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Why tensions between China and Taiwan are on the rise

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In May, President Joe Biden issued a stark warning to China: The U.S. would come to Taiwan’s defense militarily if China were to invade.

“That is the commitment we made,” Biden said in response to a matter over the U.S.’ intention to guard Taiwan. “We agree with the ‘One China’ policy. We signed on to it.”

Although the White House quickly affirmed the president’s comments didn’t reflect a policy shift, his remarks got here at a time of heightened concern over China’s interest in invading Taiwan after Russia’s invasion of Ukraine.

Biden’s warning contrasted with the U.S.’ long-standing position of “strategic ambiguity” with regards to Taiwan. That policy makes it unclear whether the U.S. would come to Taiwan’s defense if China were to invade, the Brookings Institution’s Michael O’Hanlon told CNBC in an interview.

Any potential motion could have repercussions on the worldwide supply chain. Taiwan has positioned itself because the go-to supplier of the semiconductors present in 1000’s of electronics, from the iPhone to crucial military equipment. But the worldwide reliance on Taiwan for the essential chips has come under increased scrutiny amid a world shortage.

Taiwan accounts for 64% of the overall chip foundry market, based on data from TrendForce. Taiwan Semiconductor Manufacturing Company, or TSMC, accounted for 53% of total foundry revenue in 2021, based on TrendForce.

“I believe for older generations, they could remember a Taiwan that produced low cost toys,” said Rupert Hammond-Chambers, president of the US-Taiwan Business Council, in an interview with CNBC. “That, nonetheless, has really shifted.”

Watch the video above to search out out more about why tensions between China and Taiwan are on the rise, the importance Taiwan plays in the worldwide supply chain, and what experts think could come of China’s increased aggression against its neighboring island.

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