In addition to dealing with the fallout from open warfare in eastern Europe, the world is witnessing the start of a full-scale economic war between the United States and China over technology. This conflict will be highly consequential and it is escalating rapidly. Earlier this month, the US Commerce Department introduced severe new restrictions on the sale of advanced semiconductors and other US high-tech goods to China. While Russia has used missiles to try to cripple Ukraine’s energy and heating infrastructure, the US is now using export restrictions to curtail China’s military, intelligence and security services.

In late August, US President Joe Biden signed the CHIPS Act, which includes subsidies and other measures to bolster America’s domestic semiconductor industry. Semiconductors are, and will remain, at the heart of the 21st-century economy. Without microchips, our smartphones would be dumb phones, our cars wouldn’t move, our communications networks wouldn’t function, any form of automation would be unthinkable, and the new era of artificial intelligence that we are entering would remain the stuff of sci-fi novels. Controlling the design, fabrication and value chains that produce these increasingly important components of our lives is thus of the utmost importance. The new chip war is a war for control of the future.

The semiconductor value chain is hyper-globalised, but the US and its closest allies control all the key nodes. Chip design is heavily concentrated in America, production would not be possible without advanced equipment from Europe, and fabrication of the most advanced chips—including those that are critical for AI—is located exclusively in East Asia. The most important player by far is Taiwan, but South Korea is also in the picture.

In its own pursuit of technological supremacy, China has become increasingly reliant on these chips, and its government has been at pains to boost domestic production and achieve ‘self-sufficiency’. In recent years, China has invested massively to build up its own semiconductor design and manufacturing capabilities. But while there has been some progress, it remains years behind the US, and, crucially, the most advanced chips are still beyond China’s reach.

It has now been two years since the US banned all sales of advanced chips to the Chinese telecom giant Huawei, which was China’s global technology flagship at the time. The results have been dramatic. After losing 80% of its global market share for smartphones, Huawei was left with no choice but to sell off its smartphone unit, Honor, and reorient its corporate mission. With its latest move, the US is now aiming to do to all of China what it did to Huawei.

This dramatic escalation of the technology war is bound to have equally dramatic economic and political consequences, some of which will be evident immediately and some of which will take some time to materialise. China most likely has stocked up on chips and is already working to create sophisticated new networks to circumvent the sanctions. (After Huawei spun it off in late 2020, Honor quickly staged a comeback, selling phones that use chips from the US multinational Qualcomm.)

Still, the new sanctions are so broad that, over time, they will almost certainly strike a heavy blow not only to China’s high-tech sector but also to many other parts of its economy. Any European company that exports to China now must be doubly sure that its products contain no US-connected chips. And, owing to the global nature of the value chain, many chips from Taiwan or South Korea also will be off-limits.

The official aim of the US policy is to keep advanced chips out of the Chinese military’s hands. But the real effect will be to curtail China’s development in the sectors that will be critical to national power in the decades ahead. China will certainly respond with even stronger efforts to develop its own capabilities. But even under the best circumstances, and despite all the resources it will throw at the problem, any additional efforts will take time to bear fruit, especially now that US restrictions are depriving China of inputs that it needs to achieve self-sufficiency.

The new chips war eliminates any remaining doubt that we are witnessing a broader Sino-American decoupling. That development will have far-reaching implications—only some of them foreseeable—for the rest of the global economy.

Ukraine is already repairing and restarting the power stations that have been hit by Russian missile barrages since the invasion began in February. But it will be much more difficult for China to overcome the loss of key technologies. As frightening as Russia’s 20th-century-style war is, the real sources of power in the 21st century do not lie in territorial conquest. The most powerful countries will be those that master the economic, technological and diplomatic domains.

The visit to Taiwan by a US congressional delegation led by Speaker of the House of Representatives Nancy Pelosi has once again pushed the Taiwan Strait to the front of international attention. It shows Taiwan’s role as a metaphor for fundamental questions about the nature of the international system and whether, for all its aspirations to peace and human progress, it is ultimately a system wrought by the hard power of states, whether China’s or the US’s, in their interests.

