China vs Taiwan - What Will Happen if China Invades？
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Summary
The South China Sea is one of the most strategically important water bodies in the world. It's home to a third of the world's maritime trade, and it's a key supply route into and out of the Asian giant, China.
Transcript
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So why do Elon Musk, Ray Dalio, and multiple four-star generals say China's going to be
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invading Taiwan in no time? But if you look at the numbers, it all makes sense why they
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will, or more importantly, need to, because they actually need what Taiwan has to offer.
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So anyways, let's set that part aside. When you think about U.S. and import-export,
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you think about Panama Canal. When you think about what's important to Europe,
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you think about Suez Canal. But when you think about China, Philippines, Malaysia, India,
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you would think about the Strait of Malacca. So the reason why this is so important to China is
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because just a few years ago, every day, China would ship, would come and move and dump three
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and a half acres of sand every day just to build land. So they can say it's their island, which
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turned into the nine-dash line to protect them, to say that is our territory, because that entire
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area is filled with many U.S. allies. So God forbid, if they all unified against China, China would be
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in a lot of trouble. Why? Here's some data for you. $5.3 trillion trade is passing through the
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South China Sea every year. More than 60% of global maritime trade and more than 22% of total global
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trade passes through this water body. One-third of the global shipping passes through the sea
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every year. Over 60% of its trade in value traveling by sea. More than half of the world's
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fishing vessels are in the South China Sea. And the same exact region is also thought to contain
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oil reserves of at least 7.7 billion barrels. Some even say 213 billion barrels. If that is true,
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that would be the equivalent of about 80% of the oil reserves of Saudi Arabia. And last but not least,
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one Chinese estimates that the entire South China Sea estimates natural gas reserves to be two
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quadrillion cubic feet. Quadrillion is one more than a trillion. So when you look at that, China looks at
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this entire area, he says, guys, we got to figure something out here. We cannot give this thing up.
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We need all of this stuff for many different reasons. This is why many believe that China
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will eventually invade Taiwan. We're going to talk about that today.
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Okay, so if you give value out of this video, give it a thumbs up and subscribe to the channel. So
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let's get right into it. So look, this entire area, the South China Sea, who claims this territory?
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China is trying to say this is our territory and why they started building all these islands,
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which we'll take a look at it. But let's first learn about what this nine dash line really means.
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So this refers to a demarcation line used by the People's Republic of China and Taiwan to claim
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large portions of the South China Sea. The line encompasses about 90% of the South China Sea and
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includes areas claimed by several other countries. So what are the origins of this? This concept for
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the first line appeared on a Chinese map in 1947. Initially, it had 11 dashes. But by 1949,
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when the communists took over mainland China and established the People's Republic of China,
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the claim was inherited by the PRC while the Republic of China retreated to Taiwan. And in 1950s,
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the two dashes in the Gulf of Tonkin were removed, thus leading to the nine dash line. The significance
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of this is that the South China Sea is rich in resources such as oil, natural gas, fisheries.
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Additionally, it's one of the world's major shipping routes, making its control significant both
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economically and strategically. You ever wonder why Jamie Dimon, CEO of Chase, has a $900 million art
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Now, when it comes on to the territorial claims with the nine dash line, there are several
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archipelago, namely the Parcel Islands, the Spratly Islands, and the Scarborough Shoal. These land features
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are also claimed wholly or in part by several countries in the region, including the Philippines,
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Vietnam, Malaysia, Brunei, and Taiwan. Look, you may be saying this, Pat, who cares about these
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two dash line, the nine dash line, the 11 dash line. This is so sensitive to people who live in
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this area to the point where Vietnam banned the movie Barbie from being played in Vietnam because
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of the way you drew the nine dash line they were offended by. It's a very sensitive topic in that
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area. So now, international disputes. China's extensive claims based on the nine dash line have
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resulted in multiple territorial disputes in the South China area. These tensions have occasionally
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escalated into standoffs and confrontations. And the UNCLOS text, the United Nations Convention
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on the Law of the Sea, is an international treaty that defines nations' rights and responsibilities
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in the world's oceans. It establishes guidelines for businesses, the environment, and the management
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of marine natural resources. However, the nine dash line claim doesn't adhere to the conventional
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territorial sea limit set by UNCLOS. China is a signatory of UNCLOS, but interprets it in ways
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that supports its broad claims in the South China Sea. Let's talk about the 2016 ruling.
