Originally published on Jun. 9, 2022 by TraderStef at CrushTheStreet
Have you had enough of geopolitics with wars and rumors of war? I’m sorry to report that in addition to Russia’s “Surge of Little Green Men” into Ukraine and Iran’s noted belligerence in the “Sinking Feeling About Nuclear Persia” series, tension over Taiwan between China and the U.S. is accelerating. There’s also a renewed nuclear threat from North Korea, but that goat rodeo will have its own story to unwrap in the near future if the world doesn’t nuke itself first.
Recent rhetoric out of China and its state-affiliated media sources let a cat out of the bag about its plans to rein in Taiwan that’s right out of the CCP’s Barbarian Handling playbook. Don’t dismiss that China is likely to take advantage of the U.S. preoccupation with Ukraine and views the Afghanistan debacle as a weak commitment by the Biden administration to its allies. Let’s peruse a few choice quotes since 2020 and connect a few dots before diving into what China is up to.
An Ice-9 Pandemic Tipping Point Exposes China’s Barbarian Handling… “A history of ‘barbarian handling’ influences China’s CCP leadership, which is a tradition of making adversaries become dependent on their economic largesse, subsequently pressuring foreign leaders to shift over to their value systems. The practice prejudices the CCP to see other nations as hegemonic or a vassal state instead of coequals and pushes them to create economic dependence so they can manipulate foreign elite opinions to view Chinese power as advantageous.” – TraderStef, Mar. 2020
Dancing With a Taiwanese Time Bomb… “Steve Bannon: ‘If you think we don’t have a moral obligation for Taiwan, leave that aside for a minute. Silicon Valley West, the entire American economy centers around the chips, and in particular the advanced chips designed, made, and manufactured in Taiwan. It is something we have to hold. If we don’t hold it, we don’t have an economy. The economy will implode’” – TraderStef, Sep. 2021
A Watch List for Trading the Chip Addiction… “There are only three major FABs (fabricating facilities) in the world today, with two of them located in Asia and one in the U.S. at Intel. The ongoing pandemic harshly brought to light the fragility of global supply chains since the U.S. is 88% dependent upon foreign FABs. The largest supplier and most advanced FAB is located in Taiwan at Taiwan Semiconductor Manufacturing (TSMC).” – TraderStef, Sep. 2021
Preparing for War With China at All Costs… “The tension between the U.S. and China escalated significantly following Trump’s exit from the White House and Biden’s diplomatic team’s first meeting with Chinese diplomats. With issues ranging from the pandemic’s origins, the political takeover of Hong Kong, South China Sea sovereignty violations, the West’s naval excursions and exercises with allies throughout Indo-Pacific international waters, and Taiwan’s independence, the diplomatic disaster during the first U.S.-China face-to-face meeting in Alaska intensified the CCP’s fearless attitude (i.e. ‘The United States is in no position to lecture China or make wanton comments on China, let alone asserting to deal with China from a position of strength’).” – TraderStef, Oct. 2021
PLA monitors US warship transit in Taiwan Straits amid Ukraine crisis, slams move as ‘hypocritical, futile’… “Taiwan is not Ukraine, as Taiwan is an inalienable part of China. ‘The Taiwan region’s peace hinges on the peaceful development of cross-Strait relations, rather than fawning on foreign forces for arms sales and military support,’ Chinese Foreign Ministry spokesperson Hua Chunying said at a routine press conference on Wednesday. ‘Taiwan independence’ only leads to a dead end, and no one should have any illusion or make any miscalculation on this issue, Hua said.” – Global Times, Feb. 2022
China warns of ‘worst consequences’ for any country that supports Taiwan militarily… “China’s relationship with Taiwan has come into focus against the backdrop of Russia’s invasion of Ukraine… Adding that ‘no one and no force’ would be able to stop the Communist Party if it took action against the island country/, according to a report…. Taiwan said it planned to double its yearly missile-production capacity this year. The announcement from the defense ministry came after Taiwan approved an extra $8.6 billion for military spending over the next five years.” – Fox News, Mar. 13
Potential Supply Shortage of Neon Gas for Microchip Manufacturing… “The just-in-time (JIT) supply chain structure that dominates manufacturing and retail inventory across all industries is set to experience another global hiccup due to the renewed lockdowns in China. The microchip industry will not escape a prolonged supply chain crisis, and the proxy war that launched in mid-February between NATO and Russia in Ukraine introduced a lesser-known component that’s critical for semiconductor fabrication facilities (FABs). Welcome to the world of semiconductor-grade neon gas that’s semi-dependent on Russia and Ukraine for global supplies. Import requirements vary from 25% to as high as 90% for some countries. Neon gas is required to operate the lasers used in the lithography phase, the heart of semiconductor fabrication. Without neon, chip production would come to an abrupt halt.” – TraderStef, May 10
When Biden was confronted by a journalist in Japan during an overseas trip in May, he was asked if he’s willing to use force to defend Taiwan, he said: “Yes. That is the commitment we made.” The White House and Pentagon hurriedly tried to contain any political fallout from that gaffe and emphasized that U.S. policy towards Taiwan had not changed since the Taiwan Relations Act of 1979.
“States that the United States decision to establish diplomatic relations with the People’s Republic of China rests upon the expectation that the future of Taiwan will be determined by peaceful means and that any effort to determine the future of Taiwan by other than peaceful means, including by boycotts or embargoes is considered a threat to the peace and security of the Western Pacific area and of grave concern to the United States… States that the United States shall provide Taiwan with arms of a defensive character and shall maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or social or economic system, of the people of Taiwan.” – H.R.2479, 96th Congress (1979-1980)
Biden made additional comments in Japan that raised more red flags after he referenced sanctions imposed on Russia by the U.S. and NATO and suggested that China has seen what it would face if it invades Taiwan. That sentiment was also shared by U.S. officials at a House Financial Services Committee hearing in April.