These strategic questions about the place of Taiwan in the world have, however, been quickly overtaken by the tactical actions by both Beijing and Washington around the visit. Beijing has enacted economic sanctions against Taiwan and the People’s Liberation Army is conducting four days of military exercises in six locations around the island. Like the PLA’s missile tests in 1995 and 1996, these will have far-reaching consequences for the future of cross-strait relations, US–China relations and Taiwan’s future. None of these actions take Taiwan closer to Beijing’s existential goal of unification.

There’s a reasonable case to be made that both Beijing and Washington have mishandled the visit. Washington failed to communicate clearly and coherently on its purpose, such as whether it was a response to PLA Air Force flights into the Taiwan Strait that are undermining the US–China normalisation agreements reached in the 1970s and 1980s. It has also failed to mobilise consistent messaging from US allies in the region. The vacuum has been filled with furious rhetoric from Beijing and left the US isolated. Beijing, meanwhile, chose to escalate the implications of the visit in its official responses, possibly with an eye on the Chinese Communist Party congress at the end of the year, creating circumstances in which neither the US nor Beijing could back down.

As has been typical over the past several years, the wisest moves have come from Taipei, which with very measured and discrete responses welcomed the visit but did not add to any escalation.

The Taiwan side also offered an interesting itinerary. Pelosi addressed the Taiwanese legislature and met with President Tsai Ing-wen, as would be expected, but also visited the National Human Rights Museum in Jingmei in the south of Taipei. This museum is the site of a former prison complex where, over the decades of authoritarian rule in Taiwan, thousands of political prisoners were detained and tried in military courts. Some of Taiwan’s most famous dissidents passed through the prison, including the leaders of the human rights protest in 1979 known as the Kaohsiung incident. The so-called Kaohsiung eight went on to become key figures in Taiwan’s democratisation in the late 1980s and 1990s. Pelosi’s visit to the museum was led by Chen Chu, one of the eight, who was mayor of Kaohsiung from 2006 to 2018 and is now chair of the National Human Rights Commission and president of the Control Yuan, the oversight branch of the government.

The prison complex became a memorial site in 2007 and in 2018 was placed under the administration of the National Human Rights Museum. It is a symbol not just of Taiwan’s struggle for democracy but also of the long process of truth and reconciliation in the years after the formal realisation of democracy in the late 1980s. The museum demonstrates the process in which the political dissent that was once a life-risking stand against an authoritarian state becomes part of political history and the social fabric through the institutionalisation of memory. It is the power of democracy that makes this possible, taking the trauma and injustice of the past and creating institutional mechanisms for public reflection and understanding that can be difficult and divisive but ultimately offer a lasting guide to a society’s progress into the future.

This journey for Taiwan is in sharp contrast to China’s, where history remains an instrument of CCP power. It offers lessons to a democracy like Australia that is wrestling with how to address its history of colonial violence with its own institutionalisation processes. The Taiwanese have much to teach Australians if we take the time to learn.

It also illustrates what is at stake for the people of Taiwan. If Taiwan fell under the authority of Beijing, the National Human Rights Museum and numerous other democratic institutions and forms of social and cultural expression through which the Taiwanese are coming to terms with their history would not continue. The People’s Republic of China’s ambassador to France, Lu Shaye, stated this starkly in an interview on French television about Pelosi’s visit. He said, ‘After reunification, we will do re-education’, a grotesque suggestion that what China scholar Louisa Lim has called the People’s Republic of Amnesia will attempt to force 24 million people to forget a century of social, economic and political progress.

Foreign and security policy is focused on the actions of states and is less interested in peoples and their stories. The PLA military exercises will generate serious geopolitical consequences that will require thoroughgoing policy assessment around the world. But Pelosi’s visit should serve to highlight the meaning of the Taiwanese story and the consequences of losing the lessons it offers countries like Australia about the pathways to make better societies.

On 18 December, Taiwanese voters went to the polls to vote on four referendum questions. Referendums have sometimes been a contentious aspect of Taiwan’s democratic system. Their provision is in the Republic of China constitution, but they weren’t enacted until 2003, to which both Beijing and Washington objected at the time due to their potential to mobilise public sentiments on a vote about national sovereignty.

There have been 20 referendum questions put to voters since then. This time, the questions were about activating the Lungmen nuclear reactor, banning the importation of pork containing the additive ractopamine, requiring referendums to be held concurrently with general elections, and relocating the proposed Guantang liquefied natural gas terminal away from the Datan Algal Reef.

