Critical approaches to geoeconomics: Taiwan’s position/ing in the global chip war

Abstract

This essay argues that a meshing of the genealogical analysis proposed by critical geoeconomics with the critical (geo)political economy approach is well-equipped to expound on the proliferation of geostrategic thinking and practices in the contemporary era marked by the ‘great power rivalry’ or the ‘new Cold War’. To elaborate on this proposition, I examine the rise of global strategic-technologic competition centring on semiconductor production and Taiwan’s position and positioning in such dynamics.

Critical geoeconomics of contemporary geostrategic thinking

The intensification of the ‘great power rivalry’ in the global economic arena has sparked a surge of scholarly interest in geoeconomics (Beeson, 2018; Csurgai, 2018). Nevertheless, studies on geoeconomics remain a highly contested terrain across academic disciplines with different theoretical traditions. The disagreement between conventional International Relations (IR) scholars and critical political geographers on the geoeconomics scholarship is best exemplified in the polemic debate between Vihma (2018), Sparke (2018a) and Moisio (2018) featured in the journal Geopolitics in 2018. While the critical camp contested the conventional IR approach to geoeconomics for its underlining statism and instrumentalism, the analytical methods employed by critical geopolitics scholars were criticized for their near exclusive focus on representation.

Sharing concerns for the tendency of privileging discourses and representations on the part of critical geopolitics scholarship, Mallin and Sidaway’s (2024) genealogical inquiry into geoeconomics represents an alternative engagement with the conventional IR scholarship from political geography. Mallin and Sidaway trace multiple waves of geoeconomic knowledge production from the Weimar Germany of the interwar decades to the US-dominated Cold War era, conceiving geoeconomics as an evolving form of knowledge production aimed at repositioning states in their respective global political-economic conjuncture. Their endeavour to historicize the intellectual development of geoeconomics, therefore, saved the notion from being rendered as free-floating discourses.

While Mallin and Sidaway’s work primarily tackles the period prior to the ‘geoeconomics boom’ in the post-Cold War era, their approach is well-positioned to critically engage with the (re)emerging geoeconomic paradigm of our time. Despite vociferous talk about the ‘new Cold War’, the geopolitics of connectivity has surpassed the conventional logic of containment. Although studies of the strategic importance of interconnectedness in IR emerged against the ascendance of globalization theory (Keohane and Nye, 1998), what contributed to the resurgence of such strategic thinking was the recent conjuncture of the evolving global political-economic dynamics marked by China’s rise, the disentangling of the so-called ‘Chimerica’, and the global supply chain reorganization precipitated by the spread of the COVID-19 pandemic – all giving rise to the geoeconomic model of ‘globalization 2.0’ (Poon, 2024). The shift in strategic thinking aiming at re-engaging the (post)neoliberal global economy is demonstrated in the prevalence of the ‘weaponized interdependence’ thesis (Farrell and Newman, 2019), which draws on network theory to re-interpret the strategic implications of the (neo)liberal economic order dictated by finance and information flows. This paradigm shift is also seen in the US geoeconomic strategies towards China from ‘de-coupling’ to ‘de-risking’, where the Biden administration upholds the interconnected nature of the global economy while seeking to cement US leadership in strategic sectors, such as information, biotechnology and energy (Demarais, 2023). Significantly, the spatial metaphors of networks, connectivity and flows prevail in the current geostrategic paradigm.

Grounding critical geoeconomics with critical (geo)political economy

If geoeconomics denotes a form of knowledge production that aims to inform action, then the questions to ask are: How do the struggles over geostrategic visions take place both within and beyond academic/strategy circles? Has turning the incipient geostrategic paradigm into real-existing policies invoked discrepancies and contradictions? If so, what are the implications of this messy reality for the study of the entanglement of geoeconomics and geopolitics? Echoing Glassman’s (2024) rejection of strategic abstraction and Sparke’s advocacy for conjunctural analysis, the following discussion highlights the utility of incorporating critical geopolitical economy (GPE) scholarship in the critical approach to geoeconomics and employ the convoluted politics of the global chip war for further elaboration.