US Warns China Would Face Sanctions Similar to Russia for Invading Taiwan… “On Wednesday, Treasury Secretary Janet Yellen said that the US would be ready to use sanctions similar to what has been imposed on Russia against China if Beijing were to invade Taiwan. Yellen told the House Financial Services Committee that she believes the US has shown it can impose significant economic pain. ‘I think you should not doubt our ability and resolve to do the same in other situations,’ she said. Deputy Secretary of State Wendy Sherman also testified before the Committee and warned that the US would impose harsh sanctions on China if it helped Russia in its war in Ukraine. ‘It gives President Xi, I think, a pretty good understanding of what might come his way should he, in fact, support Putin in any material fashion,’ she said… US officials have also warned that Washington would take action against Beijing if it helped Russia avoid Western sanctions.” – AntiWar.com, Apr. 6
So, what’s China up to? The Russian invasion of Ukraine focused a lot of attention by analysts on the threat to Taiwan by China. The big difference between a Chinese confrontation with Taiwan and NATO’s proxy war with Russia in Ukraine, is that any military move on Taiwan would immediately morph into a naval war with the U.S., NATO, Japan, and Australia. The mainstream media seems to be enamored with an amphibious landing and aerial invasion threat, but a more likely scenario that reduces China’s use of kinetic force is a naval blockade. China can starve-out Taiwan’s island population and block international trade to collapse its financial independence. In the fall of 2021, Taiwan expressed its heightened concern over a naval and aerial blockade.
Taiwan says China can blockade its key harbors, warns of ‘grave’ threat… “Taiwan’s defense ministry, in a report it issues every two years, said China had launched what it called ‘gray zone’ warfare, citing ‘intrusions’ by Chinese war planes into its theatre of air defense since September 2020… ‘At present, China’s PLA military is capable of performing a joint blockade against our critical harbors, airports, and outbound flight routes, to cut off our air and sea lines of communication and impact the flow of our military supplies and logistic resources,’ the ministry said… To counter China’s attempt to ‘seize Taiwan swiftly whilst denying foreign interventions,’ the ministry vowed to deepen its efforts on ‘asymmetric warfare’ to make any attack as painful and as difficult for China as possible. That includes precision strikes by long-range missiles on targets in China.” – Reuters, Nov. 2021
Beijing’s War Plan: An Interview with Lude Media… “According to Lude media sources, China will try to use nuclear blackmail and unrestricted warfare to collapse the United States while forcing Taiwan, Japan and South Korea under Chinese control… Failing this, China and Russia will launch a full-scale war against the United States… ‘The strategy here involves a very ancient Chinese tactic. It is encirclement of an enemy post in order to eliminate their reinforcement. So, the post they are encircling is Taiwan. And the support they are trying to fight back or eliminate is the U.S. [relief] force… The first step is to put Taiwan in entrapment. So, they will use all kinds of blockade. Total blockade… If the U.S. forces want to break the blockade, the People’s Liberation Army will start shooting. If a U.S. force is scared off, or if U.S. forces are defeated, the blockade will hold. Then Taiwan’s situation will be desperate. Taiwan will see that America is not helping them. Taiwan would be very easy to take.’ – J.R. Nyquist, Jun. 4
Given the current supply chain crisis that’s worsening, I think China’s game plan is to blockade Taiwan and shutdown its manufacturing and export of semiconductor microchips. The U.S. is in the process of expanding its fabrication capacity on U.S. soil and TSMC is participating in that process by building a $12 billion FAB factory in Arizona.
“Taiwan Semiconductor Manufacturing Co ($TSMC) said on Friday it will build a semiconductor facility in Arizona, as concerns grow in Washington about the security of the technology supply chain which is largely centered in Asia.” – May 2022
If the U.S. microchip supply chain from Taiwan was cut off in the near future, our country would be dead in the water. We should exercise diplomacy with China and Russia or a world war will leave us all living among sticks and stones. Connecting all the dots above led me to the following:
China urged to seize TSMC if US ramps up sanctions… “‘If the US and the West impose destructive sanctions on China like sanctions against Russia, we must recover Taiwan,’ said Chen Wenling, chief economist at the China Centre for International Economic Exchanges. The research group is overseen by the National Development and Reform Commission, China’s top economic planning agency. ‘Especially in the reconstruction of the industrial chain and supply chain, we must seize TSMC,’ Chen said in a speech last month hosted by the Chongyang Institute for Financial Studies at Renmin University, which was posted online Tuesday by the nationalistic news website Guancha. ‘They are speeding up the transfer to the US to build six factories there,’ she added. ‘We must not let all the goals of the transfer be achieved.’ The comments are some of the most prominent so far showing how Taiwan’s chip industry is seen in Beijing as a key strategic asset in the intensifying rivalry between the world’s two largest economies.” – TechCentral, Jun. 7
Taiwan’s leaders try to calm fears over Ukraine invasion, but citizens worry their island will be next… “In Taiwan, where residents have for years been numb to Beijing’s threats and intimidation — including daily incursions into their air defense identification zone, military exercises simulating attacks on the island, and cyberattacks — there is a growing realization that the status quo may no longer hold.” – Washington Post, Mar. 4
The U.S. Naval Update Map provided by Stratfor Worldview as of June 9, 2022, shows the approximate locations of U.S. Carrier Strike Groups (CSGs) and Amphibious Ready Groups (ARGs), based on available open-source information. No classified or operationally sensitive information is included.
Chinese Military Surrounds Taiwan In Massive ‘Rehearsal’ Of Invasion Plans – Texas News Studio
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