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In 2013, the Philippines initiated a case at the Permanent Court Arbitration, PCA, against
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China challenging the validity of the nine dash line. And in 2016, the PCA ruled in favor of
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the Philippines on several key issues. Notably, it included that China's nine dash line claim
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has no legal basis under UNCLOS. However, China rejected the ruling, and it did not lead to
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significant changes on the ground. China continues to assert its claims in the South China Sea,
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often back in its stance with naval and coast guard patrols, as well as land reclamation and
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militarization of certain features. This has resulted in tensions, not only with neighboring
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countries, but also with extra regional powers, most notably the United States, which conducts freedom
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of navigation operations in that area. So according to the Exclusive Economic Zone, there's a number of
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how many miles a land can be from a country to say that's ours. So when you look at EEZ,
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according to international law, an exclusive economic zone, or EEZ, is an area of the ocean
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generally extending 200 nautical miles, roughly 230 miles, beyond a nation's territorial sea,
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within which a coastal nation has jurisdiction over both living and non-living resources. So if you look
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at China and Taiwan, you know what the distance is? 81 miles. So this is where China is trying to say,
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Taiwan is part of us, and Taiwan is saying, no, no, no. We're our own country. We have nothing to do
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with you. So it's such a cluster in the South China Sea that all these countries are building
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fake islands, man-made islands, to say, whoa, this is within 200 miles, and this is our territory.
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And everyone says, no, that's not your territory. China's doing it. Malaysia's doing it. Vietnam's
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doing it. Philippines is doing it. Literally everybody in that territory is doing it. Led by the
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Kuomintang Party, the KMT Party, resumed its civil war with the Chinese Communist Party,
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and by 1949, the CCP emerged victorious on the mainland, leading on the establishment of the
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People's Republic of China. The KMT, led by Chiang Kai-shek, retreated to Taiwan, along with about
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2 million refugees, and the KMT continued to declare itself the legitimate government of all of China
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and vowed to retake the mainland. And that leads us to the separate paths from 1950 onwards, Taiwan
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underwent significant economic development, transforming from an agrarian society to one of the four Asian
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tigers. Initially an authoritarian state, under martial law, Taiwan also began a process of
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democratization in the late 80s, culminating its first presidential election in 1996. In other words,
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Taiwan sees themselves as their own country. Guys, leave us alone. Let us do what we're doing here.
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We got our own economy. We're doing good. So now, how was U.S. handling this relationship with China
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and Taiwan? Up until 1979, the U.S. officially recognized the Republic of China on Taiwan as the
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legitimate government of all China. However, in a move to establish formal relations with the
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People's Republic of China and Beijing, the U.S. switched diplomatic recognition from Taipei to
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Beijing on January 1st of 1979. The PRC views Taiwan as part of its territory, and one of its
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conditions for diplomatic relations was that the U.S. could not maintain official diplomatic ties with
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both the PRC and the ROC. And that led to the Taiwan Relations Act. While the U.S. severed formal
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diplomatic ties with Taiwan in 1979, it passed the Taiwan Relations Act the same year. The TRA provides a
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legal framework for the continuation of unofficial relations between the U.S. and Taiwan. It also
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commits the U.S. to provide Taiwan with arms of defensive character and states that any effort
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to undermine Taiwan's future by non-peaceful means would be of great concern to the U.S.
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And by the way, they're saying this trying to make two people happy. Look, this is your business.
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You guys kind of figured it out, but we got a great relationship with them, and we got a great
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relationship with you, and we don't want to see you bully these guys. If you do, we can't do business with
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you. So U.S. is kind of holding this conflict from taking place because China knows if they
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do something here, they may lose the U.S. relationship, and they desperately still need
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the U.S. relationship. So it's important to know which country needs this area the most,
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not just based on their GDP, but as well as the percentage of all the trade they do. So look at
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this here. U.S., if you look at this, look at the top. It says country, then percentage of share of
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world GDP, then it says trade value through South China Sea in billions, then it says South China Sea
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trade as percentage of all trade in goods. U.S. is only 5.72%, but look at China, 39.5%. Then it's
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Japan, it's 19%, Germany, 9%, UK, it's 12%, France, 7 or 8%, India's 31%, Italy's 8%, Brazil's 23%,
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Canada's 2 or 3%, but if you look at China, nearly 40%. There's one country that cannot afford a lot of
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conflict in this area, and that's China. America can, because it's only 5.72%, but China first,
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then India. It matters to the both of them. So to just kind of help give a visual so you
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understand what this means, let's just say China all of a sudden had conflicts with all of these
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guys. None of them want to work with them, not Vietnam, not Philippines, not Malaysia, and U.S.,
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and they've made U.S. upset. If you look at this chart, where do they go through to get the
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shipments of everything they need? Do they go all the way around? Can they no longer use the Malacca
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Strait, or the Sunda Strait, or the Lombok Strait? They're going to need all of that.
