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I’m back from my ski weekend, so let me finish up this thread.
As Taiwan depends more on trade with China, and accumulate more debts, its leverage decreases, and China’s leverage increases.
Furthermore, you saw how the people and the market of Taiwan reacted to CSB’s recent speech. He had to assure the markets that he was not pushing for formal independence. As others have already mentioned, CSB is really just a lame duck now and it’s quite apparent. Just extrapolate the current trend and it’s very reasonable to make a case for unification. One of the most telling signs that CSB doesn’t have the support is when Taiwan’s own market reacted negatively to even ambiguous speech and needed clarification from CSB.
As I wrote before, when you add to that the net disintermediation, it quite clear the Taiwanese people don’t have confidence in Taiwan enough to invest fully in its future. That is very damning, because as they say, “Talk is cheap”. When I want to know about real confidence, I don’t look to political talking heads who are paid and in some ways retain their job to give a great spin, I look at what the local business people are doing first, then look at what investors around the world are doing, as it will give me a much better idea where is the real confidence.
This is yet another example of practical tradeoffs trumping political ideology as the market responses to even ambiguous language, was enough to send the Taiwanese market downwards. One day, you might be practical enough to see this reality.
China did not always trade with Taiwan. After the Chinese Civil War, there was a period of time when China didn’t trade with Taiwan, so not only is it possible to cut trade, but one only needs to look at the history to know that.
You can get almost any report to support a position, but one of the best indications of true support is how do the people and the businesses feel about Taiwan’s future. When CSB needed to backtrack quickly and clarify that he was not pushing for formal independence, that was an indication how Taiwanese truly felt and the fears in the market regarding the negative impact of even ambiguous language that remotely suggested formal independence. There were many Taiwanese who were unhappy with his speech. CSB really doesn’t have much leverage, and as the reliance on trade increase, and debts increase, he will become a greater and greater lame duck!
I agree with your explanation of Latin America, Africa, and India. But the point wasn’t about their stability. As you may or may not know, China outsource some labor and assembly to other countries since it doesn’t have the lowest labor cost. One main reason why so many countries are in China is because of this large domestic savings, which can mean large consumption. It’s no secret that if you want to get your foot in the door of the Chinese market, you better start with investing into China.
The examples I gave weren’t about stability. My point was, if people are only looking for low labor cost, they could find it in many places in this world. But when you factor in domestic savings, domestic consumption ability, stability, ability to protect shipping vessels and channels (something China is rapidly working on by strengthening its Navy), it’s a no-brainer why China. This contrasting example, was really just to expand Fish’s myopic view on China and why many in the world invest in China.
Lastly, the Taiwanese market doesn't share your optimism that it can survive without China trade. The Taiwanese market took a downturn just with ambiguous language by CSB, so what would actual sanctions and cutting off trade do?