Adaptive Strategic Ambiguity: An American Response to the Evolving Balance of Power in the Taiwan Strait

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1. Introduction

Although the triumph of Chinese Communist party (CCP) over Kuomintang nationalists concluded in 1949, it took nearly three decades for the United States to acknowledge the realities on the ground, terminate official ties with the Republic of China (ROC) and diplomatically recognize the People’s Republic of China (PRC) as the sole state representing the entire country. However, while the Carter administration finalized diplomatic normalization with the PRC, the geopolitical significance of Taiwan –where the nationalists retreated following their defeat in the Chinese civil war– prevented the American foreign policy decision-makers from disregarding the fate of their former ally on the island. Consequently, in 1979, the US Congress passed the Taiwan Relations Act (TRA), which deemed any non-peaceful attempt to determine the future of Taiwan as unacceptable. Accordingly, even though the United States did not legally commit itself to military intervention in support of Taiwan, it declared its intention to provide the island with “defense articles and defense services necessary for its self-defense capability” (US Congress, 1979). By maintaining such strategic ambiguity in its position towards Taiwan, the United States aimed to deter the PRC from resorting to violence. Meanwhile, by avoiding a legally-binding commitment for Military support, the US also resolved not to provoke Taipei into declaring independence unilaterally.

At the time the Taiwan Relations Act was signed into law, due to the extensive US military support to the Kuomintang, the cross-strait balance of power was heavily to the PRC’s disadvantage. However, over the past four decades, regional dynamics have undergone significant changes, rendering the traditional strategic ambiguity increasingly irrelevant, ineffective, and costly. China's economic rise resulting from the CCP's policy of “reform and opening up” since the early 1980s not only failed to foster political reforms or the gradual acceptance of Western norms and values, but also provided the CCP with the necessary financial and technological resources for military modernization (Chiang, 2023). Between 2001 and 2023, China's defense budget grew five-fold, enabling substantial investment in the qualitative enhancement of the People’s Liberation Army (PLA). As a result, China -already a nuclear-armed power- now possesses the world's largest missile force, the second-largest navy, and the third-largest air force (Kuo, 2023). By 2017, China had already attained sufficient military capabilities to seriously challenge the US conventional superiority in the event of a cross-strait military confrontation (Heginbotham et al., 2015). In essence, the shifting balance of power in the Taiwan Strait has gradually eroded the US pivotal role in regional deterrence; in other words, while a potential US military intervention remains necessary, it is no longer enough to deter the Chinese invasion of Taiwan.

Given the current circumstances, it is no longer feasible to expect that maintaining the traditional strategic ambiguity will effectively preserve the cross-strait status quo and deter China from resorting to military force against Taiwan. Furthermore, the gradual enhancement of China's position in the global supply chain, coupled with its substantial trade volume with the United States and its allies, adds complexity to the already complicated dynamics governing the Taiwan Strait. In this unprecedented era of Sino-American economic interdependence, a substantial military confrontation over Taiwan could have profound economic, political, and security ramifications for the United States. Estimates indicate that a military conflict in the Taiwan Strait could result in a staggering $2 trillion setback for the global economy (Garamone, 2023). Considering this, it is crucial to question whether the United States could impose a comprehensive sanctions regime on China in the event of a cross-strait military confrontation without incurring substantial economic and financial costs. Moreover, it is also natural to question the extent to which the international community would follow suit if such a sanctions regime were imposed.

The complexity of such questions reflects the escalating levels of uncertainty and unpredictability that have come to dominate the dynamics between the two sides of the Taiwan Strait in recent years. These complexities have compelled the United States to halt the ongoing erosion of the regional balance of power and to restore the necessary strategic maneuverability to counter China's growing influence in the area. In this context, the central question guiding this paper is: How has the United States responded to the evolving geostrategic dynamics in the Taiwan Strait?

The hypothesis put forward is that since the Trump administration, the United States has implemented a series of policies that have either been continued or even intensified following President Biden's assumption of office in 2021. This essay categorizes these policies within a new conceptual framework termed Adaptive strategic ambiguity. Specifically, the United States views the maintenance of the cross-strait status quo –along with Taiwan’s security- as contingent upon a gradual shift away from traditional strategic ambiguity. In this regard, the United States, still adhering to the One China policy, is taking steps towards achieving political clarity through both quantitative and qualitative development of its political relations with Taiwan. Simultaneously, the United States is deepening its security and military coordination and cooperation with its regional network of allies and partners. This concerted effort aims to reconstruct the cross-strait balance of power and deter China from resorting to military action against Taiwan. Such endeavors, coupled with the establishment of a collective regional deterrence against China, provide the United States with a window of opportunity to gradually mitigate its economic vulnerability to the ramifications of a plausible deterioration of its political ties with the PRC. This approach, known as economic de-risking, would also enhance the US strategic maneuverability in curbing PRC’s ambitions over Taiwan through the imposition of effective sanctions regimes on China’s economy in the event of cross-strait military confrontation.

In general, Washington's gradual shift in foreign policy towards Adaptive strategic ambiguity provides the necessary platform for protecting the security and stability of Taiwan as a democratic model in Asia, a leading economy in cutting-edge technologies, and a crucial ally in the first island chain.

This paper employs a descriptive-analytical methodology to examine the evolution of U.S. foreign policy towards Taiwan. The descriptive component focuses on presenting a detailed account of key diplomatic events and policy shifts, particularly during the Trump and Biden administrations. By synthesizing official documents, speeches, and secondary sources, this approach provides a contextual perspective of U.S. strategic approach toward the ongoing security dynamics of the Taiwan Strait. The analytical aspect involves a critical evaluation of these policies, situating them within broader geostrategic developments in the Taiwan Strait and assessing the strategic calculus behind U.S. foreign policy decision-making. Through this dual approach, this paper aims to provide a comprehensive understanding of the way in which evolving geopolitical realities have shaped and continue to influence the application of strategic ambiguity in the U.S. foreign policy behavior.

