Valuetainment - October 19, 2023


China vs Taiwan - What Will Happen if China Invades？

Hosted by
Patrick Bet-David
Mentioned
Masterworks Ray Dalio Elon Musk Warhol Chiang Kai-shek Jamie Dimon Steve Cohen Statista Banksy Barbie
The Real Reason Why The Market Hasn’t Crashed… YET The History of Hamas, Hezbollah, and ISIS

Episode Stats


Length

14 minutes

Words per minute

201.91

Word count

3,023

Sentence count

217

Harmful content

Hate speech

10

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

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

Transcript generated with Whisper (turbo).
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.000 So why do Elon Musk, Ray Dalio, and multiple four-star generals say China's going to be
00:00:04.040 invading Taiwan in no time? But if you look at the numbers, it all makes sense why they 0.86
00:00:08.580 will, or more importantly, need to, because they actually need what Taiwan has to offer.
00:00:13.360 So anyways, let's set that part aside. When you think about U.S. and import-export,
00:00:18.400 you think about Panama Canal. When you think about what's important to Europe,
00:00:21.720 you think about Suez Canal. But when you think about China, Philippines, Malaysia, India,
00:00:26.760 you would think about the Strait of Malacca. So the reason why this is so important to China is
00:00:30.800 because just a few years ago, every day, China would ship, would come and move and dump three
00:00:36.060 and a half acres of sand every day just to build land. So they can say it's their island, which
00:00:42.460 turned into the nine-dash line to protect them, to say that is our territory, because that entire
00:00:48.860 area is filled with many U.S. allies. So God forbid, if they all unified against China, China would be 0.87
00:00:54.300 in a lot of trouble. Why? Here's some data for you. $5.3 trillion trade is passing through the
00:01:00.000 South China Sea every year. More than 60% of global maritime trade and more than 22% of total global
00:01:06.360 trade passes through this water body. One-third of the global shipping passes through the sea
00:01:11.560 every year. Over 60% of its trade in value traveling by sea. More than half of the world's
00:01:17.920 fishing vessels are in the South China Sea. And the same exact region is also thought to contain
00:01:22.980 oil reserves of at least 7.7 billion barrels. Some even say 213 billion barrels. If that is true,
00:01:29.200 that would be the equivalent of about 80% of the oil reserves of Saudi Arabia. And last but not least,
00:01:35.460 one Chinese estimates that the entire South China Sea estimates natural gas reserves to be two
00:01:41.520 quadrillion cubic feet. Quadrillion is one more than a trillion. So when you look at that, China looks at
00:01:47.660 this entire area, he says, guys, we got to figure something out here. We cannot give this thing up.
00:01:51.020 We need all of this stuff for many different reasons. This is why many believe that China
00:01:55.240 will eventually invade Taiwan. We're going to talk about that today.
00:01:59.060 Okay, so if you give value out of this video, give it a thumbs up and subscribe to the channel. So
00:02:11.880 let's get right into it. So look, this entire area, the South China Sea, who claims this territory?
00:02:16.640 China is trying to say this is our territory and why they started building all these islands,
00:02:20.440 which we'll take a look at it. But let's first learn about what this nine dash line really means.
00:02:25.060 So this refers to a demarcation line used by the People's Republic of China and Taiwan to claim
00:02:31.960 large portions of the South China Sea. The line encompasses about 90% of the South China Sea and
00:02:38.740 includes areas claimed by several other countries. So what are the origins of this? This concept for
00:02:43.940 the first line appeared on a Chinese map in 1947. Initially, it had 11 dashes. But by 1949,
00:02:49.220 when the communists took over mainland China and established the People's Republic of China,
00:02:53.280 the claim was inherited by the PRC while the Republic of China retreated to Taiwan. And in 1950s,
00:02:59.980 the two dashes in the Gulf of Tonkin were removed, thus leading to the nine dash line. The significance
00:03:06.180 of this is that the South China Sea is rich in resources such as oil, natural gas, fisheries.
00:03:11.920 Additionally, it's one of the world's major shipping routes, making its control significant both
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00:04:25.820 Now, when it comes on to the territorial claims with the nine dash line, there are several