The ruling Democratic Progressive Party (DPP) government campaigned for the negative for all four questions, while the opposition Kuomintang (KMT) argued for the affirmative. None of the four questions attracted a majority of voters, nor did any of them cross the minimum voter threshold of 25% of eligible voters required for affirmation.

The Lungmen nuclear reactor began construction in 1999. It uses an advanced design, but has been mired in delays, cost overruns, design changes and contractual disputes, as well as political opposition. The reactor is complete, but public opinion turned against its activation after the Fukushima disaster in Japan in 2011. The referendum result is only the most current development in a saga that has beset successive Taiwanese governments and, unless the reactor is demolished, it will continue to do so.

Allowing the importation of pork with ractopamine has been contentious for Taiwan’s farmers and US–Taiwan relations for several years. Ractopamine is a growth promoter banned in many jurisdictions, including the EU and China, but used in the US and Canada. It is also used in the Australian pork industry but strongly opposed by beef producers. The US Trade Representative Office has long been less sympathetic to Taiwan than the State and Defense departments, and pork import restrictions had become a barrier to US–Taiwan trade liberalisation generally and the promise of a bilateral free trade agreement. President Tsai Ing-wen’s government lifted restrictions on US pork in 2020, against public opinion, prompting a vigorous political campaign by the opposition KMT that included party legislators throwing offal from buckets at ruling DPP members in the legislative chamber. The referendum result on this question is a significant win for Tsai and the DPP.

The referendum date question was largely procedural but addressed the status of referendums in Taiwan’s democratic system and the issues of voter turnout, partisan and populist politicisation, and election cost. Referendums can be initiated through the legislature or by the public in a two-stage process. Publicly initiated referendums currently require 1.5% of the total of registered voters, or nearly 300,000 signatures in the second stage to move to a vote. The failure of all four questions will no doubt inform future procedural changes and the use of referendums as a political tactic.

The result of the final question, on the location of the Guantang LNG terminal, will be disappointing for Taiwan’s environmental movement. This question also had the potential to affect Australia–Taiwan relations. Australia is the world’s largest LNG exporter and Taiwan is targeting 50% of its electricity generation to be from LNG by 2025. Relocating the terminal would have delayed its completion by many years, potentially placing this target out of reach. The fight for the Datan reef is undoubtedly not over for activists, but the LNG terminal is also part of the Taiwan government’s plan to achieve net-zero emissions by 2050 in part by reducing reliance on coal. This connects the Guantang LNG terminal with the future of the Lungmen nuclear reactor and the broader question of Taiwan’s energy policy.

Taiwan has enormous direct and structural government energy subsidies that have been used as an economic policy tool for decades but are now politically very difficult to reform. Successive Taiwanese governments have struggled with how to manage the costs of these subsidies, although renewable energy and emissions-reduction targets might yet be a mechanism through which reform becomes possible.

Each referendum question will play out in policy for many years, but the immediate impact is political. The campaign tactic of both major parties was to treat the referendums as polls on the government, and in this Tsai and the DPP had another comprehensive victory.

The KMT, which formed out of the groups that overthrew millennia of dynastic rule in China in 1911, has been through many changes in its storied history, but finds itself struggling to be an effective opposition and land political hits against the government in democratic Taiwan today. Last in government from 2008 to 2016 under President Ma Ying-jeou, it emphasised—like many governments at the time—its capacity to build relations with China in the interests of economic prosperity. The Chinese Communist Party and the KMT have an intertwined history of cooperation and violent conflict as rival architects of post-imperial China, and this connection gave the KMT government unique engagement with Beijing.

In the Xi Jinping era, however, and with daily military threats against Taiwan from the PRC, this stance has become unviable. The KMT has pivoted through a range of local and populist issues in response, most notably on US pork imports, but it is struggling against the DPP’s formidable campaign machine and leadership depth.

Washington and Canberra will no doubt be pleased enough that the referendums mean no change in trade policy from Taipei. Beijing, however, will be calibrating policy based on the KMT’s poor showing. In its totalising ideology and historical fixations, the CCP still sees the KMT as part of its narrative of China’s ‘great rejuvenation’. The KMT will endure, but the work it needs to do to return to electoral viability in Taiwan will only take it further away from its place in CCP ideology, especially given China’s direction under Xi.

