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Terry Gou, a 72-year-old billionaire and founder of iPhone maker Foxconn, campaigns for his presidential bid in Taipei
Terry Gou says China can’t pressure him. China says ‘Watch us.’
Terry Gou is the billionaire founder of electronics giant Foxconn, the manufacturer of Apple iPhones in mainland China, and he’s one of Taiwan’s richest men. Gou has historically supported the opposition – and China-friendlier – Kuomintang, or KMT. But he recently announced that would run independently for the presidency , taking on KMT candidate Hou Yu-ih as well as more hawkish candidates.
Foxconn’s extensive business in China prompted questions of undue influence from Beijing, but Gou has said he won’t let Beijing push him around – and that he doubts China would want to face the geopolitical implications of disrupting Foxconn’s business.
Famous last words? On Sunday, state media reported that tax authorities are
scrutinizing
Foxconn subsidiaries while the natural resources ministry looks into the company’s land use practices. Foxconn’s stock price on the Shanghai exchange slid 10% on the news before triggering an emergency halt in trading.
“It’s not Terry Gou’s policy positions that are problematic for Beijing,” says Eurasia Group China expert Anna Ashton, “it’s that he is dividing the KMT voter base and making it less likely that anyone other than Lai can win,” referring to the incumbent Democratic Progressive Party’s William Lai.
Lai is leading in the polls , supported by 32% of Taiwanese, but he faces a strong challenge from fellow China hawk Ko Wen-je, at 23%. That’s a clear 55% majority of voters backing China hawks — while Gou, the most dovish, is trailing at just 10%. The KMT’s Hou has 17%, leaving him well behind his opponents.
Unless, that is, Gou were to bow out. If Gou’s supporters shift to Hou, and the China-hawk vote stays split, there’s a fighting chance that Beijing can avoid the worst outcome for its interests. Who said Beijing doesn’t understand democracies?
Taiwan's President Tsai Ing-wen
President Tsai Ing-wen visits last African state that recognizes Taiwan's independence
Taiwan’s President Tsai Ing-wen is currently on a diplomatic visit to Eswatini, the country’s last remaining ally on the vast African continent. The southern African country is hardly a natural ally for democratic Taiwan: King Mswati III has ruled the landlocked country of 1.1 million with an iron fist since he assumed the throne in 1986 at age 18. It’s the region’s last absolute monarchy.
What’s Tsai doing there? Eswatini is one of just 13 remaining countries worldwide that has not ditched ties with Taiwan in favor of relations with China, which views the self-ruled territory as part of the mainland. Since Tsai took office in 2016, Beijing has coaxed nine countries into switching alliances, most recently Honduras, and continues to pressure other holdouts to follow suit.
Tsai’s trip – notably on the heels of Chinese President Xi Jinping’s visit to South Africa – saw Taipei dole out $1 million in funds to the kingdom. And it comes ahead of Taiwan’s election in Jan. 2024, where Tsai’s VP William Lai is ahead in the polls. (Tsai is term limited.)
Terry Gou, Foxconn founder announces bid for Taiwan presidency during a press event in Taipei
Foxconn founder joins race to become Taiwan’s president
Terry Gou, the billionaire founder of Foxconn, has thrown his hat in the ring for
Taiwan’s
presidency – making waves in an election that will have wide-ranging implications for the Western Pacific. Having failed to win the opposition party’s nomination, Gou will run as an independent focused on taking down the ruling Democratic People’s Party, which he
blames
for the increasingly fractious relationship between Taiwan and China.
But ironically, Gou’s candidacy makes a DPP win more likely in the January 2024 election by pulling votes away from the other two candidates hoping to beat DPP nominee, Vice President Lai Ching-te.
Gou – who is polling in last place at just 15.2% – has expressed interest in teaming up with another opposition candidate to avoid splitting votes. But Lai has a formidable lead at 33.9%, and if all three opposition candidates remain in the race, it is likely the DPP will prevail.
