Predictably, the Chinese have responded with a vengeance to House Speaker Nancy Pelosi’s August 2-3 chest-thumping visit to Taiwan.
The Speaker’s remarks, which unexpectedly found me offering live color commentary at the time on CNBC Asia, played well in domestic political circles, both in the US and Taiwan. But they added high-octane fuel to an increasingly conflicted US-China relationship. The Biden Administration urged China to turn the other cheek, counseling them to treat this as nothing more than another in a long string of routine visits by a US congressional delegation that just happened to be headed by the Speaker of the House, second in the line of presidential succession.
The subsequent launching of 11 missiles in the Taiwan Straits as part of an unprecedented Chinese military drill suggests that this advice rang on deaf ears in Beijing. Obviously, Xi Jinping felt a need to respond to the Pelosi provocation. Some have argued that this is a Chinese-style “wag the dog” gambit, deflecting attention away from China’s considerable problems at home, such as anemic growth, zero-Covid policy, deleveraging, and an imploding property sector.
I think this misses the far bigger point. Like it or not, China views containment as an existential threat. And, as argued in Accidental Conflict, China is convinced that the United States is leading a full-blown China containment campaign. Starting with Obama’s “Asia pivot” and a proposed TPP trade accord that excluded China and continuing with Trump’s trade and tech wars, the case for containment is hardly a figment of the Chinese imagination. And now Nancy Pelosi openly admits to playing the Taiwan independence card, breaching China’s sharpest “red line.”
With missiles flying in the Taiwan Straits, a seriously troubled relationship is going from bad to worse to dangerous. That’s what the Speaker really accomplished.
You can follow me on Twitter @SRoach_econ