Congratulations, you’re right!

The debate over U.S. House Speaker Nancy Pelosi’s recent visit to Taiwan underscores the fragile situation in that vital part of the world.

It also demonstrates the dangers of managing a globalized economy where investment and production of vital products and technologies can be concentrated in one country or region due to return on investment rather than strategic political and military considerations. 

In this instance, Nancy Pelosi’s intentions may have been good but given the current state of global political and economic tensions, it might have not been. As saying goes, the road to hell is paved with good intentions. Her trip provoked a predictable response from Beijing and left her no way to back out lest she look weak. 

The main purpose of her visit served to warn China not to attempt to emulate Russia’s invasion of Ukraine by forcefully taking possession of Taiwan. 

Such a move would have dire consequences for all.

The Taiwanese would fight back with their strong military and the weapons provided by the United States. Unlike Ukraine, Taiwan has real security arrangements with the United States and the Americans could be drawn into a conflict that would be costly in many respects.

It could involve nuclear weapons should the Chinese fear that they are being threatened existentially by the U.S. in what it considers its own territory.

Should the situation come to blows, the U.S. and its allies would likely put strong sanctions against Beijing. This would disrupt already fragile production chains that would not only jeopardize the Chinese economy but also put the Western economies, already dependent on China as its manufacturing center, in grave danger of collapse.

Last week I wanted to order a new SUV and was told that it would be delivered in about a year due to the shortages of chips as a result of COVID. 

What would happen to our economies if people could no longer access automobiles, television sets, computers, and all the other things that currently require semiconductors and parts that are only produced in sufficient quantities in China and in Taiwan? What would happen to the tens of millions of jobs, companies and financial markets that would be impacted?

As the sanctions against Russia have proven, the medicine sometimes backfires on the medics applying it. Europe faces a very cold winter in view of its dependence on energy products that Russia is successfully peddling in other markets. The Russian economy appears to be surviving as Europeans consider if they should backtrack on the sanctions.

China has a large internal market that could sustain demand for a period of time but without Western customers, many jobs, and social order might be at risk. In the same way however, any lack of supply to the West would only cause further economic disruption. 

What Nancy Pelosi’s visit to Taiwan is leave precious little space for either side to restrain its urges and maintain the status quo that has worked for 50 years. During this time, both the economies of China and Taiwan have developed exponentially. 

The United States has protected its economic interests and massive investments in China without putting their economy at risk by having to come to Taiwan’s aid.

The status quo, that had worked for five decades, appears to be unravelling.

But the fault is not only Pelosi’s.

Chinese President Xi Jinping is also anxious to take China to the next level as a global power. In this, he may well be thinking with his heart rather than with his head. 

His legacy could be to leave a modern China as a major economic and military power. Instead, he is putting in the hands of an uncertain fate – a war that could cost China plenty, risk the paramountcy of the Communist Party and weaken the economy and China’s standing in the world as a responsible global player.

So, President Xi and Speaker Pelosi, congratulations, you are both right.

But, at what cost?

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Edición: Ana Ordaz