Sat, Sep 15, 2018 - Page 8 News List

Preparing for war in just two years

By Huang Tien-lin 黃天麟

On Aug. 31, the Ministry of National Defense submitted its annual China Military Power Report.

The report states that the Chinese People’s Liberation Army (PLA) is planning to complete comprehensive preparations for armed combat with Taiwan and perhaps take action, including blockading Taiwan, before 2020.

This is the ministry’s clearest statement of the Chinese military’s time frame to complete preparations for an attack on Taiwan. Surprisingly, the report has been met with silence from the government and the opposition.

Have Taiwanese stopped worrying about a Chinese attack on Taiwan? Have they finally become numb to the possibility of such a thing, despite Chinese aircraft and ships patrolling around Taiwan, military exercises in the South China Sea, diplomatic allies severing relations with Taiwan, Chinese bullying and so on?

If that is true, then this is the result that Beijing has dreamed about and Taiwan is closing in on the day when the Chinese Communist Party (CCP) will live up to its pledge to take the nation in just three days.

The report was the result of the ministry’s careful analysis of national defense guidelines and the PLA’s advances, forming the the basis for the view that the PLA will complete preparations by 2020, including the ability to deny US intervention.

The only way to prevent war is to prepare for war. Annihilating the enemy is the domain of the military, so planning is in its hands. Still, a three-day war is not only a matter of military power; the strength and stability of political and economic forces will be a key factor in the outcome.

If the economy collapses overnight and panic spreads to the markets, the outcome will have already been decided.

For example, when the US raised import tariffs on Turkish steel and aluminum, the Turkish lira collapsed. In the same way, Taiwan’s big financial holding companies would immediately be paralyzed if China were to impose a military blockade or freeze the Chinese assets of Taiwanese banks in China, which is a result of the fact that Taiwanese remain fully unaware of who the enemy is as they continue to invest in China.

The cross-strait relationship has deteriorated over the past two years and China’s unbridled bullying continues. At the same time, Taiwanese financial companies continue to move to China at an increasing pace with the government’s connivance and Beijing’s incentives.

By March, Taiwanese banks’ exposure to China reached US$71.2 billion, just behind their exposure to the US, which is US$71.3 billion. Exposure to China among some Taiwanese financial holding companies is as high as 93 percent of their net value.

According to Financial Supervisory Commission rules, exposure must not exceed 100 percent of the net value. This rule is in itself absurd: How could a bank continue to operate if 100 percent of its net value is confiscated?

Hopefully, the government will raise its awareness of who the enemy is and amend the regulations.

In preparation for war in 2020, Taiwanese banks should bring their exposure to China below 20 percent of their net value.

China’s military ambitions are abundantly clear, so the best way to avoid war is to prepare for it.

Fortunately, 2020 is still two years away. Foreign-exchange reserves have inflated in recent years and the question of how to build a substantive reserve is one of the issues that must be addressed.

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