Gou and the other two opposition candidates support closer ties between Taiwan and China. Gou, who has called for talks under the one-China framework to reconvene, has been questioned about a potential conflict of interest because of Foxconn’s huge investments in China. Having stepped down as chairman in 2019, Gou denies that Beijing would have any leverage over him, and while he remains a substantial investor in the company, he has said he would “ sacrifice ” his personal assets in China in the event of an attack on Taiwan.
The DPP, meanwhile, champions Taiwan’s autonomy from China, much to Beijing’s disdain. To rile up pro-China voters, Beijing has threatened that a win by Lai could lead to military action, a warning that opposition candidates point to as evidence that the DPP is responsible for rising tensions with Beijing.
Voter intention for Taiwan's presidential poll in 2024.
The Graphic Truth: Taiwan's surprising third-party challenger
Taiwan goes to the polls in January 2024 in what is likely the most consequential presidential election since the self-ruled island embraced democracy in 1996. As usual, the vote will be all about ... China.
Looking to replace term-limited President Tsai Ing-wen are VP William Lai , from the ruling Democratic Progressive Party, and Hou Yu-ih, a former top cop nominated by the opposition Kuomintang Party. The DPP and the KMT have always dominated Taiwanese politics, with the former taking a tougher line on relations with the mainland. But this time a third-party candidate wants to give them a run for their money.
Enter Ko Wen-je, a two-time former mayor of the capital, Taipei, who's running on the first-ever presidential ticket of the upstart Taiwan People's Party. Ko — who sometimes expresses himself awkwardly because he has Asperger’s syndrome — has been grabbing headlines after recently placing second in the presidential polls ahead of Hou.
Ko is gaining traction thanks to his popularity with young voters fed up with the establishment parties, says Eurasia Group analyst Ava Shen. But he also has many detractors.
"To those who support him, Ko is a much-needed third force that could alter the polarized landscape in Taiwanese politics," Shen explains. "To those who are critical of him, Ko is an inexperienced politician with controversial gaffes and an unclear platform, unfit for national government."
Still, the TPP candidate offers something different to voters: Ko doesn't bang people over the head about relations with China, preferring to focus on domestic issues such as energy and housing — as if he were running for local office instead of the presidency.
When he does talk about how he'd deal with Xi Jinping, Ko styles himself as a pragmatist who will neither provoke China like the DPP nor defer to it like the KMT. Yet, his enemies see the TPP presidential hopeful as a tad closer to KMT appeasement, fueling speculation that Ko might be a Manchurian Candidate.
Shen doesn’t buy it. “Beijing still prefers Hou and the KMT to win; it is not yet clear how Beijing feels about Ko and the TPP,” she says. “Nevertheless, Ko's position on cross-strait relations appears to be more moderate than Lai’s — which could appeal to China.”
Whether or not Ko is cozier with Xi than he lets on, he faces long odds of winning Taiwan's presidency, since the TPP lacks an established voter base. What's more, KMT supporters are putting pressure on Ko to become Hou's running mate and consolidate the anti-DPP vote.
So far, though, the TPP hopeful says he's in the race to win it. But if by doing so he ends up handing the election to Lai, Beijing will not be pleased.
Human rights activists demand the safe return of Ricardo Lagunes and Antonio Díaz, community defenders who disappeared on January 15. Mexico City, Mexico, January 22, 2023.
Hard Numbers: Environmentalists targeted, World Bank outlook improves, mass shooting in Louisville, fiery cocktails in Northern Ireland, Winnie-the-Pooh gets punched
24: This year alone, at least two dozen environmental activists have already been murdered or disappeared in Mexico and Central America, according to an investigation by The Guardian. Many are from indigenous communities protesting against mining activities on their traditional lands.
2: Outgoing World Bank President David Malpass revised the international lender’s 2023 global growth outlook on Monday, bumping it from 1.7% to 2%. He credited China’s improved economic trajectory for the change. Malpass, who plans to step down in June , kicked off his final World Bank/IMF Spring Meetings with the news.
