Trump is a dealmaker, and China’s Xi Jinping is determined to take control of Taiwan. While Trump prefers to avoid economic disruption and war, he understands the strategic importance of Taiwan and its semiconductor industry. No US president can allow China to control this critical resource. A major war over a territory 7,000 miles away would be devastating however there is always a alternative solution.
Neo-conservatives often argue that Taiwan’s eastern coast will give China access to the open ocean, which would hinder US monitoring efforts, making China a greater threat. However, the shallow depths of the “first island chain” — the string of islands surrounding China — make it possible to track Chinese ships and submarines.
By preventing China from taking Taiwan, the US effectively contains China within this first island chain, limiting its naval power and ambitions. This is one reason why China has been aggressively building artificial islands in the South China Sea, attempting to break free from this geographic constraint.
For the US to ignore its commitment to defend Taiwan and allow China to take control, there would need to be significant benefits for the US. While China might offer financial incentives, a grand bargain could achieve more. Xi Jinping views Taiwan as crucial to his legacy and would likely make major concessions to reclaim it.
If Trump demanded a trillion dollars as payment for a peaceful reintegration of Taiwan under US supervision, he might accept. However, there are potentially better deals to be made that don’t have a price tag. Taiwan holds immense value for Xi Jinping, comparable to the “precious” ring in Lord of the Rings. He would go to great lengths to regain it, and this leverage can be used to negotiate a deal that benefits the US and ensures regional stability.
If Trump was to put America First, then he would not defend Taiwan. Let me explain the potential pitfalls of a Chinese invasion of Taiwan:
Trap 1: The confiscation of Russian assets held in central banks after the Ukraine invasion demonstrated that the dollar system is not safe for those who engage in hostile actions. However, Russia conducted relatively little business with Europe and the United States besides selling natural gas. In 2021, Europe sold Russia 88 billion euros worth of goods. In comparison, Europe sold 223 billion euros worth of goods to China in the most recent year.
Reducing trade with Russia was painful, but reducing trade with China would be devastating. Businesses across Europe could face bankruptcy, losing their largest customer. The financial and economic damage would be immense. This raises the question of what actions would actually be taken in response to a Chinese invasion of Taiwan.
Restricting China from SWIFT, the international banking system, would likely backfire on the United States. China imported $2.6 trillion worth of goods in 2023, much of it from emerging markets who would likely remain neutral in a conflict over Taiwan. These countries would continue trading with China and readily adopt a Chinese alternative to SWIFT, which is already under development.
Cutting China off from SWIFT would hasten the decline of the US dollar’s dominance in international transactions, potentially dropping its share from 56% to around 30%. It would also create a banking system outside US control, benefiting countries like Iran and North Korea.
The US must avoid prohibiting China from trading with other countries. Doing so would accelerate the end of the dollar’s dominance and empower US adversaries. Confiscating Russian assets was a foolish move that has driven many countries to increase their gold reserves. While Russia’s actions were wrong, this response was an overreaction by inept politicians and an abuse of power.
Trap 2: The vulnerability of Taiwan’s semiconductor fabrication plants (fabs). China is developing its domestic chip industry to reduce reliance on imports and prepare for a potential conflict over Taiwan. However, if Taiwan falls to China, or if the US destroys the fabs to prevent them from falling into Chinese hands, it will disrupt the global semiconductor supply chain.
The US, Japan, South Korea, Germany, and Singapore need to develop backup chip production capabilities in case Taiwan’s fabs are destroyed. It was a strategic mistake for the US to become overly reliant on Taiwan for semiconductors. Intel, once positioned to be a leading chip manufacturer, pursued an ambitious but ultimately flawed strategy. They focused on building multiple fabs to produce cutting-edge chips before perfecting the technology, wasting resources instead of concentrating on refining their manufacturing process in a single fab.
Trap 3: the United States intervenes to stop China and loses; it will project weakness on the global stage. This could lead to countries aligning with China and embolden those already in China’s sphere of influence. Therefore, the best strategy might be to avoid direct conflict altogether.
Trap 4: If the United States does nothing and allows China to take Taiwan, it will appear as though the US is abandoning its security commitments, damaging its credibility with allies.
