Taiwan matters more than we'd like to tell ourselves

For most businesses, risk diversification is a good thing.

- Rahul Jacob

Yet, late last year, Morris Chang, who heads Taiwan Semiconductor Manufacturing Corp, the world’s largest semiconductor company, sounded downbeat as plans to break ground on a new plant in the US proceeded apace. Globalization and free trade, he insisted, were almost dead. He grumbled that the US government’s plans to bring semiconductor manufacturing home were “doomed to fail." Yet Chang knows better than most that, controversial as industrial policy is because it usually comes with higher costs, his new plant in Arizona reduces the risk that Beijing will enjoy dominant control of chip production if it were to attack and overpower its tiny neighbour.

This week, it was the turn of French President Emmanuel Macron to underplay that worryingly likely possibility. Macron went further in a reference to Taiwan when he said Europe should not fall into a “trap" and become involved in “crises that are not ours." Commentators in China said Macron was “brilliant". Pity Taiwan. With a population of just 24 million and an army a fraction the size of China’s, it needs the world’s support. Instead, multilateral agencies and global leaders have pandered to China’s claim that it is a renegade province by not recognizing Taiwan as an independent country with a vibrant democracy. Macron’s blunder and Chang’s grumble about the costs of moving production overseas are just the latest examples of such short-sightedness.