145: The mass shooting at a bank in Louisville, Kentucky, on Monday was at least the 145th incident of its kind in the United States since the start of this year, according to the Gun Violence Archive. Five people – including a close friend of the state governor – were killed and nine injured when a disgruntled bank employee opened fire.
4: On the eve of President Biden’s trip to Northern Ireland to celebrate the 25th anniversary of the Good Friday Agreement, at least four men were spotted hurling petrol bombs at police. The incident occurred during a parade organized by people who oppose the agreement, which ended decades of conflict between Irish nationalists and the British government. For more on the contentious history, read our primer here .
300: A wildly popular new patch worn by Taiwanese fighter pilots shows a native Formosan black bear punching Winnie-the-Pooh – a common satirical stand-in for Chinese president Xi Jinping – in the face. The patch has been around for a year, but orders blew up this weekend after China conducted its mock invasion of Taiwan. A little e-commerce research shows that you too can own one of these patches for a mere 300 NT$ (about US $9.60).
Sri Lankan Commando Regiment members in Colombo, Sri Lanka.
What We’re Watching: Sri Lanka’s shrinking military, mass shootings in America, McCarthy’s Taiwan visit, a common currency pipedream
Sri Lanka’s military downsize
In its latest bid to cut the economic fat, Sri Lanka's government announced that it will downsize its army, aiming to reduce the number of military personnel from 200,783 to 135,000 by next year and to 100,000 by 2030. Sri Lankan defense officials say the army is restructuring in order to boost its tech capabilities, primarily in cyberspace. But analysts highlight that this is part of President Ranil Wickremesinghe’s pledge to slash the bloated public sector, a precondition to unlocking a $2.9 billion bailout package from the International Monetary Fund. Crucially, military salaries make up around 37% of public wage costs. Cash-strapped Sri Lanka defaulted on its external debt for the first time in May 2022, after years of economic mismanagement led to acute fuel and food shortages – and forced Colombo to borrow heavily from India and China. With the bulk of Sri Lanka’s defense spending going to salaries rather than investment in equipment, this plan presents an opportunity for the country to correct its balance sheet. But some critics worry that Colombo, facing an internal terror threat , could be moving too hard too fast.
America’s gun violence disease
It’s been a deadly start to the year in America, with 38 mass shootings recorded nationwide in just three weeks. In recent days, two mass shootings in California in just 48-hours – including in Monterey Park, where 11 Asian Americans were gunned down while celebrating Lunar New Year, and in Half Moon Bay, where 7 were killed on Monday – have again put the spotlight on America’s unique gun problem. Communities in Florida, Louisiana, and Maryland are also reeling from mass shootings in recent weeks, reflecting the long established gun culture in America that distinguishes the US from other advanced economies. (For context, there are around 120 guns circulating in the US for every 100 people.) So, what happens now? President Joe Biden on Monday called on Congress to pass legislation banning assault weapons and raising the purchasing age to 21, but the newly empowered House Republican caucus will never go for it. Meanwhile, to defend their pro-gun position, Republicans are pointing out that many states with high gun-violence rates already have tight gun laws, but that ignores the fact that many of these weapons are illegally smuggled from states with laxer regulation.
Mr. McCarthy (soon) goes to Taiwan
Having vowed last year to retrace the steps of his predecessor, newly installed House Speaker Kevin McCarthy announced on Monday that he too will visit Taiwan . You’ll recall that Nancy Pelosi’s trip last August ruffled feathers and changed the status quo, prompting China to conduct live-fire military exercises near the self-governing island. McCarthy’s trip, likely this spring, is almost certain to raise tensions across the Taiwan Strait. China, which considers Taiwan a breakaway province, is concerned that visits by top-level American officials to the region are a de-facto recognition of its government as separate from China’s. The US maintains its “One China” policy, which notably does not allow for official diplomatic relations with Taiwan and recognizes the island as a part of China. Also, the 1979 Taiwan Relations Act only commits the US to helping Taiwan defend itself, although President Joe Biden has said Washington would come to Taiwan’s defense if China attacked. Support for Taiwan is seen as an important geostrategic interest and a bellwether of US credibility in upholding international commitments to its allies. But President Xi Jinping is unlikely keen to see an escalation as he grapples with a national public health crisis after abandoning China’s zero-COVID policy.