The theoretical framework of this paper integrates elements from both realism and liberalism to provide a nuanced analysis of the U.S. foreign policy in Taiwan Strait. From a realist perspective, the concepts of balance of power and balance of threat are central to understanding the strategic calculations of the U.S. as it navigates the shifting dynamics of power between China and Taiwan. This framework allows for an exploration of the way in which the U.S. seeks to balance China’s growing influence while maintaining its own strategic foothold in the region. Meanwhile, the paper draws on liberalist literature of economic interdependence to examine the way in which China's integration into the global economy over the past few decades has fundamentally altered the nature of Sino-American strategic competition. As China became a key player in international trade, the U.S. found itself not only competing with China for regional dominance but also deeply economically intertwined with it. This economic interdependence has created a situation in which both countries must carefully balance their geopolitical rivalry with the need to preserve stable economic relations. By merging these two schools of thought, this paper highlights how both geopolitical priorities and economic considerations shape the U.S. foreign policy, reflecting the complexity of managing security concerns alongside economic interests in the post-Cold War era.

2. Taiwan’s Comeback: From an Autocratic Unsinkable Aircraft Carrier to a Democratic Technological Giant

The introduction of strategic ambiguity in 1979 was deemed a necessary measure, commensurate with the prevailing balance of power that constrained China from taking drastic actions against Taiwan. However, the dynamics in the Taiwan Strait have undergone significant changes over the past four decades. In 1979, the primary impetus behind the United States' adoption of strategic ambiguity and its support for the Kuomintang government against a potential PLA invasion, was Taiwan's geopolitical position within the first island chain. This strategic island, as referred to by Douglas MacArthur (1950) as an “unsinkable aircraft carrier”, is situated at the core of the first island chain, a geopolitical construct introduced by the United States in the 1940s to counter the naval aspirations of China and the Soviet Union in the Pacific Ocean. This geopolitical chain encompasses a series of islands and archipelagos spanning from the Kuril Islands in the north, through Okinawa, the Ryukyu Islands, Taiwan, the Philippines, and extending to Indonesia (Erickson & Wuthnow, 2016).

However, as time has passed and China's military capabilities have grown, Beijing has sought to expand its influence within the first island chain by employing a range of military operations under the "gray zone" strategy. Examples of China's gray zone tactics include the construction of artificial islands, the deployment of A2/AD systems on them, and the expansion of the PLA Navy's patrolling presence through the South China Sea. Nevertheless, to establish a permanent and stable presence in this region, the PRC would need to gain control over Taiwan (Espena & Bomping, 2020). Such a development, if realized, could disrupt the integrated deterrence along the first island chain due to Taiwan's pivotal location, potentially facilitating the expansion of China's sphere of influence in the broader Pacific Ocean. Hence, despite the diplomatic recognition of the People's Republic in 1979, the critical position of Taiwan in the regional geopolitics served as a warning to the United States against indifference toward the fate of this geo-strategic island. Therefore, through the employment of strategic ambiguity, the Carter administration sought to restrain China's resolve to reclaim Taiwan.

Meanwhile, at the time of the ratification of the TRA in the US Congress, Taiwan's political and economic identity was not much different from the authoritarian rule of the CCP on the other side of the strait. Following the Kuomintang's exodus to Taiwan, the Republic of China implemented a sequence of stringent repressive measures against its populace, thereby enveloping Taiwan's political landscape in what has come to be known as the “White Terror” (Fuchs, 2017). At this time, The ROC operated as a one-party system, lacking democratic characteristics and restricting political freedoms through the imposition of martial law. Additionally, Taiwan's total gross domestic product in 1980, just one year after the United States severed diplomatic ties with the island, amounted to slightly over $42 billion (IMF, n.d.). On the other hand, the adoption of strategic ambiguity in the US foreign policy coincided with China's commitment to economic reforms, the success of which relied on Beijing’s ability to uninterruptedly attract foreign direct investment and maintain stable access to global markets. Under such circumstances, the vulnerability of China’s still underdeveloped economy to international sanctions was much higher than the sensitivity of the global economy to the potential repercussions of a cross-strait military conflict. As a result, any military action against Taiwan, regardless of its outcome, could incur significant costs that would dissuade the PRC from resorting to force.

However, the military and economic balance of power in the Taiwan Strait has undergone significant changes over the past four decades. China's remarkable economic growth, along with its prominent role in the global supply chain, has increasingly exposed the United States and its allies to potential economic repercussions in the event of a diplomatic breakdown with the PRC. As a result, the cost of imposing comprehensive political and economic isolation upon China – this time as the world's second-largest economy- has gradually risen.

Taiwan has also undergone significant transformations during this period. Political and economic reforms have propelled ROC to become a vibrant democracy in East Asia, a leading economy in cutting-edge technologies, and a crucial participant in the global value chain. Consequently, a military conflict between China and Taiwan, which was previously viewed primarily as an isolated regional issue, now has the potential to rapidly escalate into an international crisis with significant financial, political, and security implications.

Such developments raise the question of whether the US’s adherence to the traditional strategic ambiguity is still effective in maintaining the status quo and safeguarding Taiwan's security. The concerns surrounding the efficacy of traditional strategic ambiguity have been further heightened since the onset of Russian military aggression against Ukraine in February 2022.

