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Shelley Rigger is a professor of East Asian politics at Davidson College and a non-resident fellow at the Taiwan Studies Program at Nottingham University. She is the author of numerous books and articles about Taiwan’s society and domestic politics as well as cross-strait issues, including Why Taiwan Matters (2011), and most recently, The Tiger Leading the Dragon (2021). The following is a lightly edited transcript of an interview that took place largely before Russia’s invasion of Ukraine.

Q: The international media is paying closer attention to Taiwan and the threat of an invasion from China at some point. Do you think this closer media scrutiny matches the reality of the situation?

A: It gives me a conflicted feeling because I think it’s important for Taiwan to have more attention. It’s no joke that for a long time if you said you’re going to Taiwan or you study Taiwan, people would think you were talking about Thailand. And so it’s great that Taiwan is getting more attention. What’s unfortunate, though, is that what it’s getting attention for is nothing good, although the attention around the military build-up — China’s military buildup and military pressure — has called attention to some of Taiwan’s virtues. People are asking, why is this happening? Well, it’s because Taiwan is a democracy. It’s also called attention to Taiwan’s economic value to the world. COVID itself has called attention to Taiwan’s state capacity to manage the pandemic in a way that does not strongly affect human rights or people’s freedom. 

So that’s the upside. But the downside is that a lot of the attention, especially to the military pressure or military build-up, assumes things that are probably not true and elevates voices that are either uninformed or politically motivated and motivated to overstate the degree of threat that Taiwan is under. Not because they are concerned about Taiwan and want to make sure people are really getting what the danger is, but because they are trying to seduce the U.S. government into a more aggressive policy toward China. Taiwan becomes a pawn in this other game that they’re playing. So a lot of the media attention to Taiwan overstates or misinterprets aspects of the military situation and feeds a narrative that is not good for U.S.-China relations and also not good for Taiwan.

There have been a lot of comparisons made between Taiwan and the situation in Ukraine with regard to Russia. Do you think people in Taiwan are looking at Ukraine right now as a litmus test to how the rest of the world would react if Taiwan was under attack? Are any of these fair comparisons?

Obviously, people in Taiwan are talking about it. But most people in Taiwan recognize or sort of instinctively guess that Taiwan is different from Ukraine. I see the points of comparison. You have these two large, ambitious powers that are trying to control their border or their periphery by dialing back the security alignment that peripheral places have with powers or institutions that the Russian government or the Chinese government perceive as hostile. Putin’s stated objective here is to secure a guarantee that Ukraine will not become part of NATO. China’s stated objective is obviously quite a bit different, but in the near term at least, China’s actual objective is to ensure that Taiwan does not become any more deeply entwined in the U.S. security apparatus in Northeast Asia than it already is. 

In the near term at least, China’s actual objective is to ensure that Taiwan does not become any more deeply entwined in the U.S. security apparatus in Northeast Asia than it already is. 

One thing that is really important to remember is that Ukraine is not a fundamental interest of the United States. NATO is a fundamental interest of the United States and so is preserving the viability and credibility of NATO. That’s why the U.S. has to take such a strong stance. 

Taiwan is in many ways more important, and it’s a more direct interest of the U.S. The U.S. is sharing the Ukraine responsibility with allies, partners and formal treaty military allies in Europe. We have allies in the western Pacific, but South Korea is actually not part of a collective security agreement. So it’s really Japan that we’re talking about. So the U.S. role is disproportionately large with respect to Taiwan. Whatever the U.S. does, it’s like small, medium and large: direct U.S. interest in Afghanistan was small. Direct U.S. interest in Ukraine is medium. Direct U.S. interest in Taiwan is large. So those other comparisons reveal certain things about U.S. foreign policy and national security, but they do not offer some kind of blueprint that would allow us to make predictions about Taiwan. 

It doesn’t allow us to make a prediction, but given that it highlights how important Taiwan is to the U.S., could this suggest that the U.S. would step up for Taiwan in that kind of situation?

