The presidents of China and Taiwan, Xi Jinping, and Tsai Ing-wen, in their New Year messages had warned each other. Xi had said that the complete unification was the aspiration of people on both sides. Tsai said, “We must remind the Beijing authorities to not misjudge the situation and to prevent the internal expansion of ‘military adventurism’”. Zhu Fenglian, spokesperson of the Taiwan Affairs Office in Beijing reacting to Tai’s speech said, “We are willing to strive for the prospect of peaceful reunification.” But he had warned Taiwan against crossing ‘red lines’ even as Tsai had expressed concern over erosion of freedom and democracy in Hong Kong.

Interestingly, after China had started on its economic reforms under Deng Xiaoping, a large chunk of investment came from Taiwan, across the strait. China found it useful and it had even encouraged it. Taiwan was already a success story as a market economy, and it saw a great opportunity when China had opened its economy.

It seemed that both sides are complementing each other’s strengths. Of course, the Americans and the rest of the Western market economies followed suit. Taiwan had earned a place for itself in the 1980s as one of the “Tiger economies” along with South Korea, Singapore, and Hong Kong. While Singapore and Hong Kong had shone as financial hubs, South Korea and Taiwan became manufacturing hubs for electronic components and computers.

And all these countries had achieved economic growth from the 1960s onward on the back of exports. They suffered a setback in the 1997 Asian economic crisis. But they retain much of their hard-won economic strengths. Though Hong Kong was handed over to China by Britain as the 99-year-old lease had expired, Hong Kong continued for a long while as a market gateway to China.

There is the all-important political angle. As the Western countries led by America were engaged in a pitched ideological battle with communism, China was denied the seat in the United Nations Security Council (UNSC) after the communists took over the country in 1949 under Mao Zedong. Taiwan, the small island, continued to enjoy the privilege of representing China at the influential UNSC. But this ended when United States president Richard Nixon travelled to Beijing and shook hands with Mao in 1972. China came back to the UNSC, and Taiwan had lost its place. Taiwan had however continued to enjoy American support, and the island-country had become an economic power in its own right.

When Hong Kong returned to Chinese control, a compromise evolved wherein Hong Kong had enjoyed its democratic and market economy status as before and it was called “One Country, Two Systems.” But nearly a quarter century later, Hong Kong is being integrated with the rest of China and it is losing its democratic status. Taiwan has a stronger claim to hold out. It still enjoys American support, and President Joe Biden had declared that America would defend Taiwan though he left the question unanswered whether America would go to war with China over Taiwan. China under President Xi has adopted a more aggressive position than ever before, and Taiwan has become the hot spot as it were of the new cold war between America and China.

There are indications that China would not resort to military takeover of Taiwan despite its overwhelming military strength because this would destroy the economic base of the island-country which would be a big loss to China. That is why, Chinese leaders while making their claim over Taiwan unambiguous, still hold themselves back. They do not want to precipitate a world crisis. Nor is America willing to wade into another war in Asia.