Freedom Beer in Taipei

I’m excited to be bringing you my third edition of the Democracy Dispatch from Taiwan.?

Perhaps you signed up from week or you are a first-time reader today, under all circumstances, welcome! Do leave me comments and share with a friend or two.?

I have three exciting topics on Taiwan beer, minuscule semiconductors, and Taiwan’s laudable support for Ukraine, so let’s dig in.??

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China’s economic coercion

On Saturday, it was time for a #FreedomBeer in Taipei. Many steeped in to say cheers on Twitter . The background is that the People’s Republic of China banned imports of some goods from Taiwan including beer.?That is part of a long and dismal track record of authoritarian economic coercion. China was happy joining the WTO in 2001 and reaping the benefits of economic globalization.?

But China never really wanted to play by the free trade rules. Now it uses market access to bully companies and even countries.?For example, China targetted Australia in 2020 for demanding something as outrageous as a full investigation into the origins of COVID-19 in China. That’s still a good idea. Australian wine (#FreedomWine ) and other products were banned.??

In 2021, China then set their sights on Lithuania, going as far as erasing it as country from its customs books and trying to hit internal supply lines in the EU. Lithuania’s ‘crime’ in Beijing’s view? Increasing ties with democratic Taiwan. China wanted to set an example to scare other European nations. Instead, I hope Lithuania’s example will inspire other European countries.??

But it is not enough to drink ??. The free world needs to poke back, stand united and secure effective deterrence.??

That’s why we at Alliance of Democracies Foundation , led by our chairman Anders Fogh Rasmussen have developed the concept of an Economic Article 5 among free nations to counter authoritarian economic coercion. I wrote about the suggestion for the Wall Street Journal in 2021. ?

It is also a part of our contribution to the next president Biden #SummitforDemocracy in collaboration with Ministry of Foreign Affairs of Lithuania and Freedom House ?which you can read more about by clicking here .?

Outsourcing semiconductors: New holes in Taiwan’s semiconductor shield?

A big news story was TSMC, Taiwan’s crown-jewel company in semiconductor production, opening a new factory in Arizona and a large investment of $40 billion.?Apple’s CEO, Tim Cook, said proudly that iPhone chips could now be stamped ‘made in America’.???

Globally, Taiwan is in the lead on the top end of semiconductor production. We are talking ridiculously miniscule from 1 to 10 nanometers (yes, that’s a billionth of a meter). For years, it has worked smoothly with Taiwan and TSMC being the global hub.?But COVID-19 disruptions on supply chains, and the US-China tech war, make that Taiwanese pole position more fraught.

Reshoring for secure supply lines is the name of the day with the US pushing this massively by spurring US-based production. The EU and Japan are running in the same direction, also trying to lure semiconductor manufacturers to relocate to their markets. And so is China, desperately trying to catch-up in chips, and throwing billions after research, technology transfers, and after buy-ups abroad which US restrictions have made more difficult, if not impossible.??

In the short term, these global developments will not disrupt Taiwan’s eminence in semiconductors. Its so-called ‘silicone shield’ remains intact, meaning that a Chinese war against Taiwan would put the world economy, including China’s, to a stand-still. One estimate, quoted in Bloomberg, costs minimum 1 trillion USD in immediate disruption. The world relies on semiconductors for all things tech in the world. And last but not least, TSMC keeps the holy grail of top-top end of semiconductor production (down to 1 or 2 nanometer) in Taiwan.??

But long-term, it does pose a challenge. It could poke holes in the silicon shield. It will become a much more bifurcated world economy: between China and the US. Morris Chang, the iconic founder of TSMC who has been in semiconductors since the 1950’s, also said nostalgically at the Arizona opening:?"Globalization is almost dead, and free trade is almost dead."?

Taiwan stands with Ukraine

Geographically, Taiwan and Ukraine are in two very different corners of the world but they do share, unfortunately, having an aggressive authoritarian neighbor. Many Taiwanese people are appalled and seized by Russia’s war of aggression against Ukraine.??

Here in Taipei, I have experienced the Taiwanese solidarity with Ukraine. On Sunday, I went to the Ukrainian Winter Festival where they raised 120 thousand Taiwan dollars for Ukraine! Well done to Olek Shyn and the many other organisers & volunteers. I bought a wonderful teacup depicting a pro-Ukraine rally on Taipei’s Freedom Square. It stands nicely next to the Copenhagen Democracy Cup, my great AOD-team made me for this trip.??????

At the festival, I met Tony, a Taiwanese soldier who has returned from fighting in Ukraine for their liberty against the Russian occupiers. We will meet up again so I can hear more about his experiences.??

Fittingly I also have a eulogy coming out tomorrow in Danish newspaper Berlingske for Jonathan Tseng, a brave Taiwanese soldier who died in combat in Ukraine and was given a final funeral ceremony in his hometown of Hualien last weekend. You can read it here . #TaiwanStandsWithUkraine is not merely a hashtag.??

My shout-out goes this week to

Oleksandr Shyn for his dedication to Ukraine and Taiwan. And to NPR’s Emily Feng for being helpful and for providing excellent content. Listen to her excellent coverage of Taiwan and semiconductors . And finally, a shout-out to Alexander Sj?berg , Berlingske’s new Asia-correspondent whom I had the pleasure of sharing a meal with in Taipei.??

My word of the week is

傘 meaning umbrella. I have used that word all these last seven days, as it has been raining all week in Taipei, but I still often forgot my umbrella and had to go back to retrieve it.??