Yeah, it does. Especially [as Russia has not been] deterred from military action against Ukraine… the deterrent potential of actions that the U.S. routinely takes with respect to Taiwan is in doubt. If we can’t deter Russia, can we deter China? My assessment would be that [the Ukraine situation] is driving some rethinking about Taiwan. But that rethinking about Taiwan was already happening because the importance of Taiwan to U.S. foreign policy and U.S. national interest is not new. We’re not just noticing Ukraine. It’s just become more visible to the public. 

Let’s shift now to your recent book, The Tiger Leading the Dragon: How Taiwan Propelled China’s Economic Rise. What are some of the main ideas and arguments in your book?

The argument of the book fundamentally is that without Taiwanese investors, there would not have been the “Chinese economic miracle” as we know it. So it really starts as a mystery. From a historical perspective, it’s quite mysterious how a country that wiped out private enterprise in the late 1950s and punished every kind of entrepreneurial sprout that tried to come forward could become the factory to the world within 30 years of Deng Xiaoping’s reform and opening. How did that happen? We know where the labor force came from; China was not short of labor in 1978. But China was short of every other input to business that you can name: business know-how, contracting relationships, capital, technology, all of those things were pretty much absent from the Chinese economy. So how in the world did that turn around in 20 or 30 years and result in mainland China being the leading source of manufacturing exports in the world? 

The argument that I make in the book is that Taiwanese investors enabled that transformation. And the way they enabled that transformation was certainly bringing capital, actual money to China, setting up factories. The technology, the basic managerial expertise is one layer and it was a very important layer. Between 1987 — when Taiwanese people were first allowed to go to mainland China — and about 1992, most of Taiwan’s traditional manufacturing moved from Taiwan to the mainland. Apparel, shoes, toys, furniture, small electronics, a massive flood of manufacturing capacity from Taiwan to the mainland. In that wave, what the PRC was getting was money, physical infrastructure, jobs for Chinese people. The Chinese population was very under-employed in the late years of the Mao era. So there was a very large potential workforce in China. Local governments got tax revenue directly from the Taiwanese companies and Taiwanese factories and also from all of the employees and supporting businesses that formed to service the Taiwanese companies. 

But something that we don’t always fully appreciate is that most of the Taiwanese small and medium-sized enterprises (SMEs) that moved their operations to mainland China in the 80s, 90s and 2000s were suppliers to larger companies, and many of them were suppliers to international brand companies. So we’ll just take Nike as an example. When Phil Knight created Nike, he said ‘I’m not going to make shoes. I’m going to design and market shoes under this brand, but they will be made by subcontractors.’ He had contractors in Japan initially, but pretty quickly, a lot of his subcontracting activities shifted to Taiwan. Here’s the thing: it’s very hard to make shoes for Nike. Part of the reason that those companies were able to do it was they grew up with Nike: the business got more complicated together, Nike with its contractors. By the time China opened up, these companies were really good at doing exactly what Nike needed. 

Companies forming in the PRC at that time could not perform the way the international brands needed them to perform. Nike actually experimented with some Chinese companies and they just could not provide the quality, timing and IPR protection that makes Nike go. So instead of contracting directly with PRC firms in order to get the lower China land and labor prices, Nike’s Taiwanese subcontractors moved to the mainland and they took advantage of the local land and labor prices, but they continued to provide the high quality, speed of delivery and IPR protection that Nike needed. Across the PRC economy what you see is the subcontractors for the big global brands are, at least initially and really through the early 2000s, overwhelmingly foreign-invested. And of the foreign-invested sector, the Taiwanese are the biggest. So that’s why I don’t think the Chinese economy could have blossomed the way it has without the Taiwanese firms because Chinese companies would have had to build on their own the capacity to be in those supply chains. Developing that capacity is very difficult and takes a long time and a lot of money. The PRC in those early years just didn’t have the money to put into that kind of thing. 

But now they do and now we feel like China can do whatever they want. But the reason that they had the capital resources that they have today is because the success between 1987 and 2007 and the accumulation in that period depended very heavily on foreign investment, especially Taiwanese investment.