Yesterday’s virtual summit between Joe Biden and Xi Jinping followed two presidential telephone calls and last week’s joint declaration on enhanced climate action drafted by US climate envoy John Kerry and his Chinese counterpart, Xie Zhenhua.

The meeting’s outcome was underwhelming: vaguely reassuring but laden with warning bells for how both Biden and Xi see the result and think about what happens next.

The danger is that Biden thinks he’s achieved more than he has, and that Xi feels more empowered to continue on his current path. We’ll get signs on both in the weeks ahead.

Biden clearly intended to set the terms to compete intensely on a range of issues where US and Chinese interests clash—Taiwan, China’s military aggression in the South China Sea, human rights and the use of trade as a weapon against US allies.

Biden also wanted to map out where holding the advantage is important for national power and prosperity, like in high technology.

His administration has worked hard with allies and partners to create a unified assessment on this key issue. That was most clearly expressed in the June Brussels communiqué from the 30 NATO allies: ‘China’s stated ambitions and assertive behaviour present systemic challenges to the rules-based international order and to areas relevant to Alliance security. We are concerned by those coercive policies which stand in contrast to the fundamental values enshrined in the Washington Treaty’ (which created NATO).

Biden told Xi he sees competition in these intense areas as needing ‘guard rails’ along with communication and engagement to limit the risks of escalation. This is a worthy goal. There’s no direct phone line between the US and China for crisis contact and, and even if there was, Xi has empowered no one to answer it whose words would matter.

In their September phone call, Biden told Xi: ‘It seems to me our responsibility as leaders of China and the US is to ensure that our competition between our countries does not veer into conflict, whether intended or unintended.’

At the same time, the Biden administration has sought to cooperate with Beijing on key global challenges where collective action is deeply desirable, notably pandemic control and climate change. This is significant for Biden’s base and fits with much of his domestic economic program, to the extent he can get it through Congress.

Xi went to the summit with equally clear intent. He bases his policy towards the US on the assessment that its power is waning as China’s grows. He sees the current decade as a perhaps unique window of opportunity because the US and its partners are preparing to raise the political and military costs to Beijing of conflict over Taiwan, and because China has entered a period of demographic decline and slowing growth.

At the summit, Xi continued his line that the US must make compromises to get the relationship ‘back on track’.

He declared that he was ready to ‘work with President Biden to build consensus and take active steps to move China–US relations forward in a positive direction’, also using the Beijing boilerplate language of ‘mutual respect’.

Chinese state media reports of earlier discussions didn’t mention US concerns over Chinese intimidation of Taiwan, human rights and Xinjiang, or economic coercion of US allies. Instead, state media represents Biden’s statements on Taiwan as accepting a ‘one China’ policy, without noting the fundamental differences between Beijing’s version of this and the US’s.

The content of the six-page summit release from China’s foreign ministry is unchanged from speeches Xi delivered in 2017 and at the Chinese Communist Party’s centenary celebration, despite the marked changes in China’s external environment. It reads like Xi was giving Biden a rousing lecture about the path he needs to take to benefit from Xi’s leadership, just as he repeatedly tells the Chinese people to do.

Xi’s talking, not listening. He raises not a glimmer of a possibility of Beijing making policy or behavioural change on any of the difficult issues in the US–China relationship: any change must come from Biden as the price of engagement.

Xi sees the Biden meeting and phone calls as global recognition of China as a great power, at least equal in status to the US, and as a means of achieving concessions from. He conveys his overarching narrative that engaging with China is ‘win–win’ or ‘not zero sum’ cooperation, while underlining that he has no intention of shifting where Beijing’s ‘core interests’ are involved. We hear about ‘managing differences’ and ‘showing mutual respect’, but there’s no indication he sees any need to reciprocate for US compromises or policy moves benefiting Beijing.

This words–action gap has characterised Beijing’s international commitments under Xi. Whether at this summit, the World Trade Organization or the United Nations, on Covid-19, on state-owned enterprises or on the militarisation of the South China Sea, in each case, Xi has authorised officials to commit to ‘best efforts’, to consider future actions to address outstanding issues, or to promise cooperation and openness—or he’s used this approach himself. But these future promises have led to little.

In almost all of the above areas, as well as on Hong Kong, Xi has simply broken his word without suffering embarrassment or adverse consequences.

