Chinese
tourists
walk
past
an
installation
depicting
Taiwan
(R)
and
mainland
China
at
a
tourist
area
on
Pingtan
island,
the
closest
point
to
Taiwan,
in
China’s
southeast
Fujian
province
on
April
6,
2023.

Greg
Baker
|
AFP
|
Getty
Images

Fraying
U.S.-China
relations
and
rising
tensions
over
Taiwan
have
influential
business
leaders
such
as
Elon
Musk
and
Warren
Buffett
sounding
alarms
about
a
possible
invasion

a
matter
that
will
likely
loom
over
the
2024
election.

China
is
already
bound
to
be
a
major
issue
in
the
U.S.
campaign
as
President

Xi
Jinping

pushes
to
expand
his
nation’s
power.

China’s
policy
regarding
Taiwan
,
the
world’s
leader
in
the
semiconductor
industry,
could
end
up
making
it
an
even
bigger
focus.

The
cross-strait
strife
has
already
provoked
commentary
from
some
top
contenders
in
the
Republican
presidential
primary
race
who
have
stressed
the
need
to
deter
a
possible
Chinese
invasion
invasion
of
the
island.
Taiwan
is
also
a
topic
of
discussion
during
this
week’s
Group
of
Seven
meeting
in
Japan,
which
President
Joe
Biden
is
attending.

Xi
has
made
Taiwan
“reunification”
a
focal
point
of
his
agenda
and
Beijing
has
ramped
up
hostilities
against
the
island,
putting
a
spotlight
on
its
importance
to
the
global
economy
and
conjuring
fears
of
a
major
international
conflict
that
could
eclipse
Russia’s
devastating

war
in
Ukraine
.

“The
official
policy
of
China
is
that
Taiwan
should
be
integrated.
One
does
not
need
to
read
between
the
lines,
one
can
simply
read
the
lines,”


Tesla

CEO
Musk

said
in
an
interview

Tuesday
with
CNBC’s
David
Faber.

Tesla CEO Elon Musk on U.S.-China tensions: There is some 'inevitability' to Taiwan situation


watch
now

“So
I
think
there’s
a
certain

there’s
some
inevitability
to
the
situation,”

Musk

said,
adding
that
it
would
be
bad
for
“any
company
in
the
world.”

Tesla
just
last
month
announced

plans

to
open
a
new
factory
in
Shanghai
that
will
build
“Megapack”
batteries.

Musk’s
remarks
came
one
day
after
Buffett’s


Berkshire
Hathaway

revealed
in
a
filing
that
it
has
completely
abandoned
its
recently
acquired
stake
in


Taiwan
Semiconductor
Manufacturing
Co.
,
once
worth

more
than
$4
billion
.
The
world’s
largest
chipmaker,
based
in
Hsinchu,
Taiwan,
produces
the
majority
of
the
advanced
semiconductors
used
by
top
tech
companies
like


Apple
,


Amazon
,


Google
,


Qualcomm

and
more.

Buffett

said

in
recent
weeks
that
the
geopolitical
strife
over
Taiwan
was
“certainly
a
consideration”
in
his
decision
to
offload
the
shares
over
the
last
two
fiscal
quarters.
And
in
an
analyst
call
earlier
this
month,

Buffett

said
that
while
the
company
was
“marvelous,”
he
had
“reevaluated”
his
position
“in
the
light
of
certain
things
that
were
going
on.”

“I
feel
better
about
the
capital
that
we’ve
got
deployed
in
Japan
than
Taiwan.
And
I
wish
it
weren’t
so,
but
I
think
that’s
a
reality,”
he
said.

Meanwhile,

Ray
Dalio
,
founder
of
hedge
fund
titan
Bridgewater
Associates,
in
late
April
wrote
a

lengthy
post

on
LinkedIn
warning
that
the
U.S.
and
China
were
on
the
“brink
of
war”

though
he
specified
that
that
could
mean
a
war
of
sanctions
rather
than
military
might.