Now we have Taiwan making most of the world’s chips and China wanting to replace Taiwan or absorb a lot of that market. Given how good Taiwan has gotten at this — producing parts for companies or contracting for companies — do you think China or any other country could ever surpass Taiwan’s chip capacity?

This is another one of the really cool parts of the story: where did that high-tech capacity come from? Back in the early 90s, especially in the early to mid-90s, Taiwan watchers were panicking because what we saw was the Taiwanese economy hollowing out. All of the manufacturing was leaving Taiwan. Traditional manufacturing in the SME sector was Taiwan’s strength. We were imagining that Taiwan could be in very serious trouble. If it lost its manufacturing, what would replace it? Well, what replaced it was even more valuable and strategically important — both economically and politically — industries in the high-tech sector. And we all have to acknowledge that while there was incredible entrepreneurship and incredible engineering genius involved in all of those processes, the Taiwanese government was also involved in cultivating the high tech boom in Taiwan. They kind of ‘replayed’ a similar playbook of what they used to become a traditional manufacturing powerhouse in a different set of industries. In the 1990s and into the 2000s, the Taiwanese government worked together with Taiwanese industries to create this incredible high-tech boom. And TSMC is obviously the flagship of that high tech boom, but it is by no means all there is to it. 

I remember years ago in Taiwan, chatting with a scholar from Finland. And I was congratulating him on Finland’s success with Nokia. And he said ‘yeah, however, Nokia is 25 percent of our national economy. And if it ceases to thrive, we’re in real trouble.’ And now Nokia ceases to thrive. Taiwan would definitely suffer a lot if TSMC lost its mojo. But there are a lot of other companies that are super important to global supply chains in that high-tech sector in Taiwan. 

There’s a sort of fundamental difference between making chipsets or motherboards and making socks. Even simple electronic devices, even commodity semiconductors… it’s just not that hard to make those items. The value of the technology is not a large share of the cost or the price. So if you make socks or low-end computer chips in China knowing that you are not going to control that technology for long, it’s worth it because you’ll make money anyway. [For example,] Foxconn is a super low-margin business. It’s a huge company. It provides a really important service. It’s why we can have electronic devices at an affordable price. But Foxconn is not raking in profits. Because the thing that it does is a volume business. TSMC does a lot of volume, but mainly its profits come from its technological advantage. That is why TSMC does not simply move its operations to mainland China. And I don’t think that is going to change. 

Every Taiwanese company thinks hard about which of their technical and business processes can safely be offshored, whether to mainland China or to some other place, and which of its functions need to stay someplace where they have high confidence in the intellectual property rights regime. The driver is economic, informed by a very clear-eyed understanding of the risks of technological loss in China. The statements of the PRC government, mainly the Made in China 2025 announcement have pretty well guaranteed that if there were any manufacturers in Taiwan who might forget those risks, those risks are top of mind. Because once the PRC government said, ‘our goal is to develop our own supply chain in these goods that will replace non-PRC suppliers,’ the glove is thrown. And the Taiwanese are definitely responding to that cue.

Do you think that China is on track right now with its own companies’ higher-quality chips to achieve that goal?

I don’t know. I am not a technical person. But I have heard people from TSMC talk about this. And I’ve heard people who are not from TSMC who are industry experts talk about it, and they say it is pretty much inconceivable that any of the PRC companies or any PRC company that might be founded could overtake TSMC at the technical frontier in the next few years. And there are many reasons for that. A lot of people worry in Taiwan about Chinese companies poaching Taiwanese engineers and transferring the brainpower to PRC companies. And that’s certainly important. I would never underestimate the importance of that workforce. But another huge factor is just the cost of building these facilities. One photolithography machine costs [around $140 million] apiece, and there’s one company that makes them in the Netherlands. This Dutch company is happy to supply TSMC. Would they be happy to supply SMIC or some other company to overtake TSMC? Maybe they would, but maybe they wouldn’t. 

