talk to another and if totalitarian state gets upset? Well that's too bad. So what happens next? I mean, could we see an armed conflict between the world's 1st and 2nd biggest economies over this? Sure, and we can see World War Three and we can see the end of humanity. Any of these things are possible. Um I don't think that china is going to invade Taiwan, especially this year, as some people have said. Um but we've always got to remember that china can take us by surprise and most important in the pentagon doesn't take this into account. Most important the chinese can trigger an accident That can cause conflict as we try to do on May 26 with that Australian ph that I mentioned. So um we are you know we just we Americans are just oblivious to what's going on. We are purposefully ignoring what the Chinese say and you know history's gonna look back at us and say we Americans just failed to defend ourselves, our friends and international order. So we do have a big development here. Gordon? And I want to get your take on we are learning that china's President xi Jinping is actually gonna meet in person with President biden and his first foreign trip in more than two years. How do you think this meeting is going to go and what might come out of it? I think very little will come out of it except that of course biden will delay taking action that is necessary. We should actually stop talking to china. We have told china what we expect what the international community expects and china just is absolutely determined to do things which are taking down um not only the United States but also global order. So we should stop talking to the chinese and just start imposing costs. We need to give the chinese a reason to talk to us and continue discussions only gives them reason not to act not to do the right thing interesting. Um Well biden signing the inflation reduction act, tens of billions of dollars expected to go to semiconductor manufacturing here in the U. S. Does that make the US more secure? Does it help the global supply chain or is Taiwan semiconductor so big that a lot of these issues 5, 10 years from now will still persist. Well of course the chips act does help us self sufficiency. Um It should have included a provision that would have prohibited um those taking federal money from actually making what are called legacy chips in china. Those legacy chips are we our military runs on. They don't run on the most sophisticated chips so it helps. But it should have helped more. And clearly we're not serious about obtaining self sufficiency at a time where it's very clear that we may no longer get goods across the pacific interesting. Alright asian affairs expert and author. Gordon? Chang? Gordon? Thank you as always for joining us. Good to get your take