Here’s ideology and policy at work. International engagement with Chinese socialist characteristics in the ‘new era of Xi Jinping thought’ was the foundation for the Xi–Biden summit and will remain for future engagements.

On climate change, Biden worked Congress hard to be able to take new commitments to Glasgow that Kerry clearly used in negotiating with Xie. Xi didn’t see a need to turn up at Glasgow, and after a splash globally about not building more coal-fired power stations outside China, he noted that it would continue to build coal-fired power stations for its domestic needs.

China’s commitment to ‘net zero’ emissions by 2060, while late, is welcome. It sees value in acting on renewable energy for its economy and as a source of technological and economic power, so we can expect actions here—with the US and the rest of the world finding out about them as they unfold, not because of clever US diplomacy and engagement.

The Kerry–Xie negotiations that resulted in the joint climate declaration unveiled to a surprised COP26 falls into a familiar pattern of Beijing’s statecraft.

Putting aside whether a two-nation deal that blindsides the international gathering is good for collective action, it’s worth examining what each committed to. It looks like neediness from the Biden administration—and certainly Kerry—to achieve a deal. That’s predominantly bad news, for both climate action and strategic stability.

The declaration begins well saying the US and China ‘recognize the seriousness and urgency of the climate crisis’. They’re committed to tackling it through their respective accelerated actions in the critical decade of the 2020s and ‘committed to pursuing such efforts, including by taking enhanced climate actions that raise ambition in the 2020s’. It has clear commitments from the US, and blurry words from China on enhanced actions.

The US announced a methane emissions reduction action plan it had worked on with the EU but which is at least an actual plan. China said it ‘intends to develop a comprehensive and ambitious National Action Plan on methane’ and would join the US in convening a meeting in 2022 to focus on the specifics of enhancing measurement and mitigation of methane.

The US has committed to reaching 100% carbon-pollution-free electricity by 2035. China will phase down coal consumption during the 15th five-year plan and make ‘best efforts’ to accelerate this work.

Kerry gave China the status of a cooperating partner on climate change at a price to the US but no price to China. That gives Xi grounds to expect that Biden will operate the same way in issues beyond climate change, now that the positive ‘atmospherics’ of this first summit have set the scene.

The warning bells come from how these US–China interactions create the prospect of a ‘G2’ setting the terms for how the broader international community then engages on multiple issues.

This is the new type of great-power relations Xi offered Barack Obama when he was president, and Obama was smart not to accept. Here a strengthened China is offering it again. If Biden thinks he’s found a better way to work with his old friend Xi than Obama—or Donald Trump—did, it should worry us all.

The Kerry–Xie deal is bad news for multilateralism and a disturbing sign that parts of the US administration do not grasp the multiplier effect the US gains from working with its allies and partners.

It’s a contrast to Biden at the NATO summit and G7-plus, let alone his announcing AUKUS, and we have to stop it becoming contagious to broader US China policy.

The net effect of the summit is that both leaders expressed their carefully prepared, consistent messages and they’ve established a less fraught atmosphere between them, while leaving all the underlying stark differences and tensions in place.

If Xi puts the summit conversation and the Kerry–Xie deal together and concludes it all adds up to consequence-free pursuit of everything he’s engaged on—because Biden, like Kerry, is needier than him—we’re in for a troubled time and increasingly disappointing US–China summits.

So, whether the motivation is addressing climate change or deterring China from conflict, or both, may Kurt Campbell and Jake Sullivan, not John Kerry, be Biden’s primary implementers, and the ones briefing him on what to do next.

The 10th of October marked the anniversary of the Xinhai Revolution, the 1911 military insurrection in the city of Wuhan against the Qing imperial government. Coming after years of activism for reform and revolution, the insurrection spread throughout China and led to the end of the Qing dynasty and the founding of the Republic of China on 1 January 1912 by the Chinese Nationalist Party, or Kuomintang, under Sun Yat-sen.

The event is commemorated by Beijing as a critical historical event on the way to the founding of the People’s Republic of China in 1949, and by Taipei as the National Day of the Republic of China, also known as Double Ten. It is for both sides an event of immense contemporary political meaning. For Beijing, it is code for ‘reunification’ and what Xi Jinping calls the ‘Great rejuvenation of the Chinese nation’, while for Taipei, it expresses the deep contestation of Taiwan’s 20th-century history and the struggle for democracy.