00:04:29.700 archipelago, namely the Parcel Islands, the Spratly Islands, and the Scarborough Shoal. These land features
00:04:36.200 are also claimed wholly or in part by several countries in the region, including the Philippines,
00:04:40.980 Vietnam, Malaysia, Brunei, and Taiwan. Look, you may be saying this, Pat, who cares about these
00:04:46.060 two dash line, the nine dash line, the 11 dash line. This is so sensitive to people who live in
00:04:50.820 this area to the point where Vietnam banned the movie Barbie from being played in Vietnam because
00:04:56.380 of the way you drew the nine dash line they were offended by. It's a very sensitive topic in that
00:05:01.360 area. So now, international disputes. China's extensive claims based on the nine dash line have
00:05:06.020 resulted in multiple territorial disputes in the South China area. These tensions have occasionally
00:05:10.380 escalated into standoffs and confrontations. And the UNCLOS text, the United Nations Convention
00:05:15.760 on the Law of the Sea, is an international treaty that defines nations' rights and responsibilities
00:05:21.080 in the world's oceans. It establishes guidelines for businesses, the environment, and the management
00:05:25.960 of marine natural resources. However, the nine dash line claim doesn't adhere to the conventional
00:05:31.020 territorial sea limit set by UNCLOS. China is a signatory of UNCLOS, but interprets it in ways
00:05:37.620 that supports its broad claims in the South China Sea. Let's talk about the 2016 ruling.
00:05:42.960 In 2013, the Philippines initiated a case at the Permanent Court Arbitration, PCA, against
00:05:49.120 China challenging the validity of the nine dash line. And in 2016, the PCA ruled in favor of
00:05:54.000 the Philippines on several key issues. Notably, it included that China's nine dash line claim
00:05:58.880 has no legal basis under UNCLOS. However, China rejected the ruling, and it did not lead to
00:06:04.460 significant changes on the ground. China continues to assert its claims in the South China Sea,
00:06:09.380 often back in its stance with naval and coast guard patrols, as well as land reclamation and
00:06:14.380 militarization of certain features. This has resulted in tensions, not only with neighboring
00:06:19.000 countries, but also with extra regional powers, most notably the United States, which conducts freedom
00:06:24.200 of navigation operations in that area. So according to the Exclusive Economic Zone, there's a number of
00:06:29.600 how many miles a land can be from a country to say that's ours. So when you look at EEZ,
00:06:35.940 according to international law, an exclusive economic zone, or EEZ, is an area of the ocean
00:06:41.180 generally extending 200 nautical miles, roughly 230 miles, beyond a nation's territorial sea,
00:06:47.340 within which a coastal nation has jurisdiction over both living and non-living resources. So if you look
00:06:53.660 at China and Taiwan, you know what the distance is? 81 miles. So this is where China is trying to say,
00:06:58.000 Taiwan is part of us, and Taiwan is saying, no, no, no. We're our own country. We have nothing to do
00:07:02.460 with you. So it's such a cluster in the South China Sea that all these countries are building
00:07:07.200 fake islands, man-made islands, to say, whoa, this is within 200 miles, and this is our territory.
00:07:13.400 And everyone says, no, that's not your territory. China's doing it. Malaysia's doing it. Vietnam's 0.95
00:07:17.560 doing it. Philippines is doing it. Literally everybody in that territory is doing it. Led by the
00:07:21.060 Kuomintang Party, the KMT Party, resumed its civil war with the Chinese Communist Party,
00:07:25.280 and by 1949, the CCP emerged victorious on the mainland, leading on the establishment of the
00:07:30.620 People's Republic of China. The KMT, led by Chiang Kai-shek, retreated to Taiwan, along with about
00:07:36.560 2 million refugees, and the KMT continued to declare itself the legitimate government of all of China
00:07:41.980 and vowed to retake the mainland. And that leads us to the separate paths from 1950 onwards, Taiwan
00:07:48.000 underwent significant economic development, transforming from an agrarian society to one of the four Asian
00:07:54.060 tigers. Initially an authoritarian state, under martial law, Taiwan also began a process of
00:07:59.400 democratization in the late 80s, culminating its first presidential election in 1996. In other words,
00:08:05.260 Taiwan sees themselves as their own country. Guys, leave us alone. Let us do what we're doing here.