Furthermore, the US is not prepared for a war over Taiwan, while China has been actively preparing for an invasion for over a decade. China possesses a vast arsenal of drones capable of overwhelming Taiwan’s defenses and targeting key infrastructure. In the initial days of an invasion, Taiwan’s anti-air capabilities and runways would likely be destroyed. China has reportedly identified all major targets in Taiwan and has multiple weapons systems to ensure their destruction. The strategy is to overwhelm Taiwan into submission.
While the US could resort to nuclear weapons to defend Taiwan, this would likely backfire and isolate the US from the international community, much like Russia’s nuclear threats have.
Trap 5: The biggest issue is that the younger generation in Taiwan likely won’t defend the island with the same ferocity as the Ukrainians. They may assume the United States will bear the brunt of the fighting. If Taiwan doesn’t actively resist a Chinese invasion, the US will appear weak when it falls. Under these circumstances, the best solution is a negotiated settlement that benefits the United States. If Taiwanese citizens won’t lay down their life to support Taiwan, the United States needs to squeeze out of Taiwan a Grand Bargain while it can.
Trap 6: The only viable solution is a détente agreement that favors American interests. While China might not uphold its end of the bargain in the long term, some immediate concessions could be secured prior to the handover of Taiwan. This would take the form of a grand bargain, with significant concessions from China in exchange for the US allowing a peaceful reunification with Taiwan.
A grand bargain would require significant concessions from both China and the United States. Let’s examine the concessions China would need to make. Ironically, the US might indirectly benefit more from this arrangement.
- South China Sea: China must respect the 200-nautical mile exclusive economic zones (EEZs) of:
a. Vietnam
b. Philippines
c. Malaysia
d. Brunei
e. Indonesia
The South China Sea is rich in natural resources, including natural gas, oil, and fisheries. China’s disregard for the EEZs of these nations has led to conflicts and instability in the region.
China’s concession: Sign agreements recognizing and respecting the EEZs of these countries. Even despite the location of artificial islands.
In return, Vietnam, the Philippines, Malaysia, Brunei, and Indonesia would each commit to long-term agricultural import agreements with the United States, valued at $15 billion per year. This would boost US agricultural exports and strengthen economic ties with Southeast Asian nations.
In exchange Chinese companies and US companies get first rights to explore any potential oil and gas blocks.
China might even be required to relinquish some of its artificial islands if they fall within the recognized EEZs of these countries or affect the EEZ’s. This would further reinforce international maritime law and reduce tensions in the region.
2. Japanese Islands: The Senkaku Islands are a source of conflict between China and Japan, with both countries claiming sovereignty. In this grand bargain, China would renounce its claim to the islands, recognizing Japan’s sovereignty.
While this primarily benefits Japan, the United States gains indirectly. As part of this agreement, Japan would owe the United States a favor for resolving this dispute.
3. North and South Korea: China, as North Korea’s lifeline, would facilitate the removal of the current regime and hand over control of North Korea to South Korea.
This would enable the reunification of the Korean peninsula, with South Korea administering the North and providing its citizens with opportunities for work, better wages, and improved living conditions.
The US would reduce its troop presence in South Korea from 24,000 to 10,000 and agree not to station any troops north of the current DMZ.
In exchange for relinquishing its buffer zone against US troops, China would demand a significant concession: the establishment of a new country in North Korea for Taiwanese citizens who wish to leave after reunification with China.
The new Taiwanese territory would encompass 603,000 hectares on the west coast of North Korea, away from the Chinese border. This area is comparable in size to the habitable area of Taiwan (778,000 hectares) and represents about 5% of North Korea’s landmass.
China would not only allow Taiwanese citizens to leave but also be responsible for building a new city for them in this sparsely populated region. While it’s uncertain how many Taiwanese would choose to relocate, it’s estimated that around 25% might opt to leave. Building a city for 5 million people could cost upwards of $50 billion. China has great experience building cities for millions of people.
This new Taiwan would provide an alternative homeland in Asia for those unwilling to live under Chinese rule. South Korea would benefit by gaining control of 95% of the Korean peninsula.
This solution addresses several key issues:
- Taiwanese autonomy: It offers Taiwanese citizens a choice and a potential escape from Chinese rule.
- Korean reunification: It fulfills the long-held desire for a unified Korea.
- Regional stability: It reduces tensions and the risk of conflict in the region.