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Diplomacy matters more to China than any other country in that region. So now you may say,
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but Pat, you still haven't answered the question about Taiwan. Why do they need Taiwan? Let me
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explain a little bit more. Number one, if you watched our semiconductor video, you would know
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why they need it, because Taiwan produces some of the most highly demanded, technical, difficult
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semiconductor chips in the world. They need Taiwan, but it's more than just semiconductor chips.
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They're worried about the trade vulnerability. China is landlocked and heavily dependent on imports
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over North Desert, the West Himalayas, and South, which is a jungle. 60% of its trade is
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value traveling by sea. And between 2000 and 2020, China's food self-sufficiency ratio decreased from
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93.6% to 65.8%. And last but not least, China imports over 70% of its oil. So again, they need
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that area. And if you look at this here, with U.S. naval bases and installations, look how focused we are
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here. Whether it's naval air facility, whether it's U.S. naval base, whether it's naval station area,
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whether it's contract-granted naval base, or whether it's enhanced defense cooperation agreement
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provides U.S. forces with rotational access to these bases, America is there. And that doesn't
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make China comfortable, but it makes their alliances comfortable, something China probably
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doesn't like. Now, some people ask and say, well, Pat, how strong is Taiwan against China? Take a look at
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this chart here. This is according to Statista, the military imbalance in the Taiwan Strait. If you look
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at mainland China, it's the red, and Taiwan is the blue. So personnel, obviously, they got a lot more,
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but Taiwan would offer an additional 89. Tanks, Taiwan would offer another 850 if they're able to
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invade them. Artillery pieces, you see the numbers there. Aircraft carriers, they have nothing to
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offer. Destroyers, they have four to offer. Frigates, they got 22 to offer. Tank landing ships,
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they got 31 to offer. Submarines, only two. Fighters, they got 300. Bomber attack, zero. Transport aircraft,
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look at that right there, 30 to 20. So now if you say, but Pat, I'm still paranoid,
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like what Dalio, Musk, and four-star general is saying, they're still going to invade them,
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no problem. The challenge China is going to face is there's only two months out of the year that
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they can attack them because the sea in that area is very choppy. So the only two months they have,
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it's not like it's a back-to-back two months where it's like 60 days straight. It's either April or
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it's October. Any other month, it's tough for them to invade. The other problem they have is they
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don't have any allies. Everybody surrounding that area just doesn't like China, whether it's Japan,
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South Korea, Taiwan, they're allies of US, or it's Philippines, Indonesia, Vietnam, and India. Again,
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they're not full-on allies of what China's got going on. And then the way Taiwan is set up as a
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country, the region, it's a little bit out of whack. If you look at this chart right here,
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if you look at the green, the green will show you that there's roughly 3,700 meters in elevation is
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the green, and then the rest is a little bit lower, which means if somebody wants to invade,
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it's not really the most ideal way an island is set up to invade. But again, they could if they want
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to, but it's going to be a little bit more challenging. And for Taiwan to fight a potential
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invasion, they've got some certain things they've done themselves as well, which one is mine lane
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ships in case they do attack, boom, they would explode, setting up oil pipelines at beach entry
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points that can dump oil into the ocean and set the entry point on fire. They've scorched earth
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tactics, guerrilla warfare, and China does not have the infrastructure to deploy its entire air fleet
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into the combat zone. So China's Navy has quantity, but it lacks quality, and most of China's military
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jets cannot make it to Taiwan because of its distance. So now the case study that China has,
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China's been watching Russia invade Ukraine to see, well, let's see how the world is reacting to
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it. At least Ukraine, there is part of NATO, so NATO's going to back up Ukraine, but who's Taiwan
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part of? Well, maybe this is the reason why China could attack Taiwan, but if they do, Taiwan has a
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lot of allies. And does China want to lose US? What if they lose US? And okay, let's just say China
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does invade Taiwan. Who's going to back them up? And emptied Russia with resources? That's who's going to
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back them up. Who's going to back them up? So it's very complicated when you look at this. China's
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friend-making skill set is not that good. They've not made enough friends in that region, in that area
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to say, we're willing to help you. They've pissed everybody off that is not wanting to see this become
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a reality. So Musk, Ray Dalio, four-star generals, very smart for saying that this could possibly happen,
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and it could possibly happen. But if it does, it may be very complicated on the way they do it.
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They're definitely going to need someone's help. Whose help? No one knows yet. Having said that,
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if you got value out of this video, give it a thumbs up, subscribe to the channel. If you've
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