MM#331--A Storm Is Brewing in East Asia: China's Tightening Grip & Taiwan's Precarious Future

Transcript

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Welcome to the Theory to Action podcast, where we examine the timeless treasures of wisdom from the great books in less time, to help you take action immediately and ultimately to create and lead a flourishing life.

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Now here's your host, david Kaiser.

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Hello, I am David and welcome back to another Mojo Minute.

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Now, because of rapidly changing events in the world, we are going to push our currently scheduled Mojo Minute to this Thursday and instead cover the most recent events happening in East Asia.

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Now I titled this episode Is China Closing the Noose on Taiwan?

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Because you will remember, not that long ago, one of the four Asian economic tigers was Hong Kong.

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And what happened to Hong Kong in the last five years?

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Well, they have undergone significant changes.

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It started with the national security law, the NSL, in 2020, that was imposed by China after Hong Kong was forced or after Britain, the United Kingdom was forced to give it back after the 99-year lease, and actually China said that they would wait until, I think, 2040, 2045, 2050, based on how all the math worked out, and China essentially broke their word on that, broke their uh, their word on that.

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Now the national security law um has led that led to a crackdown on dissent.

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Uh, many numerous pro-democracy activists have been arrested, prosecuted, many others fleeing the city.

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The law law the nsl, the law has eroded Hong Kong's autonomy.

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Beijing has increasingly exerted tons of control over the city's affairs.

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There, essentially, is no judicial independence and, essentially, no rule of law.

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They've changed the electoral system.

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It's much harder for pro-democracy candidates to be elected.

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They've introduced what they call Article 23 legislation, which further cracks down on freedom of speech and assembly.

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And the international community gnashes its teeth, wrings its hands, but the erosion of civil liberties continues to happen.

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Many countries have imposed sanctions on certain Hong Kong officials and entities close to Beijing, but that does nothing.

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Human rights groups gnash their teeth, yell, kick, scream nothing happens, even though they call for the release of political prisoners.

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We've covered from this microphone the tale, or the the tale of jimmy lye, the uh political prisoner, um, who has just been treated completely unfairly, has been given show trials in china, all because he um ran a newspaper, the apple daily, and and it was a pro-democracy newspaper and he spoke out about all the human rights problems within China.

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And the Chinese didn't like that.

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And what's the Chinese response to all of the issues happening in Hong Kong?

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Well, to tell the international community to go pound sand, essentially saying what are you going to do about it?

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And unfortunately, we have a similar series of events happening again.

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Just last week, china significantly escalated its military activities around Taiwan.

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Many experts believe this is rehearsals for a potential blockade or invasion.

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Now, we talked about this when we covered Ray Dalio's book, the Principles of a Changing World Order.

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We also have covered this in the member section.

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We've done Academy review on the book called Chip War, which is all about Taiwan and that vital link with our supply chain for the most advanced semiconductors.

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So be sure to check out both of those items.

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If you're not a member of the Academy, why not?

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We have over 37 books in there, with more coming each and every week.

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But a brief review of what has happened in China in the last week, or with China and Taiwan the last week, china and Taiwan.

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The last week, china being they launched a extensive military exercises in the Western Pacific, actually involving an aircraft carrier and over 60 naval vessels and warplanes.

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Now these drills are seen as most likely a response to recent US military activities in the region and because of the inauguration of Taiwan's new president, lai Ching-te, and these exercises appear to simulate a blockade of Taiwan, with Chinese forces literally encircling the island.

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These included joint sea air combat readiness patrols, joint seizure of comprehensive battlefield spots and joint precision strikes on key targets.

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All of this has led the Taiwan Ministry of National Defense to report significant increase in Chinese military activity with at least 68 warplplanes.

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Often will perforate Taiwanese airspace, causing more consternation.

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So China is not respecting any of the international laws in place.

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They're constantly dancing over that line, breaking those laws.

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Now what has the United States done?

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Well, united States and its allies, especially the US Indo-Pacific Commander, samuel Paparayo, noted that the drills look like a rehearsal for an invasion.

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Us lawmakers have emphasized the importance of supporting Taiwan amidst these heightened tensions, and many experts on both sides of the aisle believe this is part of China's broader strategy to pressure Taiwan and test international and especially US responses.

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Test international and especially US responses.

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So what would happen if China were to impose a blockade?

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Not sure, because it will go to the UN Security Council.

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China and Russia are on the Security Council, so it would be a three to two vote.

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Then everything is stalemated.

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And what will the international community do after that?

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It will be hard to leverage.

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Um, many allies to uh actually defined a blockade as an act of war.

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The formal definition is based on precedent in international law that a blockade is an act of war, but enforcing that with a 3-2 vote in the Security Council, everything would just be stalemated.

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So then, it's actually power for power.

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And do we think Joe Biden will be able to recruit our allies in the region Japan, south Korea, philippines, australia to help in this situation?

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They are major stakeholders, after all.

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Can the United States, can Taiwan by itself, win over China?

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And how will Joe Biden react during the lead up to a presidential election?

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This is probably the biggest challenge he's ever had, even outsizing the debacle of the withdrawal in Afghanistan in 2021.

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So these are all very, very difficult questions.

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Now, what happens if a blockade is put in place?