As with every year, the day was marked by speeches, this year by Chinese Communist Party Chairman Xi and Taiwanese President Tsai Ing-wen.

On the PRC side, speaking on 9 October, Xi said, ‘The Revolution of 1911 will forever stand as a towering landmark on our nation’s journey toward rejuvenation.’ He outlined a deterministic historical narrative in which the end of the Qing and the history of the republic was one stage in China’s journey towards socialism led by the CCP: ‘With the salvoes of Russia’s October Revolution in 1917, Marxism–Leninism was brought to China, sparking a great awakening among the Chinese people.’ And, ‘Chinese communists were the most steadfast supporters, loyal collaborators, and faithful successors to the revolutionary cause initiated by Dr Sun Yat-sen.’

The teleological historical determinism in Xi’s speech is fundamental CCP ideology and a reminder that for Beijing and the party-state system, the unification of the mainland with Taiwan is a Marxist project. As Xi said, ‘History spirals upward, advancing in waves of progress.’ For the CCP, progress includes unification.

This ideological architecture includes historical materialism, which means culture and social identity are produced by economic conditions, or the ‘relations of production’, and hence economic integration between Taiwan and China should lead to a convergence of identities. Awkwardly for Marxist theory, it has stubbornly failed to do so. But the theory also includes the barriers to progress, those who stand against history’s tide, against whom the power of the state must be deployed, including its military power, and against whom the people must ‘struggle’ to achieve the goals of the revolution.

Xi continued: ‘Secession aimed at “Taiwan independence” is the greatest obstacle to national reunification and a grave danger to national rejuvenation. Those who forget their heritage, betray their motherland, and seek to split the country will come to no good end; they will be disdained by the people and condemned by history.’

In Taipei, 10 October is a commemoration of the National Day of the ROC, which has become the subject of political debate. By the time of the Xinhai Revolution in 1911, Taiwan had already been a Japanese colonial territory for 16 years, on a separate path to the formative historical events described by Xi. Taiwan was passed to the administration of the Republic of China in 1945 by the Allies following Japan’s defeat in World War II. In 1949, the ROC national government under Chiang Kai-shek and the Kuomintang retreated to Taiwan from the advancing communists and imposed the symbolism, and authoritarian practices, of the ROC state on the Taiwanese.

Since democratisation in the late 1980s, however, all of the ROC national symbolism and history on Taiwan has been open to intense public debate about its meaning and salience. Views range widely, sometimes acrimoniously, with some celebrating the republic and others rejecting it. Taiwan’s democratic system has adapted to this. The ROC national anthem especially is reinterpreted again and again to acknowledge its contested meaning, sometimes in very moving ways.

Tsai’s 10 October speech navigated these politics. She noted the history of the ROC after 1949, reached out to the new chairman of the opposition Kuomintang, Chu Li-luan, and leaned into campaign mode ahead of 2022 local elections in highlighting Taiwan’s success in managing the Covid-19 pandemic and sustaining economic growth.

She also emphasised democracy as Taiwan’s core national value and source of strength in its international relations: ‘[W]henever our nation’s dignity or the future of our people is at stake, we come together for the sake of the Taiwanese people to defend our sovereignty and our free and democratic way of life.’

The other major speech of the day was by the president of the Legislative Yuan, Taiwan’s parliament, Yu Shyi-kun. He directly addressed the history of Taiwan as distinct from that of the ROC and the PRC, and described a teleology of Taiwan’s own that led to democracy. Noting that 2021 was the centenary of the founding of the movement to establish a parliament in Taiwan, which petitioned the Imperial Diet in Tokyo for Taiwanese self-rule for more than a decade, he said, ‘Taiwan has spent a century pursuing democracy.’

Both Beijing and Taipei used the commemoration of the Xinhai Revolution to delineate their different ideological visions and the historical realisations and contemporary meanings of the event. For Taiwan, it is liberalism and democracy; for Beijing, it is Chinese Marxism and ‘socialism with Chinese characteristics’. This schism emerges from foundational ideological divides from the end of the 19th and the beginning of the 20th centuries.

Cross-strait relations are often understood in terms of democracy, authoritarianism, nationalism and state power in the international system. But they are at their core a contest of foundationally different visions for national progress and of the power of states to redraw or defend the boundaries of that contest with all the instruments available to them.