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Pelosi visit to Taiwan shines light on trade and foreign policy


Sometimes you’re darned if you do, and darned if you don’t.

This characterizes Speaker Nancy Pelosi’s recent visit to Asia, in which she visited Singapore, Malaysia, South Korea, and Japan. She capped off the Asian visit with a final stop on August 2nd in Taiwan, which was the first visit by a U.S. House Speaker since 1997.

The Chinese government maintains a “one-China policy,” which means that it considers Taiwan to be a part of China. It is very sensitive about foreign governments recognizing Taiwan’s independence, and tends to react quickly and negatively when they do so.

This is exactly what happened immediately after the Pelosi visit. China quickly conducted military drills, even shooting live ammunition into international waters close to Taiwan. China’s drills simulated surrounding Taiwan in what would be a future invasion. Its drills were disruptive to the region, as some of its missiles crashed into what Japan considers its Exclusive Economic Zone. Making its displeasure crystal clear, the Chinese foreign ministry stated that the Pelosi’s visit “has a severe impact on the political foundation of China-U.S. relations, and seriously infringes upon China's sovereignty and territorial integrity. It gravely undermines peace and stability across the Taiwan Strait, and sends a seriously wrong signal to the separatist forces for Taiwan independence."

Was Pelosi’s visit the wrong move? Many strategists believe that de-escalating diplomatic tensions with China should be the ultimate goal for U.S. foreign policy with that country, and that Pelosi’s trip had the opposite effect by heightening tensions. When it was announced several weeks ago that the Speaker would visit Asia, there was widespread speculation whether she would visit Taiwan. This speculation led China to begin to issue negative statements and threats against a possible visit to Taiwan. Thus, the game of chicken began weeks before Pelosi landed in Taipei.

The Speaker was put in a tough position. Responding to Chinese threats not to visit Taiwan would have been interpreted as U.S. weakness in the face of a bully. Going forth with the visit could mean increased tensions on top of already strained relations due to the U.S.-China trade war, and the U.S.’s criticism of China refusing to condemn Russia’s invasion of Ukraine. Pelosi chose to go forward with the visit. In addition to its threatening military drills, China also announced that it was suspending dialogue with the U.S. on military relations and climate change. The U.S. was especially disturbed about China’s climate change pullback and stated that China was “punishing the world” by doing this.

The U.S. walks a very fine line in its relationship with Taiwan. Since Chiang Kai-shek and his nationalist forces were driven off of mainland China to Taiwan by Mao Zedong and the Communists, the U.S. has committed support to Taiwan, which chose as its official national name the Republic of China. For many years, both mainland China and Taiwan claimed legitimate authority over China. For nearly two decades after the end of WWII, the U.S. and China did not have official diplomatic relations.

This changed in 1972 with Richard Nixon’s visit to China, putting the U.S. and that country on the path to normalized relations. In 1979, The Carter Administration formally recognized the People’s Republic of China and de-recognized the Republic of China (Taiwan). However, the U.S. did not recognize Chinese sovereignty over Taiwan, it simply chose to acknowledge that Taiwan was part of China. This was a sore matter that threatened the normalization of diplomatic relations, which were eventually established. Thereupon began the cat- and-mouse game the U.S. plays by having formal diplomatic relations with China and unofficial ones with Taiwan.

And why does the U.S. care so much about having relations with Taiwan in the face of Chinese threats and negativity? Since WWII, Taiwan has evolved into one of the world's most stable democracies. It is a major trading and Asian strategic partner of the U.S. At $36.5 billion in purchases in 2021, Taiwan ranks eleventh on the list of most popular destinations for U.S. exports. It imports more U.S. products than France, Italy, Australia, Switzerland, and Spain. Therefore, Taiwan is important to the U.S. from a strategic and trade standpoint.

It is interesting to note that in its lists of threats and punitive actions after Pelosi’s visit, China has not made any major moves in its trade relationship with the United States. China knows how much it depends on its exports to the U.S. to fuel its economy. Chinese sentiment in the U.S. is at rock-bottom levels and many business people and policymakers are calling for a hard pivot away from China. So, while China can throw a tantrum by curtailing dialogue and saber rattling, the last thing it wants to do is further inflame an anti-Chinese movement in the U.S. after a legal and expected visit by a U.S. official to Taiwan.

Jerry Pacheco is President of the Border Industrial Association and Executive Director of the International Business Accelerator.