00:08:08.940 We got our own economy. We're doing good. So now, how was U.S. handling this relationship with China
00:08:13.120 and Taiwan? Up until 1979, the U.S. officially recognized the Republic of China on Taiwan as the
00:08:18.620 legitimate government of all China. However, in a move to establish formal relations with the
00:08:22.740 People's Republic of China and Beijing, the U.S. switched diplomatic recognition from Taipei to
00:08:27.660 Beijing on January 1st of 1979. The PRC views Taiwan as part of its territory, and one of its
00:08:33.760 conditions for diplomatic relations was that the U.S. could not maintain official diplomatic ties with
00:08:39.360 both the PRC and the ROC. And that led to the Taiwan Relations Act. While the U.S. severed formal
00:08:45.800 diplomatic ties with Taiwan in 1979, it passed the Taiwan Relations Act the same year. The TRA provides a
00:08:51.400 legal framework for the continuation of unofficial relations between the U.S. and Taiwan. It also
00:08:56.400 commits the U.S. to provide Taiwan with arms of defensive character and states that any effort
00:09:00.660 to undermine Taiwan's future by non-peaceful means would be of great concern to the U.S.
00:09:05.540 And by the way, they're saying this trying to make two people happy. Look, this is your business.
00:09:09.660 You guys kind of figured it out, but we got a great relationship with them, and we got a great
00:09:12.860 relationship with you, and we don't want to see you bully these guys. If you do, we can't do business with
00:09:16.460 you. So U.S. is kind of holding this conflict from taking place because China knows if they
00:09:21.660 do something here, they may lose the U.S. relationship, and they desperately still need
00:09:26.960 the U.S. relationship. So it's important to know which country needs this area the most,
00:09:31.340 not just based on their GDP, but as well as the percentage of all the trade they do. So look at
00:09:35.920 this here. U.S., if you look at this, look at the top. It says country, then percentage of share of
00:09:40.480 world GDP, then it says trade value through South China Sea in billions, then it says South China Sea
00:09:46.300 trade as percentage of all trade in goods. U.S. is only 5.72%, but look at China, 39.5%. Then it's 0.81
00:09:55.120 Japan, it's 19%, Germany, 9%, UK, it's 12%, France, 7 or 8%, India's 31%, Italy's 8%, Brazil's 23%,
00:10:03.120 Canada's 2 or 3%, but if you look at China, nearly 40%. There's one country that cannot afford a lot of
00:10:10.080 conflict in this area, and that's China. America can, because it's only 5.72%, but China first, 0.98
00:10:15.120 then India. It matters to the both of them. So to just kind of help give a visual so you
00:10:19.120 understand what this means, let's just say China all of a sudden had conflicts with all of these
00:10:23.340 guys. None of them want to work with them, not Vietnam, not Philippines, not Malaysia, and U.S., 0.89
00:10:27.320 and they've made U.S. upset. If you look at this chart, where do they go through to get the
00:10:31.900 shipments of everything they need? Do they go all the way around? Can they no longer use the Malacca
00:10:35.940 Strait, or the Sunda Strait, or the Lombok Strait? They're going to need all of that.
00:10:40.280 Diplomacy matters more to China than any other country in that region. So now you may say,
00:10:44.800 but Pat, you still haven't answered the question about Taiwan. Why do they need Taiwan? Let me
00:10:48.040 explain a little bit more. Number one, if you watched our semiconductor video, you would know
00:10:51.720 why they need it, because Taiwan produces some of the most highly demanded, technical, difficult
00:10:57.100 semiconductor chips in the world. They need Taiwan, but it's more than just semiconductor chips.
00:11:02.000 They're worried about the trade vulnerability. China is landlocked and heavily dependent on imports
00:11:06.300 over North Desert, the West Himalayas, and South, which is a jungle. 60% of its trade is
00:11:11.240 value traveling by sea. And between 2000 and 2020, China's food self-sufficiency ratio decreased from
00:11:17.280 93.6% to 65.8%. And last but not least, China imports over 70% of its oil. So again, they need
00:11:25.000 that area. And if you look at this here, with U.S. naval bases and installations, look how focused we are
00:11:30.400 here. Whether it's naval air facility, whether it's U.S. naval base, whether it's naval station area,
00:11:35.740 whether it's contract-granted naval base, or whether it's enhanced defense cooperation agreement
00:11:39.900 provides U.S. forces with rotational access to these bases, America is there. And that doesn't