The PRC government has put a ton of capital into trying to develop a semiconductor industry that can compete technologically with TSMC and the other big firms and they’ve not reached that goal. So I don’t know why we would expect that they would experience such a large breakthrough in the near term. But that’s not to say that they are not investing every possible resource in that. That is absolutely a top priority. And it could be done eventually.

Has China used its close ties with Taiwanese companies in the PRC, or even Chinese companies in Taiwan, to influence Taiwan or Taiwanese people in its favor? And do you see this becoming more prominent as time goes on?

Early on there was a lot of speculation and conversation about whether Taiwanese investors in the mainland would become a kind of lobby — a China lobby within Taiwan, and specifically whether they would lobby for political unification. But political scientists tend to think that everything is about politics. What we forget is what businesses lobby for, what businesses put their reputation toward, is business. So yes, Taiwanese firms in the mainland definitely lobbied for something. What do they lobby for? They lobby for their own business interests. Did they lobby for unification? No, they did not. And the ones that did became pariahs in Taiwan — well, we all still eat the Want Want noodles [the Taiwanese food manufacturer Want Want has faced criticism and government fines for attempting to exert pro-Beijing influence over Taiwanese media]. The products are on the shelves, people buy them, people read Zhongguo Shibao [the Want Want-owned newspaper China Times]. But it’s not like anybody in Taiwan is under the impression that that company is somehow a neutral voice in Taiwan politics. Everybody knows that [Want Want’s founder] Tsai Eng-meng has expressed support for unification. So in a way when Taiwanese companies make the decision to do political lobbying for Beijing, they put themselves on a side in a way that is damaging both to their political influence and their business as well. 

There have been companies that have tried the other thing: they’ve been active within Taiwan’s domestic politics in a way that causes the Chinese government to punish them, so they just stop talking about politics altogether. The PRC’s decision to go after them is counterproductive because the lesson that it teaches Taiwanese companies is that no matter whether you’re good or bad, whether you behave yourself or you act up, you’re still going to get in trouble. 

Has China ever seen this type of influence as an alternative means of unification? Or an alternative to invasion by force?

I think the PRC government has been optimistic from the beginning about the engagement or interaction across the strait. The PRC government has been hopeful that Taiwanese would be persuaded by their experiences in the mainland and the opportunities the mainland afforded to them, that unification was a good outcome for Taiwan. And they still have the 31 measures to try to entice Taiwanese. I think it’s a source of great frustration and disappointment, and a feeling that is communicated in PRC statements of betrayal: ‘you’re earning your money in the mainland, and you’re not following up by becoming a more devoted Chinese person.’ So the PRC government has definitely tried that.

What they’re doing now is a shift from what we might think of as soft power. What we see now is more of the sharp power, where, for example, the PRC government is funding organizations that are grassroots in nature… but that have really subversive potential and are in some cases being actually used in subversive ways. So the China Unification Promotion Party, for example, mostly just waves the Chinese flag down at the bottom of Taipei 101. But they also have allegedly been involved in some more violent things. 

Could these tactics — like exerting influence over elections — actually destabilize Taiwan?

It’s really unlikely. There are two things pulling in opposite directions in my mind. On the one hand, I encounter a lot of people in Taiwan who say, we can’t hold out forever, sooner or later something’s got to give, and it’s very unlikely we’re going to get formal independence. I do talk to people who are envisioning a situation in which Taiwan is able to secure permanently its independence. But I also talk to a lot of people who believe that some kind of unification is more plausible than either independence or the continued maintenance of the status quo, which is neither unification nor independence. And that’s separate from their preference. They don’t want that outcome. They just have this kind of resignation to it. 

Maybe that means Beijing is succeeding in undermining people’s confidence in Taiwan’s ability to carry on. On the other hand, Taiwan looks to me like a society that is uniquely alert to the dangers that it faces. I get asked a lot by people, especially people in Washington, why don’t Taiwanese people recognize the threat that they’re under? I think they recognize the threat they’re under. They’re highly skeptical of the information that they receive. 