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We're at a stalemate in the UN Security Council.

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Well for sure, global trade will be impacted.

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The Taiwanese Strait is a critical shipping lane.

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Contains roughly half of the world's container ships transit that area.

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80% of large container ships pass through it as well, so a blockade would severely disrupt global trade routes.

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Obviously, there would be significant delays and increase to shipping cost.

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We learned in chip war that Taiwan is a major source of global semiconductor supply chain and 92% of the world's advanced logic chips are made there.

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That's all happening on the western side of Taiwan.

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The side facing China the other side, is a rigorous mountain range.

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The side facing China, the other side, is a rigorous mountain range Outside of semiconductors.

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Estimates a blockade could lead to a $2.7 trillion with a T-drop in global economic output in the first year.

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That amounts to a 2.8% decline in global GDP.

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Now Bloomberg's model predicts that 5% contraction in global GDP would happen with a blockade.

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It would significantly drop the United States, taiwan and China's import exports.

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Obviously Taiwan's economy, heavily relying on exports, would suffer immensely.

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Exports account for 60% of Taiwan's GDP.

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In a blockade would essentially cripple uh that sector.

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Now trade finance and insurance premiums would skyrocket.

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Um, I'm sure financial institutions would would be wary of exposure to uh South East Asia and Southeast Asia, leading to a contraction in trade finance.

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Certainly global financial markets would be disrupted Just major supply chain disruptions all over.

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We still get a lot from China, so certainly we would restrict some of those key industries.

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I mean, for example, right now I'm having a tough time getting eight ounce plastic cups from getting delayed by over a month on their ETA to the United States.

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So I can't imagine how the rest of markets would react and how the rest of markets would react Now in terms of geopolitical.

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Could a blockade escalate into a full-scale military conflict between the US and its allies?

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Certainly it's just going to further destabilize the whole region.

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We would certainly have to impose some type of sanction.

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I think Joe Biden would be put in a very precarious situation and I'm not sure he is up for it.

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He's been wrong on every foreign policy decision, going all the way back to his days of vice president and as senator.

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We've documented them here from this microphone.

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Now, how would a blockade affect the United States?

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That's another key critical question.

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Ok, it affect the United States.

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That's another key critical question.

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Taiwan is the United States' eighth largest trading partner, roughly valued about $114.1 billion.

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They are a key link in our global technology and manufacturing supply chains.

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China is our third largest trading partner, the United States' third largest trading partner.

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It's $758 billion.

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Obviously, it's very significant.

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We get a lot of products from China, especially US agricultural exports that totals $3.9 billion coming from China.

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Japan certainly is an ally within that region, but their trade could be affected.

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They're our sixth largest trading partner.

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We get a lot of US automotive exports from Japan, especially parts and pieces to keep our cars running.

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That's $307 billion.

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So we have our eighth largest trading partner in the region, our third largest trading partner that we might be at war if they do in fact create a blockade around Taiwan and we have our sixth largest trading partner, so we have three of the top eight in the region.

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Now I would say that I have some answers, but I don't.

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But I do have An excellent piece and it's not a book, it's actually a podcast, and I don't recommend many podcasts because I believe in our review of books we provide excellent content and give you those nuggets of wisdom that you need, that you're not getting from regular traditional media, and we believe it's much better than most of the people on television in fact, most of the experts because we're getting it straight from the books, with most books being a more nuanced, a more deeper dive into the topics, into the ideas and actually flushing out those ideas.

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So we say welcome to the digital age where we can do this age, where we can do this.

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There's not too many people that are actually digging in with human beings and actually providing book reviews and finding these nuggets of wisdom.

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But with that, we're going to call a little audible and we are going to recommend the latest podcast from Eric Prince called Off Leash, and I think it's called Off Leash.

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Let me double check yes, off Leash, with Eric Prince and the title of the episode and I'll put a link in the show notes to make this easy for you.

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Very fast, 22 minute listen.

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The title is how Taiwan Can Defeat China.

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Eric digs into this.

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If you don't know, eric Prince, former Navy SEAL, author of Civilian Warriors Very good book.

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And if you want to know how a US president gets briefed on very important topics, especially with US foreign policy, listen to this 22-minute podcast and you will understand how a president gets briefed.

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I'm sure Eric has briefed various presidents on various tactical things, as a former Navy SEAL and certainly as the owner and operator of Blackwater back in the day.

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So fascinating, probably one of the best podcasts I've listened to in the last two to three years.

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Just that 22-minute episode is worth your time.

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I'll put a link in the show notes.

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Is worth your time.

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I'll put a link in the show notes.

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But in today's Mojo Minute.

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These recent military activities underscore the growing tensions in the Tawant Strait and our complex geopolitical dynamics, most especially involving China, taiwan and the international community.

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And this storm that is brewing in the East China, in the Western Pacific, between China and Taiwan, is unfortunately quickly becoming a perfect storm and we would do well to watch it.

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Thank you for joining us.

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We hope you enjoyed this theory to action podcast.

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Be sure to check out our show page at team mojo academycom, where we have everything we discussed in this podcast, as well as other great resources.

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Until next time, keep getting your mojo on.

MM#331--A Storm Is Brewing in East Asia: China's Tightening Grip & Taiwan's Precarious Future

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