Taiwan's Position in the Relations Between China and the United States of America; Geopolitics or Geoeconomics?

Document Type : Original Article

Authors

1 Assistant Professor of Political Science, Department of Political Science, Shiraz University, Shiraz, Iran

2 Associate Professor of Political Sciences, Political Sciences Department, Shiraz University, Shiraz, Iran

3 M.A in International Relations, Political Sciences Department, Shiraz University, Shiraz, Iran

10.22099/ijas.2025.51983.1021

Abstract

Introduction
Taiwan, due to its strategic geopolitical and geoeconomic position, has played a prominent role in the relations between the People's Republic of China and the United States since the end of the Cold War. The island occupies a critical position in vital regional trade routes, particularly the Taiwan Strait. It has become one of the world's major economic hubs due to its industrial and technological advancements, especially in semiconductor production and other high-tech sectors. This significance arises from Taiwan's decisive role in global supply chains, where the dependence of developed countries, particularly the United States, on its products and technologies profoundly influences the economic and security policies of major powers. This study aims to analyse Taiwan’s geopolitical and geoeconomic position in the relations between China and the United States, and to examine the impact of the island’s technological and commercial dependencies on regional and global competition.
 
Methods
This study employs a descriptive-analytical approach. Data were collected from reliable secondary sources, including international reports, trade statistics, industrial company reports, and academic publications. The analysis focuses on trends in exports and imports, foreign direct investment (FDI), and the production capacities of key industries, including semiconductors and advanced technologies. In addition, Taiwan's economic relations with China and the United States were examined in terms of mutual dependencies, geopolitical implications, and geoeconomic outcomes to provide a comprehensive understanding of regional and global economic and security interactions.
 
Results and Discussion
The findings indicate that Taiwan holds an irreplaceable position in the production of advanced semiconductors, accounting for more than half of global contract chip manufacturing capacity. These semiconductors are essential for the information technology, automotive, medical equipment, and defence industries of developed countries, particularly the United States. Global reliance on Taiwanese production makes the island highly sensitive to political, economic, and military disruptions, with any tension or crisis potentially producing extensive economic consequences worldwide. Economic relations between China and Taiwan reveal that, despite deep political differences, both countries are highly interdependent in trade and investment; China is Taiwan’s largest trading partner, absorbing a substantial portion of the island’s semiconductor and electronics exports, while Taiwan relies on China for raw materials and industrial equipment. Similarly, Taiwan’s economic relations with the United States are significant; the island serves as a primary supplier of semiconductors and high-tech products for the U.S., while the United States provides Taiwan with advanced technologies, industrial machinery, and agricultural products. Mutual foreign direct investment between Taiwan and the United States further underscores the depth of economic interdependence and Taiwan’s strategic importance in global supply chains. These interdependencies influence not only economic relations but also regional security and geopolitical dynamics, making Taiwan a critical focal point in global competition.
 
Conclusions
Taiwan’s geopolitical and geoeconomic position makes it a pivotal point in the competition between China and the United States. U.S. policies of simultaneous military and economic support for Taiwan, coupled with political pressures and military threats from China, pose potential risks to economic security and the stability of global production chains. Any changes in Taiwan’s political or economic status could have widespread effects on key global industries, underscoring the need for balanced policies and risk management at both regional and international levels. As a central geopolitical and geoeconomic actor, Taiwan plays a decisive role in the economic and security strategies of both China and the United States, and the future of regional relations is closely linked to economic and security interactions with the island.

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Journal of Asian Regional Order Studies
Volume 2, Issue 2 - Serial Number 3
October 2025
Pages 221-260

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History

  • Receive Date: 21 December 2024
  • Revise Date: 10 April 2025
  • Accept Date: 18 June 2024
  • Publish Date: 23 September 2025

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