Maybe that means Beijing is succeeding in undermining people’s confidence in Taiwan’s ability to carry on. On the other hand, Taiwan looks to me like a society that is uniquely alert to the dangers that it faces. 

I don’t think people spend a huge amount of time thinking about any of this, but they are skeptical of stuff that comes out of China. I don’t think anybody believes that Xi Jinping is giving a straight story. And that’s different from a place like the U.S. In the U.S. we’re really slow to recognize the danger of misinformation. Taiwanese people have no doubt who’s creating the alternative reality online, and they’re very aware of the dangers of allowing that adversary to control the conversation in Taiwan. So I am more optimistic that Taiwanese can resist the dangers of disinformation and subversion than people in the United States can. Actually, the level of subversion and the potential for political violence in the U.S. is higher today than it is in Taiwan. Much higher.

What do you think the general feeling is within Taiwanese businesses that have factories in China or are based in China right now? Are they scrambling to take their business elsewhere, or are they pretty comfortable?

Really it depends upon what business you’re in. Foxconn cannot move. Foxconn’s business model is specific to China, because of the nature of the PRC labor market. The PRC is great for business because they can deliver you a very large number of workers who have no rights and who aren’t even from where the factory is. The whole ecosystem has created a very specific and genuinely unique labor market in China. If you need a workforce of 300,000 people in one facility, there’s no other country in the world that can give you that. Even in India, you couldn’t have a facility like the Foxconn plant. That wasn’t Foxconn’s business model initially, but it has become like that because of the nature of the Chinese economy. So some companies have a symbiotic relationship with the PRC economy. The two things have evolved together such that they cannot survive independent of one another. 

But a lot of companies are not like that; they can do what they do in a lot of different places. A lot of those companies are moving out into Southeast Asia or South Asia or beyond. And then there are the ones that are mainly about their technology or their business process or quality management, like electric vehicles, bicycles, as well as a lot of high tech firms. Many of them are moving back to Taiwan because that’s where the R&D expertise is. And this is super important: mainland China is not that cheap anymore. If your factory is not already in the PRC, you’re probably not going to move your factory to the PRC to make something that is basically about low-wage labor. It’s not political, it’s nothing personal. It’s just not that cheap, and there are cheaper places. And remember that Donald Trump’s trade war added 25 percent to the price of a lot of things that were being exported from China. So that really accelerated the offshoring of manufacturing out of the PRC.

What are you working on right now? A future book or any research we can look forward to?

Right now I have a couple of projects. One is my Fulbright project for 2019, which was about youth politics in Taiwan. I hired students to conduct focus groups. So I’m very slowly working my way through that data.

The other big project that I have going right now is a survey with three other scholars. We did a survey back in May where we were probing about three things: one is trying to measure sentiment toward MainlandChina. Other standard surveys in Taiwan asked people, are you ‘Taiwanese or Chinese or both?’ and ‘unification now, later, never, sort of never?’ But we asked, on a scale of one to 10 how do you assess the PRC government? And also trying to just get some headway on whether people differentiate the PRC state from the Chinese people. We also asked a lot of questions about the military threat. Trying to understand Taiwan’s interests and moral obligations to Hong Kong people. 

We’ve had a series of short pieces on the Brookings Institution blog. We’ve got another one [that was just published] on COVID. One of the things we did was a little experiment: we asked, ‘do you think the Taiwan government should buy the Sinovac vaccine?’ And the other form of the question was, ‘do you think the Taiwan government should buy a vaccine from China?’ And what we found was a whole lot fewer people were willing to buy a vaccine from China than were willing to buy a named vaccine. Among those people who didn’t already know it was from China, once you told them it was from China, they were not for it. That is a really interesting finding. 

Another really interesting finding on the COVID front is that the Taiwanese people overwhelmingly believe that Beijing is responsible for the global pandemic. All of this propaganda [from China] over the last two years about how China has handled it better than anybody else and nobody knows where it started… [had] no traction in Taiwan. 

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