However, unlike the war in Ukraine, China's invasion of Taiwan could have significant consequences for the United States. Ukraine, aside from its grain exports, does not hold a substantial role in the global supply chain, particularly in the high-tech industry. The total value of bilateral trade between the United States and Ukraine in 2021, a year leading up to Russia's military aggression, did not exceed $4.410 billion, (US Census Bureau, 2019) making Ukraine the 59^th trading partner of the United States. Furthermore, Ukraine’s political alignment with the West has experienced notable fluctuations over the past two decades. Kyiv's shortcomings in addressing corruption – along with the ups and downs in its relations with the European Union- were among the reasons that contributed to the US hesitancy in granting Ukraine early admission to NATO prior to the invasion (Gregorian, 2021).

In contrast, Taiwan's Gross Domestic Product surpasses that of Ukraine by more than threefold (Zhang, 2022). The bilateral trade between Taiwan and the United States reached a substantial value of $160 billion in 2022, positioning Taiwan as the US’s ninth-largest trading partner (Office of the United States Trade Representative, n.d.). Taiwan also holds a significant role in the global semiconductor supply chain. Notably, Taiwan Semiconductor Manufacturing Company (TSMC) is responsible for over 90% of the world's most advanced semiconductor output. In a broader context, Taiwanese companies contribute to a staggering 68% of the annual chip production that is subsequently distributed across global markets (Sacks & Miller, 2023). Thus any potential outbreak of a cross-strait military conflict could disrupt the manufacturing and transportation of high-end chips, which are crucial for the optimal functioning of various cutting-edge technologies. The potential disruption to TSMC's exports carries the economic implication of an annual global cost ranging from $600 billion to $1 trillion (Vest & Kratz, 2023). Such disruptions could ultimately result in price inflation and economic downturns across capital-intensive sectors on a global scale.

However, the significance of Taiwan in the American foreign policy extends beyond its economic capabilities. Taiwan holds a distinctive identity as a democratic antithesis to the paternalistic authoritarianism of the "China model" propagated by the CCP (Garver, 2011). In contrast to the CCP's assertion that democratic governance is incompatible with Chinese culture (Bell, 2015), Taiwan has demonstrated that embracing democratic norms and values, along with political liberalization not only proves feasible, but also fosters economic prosperity. Hence safeguarding Taiwan as a democratic alternative to the PRC assumes a crucial cognitive element in the US foreign policy towards the Indo-Pacific region. Moreover, a successful military annexation of Taiwan would signify the superiority of the Chinese authoritarian model over Taiwanese democracy. In such a scenario, China’s annexation of Taiwan, particularly in the absence of a US decisive action, could question the credibility of US security alliances in the eyes of its regional network of allies and partners. Under such circumstances, varying degrees of rapprochement with Beijing or even the pursuit of security autonomy, potentially through nuclear proliferation, may emerge as plausible options for those disillusioned allies seeking to avert similar military conflicts with China. Such developments would serve to diminish the security partnerships of regional actors with the United States and further erode the US regional standing (Sacks, 2023b).

These circumstances have made it necessary for Washington to implement several fundamental readjustments in the traditional strategic ambiguity in order to maintain the regional status quo and protect the security and stability of Taiwan.

3. Adaptive Strategic Ambiguity: A New Strategy for Securing an Old Objective

The US response to the cross-strait dynamics and the evolving regional balance of power can be categorized within a framework of some pragmatic reforms referred to in this study as Adaptive Strategic Ambiguity. Within this new conceptual framework, the United States continues to prioritize the maintenance of the cross-strait status quo as a strategic imperative. However, the various developments over the past four decades, including China's economic rise and military modernization, as well as Taiwan's democratic transition and increasing involvement in the global value chain, have necessitated a pragmatic departure from the limitations imposed by the traditional strategic ambiguity. Concurrently, the deepening economic ties of the United States and its allies with China have gradually caused economic considerations to constrain Washington’s strategic maneuverability for curbing China's regional ambitions. In light of these circumstances, the contextual boundaries of Adaptive strategic ambiguity, as illustrated in figure 1, can be delineated by three fundamental dimensions.

The first dimension can be perceived as a cognitive transition from a discourse that limits US foreign policy choices within a dichotomy between strategic ambiguity and strategic clarity. Under the banner of Adaptive strategic ambiguity, the United States introduces a pragmatic level of political clarity in its stance towards Taiwan. Despite maintaining adherence to the one-China policy and evading legally-binding commitments to militarily defend the ROC, the United States is expanding unofficial political relations with Taipei both quantitatively and qualitatively, with the objective of increasing the political costs for China to engage in military aggression against Taiwan.

The second dimension encompasses the US efforts to reinvigorate existing bilateral and multilateral security partnerships within the Indo-Pacific region in response to China's emergence as a common regional threat. Washington aims to foster a collective deterrence architecture against China's assertive behavior by bolstering the military capabilities of its regional network of allies and partners.

The third dimension pertains to economic de-risking. By employing political clarity and reinforcing regional deterrence, the cost of a Chinese military invasion is increased, postponing the PRC’s intention to unilaterally change the status quo in the Taiwan Strait in the medium term. This dynamic presents a window of opportunity for the United States to mitigate its economic vulnerability to the negative consequences of the potential outbreak of a cross-strait military conflict. In this regard, the selective reduction of economic ties with the PRC -achieved through the imposition of multiple export control regimes- along with the diversification of supply chains for cutting-edge technologies will gradually rebalance the existing Sino-American economic interdependence in favor of the US, providing it with a strategic freedom of action to punish a future Chinese invasion of Taiwan through imposing economic sanctions without incurring corresponding consequences.

4. Political Clarity: A Calculated Step Forward

The notable development of Taiwanese-American political relations began during the tenure of the Trump administration. Over the course of four years, the Congress enacted two legislations pertaining to US-Taiwan relations. In 2018, an unprecedented move by the US Congress resulted in the ratification of the Taiwan Travel Act, granting permission for high-ranking officials from both the United States and Taiwan to engage in reciprocal visits (US Congress, 2018). This act was perceived by Chinese authorities as conflicting with the essence of the One-China policy, which had served as a cornerstone for normalization between the two sides since 1972 (CGTN, 2018).