00:11:45.440 make China comfortable, but it makes their alliances comfortable, something China probably
00:11:50.620 doesn't like. Now, some people ask and say, well, Pat, how strong is Taiwan against China? Take a look at
00:11:55.060 this chart here. This is according to Statista, the military imbalance in the Taiwan Strait. If you look
00:11:59.740 at mainland China, it's the red, and Taiwan is the blue. So personnel, obviously, they got a lot more,
00:12:04.740 but Taiwan would offer an additional 89. Tanks, Taiwan would offer another 850 if they're able to
00:12:09.380 invade them. Artillery pieces, you see the numbers there. Aircraft carriers, they have nothing to
00:12:13.460 offer. Destroyers, they have four to offer. Frigates, they got 22 to offer. Tank landing ships, 0.52
00:12:18.240 they got 31 to offer. Submarines, only two. Fighters, they got 300. Bomber attack, zero. Transport aircraft,
00:12:24.540 look at that right there, 30 to 20. So now if you say, but Pat, I'm still paranoid,
00:12:29.160 like what Dalio, Musk, and four-star general is saying, they're still going to invade them,
00:12:32.620 no problem. The challenge China is going to face is there's only two months out of the year that
00:12:36.660 they can attack them because the sea in that area is very choppy. So the only two months they have,
00:12:41.420 it's not like it's a back-to-back two months where it's like 60 days straight. It's either April or
00:12:45.680 it's October. Any other month, it's tough for them to invade. The other problem they have is they
00:12:49.920 don't have any allies. Everybody surrounding that area just doesn't like China, whether it's Japan,
00:12:54.080 South Korea, Taiwan, they're allies of US, or it's Philippines, Indonesia, Vietnam, and India. Again,
00:12:58.540 they're not full-on allies of what China's got going on. And then the way Taiwan is set up as a
00:13:04.100 country, the region, it's a little bit out of whack. If you look at this chart right here,
00:13:07.720 if you look at the green, the green will show you that there's roughly 3,700 meters in elevation is
00:13:13.280 the green, and then the rest is a little bit lower, which means if somebody wants to invade,
00:13:17.500 it's not really the most ideal way an island is set up to invade. But again, they could if they want
00:13:22.560 to, but it's going to be a little bit more challenging. And for Taiwan to fight a potential
00:13:26.240 invasion, they've got some certain things they've done themselves as well, which one is mine lane
00:13:30.720 ships in case they do attack, boom, they would explode, setting up oil pipelines at beach entry
00:13:35.920 points that can dump oil into the ocean and set the entry point on fire. They've scorched earth
00:13:40.700 tactics, guerrilla warfare, and China does not have the infrastructure to deploy its entire air fleet
00:13:46.000 into the combat zone. So China's Navy has quantity, but it lacks quality, and most of China's military 0.88
00:13:51.480 jets cannot make it to Taiwan because of its distance. So now the case study that China has, 0.68
00:13:56.500 China's been watching Russia invade Ukraine to see, well, let's see how the world is reacting to
00:14:00.960 it. At least Ukraine, there is part of NATO, so NATO's going to back up Ukraine, but who's Taiwan
00:14:05.120 part of? Well, maybe this is the reason why China could attack Taiwan, but if they do, Taiwan has a
00:14:09.640 lot of allies. And does China want to lose US? What if they lose US? And okay, let's just say China
00:14:14.180 does invade Taiwan. Who's going to back them up? And emptied Russia with resources? That's who's going to
00:14:19.260 back them up. Who's going to back them up? So it's very complicated when you look at this. China's 1.00
00:14:24.380 friend-making skill set is not that good. They've not made enough friends in that region, in that area
00:14:30.300 to say, we're willing to help you. They've pissed everybody off that is not wanting to see this become
00:14:35.160 a reality. So Musk, Ray Dalio, four-star generals, very smart for saying that this could possibly happen,
00:14:40.880 and it could possibly happen. But if it does, it may be very complicated on the way they do it.
00:14:45.040 They're definitely going to need someone's help. Whose help? No one knows yet. Having said that,
00:14:48.660 if you got value out of this video, give it a thumbs up, subscribe to the channel. If you've
00:14:52.900 not seen our video on NATO exposed, it's a phenomenal video. Click here to watch that video.
00:14:57.160 Take care, everybody. Bye-bye, bye-bye.