What We’re Ignoring: South American common currency buzz
Ahead of new Brazilian President Luiz Inacio "Lula" da Silva’s trip to Buenos Aires this week, he and his Argentine counterpart Alberto Fernandez made waves with a joint pledge to explore the creation of a common South American currency. If it happened, the currency bloc would be about one-third as big as the Eurozone. But there’s scant chance of South America’s two largest economies striking a common coin for the continent any time soon. For one thing, although the two countries trade a lot, Argentina lives in a near-permanent state of financial crisis and is currently struggling with an inflation rate near 95%. Would Brazil really hitch its wagon to that star? What’s more, while the politics line up nicely now under two simpatico leftist leaders, Argentina’s elections this fall could (and likely will) produce a center-right government less friendly to Lula. Brazil’s finance minister has already walked back the currency idea, saying that for now the focus will be on creating better mechanisms for financing bilateral trade.Semiconductor manufacturing.
The semiconductor battle is heating up
Global semiconductor supply chains have some big resistance points that threaten to make microchips a macro-geopolitical flashpoint. On Tuesday, US President Joe Biden will visit Taiwanese chipmaker TSMC’s facility in Arizona, where he'll spotlight the White House’s efforts to ramp up US chip manufacturing amid the US-China chip race.
____________________________
In technology, as in geopolitics, a little resistance can make all the difference. Consider semiconductors, the nearly invisible microchips essential for running everything from our computers to our cars to our cruise missiles. They work by doing something deceptively simple: They use carefully calibrated resistance to slow the flow of electricity through a circuit in ways that make computing possible. The smaller they get the more powerful our devices become.
The trouble is, global semiconductor supply chains have some big resistance points of their own, choke points that threaten to make microchips a macro-geopolitical flashpoint.
America’s Democrats and Republicans don’t agree on much, but there’s a consensus at the top of both parties that Chinese advances in digital technologies, especially in supercomputing, threaten US national security. In particular, supremacy in quantum computing by one country could make it impossible for another to encrypt government and personal communications and data. US tech firms, increasingly shut out of Chinese markets, share these worries.
For now, the US is believed to have a significant technological edge over China, and Washington wants to keep it that way. That helps explain why the US has used export controls to deny Huawei and other major Chinese tech companies access to cutting-edge, US-made hardware and software.
But there’s a larger semiconductor-specific geopolitical problem for both the US and China: The vast majority of the world’s most powerful and sophisticated semiconductors are produced on the disputed island of Taiwan, which Beijing regards as a renegade Chinese province and which Washington, despite carefully crafted diplomatic language, still treats as a de facto independent nation.
The company at the core of the semiconductor question is the Taiwan Semiconductor Manufacturing Company, TSMC , a $550 billion company that holds about half the global market for semiconductors and produces about 90% of the most advanced chips. Headquartered on Taiwan's north coast, TSMC sits at the geographic heart of the tensions that divide America and China, and its strategically vital product will only become more essential to the smooth functioning of the global economy as computing power grows exponentially and more digital products are connected to the Internet of Things.
Political leaders in China and the United States know that if a military confrontation shut down TSMC, a shortage of semiconductors would cripple dozens of economic sectors in both countries and in every region of the world. They also know they need to make themselves less vulnerable by sharply increasing the percentage of advanced chips manufactured within their borders. Finally, both know this ambition will be enormously expensive for many years.
Many in Taiwan see TSMC as a “platinum shield” that protects the island’s security because China can’t force Taiwan to unify with mainland China without risking a war with the United States that might destroy the company, which Beijing considers a strategic prize.