Furthermore, in response to the CCP’s maneuvers to diplomatically isolate former president Tsai Ing-wen’s government in Taiwan, the US Congress passed another law in 2020, known as the Taiwan Allies International Protection and Enhancement Initiative Act. Drawing from this Act, the United States will support Taiwan's membership in those international organizations in which statehood is not a membership requirement. These efforts will be followed in order to grant Taiwan observer status in other appropriate international organizations (US Congress, 2020).

Enhancing political clarity in the US foreign policy also involves increasing the quantity and quality of bilateral exchanges between high-ranking officials from the United States and Taiwan. Notable instances of such exchanges began with the congratulatory telephone conversation between Tsai Ing-wen and Donald Trump following the latter's victory in the 2016 US presidential election. Table 1 lists US government officials who visited Taiwan during the Trump administration.

Alex Azer’s visit to Taiwan in 2020 also marked the highest-level American official visit to the island in four decades. However, the cancellation of the then-US ambassador to the UN Kelly Craft’s visit to Taiwan in January 2021 (BBC, 2021) raised expectations that the upcoming Biden administration would depart from Trump’s assertive approach in intensifying political support for Taiwan. But contrary to such expectations, in a momentous event occurring in August 2022, despite facing significant diplomatic pressures from Beijing, then US Speaker of the House Nancy Pelosi undertook a visit to Taiwan, Signaling America’s “unequivocal” support for Taipei (Huang, 2022). An additional manifestation of the development of bilateral relations can be found in the fact that, in 2022 alone, 28 US members of Congress undertook visits to Taiwan, marking the highest number since 2013 (Zheng & Lindberg, 2022).

The pattern of private unofficial transits undertaken by high-ranking Taiwanese authorities to the United States has also exhibited another notable qualitative expansion of bilateral ties since 2016. The transits of Taiwanese presidents to the United States are not a novel occurrence, with the inaugural of such trips occurring in 1994 during the tenure of Lee Teng-Hui. But the passage of time witnessed such transits evolving into a customary practice, serving as an informal conduit for the development of Taiwan's relations with the United States.

During her tenure, Tsai Ing-wen embarked upon no less than seven unofficial visits to the United States (Kritenbrink, 2023), emblematic of the growing Taiwanese-American bilateral relations. As a noteworthy departure from the constraints encountered by her predecessors, all of Tsai's visits to the US encompassed overnight stays along with a diversified array of activities. An illustrative example is her July 2019 transit, which extended over a duration of five days and four nights, representing the lengthiest unofficial transit undertaken by a Taiwanese president to the United States.

Tsai's meeting with then-house speaker Kevin McCarthy stands as a pinnacle in the history of bilateral interactions within the context of Taiwanese presidents’ transit trips through the United States. Table 2 lists the High-ranking US officials Tsai Ing-Wen met during her latest transit.

Additionally, the United States, as part of its ongoing diplomatic maneuvers, has pursued a deliberate strategy to take the Taiwan issue beyond the boundaries of its bilateral relations with China and to introduce it as a cornerstone in the Indo-Pacific security architecture. In effect, the Biden administration has harnessed the political and diplomatic capacities of its network of allies and partners to emphasize that peace and security in the Taiwan Strait serve as a fundamental precondition for fostering that of the broader Indo-Pacific theater. This strategic readjustment is discernible in the incorporation of the issue of Taiwan into the context of joint statements released by the United States and its allies.

It is worth noting that the US-Japan joint statement, released during the visit of then-Japanese Prime Minister Suga Yoshihide to Washington in 2021, marked the first time since 1969 wherein the issue of Taiwan featured within the text of a Japanese-American joint statement. Similarly, the G7 Leaders' communiqué released upon the conclusion of the G7 summit in June 2021, also marked the first time wherein the G7 leaders collectively mentioned Taiwan within the context of their joint statement. Table 3 lists the joint statements released by the United States and its allies referring to Taiwan from 2021 to 2023.

NATO Secretary-General Jens Stoltenberg has also criticized China's “threatening behavior” towards Taiwan (Stoltenberg, 2023). Meanwhile, the NATO 2022 Strategic Concept represents a momentous stride that marks the first-ever recognition of the strategic relevance of Indo-Pacific developments to Euro-Atlantic security (NATO, 2022). In this regard, addressing such a challenge necessitates a heightened level of NATO’s cooperation and coordination with Japan, South Korea, Australia, and New Zealand, collectively referred to as Indo-Pacific 4 (IP4). The unprecedented participation of IP4 leaders in two consecutive NATO summits, convened in 2022 and 2023, underscores NATO’s growing interest in cooperation with like-minded global partners in the face of cross-cutting “security issues and global challenges” (NATO, 2023).

Washington’s proactive endeavors to rally its regional and trans-regional allies in expressing a unified stance on the Taiwan issue, while consonant with their apprehensions concerning the profound ramifications of a cross-strait military crisis, simultaneously represents a concerted resolve to heighten the political and diplomatic costs associated with any prospective military action by China vis-à-vis Taiwan.

However, the most salient manifestation of the United States' political clarity toward Taiwan is discernible in President Biden's remarks concerning the prospect of U.S. military intervention in the event of a Chinese invasion of the island. Throughout his tenure, President Biden has made four distinct public statements affirming America's commitment to militarily defend Taiwan in the event of a Chinese incursion onto the island (Sacks, 2022). Despite the subsequent denial by the White House of any alteration in the U.S. foreign policy following each of President Biden's four statements, there is a significant need to delineate a crucial distinction between the objective and the strategy underpinning the US foreign policy orientation towards Taiwan. In President Biden's remarks, the fundamental objective of the United States remains consistent with its historical stance: a commitment to the one-China policy, underscored by an overarching resolve to preserve peace and stability within the Taiwan Strait and the maintenance of the cross-strait status quo (The White House, 2022a). Therefore, National Security Adviser Jake Sullivan's clarification of President Biden's remarks and his insistence that the President's response to a hypothetical question should not be misconstrued as a revision of U.S. foreign policy vis-à-vis Taiwan (Malloy & Vasquez, 2022), are not, in any way, in contradiction with President Biden’s position.