- US strategic interests: It allows the US to reduce influence in Asia, as the North Korean situation would be resolved.
4. India: China currently claims and occupies approximately 14,671 square miles of Indian territory, an area larger than Taiwan. This includes Arunachal Pradesh and other disputed regions. As part of the grand bargain, China would relinquish its claim to these territories and agree to a pact with India to resolve the border dispute.
In return, India would commit to increasing its purchases from the United States by 50% and maintaining a balanced trade relationship for the next 30 years. This would prevent the trade imbalance from becoming as distorted as it is with China, where the US imports $3.50 worth of goods for every $1 of exports.
Currently, the US-India trade ratio is about $1 to $2. Ideally, India would increase its imports to a ratio of $1 to $1.40, ensuring a manageable trade surplus that doesn’t become exploitative.
India could increase its purchases from the US in several key areas, including Boeing aircraft, agricultural products, oil, and chemicals. This would benefit the US economy and strengthen strategic ties with India.
5. Iran, Israel, and Palestine: China currently supports Iran, primarily by purchasing its oil. The revenue from these oil sales has allowed Iran to fund proxy groups like Hezbollah in Lebanon, Hamas in Gaza, and the Houthis in Yemen, as well as militias in Iraq. These groups destabilize the region, threaten Israel, and disrupt commercial shipping.
As part of the grand bargain, China would agree to permanently adhere to and help enforce all US sanctions against Iran. This would significantly curtail Iran’s ability to finance its destabilizing activities.
To address the Palestinian issue, China would construct a refugee city in Africa, similar to the city of Kilamba it built in Angola. This city would house Palestinian refugees from Gaza, the West Bank, Jordan, and other countries.
The proposed location for this new Palestinian state would be within Somaliland or Puntland, two unrecognized self-declared states in Somalia. These regions offer ample space and access to the sea, while also presenting an opportunity to resolve their own political status.
Approximately 7% of Somaliland and Puntland’s combined territory would be designated for the Palestinian state. This area, roughly 9,520 square kilometers, would be developed into a modern city with designated zones for residential, business, religious, and governance activities. In reality there is enough space here for Taiwanese refugees to set up their own new country.
This arrangement offers several benefits:
- Reduces regional instability: By cutting off Iran’s support for proxy groups and resolving the Palestinian issue, it promotes stability in the Middle East.
- Creates a Palestinian homeland: It provides a viable and secure homeland for Palestinian refugees.
- Resolves Somalia’s political status: It grants international recognition to Somaliland and Puntland.
- China contributes to global peace: It demonstrates China’s willingness to play a constructive role in resolving global conflicts.
While this proposal may seem unconventional, it offers a pragmatic solution to long-standing conflicts and addresses the needs of all parties involved. It’s a win-win situation for Palestinians, Somaliland, Puntland, and the international community, while also serving China’s interests in securing Taiwan and USA Interest to end never ending global dilemmas.
6. China and Venezuela – China needs to insist in one way or another on the removal of Maduro and Venezuela can no longer be a failed state. China will see that a new democratically elected leaders that has nothing to do with Maduro is installed. It doesn’t’ matter who is in charge, but the person in charge must be an elected person.
334,000 Venezuelans illegally entered the United States in 2023. This is because there is chaos due to a failed state of Venezuela.
If China cuts off this lifeline then Maduro could fall, maybe some other coaxing as well would help.
7. Cuba: China will cease all forms of support for Cuba, including subsidies, collaboration, partnerships, and sales. China will fully comply with the United States embargo on Cuba and refrain from any involvement, whether open or private, official or unofficial.
Furthermore, China will pressure Cuba to hold fair and democratic elections in exchange for a loosening of the US embargo. This would promote political stability and human rights in the region, while also reducing China’s influence in the Western Hemisphere.
8. China and the BRICS nations need to halt their efforts to promote alternative currencies and payment systems s to the US dollar for a period of 25 years. This pause would allow for greater stability in the international financial system and prevent disruptions that could harm the global economy.
Essentially, China needs to stop pushing for de-dollarization, at least for the foreseeable future.
9. South America: China needs to stay out of the back yard of South America and stop trying to convince Latin American countries to accept Yuan, and China has to agree to a no Yuan policy in Latin America until 2075.