The
apparent
worries
from
the
three
members
of
Forbes’

list

of
the
world’s
richest
people
come
“a
little
late
to
the
party,”
Longview
Global
senior
policy
analyst
Dewardric
McNeal
said
in
an
interview
with
CNBC.

“It’s
frustrating
to
me,”
McNeal
said.
“We’ve
been
talking
about
this
for
years,
and
we’ve
also
been
trying
to
warn
against
being
overly
dependent
on
China
as
your
source
for
selling
products
[and]
manufacturing
products.”

He
also
noted
that
Berkshire
Hathaway
still
holds
stock
in
BYD,
an
electric
car
maker
based
in
Shenzhen,
China.
“Quite
frankly,
it
is
advantageous
for
China
to
scare
investors
away
from
Taiwan
and
damage
or
taint
that
economy,
because
that
is
one
of
the
scenarios
[in
which] that
they
could
bring
Taiwan
to
heel
without
an
armed
intervention,”
McNeal
said.

Buffett’s
company
has

sold

more
than
half
the
stake
in
BYD
it
held
as
of
last
year.

“I
don’t
think
an
attack
is
imminent,
but
that
doesn’t
mean
you
shouldn’t
be
using
this
time
to
plan,”
McNeal
said.
“And
what
I
often
see
is
businesses
sort
of
talking
beyond
the
point,
hoping

hope
is
not
a
strategy

that
this
won’t
happen.”


The
U.S.
policy
on
Taiwan

U.S.
intelligence
officials
have

said

Xi
is
pushing
China’s
military
to
be
ready
to
seize
Taiwan
by
2027.
China
is
“likely
preparing
for
a
contingency
to
unify
Taiwan
with
the
[People’s
Republic
of
China]
by
force,”
the
Pentagon

said

in
2021.

China
asserts
Taiwan,
a
self-governing
democracy,
is
part
of
its
territory.
It
has
pushed
to
absorb
the
island
under
the
banner
of
“one
country,
two
systems,”
a
status
rejected
by
Taiwan’s
government
in
Taipei.

Beijing
in
recent
years
has
steadily
ramped
up
its
pressure
over
Taiwan
on
economic
and
military
fronts.
It
flexed
its
might
as
recently
as
last
month
by
conducting
large

combat
drills

near
Taiwan,
while
vowing
to
crack
down
on
any
hints
of
Taiwanese
independence.

China
has
not
ruled
out
using
force
to
take
control
of
Taiwan.

Taiwan’s
recent
interactions
with
the
U.S.
have
provoked
aggressive
reactions
from
China.
After
then-House
Speaker
Nancy
Pelosi,
D-Calif.,
visited
Taipei
last
summer,
China

launched
missiles

over
Taiwan
and
cut
off
some
diplomatic
channels
with
the
U.S.

A

meeting

in
California
last
month
between
Taiwan’s
president,
Tsai
Ing-wen,
and
current
House
Speaker
Kevin
McCarthy,
R-Calif.,
prompted
more
threats
and
fury
from
Beijing.

McCarthy meeting Taiwan leader clearly about increased aggression from China, says Dewardric McNeal


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now

Even
in
a
political
climate
where
both
major
U.S.
parties
have
been
critical
of
China
and
wary
of
its
encroaching
global
influence,
leaders
have
tread
carefully
around
the
volatile
subject
of
Taiwan.
The
U.S.
has
officially
recognized
a
“One
China”
policy

that
Taiwan
is
a
part
of
the
mainland

for
more
than
four
decades,
and
China
has
vowed
to
sever
diplomatic
ties
with
countries
that
seek
official
diplomacy
with
Taiwan.

While
Pelosi
spoke
of
America’s
interest
in
preserving
Taiwan’s
democracy
on
her
trip
to
Taipei,
she
stressed
in
a
Washington
Post

op-ed

at
the
time
that
her
visit
“in
no
way
contradicts
the
long-standing
one-China
policy.”