Nonetheless, what is currently undergoing transformation within the contours of U.S. foreign policy pertains to the strategy employed to safeguard the cross-strait status quo. From the onset of the Biden administration, a strategic imperative was discerned to initiate certain strategic readjustments within Washington’s Taiwan policy in alignment with the evolving geopolitical developments that have unfolded over the past four decades. The geopolitical implications of the ongoing war in Ukraine, along with its international repercussions, have also expedited the materialization of such readjustments within the U.S. foreign policy (Schaus, 2022).

Preceding the onset of the crisis in Ukraine, President Biden conspicuously rejected any prospect of U.S. military intervention in the event of a Russian invasion of Ukraine. Even a mere nine days prior to the beginning of the Russian aggression, President Biden (2022) resolutely emphasized in his public remarks that, under no circumstances, would his government deploy military forces to Ukraine.

While the United States formally upholds the One-China policy and designates the preservation of the status quo in the Taiwan Strait as a primary foreign policy objective, the traditional strategic ambiguity employed to realize this objective appears to be progressively diminishing in relevance and efficacy. Consequently, despite the Biden administration's ongoing reluctance to commit itself to a legally-binding obligation to defend Taiwan, in the last two years, it has been pragmatically demonstrating a non-binding political determination for military intervention in defense of the island. In essence, the spectrum of choices available to the United States extends beyond the dichotomy of strategic ambiguity versus strategic clarity. By undergoing a transition from the traditional form of strategic ambiguity that has characterized the U.S. foreign policy since 1979, the Biden administration has sought to augment the costs associated with any military action initiated by the PRC against Taiwan, while abstaining from formal legal entanglements mandating military intervention in support of the island. In other words, Washington is still reluctant to expunge ambiguity from the essence of its Taiwan policy (Schaus, 2022).

Meanwhile, the United States' transition away from traditional strategic ambiguity and its growing political commitment to Taiwan’s security have engendered a corresponding escalation in China's regional behavior and military activities within the Taiwan Strait. In 2022 alone, an alarming 1,700 Chinese aircrafts infiltrated Taiwan's airspace (Lostumbo, 2023). This display of military prowess heightened international concerns regarding the potential ramifications of a military crisis unfolding within the Taiwan Strait. Among the salient actions undertaken by the PLA during its naval exercises, the firing of nine ballistic missiles stood out prominently. Notably, five of these ballistic missiles made an unprecedented landing upon the waters within Japan's special economic zone, a development confirmed by Japanese officials (MOFA, 2022a). Figure 2 illustrates the number of PLA aircrafts violating Taiwan’s de-facto ADIZ per month from Sep. 2020 to Sep. 2024.

In response to PLA’s escalating military conduct, neighboring state-actors could no longer afford to regard the prospect of a military crisis within the Taiwan Strait as a matter irrelevant to their own security environment. Considering a long list of territorial disputes with China, these countries find the annexation of Taiwan not as a conclusion of Beijing’s territorial ambitions, but as an incentive to materialize its other territorial claims throughout the South China Sea and East China Sea.

5. The Reinvigoration of the US Network of Indo-Pacific Security Partnerships

The second dimension of Adaptive strategic ambiguity is discernible in US efforts to bolster the military capabilities of its network of allies and partners across the Indo-Pacific. The experience of Western military support for Ukraine in its conflict with Russia establishes a strategically significant precedent, suggesting that a non-nuclear-weapon state with comparatively limited capabilities, when provided with essential conventional military equipment, can resist aggression from a nuclear-armed power over an extended period. Building on this rationale, the United States views the enhancement of conventional military capabilities among its allies and partners in the Indo-Pacific as critical to deterring Chinese ambitions in the Taiwan Strait. In other words, the historical logic indicating that nuclear-weapon states do not engage in direct conflict with one another increasingly drives the United States to depend on its network of non-nuclear-armed allies and partners to maintain the cross-strait status quo and counter China's maneuvers against Taiwan.

The strategic reinvigoration of Indo-Pacific security architecture seeks to balance China's assertive conduct and restore the regional balance of power. China's burgeoning economic power has progressively translated into qualitative advancements in the PLA’s military capabilities. Such military development has conferred upon China a heightened degree of military advantage vis-à-vis Taiwan within critical operational domains, thereby strengthening the potential for a cross-strait military confrontation.

Within the neo-realist theoretical paradigm that underpins the balance of power theory, the ascent of a rising power inherently poses a security threat to others (Jervis, 1978). Consequently, the enhancement of a state's military capabilities in comparison to other state-actors serves as a catalyst prompting others to adopt a balancing behavior. Such behavior encompasses the proportional augmentation of economic and military capabilities as well as the development of multilateral security alliances (Waltz, 1997). Therefore, the security concerns and the subsequent balancing behavior exhibited by regional state-actors toward China's rise find their conceptual roots within Waltz's theoretical worldview, which underscores the maintenance of a regional balance of power as the primary objective of balancing. Figure 3 shows the military balance of power in the Taiwan Strait.