China will stop funding and assisting the Brazilian PT Political Party.
China will sell its bank in Argentina known as ICBC.
China has purposefully groomed several Latin American countries and this has greatly undermined the United States in the region and this is to stop.
China must cease its efforts to expand its influence in Latin America. This includes:
- No Yuan in Latin America: China must agree to a “no yuan” policy in Latin America until 2075, halting attempts to promote its currency in the region.
- End Political Interference: China must stop funding and supporting political parties in Latin America, such as the PT party in Brazil.
China has deliberately cultivated relationships with several Latin American countries, undermining US influence in the region. This agreement would help counter that influence and maintain stability in the Western Hemisphere.
10. Ukraine: If the war in Ukraine is still ongoing, China will actively seek a peaceful resolution and cease all support for Russia in relation to the war. This includes halting military aid, economic assistance, and diplomatic backing for Russia’s actions in Ukraine.
11. Semiconductor fabrication plants (fabs) in Taiwan need to be dismantled and relocated. They should be shipped either to the newly established Taiwan country or to another country friendly to the US. This would prevent these critical facilities from falling under Chinese control.
12. Trade Realignment: China must abandon its mercantilist policies, which prioritize maximizing exports while minimizing imports. While the concessions outlined in the grand bargain so far don’t directly benefit the United States, this trade realignment will.
Under this agreement, the US commits to significantly reducing imports from China. China, in turn, will agree to a 2-to-1 trade relationship, China will import from the United States each year $300 billion while the United States is caped at importing from China $150 billion.
This 2-to-1 trade relationship would be formalized in a 20-year agreement. China would reduce its exports to the US to ensure fair trade and would actively assist the US in sourcing goods from other countries.
Furthermore, the agreement would require China to maximize its imports of agricultural products from the United States, providing a significant boost to the US agricultural sector.
Conclusion:
The world is a dangerous place, rife with complex problems. Many of these problems indirectly impact the United States, even if they don’t directly threaten its borders. The US spends billions, if not trillions, of dollars over the decades to maintain global peace and security.
By negotiating a deal that allows for a peaceful resolution of the Taiwan situation, even if it means ceding control of the island, the United States could achieve a grand bargain that resolves numerous global conflicts.
What would this cost? China would bear the primary financial burden, estimated at around $400 billion. This includes:
- Dismantling and relocating Taiwan’s semiconductor fabrication plants (fabs).
- Building a new city in Africa for Palestinian refugees.
- Constructing a new city in North Korea (or Africa), potentially requiring extensive earthworks, to accommodate Taiwanese citizens who choose to leave.
- Relocating potentially millions of Taiwanese citizens.
While the price tag is significant, it’s a preferable alternative to global conflict and instability. This grand bargain offers a unique opportunity to address several pressing issues simultaneously and create a more peaceful world order.
Where is America First in this Grand Bargain?
This grand bargain prioritizes American interests in several ways:
- Reduced military presence in Asia: Resolving maritime and territorial disputes in Asia lessens the need for a large US military presence in the region, saving resources and reducing the risk of conflict.
- De-escalation with China: A peaceful resolution of the Taiwan issue reduces tensions with China and avoids a potentially devastating war.
- Economic benefits: A rebalanced trade relationship where China imports more from the US, particularly agricultural products, benefits the American economy and American farmers.
- Stabilization of key regions: Resolving conflicts involving Iran, Cuba, and Venezuela promotes stability in the Middle East and Latin America.
- Global leadership: By facilitating peaceful resolutions to long-standing conflicts, the US reinforces its role as a global leader and peacemaker.
While China gains control of Taiwan, the US achieves significant strategic advantages, including a more peaceful world order, reduced military commitments, and a fairer trade relationship with China.
This bargain may not be popular with everyone, particularly those directly involved in the conflicts. However, it offers a pragmatic solution that prioritizes long-term peace and stability over short-term gains or ideological stances.
By shifting its focus from military dominance to strategic negotiation and economic partnerships, the US can achieve its “America First” goals while contributing to a more secure and prosperous world.
This grand bargain could foster a new era of cooperation between China and the United States, allowing them to work together to resolve complex global challenges. While China may employ methods that the US can’t use, this collaboration could lead to more effective solutions and a more stable world order.