Biden

was
seen
to
break
with
America’s
longstanding
stance
on
Taiwan
when
he
said
last
year
that
U.S.
forces
would

defend

the
island
if
it
was
attacked
by
China.
The
White
House,
however,
maintains
the
U.S.
policy
on
Taiwan
is
unchanged.


2024
contenders
weigh
in

Dalio
predicted
that
the
brinksmanship
between
the
two
superpowers
will
grow
more
aggressive
over
the
next
18
months,
in
part
because
the
2024
U.S.
election
cycle
could
usher
in
a
swell
of
anti-Chinese
rhetoric.

There’s
little
doubt
that
China
will
a
major
topic
on
the
campaign
trail.
At
least
three
Republicans
who
are
seen
as
potential
presidential
candidates

Florida
Gov.
Ron
DeSantis,
Virginia
Gov.
Glenn
Youngkin
and
former
United
Nations
Ambassador
John
Bolton

have
recently
embarked
on
trips
to
Asia,
including
Taiwan,
to
meet
with
allied
leaders.

Meanwhile,
U.S.
lawmakers
at
every
level
have
produced
an
array
of

legislation

seeking
to
reverse
China’s
growing
influence,
some
of
which
has
drawn
accusations
of

fearmongering
.
And
some
of
the
potential
presidential
contenders
have
already
weighed
in
with
calls
to
meet
Chinese
aggression
with
strength.

“Xi
clearly
wants
to
take
Taiwan
at
some
point,”
DeSantis
said
in
an

interview

with
Nikkei
while
in
Japan.
“He’s
got
a
certain
time
horizon.
He
could
be
emboldened
to
maybe
shorten
that
horizon.
But
I
think
ultimately
what
I
think
China
respects
is
strength,”
DeSantis
said.

DeSantis
had
drawn
criticism
for
a
previous
foray
into
geopolitics
when
he
described
Russia’s
war
in
Ukraine
as
a
territorial
dispute
.”
His
views
on
U.S.
policy
toward
Taiwan,
in
contrast,
were
more
vague.

Former Vice President Mike Pence: The last thing we ought to do is raise taxes


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now

“I
think
our
policy
should
really
be
to
shape
the
environment
in
such
a
way
that
really
deters
them
from
doing
that,”
DeSantis
said
of
a
potential
Chinese
invasion
of
Taiwan.
“I
think
if
they
think
the
costs
are
going
to
outweigh
whatever
benefits,
then
I
do
think
that
they
would
hold
off.
That
should
be
our
goal.”

DeSantis,
who
is
gearing
up
to
formally
announce
his
presidential
campaign
next
week,
is
seen
as
former
President

Donald
Trump
‘s
top
rival
for
the
Republican
nomination.

Trump

said

last
year
that
he
expected
China
to
invade
Taiwan
because
Beijing
is
“seeing
that
our
leaders
are
incompetent,”
referring
to
the
Biden
administration.

Former
Vice
President
Mike
Pence,
who
says
he
will
make
his
own
decision
about
running
for
president
by
next
month,
said
in
April
that
the
U.S.
should
increase
sales
of
military
hardware
to
Taiwan,
“so
that
the
Chinese
will
have
to
count
the
cost
before
they
make
any
move
against
that
nation.”

In
an

interview
Wednesday

on
CNBC’s
Squawk
Box
,”
Pence
cited
the
cross-strait
tensions
as
an
argument
against
cutting
U.S.
military
spending.

“At
a
time
when
China
is
literally
floating
a
new
battleship
every
month
and
continuing
military
provocations
across
the
Asia-Pacific
and
Russia’s
waging
an
unprovoked
war
in
Eastern
Europe,
the
last
thing
we
ought
to
be
doing
is
cutting
defense
spending,”
he
said.

