Over the past 30 years, a third of the world’s economic momentum has come from China. This has been China’s positive contribution to the world. However, behind China’s moves to attract foreign capital and leverage its domestic market is its techno-nationalist agenda that manifests in the form of Belt and Road expansion. Such a program has raised serious concerns in the US-led Western camp, which sees it as a serious challenge to Western capitalism.

However, even in an ideological battle, industrial and economic developments should not be overlooked. Therefore, the United States and China exercised restraint to avoid fierce conflicts. But if they exhaust all peaceful possibilities and still fail to find a balance, then we will see more and more “near-war” actions. US export bans on AI and supercomputer chips, high-end memory and personnel have dealt China a heavy blow.

Will China give in? Or will it repeat the World War II incident where the Germans blew up the oil tanks they couldn’t secure? Unlikely, unless Chinese leaders are crazy. If semiconductor manufacturing plants in Taiwan, and even in South Korea and Japan, were threatened, one can imagine that the global economy would be hit hard and not recover for at least a decade. Problems of food supply, climate and military conflicts will follow. It would be way beyond a game of chicken.

We don’t see the benefits of rebuilding fabs on American soil. Former president of Taiwan’s Industrial Technology Research Institute (ITRI), Chin-Tay Shih, who helped introduce semiconductor technology to Taiwan in the 1970s, noted that the globalization has played a key role in generating explosive growth of semiconductors in the past, and that golden period of globalization was from 1990 to 2010. During these two decades, the growth of mutual investments between countries was more than twice the growth in global GDP. However, after 2010, the trend towards globalization slowed, replaced by regionalized production systems and investments. But the stability of global supply chains remains crucial.

All supply chain actors will want to find local partners with whom they can secure local business opportunities. Foxconn Chairman Young Liu has been busy seeking partnerships in Asian countries – a demonstration that Foxconn seeks to combine its unparalleled manufacturing capabilities with local capital and service systems, seeking to connect all markets emerging. This is a new version of the Belt and Road initiative, and the initiators will be supply chain manufacturers based in Taiwan.

After all, in the US-China race, Taiwan, Japan, Korea and neighboring countries must continue to raise the stakes in order to deter war. Another thing that Taiwan, Japan and Korea could do is indirectly bring ASEAN and South Asian countries into the race. ASEAN and South Asian countries, with their large young population and geographical advantages, have become the focus of attention. However, democratic countries in the region may not be investing as effectively as China in strategic industries.

The most practical model is not to move all the factories to the United States, but rather to bring Taiwan’s experience of the semiconductor industry internationally and to prioritize industrial infrastructure in the ASEAN and South Asian countries.

(Editor’s note: This is part of a series of articles that revolve around the issues of the US-China confrontation, but focus on issues facing Taiwan, Japan, Korea, ASEAN, India and other emerging Asian countries face in their industrial development strategies and ICT supply chains.)