Over the course of the past four decades, Taiwan has grappled with the challenge of maintaining a favorable balance of power vis-à-vis China. Owing to PRC's substantial investments in the PLA modernization, Taiwan has faced difficulties in upholding the cross-strait balance of power to its advantage. Official statistics indicate that in 2023 alone, China's defense budget surged to $224.79 billion, reflecting a year-on-year growth of 7.2% (Xinhua, 2023). If such figures hold true, China's defense expenditure would dwarf Taiwan’s by a magnitude of twelvefold. Figure 4 compares changes in defense budgets of China and Taiwan from 1992 to 2022.

Another contributory factor to the shifting balance of power lies in Taipei’s strategic priorities regarding military procurements. Historically, Taiwan's emphasis had been on acquiring high-value, high-quality weaponry designed primarily for offensive or power-projecting operations. This included investments in sophisticated military assets such as tanks, fighter aircraft, and large warships, all of which, despite their considerable financial worth, exhibited limited functional survivability and insufficient effectiveness in withstanding a potential PLA invasion (Lostumbo, 2023).

In response to the strategic shortcomings of these military procurements, Taiwan introduced the "Overall Defense Concept" (ODC) in 2017. The ODC aimed to mitigate Taiwan's deficiencies in deterring a potential PLA aggression by transitioning from a conventional warfare paradigm to the development of asymmetric capabilities (Gordon et al., 2023). In this line, despite maintaining high-quality conventional capabilities, Taiwan's limited financial resources would also be channeled into the development of large-scale asymmetric military systems (Lee & Lee, 2020).

The United States will play a pivotal role in supporting Taiwan's strategic transition towards the ODC through arms sales and the promotion of joint military training programs. During the 2023 budget adjustment process, the US Congress earmarked over $1 billion for arms assistance to ROC (Stone, 2023). In the meantime, the United States plans to deploy between 100 to 200 military personnel to Taiwan, with the primary aim of advancing joint military training programs. This surge represents a fourfold increase in the number of American troops stationed on the island, an unprecedented level of commitment compared to previous decades (Youssef & Lubold, 2023).

Japan's rapid military buildup stands out as another significant regional dynamic within the Indo-Pacific. In recent years, Japan unveiled three pivotal policy documents: the National Security Strategy (NSS), the National Defense Strategy, and the Defense Development Plan. These documents are intended to serve as a roadmap for Japan's military development and augmentation of the defense budget over a five-year span (Smith, 2022a). The provisions of these three documents set the stage for the realization of defense reforms, moving away from Japan's post-1946 exclusively defense-oriented policy known as “Senshu Boei”. They also enable Japan to actively participate in US-led endeavors aimed at crafting a regional collective deterrence architecture. In line with such reforms, Japan's defense budget is expected to reach two percent of the country's GDP by 2027, marking a significant departure from the historical norm, where annual defense budgets from 1960 to 2020 did not exceed one percent of the GDP (Yuan, 2023).

The NSS identifies China as “the greatest strategic threat to the peace and security of Japan and the international community” and designates Taiwan as a strategic partner and valuable friend (MOFA, 2022b). Additionally, the NSS recognizes cross-strait peace and security as a key factor for the security of Japan and the broader international community. Such policy reforms signal Japan's growing interest in contributing to the peaceful resolution of issues in the Taiwan Strait.

Along with Washington’s support for Japan’s military reforms, the geographical proximity of Okinawa to Taiwan also necessitates the reinvigoration of US military infrastructure on these islands to align with the evolving regional dynamics. In this line, the deployment of 2,000 military personnel on Okinawa through the establishment of the Marine Littoral Regiments would further strengthen the US’s military maneuverability along the first island chain (Kelly, 2023).

The Philippines constitutes yet another pivotal actor in the US balancing network in the Indo-Pacific. From Manila’s point of view, a successful annexation of Taiwan could embolden Beijing to militarily assert its control over other contested areas within the South China Sea, such as the Spratly Islands, claimed by China as part of the “Nine-Dash Line”. Thus, the Philippines, as another claimant to sovereignty over those Islands, regards security alignment with the United States as a vital imperative for safeguarding its territorial integrity and balancing China's territorial ambitions.

The Philippines’ unique geographic proximity to Taiwan underscores the country's role within the regional deterrence architecture promoted by the United States. The distance between Taiwan and Itbayat, the northernmost inhabited island of the Philippines, is less than 150 km, providing the Philippines with a significant potential to contribute to regional deterrence against China's ambitions in the Taiwan Strait. In February 2023, an agreement was reached between Manila and Washington, granting US military access to four new military bases in the Philippines, three of which are located in the northern region of Luzon, in close proximity to Taiwan. This agreement secures an extent of US military presence in the Philippines unprecedented in the past three decades (Wee, 2023).

The two-week Balikatan military exercise conducted in the South China Sea serves as a further illustration of the growing alignment between the United States and the Philippines. This exercise saw the involvement of more than 17,000 military personnel, 12,000 of them being US troops, marking the largest military drill in the history of security cooperation between Washington and Manila (Ng & Guinto, 2023).

6. Revitalization of Multilateral Security Partnerships

Since 2017, The US foreign policy toward China has endured a stark metamorphosis. The last national security strategy published by the Obama administration articulated a welcoming stance toward the rise of a stable, prosperous, and peaceful China. It also underscored the imperative of Sino-American cooperation on shared global and regional challenges, including climate change or denuclearization of the Korean peninsula. Overall, although the Obama administration did not eschew the concept of competition, it did not view confrontation as an inevitability (The White House, 2015).

However, President Trump's first national security strategy marked a dramatic shift in US foreign policy discourse vis-à-vis China. In this document, China, alongside Russia, was characterized as challenging the power, interests, and influence of the United States, with the aim of undermining US prosperity and security. According to the Trump administration's worldview, US support for China's integration into the international order, which evolved from the early years of Sino-American diplomatic normalization, had been motivated by the false expectation that it would lead to the CCP’s gradual adoption of democratic values (Albright, 1998). However, Trump’s NSS, while rejecting such premises, portrayed China as actively working to reshape the world in a manner contrary to American values and interests. In this context, China's efforts to modernize the PLA were perceived as nothing but a direct threat to US presence in the region (The White House, 2017).