Former
United
Nations
Ambassador
Nikki
Haley,
who
launched
her
presidential
campaign
in
February,
said
in
a
statement
to
CNBC,
“American
resolve
matters
to
China.”

“They
are
watching
what
we
do
in
Ukraine. If
we
abandon
our
friends
in
Ukraine,
as
some
want
us
to
do,
it
will
only
encourage
China
to
attack
our
friends
in
Taiwan,”
Haley
said.


‘Like
trying
to
separate
conjoined
twins’

But
the
political
will
to
defend
Taiwan
in
a
Chinese
invasion
may
clash
with
economic
forces.

“Almost
no
one
realizes
that
the
Chinese
economy
and
the
rest
of
the
global
economy
are
like
conjoined
twins.
It
would
be
like
trying
to
separate
conjoined
twins,”
Musk
told
CNBC
on
Tuesday.
“That’s
the
severity
of
the
situation.
And
it’s
actually
worse
for
a
lot
of
other
companies
than
it
is
for
Tesla.
I
mean,
I’m
not
sure
where
you’re
going
to
get
an
iPhone,
for
example.”

Some
CEOs
of
America’s
biggest
banks
have
said
they
would

pull
their
business

from
China
if
directed
to
do
so
following
an
invasion
of
Taiwan.
But
Musk’s
characterization
of
the
entangled
global
economy
is
no
exaggeration

and
much
of
the
focus
has
fallen
on
TSMC.

“If
Taiwan
were
taken
out,
we
would
be
like
severing
our
brain,
because
the
world
economy
will
not
work
without
[TSMC]
and
the
chips
that
come
out
of
Taiwan
today,”
John
Rutledge,
chief
investment
strategist
of
Safanad,
said
Wednesday
on
CNBC’s
Power
Lunch

in
response
to
Musk’s
comments.

David
Sacks,
a
research
fellow
at
the
Council
on
Foreign
Relations,
said
on
CNBC
that
Apple
is
in
a
“very
tough
position”
because
the
most
advanced
chips
it
needs
are
made
in
a
single
building
on
TSMC’s
campus
in
Taiwan.

We'd be fooling ourselves if we think we can be self-reliable on chips, says CFR's David Sacks


watch
now

The
company’s
technological
edge
in
the
production
of
semiconductors,
which
are
used
in
all
manner
of
products
from
cars
to
washing
machines,
has
led
to
it
being
a
potential
“single
point
of
failure”
for
many
companies,
McNeal
said.

But
he
also
noted
that
the
global
reliance
on
TSMC

including
by
China,
which
reportedly
depends
on
the
company
to
provide
about

70%

of
the
chips
needed
to
fuel
its
electronics
industry

could
act
as
a
sort
of
bulwark
against
an
invasion.

A

paper

from
the
Stimson
Center
on
Taiwan’s
“Silicon
Shield”
put
a
fine
point
on
the
issue:
“Without
a
doubt,
the
first
Chinese
bomb
or
rocket
that
should
fall
on
the
island
would
make
the
supply
chain
impact
of
the
COVID
pandemic
seem
like
a
mere
hiccup
in
comparison.”

CNBC
Politics

Read
more
of
CNBC’s
politics
coverage:

There
are
nevertheless
efforts
underway
to
diversify
the
industry
geographically,
including
through
a

$40
billion

investment
to
expand
TSMC
chip
production
in
Arizona.

McNeal
said
the
issue
should
not
solely
be
centered
around
TSMC
and
possible
supply
chain
woes.

“For
our
Taiwan
friends,
that
message
says
you
don’t
give
a
damn
about
them,
their
lives,
their
safety.
You’re
only
in
this
for
what
it
means
for
your
bottom
line,”
he
said.
“For
me
personally,
that’s
not
a
message
that
I
want
to
send.”



CNBC’s
Amanda
Macias
and
Michael
Bloom
contributed
to
this
report.


Disclosure:



Dewardric
McNeal


is
a
CNBC
contributor.