China’s leaders also know that the production of semiconductors depends as much on human expertise as on machinery and state-of-the-art factories. Murmurings of a Chinese attack on Taiwan – even just a naval blockade – could create a massive tech brain-drain of the most talented engineers, who might flee the potential battleground for a warm welcome in the West.
For all these reasons, China can’t move on Taiwan until it has much more confidence that it can control what happens to TSMC and the semiconductor industry.
For better and for worse, the Taiwan chip dilemma creates a kind of digital-age mutually assured economic destruction that has so far helped limit the risk that US-China tensions create real conflict.
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Editions of Taiwanese newspapers reporting on U.S. House Speaker Nancy Pelosi's historic visit to Taiwan.
What We're Watching: Tensions in Taiwan, violence in Nagorno-Karabakh, Erdoğan in Russia
(More) trouble in Taiwan
Tensions in the Taiwan Strait are now at their highest level in a quarter-century after China fired ballistic missiles at waters near the self-governing island on Thursday. The launch was part of broader live-fire drills scheduled to conclude on Sunday — Beijing's furious answer to US House Speaker Nancy Pelosi visiting Taiwan earlier this week. So, what might happen next? We're keeping an eye out for three things. First, whether China escalates even further by shooting missiles into waters off eastern Taiwan — thus violating the island's airspace, tantamount to declaring war. (By the way, the Chinese might need a bit of target practice after five projectiles landed inside Japan’s EEZ .) Second, how the drills will impact navigation and trade in the region, with many flights cancelled and cargo ships now avoiding the Taiwan Strait. Third, how the US will respond: 26 years ago Bill Clinton ended the last major US-China standoff over Taiwan in one military fell swoop, but it's unlikely Joe Biden will have the appetite to risk all-out war with China. Sanctions? Strong-worded statements blasting Beijing and supporting Taipei? You bet. But that'll be the end of it. Meanwhile, 23 million Taiwanese people will spend the next few days frantically awaiting China's next move.
Nagorno-Karabakh suffers flareup
Clashes between Armenian and Azerbjani forces reignited this week near the contested enclave of Nagorno-Karabakh, a landlocked region in the South Caucasus. (For a good primer on the conflict, read our explainer here .) Both sides exchanged barbs Thursday and blamed the other side for violating a ceasefire, which resulted in gunfire that reportedly killed three soldiers. Several outlets have reported that Armenian separatists fired on the Azerbaijanis, who then retaliated. This sliver of territory — mostly recognized internationally as belonging to Azerbaijan — has been a flashpoint since it was occupied by Armenian separatists after a bloody war that ended in 1994. In 2020, a weeks-long war between the two sides led to 6,500 deaths and large swaths of territory being handed over to Baku as part of a Russian-backed truce, which includes Moscow keeping some 2,000 “peacekeeping troops'' in Nagorno-Karabakh (Moscow is technically treaty-bound to defend Armenia.) Azerbaijan has recently begun resettling people in the disputed territory, a process it’s calling “The Great Return,” which is clearly rubbing Armenians the wrong way.
Erdogan is first NATO leader to visit Russia since Ukraine war
Turkish President Recep Tayyip Erdoğan is set to meet with Vladimir Putin in Sochi, Russia, on Friday – the first time a NATO leader has visited “Mother Russia” since it invaded Ukraine. In recent months, Turkey has ramped up its diplomatic efforts to mediate between Russia and Ukraine, most notably brokering the recent grain export deal that has seen shipments set sail this week from the port of Odesa for the first time in months. Top of mind for Erdogan will be Syria, where Russia and Iran are on the opposite side of Turkey. Erdogan recently threatened to invade northern Syria to destroy Kurdish militant groups based there, but both Moscow and Tehran have warned him against an invasion. With Russia controlling much of Syrian airspace, Erdogan needs Putin’s permission before he can proceed with any move on Syria. Putin, meanwhile, may be looking to secure economic support in the face of western sanctions, which have battered his economy. Ongoing energy cooperation between the two will also likely be on the agenda, along with the situation in Ukraine, and rising tensions in Nagorno-Karabakh, where both sides have a stake.