Within the contours of this strategic paradigm and with the objective of curbing China's regional behavior, the Trump administration articulated a new geopolitical architecture for the region under the banner of the Indo-Pacific Strategy. Within this framework, the ascendance of emerging economic powers in both the Pacific and Indian Oceans, coupled with the deepening interconnections of commercial, financial, and economic dynamics in these regions, gave rise to a form of strategic interdependence. Such interdependence rendered it impracticable to disentangle the geostrategic dynamics governing each of these oceanic expanses and to address their respective security challenges in a vacuum.

Moreover, as a nuclear-armed economic power -and notably, a democratic one-, India also triggers Washington to reconstruct regional geopolitics under the banner of Indo-Pacific strategy, so that New Delhi could further reinforce the US’s Integrated Multilateral balancing network against China.

As part of this new geopolitical terminology and motivated by common concerns regarding China's assertive conduct and expanding influence in the region (Smith, 2022b), the Trump administration revitalized the Quadrilateral Security Dialogue (QUAD), comprising the United States, Australia, Japan, and India. As a signal of multilateral solidarity and after a hiatus of 13 years, the Malabar naval exercise was also held in 2020 with the participation of all four QUAD partners (Pant & Saha, 2020)

Even with the inauguration of the Biden administration in 2021, there has been a notable continuity in the US commitment to a free and open Indo-Pacific. The introduction of the “Pacific Deterrence Initiative” (PDI) by the Biden administration is a clear signal that Washington’s commitment to Indo-Pacific security remains steadfast. The document released by the U.S. Department of Defense in March 2023, designates China as a multi-domain challenge necessitating the allocation of American financial and specialized resources, along with the reinforcement of the regional deterrence within the Indo-Pacific. The proposed budget for advancing the PDI in the fiscal year 2024 amounts to $9.1 billion, allocated with the specific aim of targeted investment in bolstering military capabilities, infrastructure, presence and readiness of the United States and its allies and partners within the Indo-Pacific region (US Department of Defense, 2023).

The Biden administration considers close cooperation and coordination with the American network of allies and partners as the pivotal component of its balancing efforts against China’s regional ambitions. In September 2021, the Biden administration demonstrated its commitment to enrich collective regional deterrence by establishing the AUKUS trilateral security partnership, through which the United States and the United Kingdom pledge to support the Australian Navy in acquiring conventionally-armed nuclear submarines. Meanwhile, the three nations commit to joint efforts in developing advanced military capabilities, particularly in the realm of cutting-edge technologies (The White House, 2022b). Providing Australia with nuclear submarines is set to bolster its capacity to actively engage in geopolitical competition with China, while also strengthening its contribution to the US-led regional security architecture across the Indo-Pacific.

7. Economic De-Risking: A Way Out of the Existing Economic Entanglement

The memory of the Cold War triumph over the Soviet Union still resonates through the US foreign policy decision-making circles. During the Cold War, the United States successfully mobilized its allies to balance the Eastern Bloc without encountering any significant economic reservations. This was largely due to the fact that even during detente, the value of Soviet-American bilateral trade remained minimal, accounting for less than 0.01% of the total annual foreign trade value of the United States (Zhen & Paul, 2020). However, the existing Sino-American economic interdependence, not only causes economic considerations to override balancing policies, but also limits freedom of action of The US and its allies to curb China’s great-power ambitions. The necessity to implement economic de-risking by the United States should be analyzed against such a backdrop.

Through economic de-risking, the Biden administration seeks to strategically readjust US economic and trade relations with the PRC, with the aim of mitigating its economic sensitivity to the possible eruption of a cross-strait military conflict, followed by the deterioration in Sino-American relations, imposition of punitive sanctions regime and its associated economic and financial repercussions.

During Trump’s tenure, U.S.-China tensions reached their zenith, largely driven by the trade war. However, the bilateral trade volume exceeding $700 billion between the two nations not only intensified capital outflows, but also facilitated the transfer of technology, science, and job opportunities from the United States to China. Such extensive economic interdependence between the United States and China constrained Washington’s maneuverability to undertake effective balancing measures against the PRC. To address this situation, the Trump administration introduced the concept of “economic decoupling” into American foreign policy literature. By using this new terminology, President Trump contended that the considerable trade deficit with China provided the CCP with the financial resources to fund its military buildup, encompassing the development of advanced military technologies (Greeley, 2020). His solution was to cut off bilateral trade relations in order to curb U.S. economic reliance on China and repatriate crucial supply chains through radical economic decisions such as the imposition of substantial trade tariffs. However, it became evident over time that achieving economic decoupling in the short-term would also entail significant financial, economic, and potentially political costs for the United States.

In contrast to economic decoupling, the Biden administration introduced a distinct concept known as economic de-risking. Through de-risking, the United States aimed to gradually curtail those specific economic ties with China that might bolster Beijing’s competitive advantage in cutting-edge technology sectors such as artificial intelligence and semiconductors. In essence, the Biden administration did not seek to pursue an all-out economic disentanglement through severing all existing ties between the American and Chinese economies. Rather, it prioritized restricting economic engagement in capital-intensive technologies capable of further deepening China's involvement in the global value chain and advancing its military modernization. Meanwhile, economic de-risking acknowledged the preservation of the existing benefits of economic interdependence through maintaining cooperation in less sensitive labor-intensive sectors in the broader economic context (Demarais, 2023).

