TAIPEI (Taiwan News) — Taiwan is in the middle of a tug of war between two major superpowers struggling for technological and political supremacy, according to leading academic Professor Chang-Tai Hsieh (謝長泰), who spoke at the Political Economy, Global Order and World Development International Conference in Taipei on May 5-6.

Hsieh said that the U.S. faced an unprecedented threat to its economic and political dominance. The U.S., in response, has implemented new rules on technological exports that aim to starve China of semiconductors and other advanced technologies crucial to its ambitions.

The U.S. Bureau of Industry and Security has expanded its “entity list” to include the Foreign Direct Product Rule (FDPR), which puts an almost complete embargo on the most advanced technologies, Hsieh believes. "The goal is to kill every single Chinese company or China-based company in four sectors: Advanced semiconductors, semiconductor manufacturing equipment, advanced computing capabilities, and supercomputers," Hsieh said.

Taiwan "has gotten completely entangled in the U.S. response to China" and "needs to be very careful because it could easily get crushed," Hsieh added.

In his lecture, Professor Hsieh explored the idea of Xi Jinping's "two strong hands". The first "strong hand" political initiative, which started before 2018, focuses on retaining political power by clamping down on potentially threatening entities, such as large private firms, influential celebrities, and NGOs. However, Xi's political campaign does not target large or foreign companies per se. The second "strong hand" emerges as a counterbalance, prioritizing the empowerment of small and medium-sized businesses, whose limited financial resources pose less of a political threat.

Meanwhile, Professor Dani Rodrik from Harvard University outlined two possible scenarios for Taiwan and the world: A zero-sum global standoff between two major superpowers, or a path that supports domestic economic and social interests but without fully neglecting global and regional integration.

Rodrik said there has been a shift in the dominant belief underpinning the global order, moving towards self-sufficiency and technological independence. Hence, many countries are adopting protectionist measures in order to support domestic producers in advanced manufacturing or green technologies.

Reflecting on Taiwan's export-oriented industrialization model adopted after the late 1950s, he said it struck a balance between protection of domestic industries and international economic integration, such as building regional economic partnerships. As such, it successfully promoted economic growth.

However, the benefits of globalization were offset by a popular perception that it was a "force of nature," Rodrick said. This led to a sense of helplessness that fueled right-wing authoritarian populism.

It has also led to the emerging national security imperative that views China as a threat to U.S. economic and technological dominance. After the 1990s, Western advocates of globalization who had initially hoped that China's increasing economic and technological prowess would lead to greater democratization were proven wrong.

Rodrik said it was vital to prevent a Cold War 2.0, zero-sum scenario. He added that during the original Cold War era the level of economic interdependence between communist countries and the West was relatively limited. This meant geopolitical competition did not spill over into the world economy.

Given the strong economic interdependence between China and the U.S., Rodrik said he feared a new Cold War could negatively affect the world economy. He therefore advocated for a "thinner" model of globalization with a more sustainable model of global integration that supports local industries and acknowledges that countries like China may never adopt a Western-style market model.

Prof. Dani Rodrik's presentation starts at 10:04.

Prof. Chang-Tai Hsieh's presentation starts at 1:57:14.