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American Enterprise Institute non-resident fellow Michael Mazza joins Yahoo Finance Live to discuss House Speaker Nancy Pelosi's visit to Taiwan, U.S.-China tensions, and the likelihood of Chinese military action in Taiwan.
BRIAN CHEUNG: During what is a very politics-heavy news cycle, with Nancy Pelosi landing in Taiwan moments ago. That's part of her tour of Asia, and by the way, also the highest level visit to the nation since 1997. The trip has proven highly controversial, and comes amid relations between the world's two biggest economies coming to a crossroads here. The Chinese government threatening military action over the visit, but the White House saying they will not be intimidated. Again, these images just happening a few minutes ago of Nancy Pelosi, the Speaker of the House, landing in Taiwan.
So Akiko, a lot of action going on there. We saw markets in Asia kind of get a little bit unsettled on some of this news, again, as some worries about--
AKIKO FUJITA: They tumbled on the news. Yeah.
BRIAN CHEUNG: Right, they-- it could escalate tensions towards--
AKIKO FUJITA: Yeah, I mean, you know, it's been interesting back-and-forth between the US and China, in terms of words exchanged over the last 24 hours or so. The White House has sort of framed this to say, number one, Nancy Pelosi travels independently. She's not going as a representative. But there is precedent, as the White House says, for members of Congress to go and visit Taiwan. We have seen lawmakers go. Of course, this is a big deal because she is third in line to the presidency, the highest level visit since 1997, when then House Speaker Newt Gingrich went.
So certainly it's going to be interesting to see this at a time of tensions. I mean, this is all speculation at this point, how exactly does China respond. And there's certainly a number of threads that I'd love to get into with our guest here in terms of, you know, what exactly the calculations are going to be on the Chinese end. On the one hand, they've got the economy that's been struggling, pulling back in a big way. At the same time, Xi Jinping is looking at the end of the year to a potential third term.
BRIAN CHEUNG: Yeah, well, I mean, all eyes definitely going to be on that session. But you mentioned the guest. Let's bring in an expert to discuss a little bit more. Michael Mazza, nonresident fellow at the American Enterprise Institute, joins us live. Appreciate you hopping on the show, especially on short notice here.
Again, we saw those images of the plane landing in Taiwan. What do you think is the significance here? As Akiko pointed out, it's not the first time that we've seen someone of this stature make relations in person in the country, but it seems like this is coming at a time where things are already quite escalated.
MICHAEL MAZZA: Yeah, well, look, it's important that high-level US officials, both from Congress and from the executive branch, meet with their counterparts in Taiwan. The United States may one day find itself fighting a war alongside Taiwanese, and those sorts of high-level discussions, I think, are important, and keeping faith with the American people and with American service members. Now, that being said, as you point out, we're in a period of heightened tensions between the United States and China, and thus I think this visit and its aftermath needs to be managed very carefully by all parties here.
AKIKO FUJITA: Yeah, Michael, I guess the big question here is, what is the intention of Nancy Pelosi's visit to Taiwan at a time, as you point out, where there are heightened tensions? And how much of this has been spurred on by what's been happening with Russia and Ukraine, as well, in many ways to just kind of send a message to show the US backing of Taiwan?
MICHAEL MAZZA: Yeah, that's absolutely right. So Speaker Pelosi just put out an op-ed, I think, right, right as she landed in Taipei. It's in the Washington Post. And she said exactly that. China has been essentially behaving badly for years now, not only threatening Taiwan and its democracy and its independence, but also with human rights abuses in Xinjiang and Tibet and in Hong Kong. And then on top of that, we have the Ukrainian-- excuse me, the Russian invasion of Ukraine. And so I think Speaker Pelosi sees democracy as under threat around the world, and sees this visit to Taiwan as an important way to show support for an independent democracy that's under threat.
BRIAN CHEUNG: I mean, how substantial is the concern over a military conflict? I mean, you just kind of outlined that, you know, maybe at some point in time, the US is fighting in a war alongside Taiwan. I mean, is that actually a risk, though, right now? Because again, this is not the first time that we've seen a high-ranking individual in the United States go over there and have conversations.
MICHAEL MAZZA: No, I don't think it's a risk in the short term. You know, China, Xi Jinping, China's leader, has made very clear that he seeks to, you know, solve the quote unquote Taiwan problem by mid-century, and has refused to rule out the use of force. In fact, the Chinese approach to the Taiwan-- to Taiwan over the past decade has grown increasingly assertive, and even aggressive. So I do think we have to worry about use of force going forward. I would be quite surprised if Speaker Pelosi's visit is the proximate cause of a conflict in the Taiwan Strait.
AKIKO FUJITA: With that said, we have heard pretty strong words coming from the Chinese government, essentially saying we're not going to be standing idly by if this actually goes forward. I mean, what do you think the calculation is, if you are Xi Jinping? On the one hand, you certainly don't want to be seen as just bluffing. You've already put those words out there. And yet at the same time, he's trying to seek stabilization, right, when the economy has really been a bit rocky because of their COVID policy.
MICHAEL MAZZA: Yeah, so Xi Jinping, as you point out, is facing some pretty significant domestic challenges, both when it comes to COVID control and the economy. And he has this Party Congress coming up in the fall, at which he's almost certain to secure another five years in power. He doesn't want that to be-- to get off-course.
And so you're right that the rhetoric has been quite fiery, but it's also not entirely out of the usual. So much was made of the fact that Xi Jinping in his phone call with President Biden a few days ago threatened that those who play with fire will get burned. Well, you know, he said the exact same thing to President Biden last November, when there was no Nancy Pelosi visit in the offing.
So I do think China-- I think we should expect China to react strongly. We've seen reactions begin. We've already seen a ban on imports of some Taiwanese goods. We have seen live fire exercises in the Taiwan Strait. We saw overnight a number of Chinese fighter aircraft flying very close to the median line, the unofficial dividing line in the Taiwan Strait between China and Taiwan. I think we're going to see more of that while Nancy Pelosi is in Taiwan and in the days and weeks to follow.
I think Xi Jinping will be trying to make a point. I think, in some sense, he'll be blowing off steam. And again, the challenge for whole involved here is to not overreact, to manage tensions in the wake of this visit and ensure that we don't find ourselves in a sort of terminal spiral towards some sort of conflict, which, again, I think is not likely at this point in time.
BRIAN CHEUNG: Michael, how does the kind of Russian invasion of Ukraine fold into all of this? I mean, is it really the case that China would want to pile on to what is already a very uncertain global geopolitical issue when you see the international reaction to Russia, with all those economic sanctions after the invasion of Ukraine?
MICHAEL MAZZA: So, you know, I don't think that the invasion of Ukraine makes China more or less likely to use force in the near term. You know, I do think that they are drawing some important lessons about how to use force, right, about how to ensure victory in the early going, if they ever decide to use force. I think that they're drawing lessons about how to sort of inoculate themselves against global economic punishment. Russia was not prepared for that in the way that, presumably, China may be if it ever comes to that.
From an American point of view and from a Taiwanese point of view, I do think the Russian invasion was eye-opening. I think it sort of dispelled some lingering doubts in some corners that China would not actually ever resort to force, that we've-- sort of we've moved beyond that in the 21st century. And that's been proven to be false.