In this regard, The Biden administration has undertaken substantial efforts to develop export control regimes targeting China, thereby seeking to optimize restrictions on technology transfers. This endeavor builds upon prior export control measures initiated during the Trump administration, notably the ban on advanced U.S.-manufactured chip sales to the Chinese technology giant Huawei. The Biden administration, however, has significantly expanded the depth and comprehensiveness of these export control regimes. A pivotal component of this expansion is the employment of the Foreign Direct Product Rule (FDPR), a legal instrument first introduced in 1959 with the primary aim of curtailing technology transfers to the Soviet Union. The FDPR empowers the United States to extend the reach of its export control regimes beyond its borders, enabling oversight and intervention in transactions between foreign entities and China. Under this framework, if a product incorporates American technology in its production, the U.S. possesses the authority to obstruct its sale, irrespective of its origin (Froehlich, 2022).

Consequently, this approach not only prohibited domestic companies from supplying cutting-edge U.S.-manufactured semiconductors to a long list of Chinese firms but also encompassed foreign companies that incorporated American expertise and technology in semiconductor production. In the meantime, to neutralize China's endeavors to localize the semiconductor supply chain, the Biden administration broadened the scope of export controls to include the design models, equipment, and requisite technologies for advanced semiconductor fabrication under the FDPR (Allen, 2022).

The U.S. has also gradually introduced further layers to its comprehensive export controls, including the prohibition of sales of critical components integral to semiconductor manufacturing equipment production to China as well as restrictions on collaboration between the US citizens and Chinese enterprises engaged in high-end chip production (Sheehan, 2022). The combined impact of these export control regimes is anticipated to hinder China's progress in cutting-edge industries, potentially requiring a five to ten-year timeframe to bridge the gap and catch up to the current level of US technologies (Lee & Nellis, 2022).

However, the US objective in de-risking is not solely centered on China. Through de-risking, The United States also strives to mitigate its economic vulnerability to the potential evolutionary repercussions of a cross-strait military crisis; even though such de-risking could target cutting US dependence on Taiwan’s semiconductor industry. President Biden signed the CHIPS and Science Act into law in August 2022, earmarking approximately $280 billion for investment in research and development along with the augmentation of cutting-edge semiconductor production capacity (Bushard, 2022). This strategic resource allocation not only aims to constrain China's progress in leading-edge technologies, but also endeavors to reshore the semiconductor supply chain back to the US, thereby mitigating America’s economic vulnerability to possible external disruptions in the future (Kannan & Feldgoise, 2022). TSMC's substantial $40 billion investment in the establishment of a semiconductor fabrication plant in Arizona (Holland & Lee, 2022) constitutes an additional facet of President Biden's endeavors in semiconductor supply chain diversification, even though there are mounting concerns suggesting that such de-risking measures may potentially compromise Taiwan's silicon shield (Powers-Riggs, 2023).

Washington now imposes approximately 18% of average tariffs on imports coming from China (Sester, 2024). The Biden administration expects that such tariffs will eventually lead to a gradual reshuffling of American trading partners based on their geostrategic orientation. In this line, the US supports the reorganization of the global supply chain through the growing contribution of like-minded trading partners with the aim of mitigating geopolitical risks of economic dependence on China. Such endeavors in the long term, while containing the geo-economic consequences of a potential cross-strait military confrontation, will provide the United States with sufficient coercive economic leverage to balance China's ambitions in the Taiwan Strait.

8. Conclusion

Following the conclusion of the Cold War, the United States embarked on the path of economic globalization with two primary objectives. US foreign policy decision-makers posited that economic globalization could gradually encourage state actors to progress in political development and adopt democratic principles. Simultaneously, by interconnecting different countries and prioritizing economic interests over political considerations, economic globalization could increase the costs associated with engaging in interstate military conflicts and therefore safeguard international peace and stability. However, over time, both of these objectives have encountered significant practical challenges.

Economic globalization not only fell short in democratizing authoritarian states like the PRC, but also failed to deter Russia from engaging in military aggression against Ukraine. Consequently, US skepticism towards the sustained promotion of economic globalization has intensified over time. The simultaneous US support for the economic development of China and Taiwan should also be analyzed against this backdrop. It was believed that economic development on both sides of the strait would gradually provide a suitable foundation upon which both the PRC and ROC could initiate political reforms and subsequently devise the suitable groundwork for peaceful reunification. While the expectations were materialized in the case of Taipei, those about Beijing faltered. The United States was confronted with a China that not only rejected liberal norms and values, but as the world's second most powerful economy, possessed sufficient financial and technological capabilities for military modernization and potential aggression against Taiwan. Consequently, despite the initial merits of Washington’s strategic ambiguity in deterring a military incursion by the PRC into Taiwan, the United States increasingly recognized the necessity to adjust its foreign policy conduct in accordance with the evolving regional dynamics. This adjustment aims to reduce US’s economic vulnerability to regional military developments, while enhancing its freedom of action to deter China's great power ambitions.

This study examined the way in which Taiwan’s geostrategic importance along with the adverse political, economic, and security implications of its successful annexation by China, compel Washington not to remain indifferent to the fate of the ROC. The recurring large-scale military exercises in the strait have fueled speculation about potential scenarios, including a blockade or even a direct military action by China. Assessing the viability of these scenarios demands close attention to both predictable and unpredictable developments influencing Beijing's foreign policy behavior, a matter that has been examined through developing several wargames over the recent years. Moreover, Beijing’s possession of nuclear weapons has already complicated the prospect of a direct US military intervention in a hypothetical cross-strait security conflict. That is why the United States aims to maintain the regional status quo and increase the costs of a Chinese incursion into Taiwan through a pragmatic shift towards non-binding political clarity, elevation of Taiwan’s stability from an isolated regional issue to a sensitive international security concern, reinvigoration of conventional regional deterrence and bolstering Taiwan's development of defense capabilities to effectively withstand an amphibious military aggression of the PLA.