The development of the critical GPE framework and its variations are extensively discussed in other scholarly work (Glassman, 2018; Moisio, 2024; Sparke, 2018b). The GPE approach attends to the connections between state spatiality and the capitalist global economy, highlighting the dialectic interplay of geoeconomics and geopolitics as an overdetermined expression of uneven development (Sparke, 2018b). Recent studies have identified two interrelated spatial processes: the politics of de/re-territorialization associated with the ‘spatial fix’ (Lee et al., 2018) and the networked, hub-and-flow spatiality against the rise of the knowledge-based new economy (Moisio, 2019, 2024). The tensions and interplay between these two spatial processes have to be explicated in actual cases. As both spatial processes involve related imaginaries and practices, critical GPE also seeks to unravel the articulation between ideational and material processes intertwined in geoeconomics and geopolitics (Moisio, 2019; Sparke, 2024).

Moreover, critical GPE portrays geoeconomics not only as international but also as multi-scalar and trans-local processes involving various actors, both state and non-state. Empirical studies include Glassman’s (2018) research on the development of the US military-industrial complex across East Asia during the Cold War, which invoked the historical bloc formation of transnational ruling elites across different localities, and Lee’s (2023) analysis of the controversial development of Jeju between the ‘Free International City’ and the Korean Naval Base that entails discrepant desires, discourses and practices among the national state, local state, local business communities, foreign investors and the US military. This point is particularly pertinent to the geoeconomics of the new economy, as network theory is widely deployed to illustrate the involvement of think tanks, universities, business communities and local and national states in promoting a competitiveness-driven geoeconomic paradigm (Moisio, 2018).

Grounding the analysis of geostrategic positioning with critical GPE’s attention to the inter-scalar, multi-actor and dialectical processes mediated by different forms of politics thus reveals the messiness, discrepancies and contradictions arising from geoeconomic policy formation and implementation. Therefore, this mode of analysis helps close the gap between conceiving geoeconomics as a form of knowledge production, a discursive practice and a material reality from which a geostrategic imperative operates.

The ‘global chip war’ and Taiwan’s position/ing

A critical GPE-informed approach to geoeconomics is well equipped to unpack the complex interplay between geopolitics and geoeconomics embodied in the ‘global chip war’ and Taiwan’s crucial, yet contradictory, position in it. One of the primary goals in the escalating geoeconomic competition is securing cutting-edge technology with strategic importance, specifically semiconductor production. Major powers involved in chip production, such as the EU, the US and Japan, despite occupying different structural positions in the global semiconductor industry, all seek to foster supply chain independence by providing substantial policy incentives. Nevertheless, given the highly specialized and networked nature of the global semiconductor industry and the structural power the US occupies in it, the ways in which the US repositions itself in the global landscape embodies the parallel logic of interdependent networks and reterritorialization – both of which feature Taiwan at the centre of the strategy.

On the one hand, the proposal for the ‘Chip 4 Alliance’ between the US, Taiwan, South Korea and Japan introduced by the Biden administration in 2022 aims at securitizing existing global production networks by promoting ‘friend-shoring’ among the allied states against China. The strategy clearly utilizes the ‘weaponized interdependence’ theory, which capitalizes on the US’s asymmetrical power in chip design, intellectual property and export control in the multi-layered and interconnected global value chain (GVC) network to curb China’s advancement in the global semiconductor industry (Malkin and He, 2024). In many ways, this strategy can be read as repackaging the conventional ‘containment’ strategy, albeit based on a more sophisticated understanding and manoeuvring of the networked global economy.

On the other, the enactment of the US CHIPS and Science Act (2022) in the same year symbolizes a parallel attempt by the US to reterritorialize chip production on its soil through subsidizing research, development, manufacturing and workforce development – a vertical integration-focused initiative at odds with the network strategies. A primary goal of the initiative was to solicit TSMC, a Taiwan-based world-leading semiconductor manufacturer, to invest in Arizona; with a US$40 billion budget, it is one of the largest FDIs in US history. Nevertheless, the realization of the strategy was mediated by inter-scalar and multiple forms of politics in and through which old and new geopolitics are reconfigured. For instance, the site selection only makes sense if one also references Cold War subnational diplomacy, which sets the conditions for a long-term political and economic connection between Arizona and Taiwan (Tubilewicz and Omond, 2021).

Housing the world’s leading semiconductor manufacturing companies, such as TSMC and UMC, the Taiwanese government also seeks to leverage the strategic position these domestic companies occupy in the technology-driven geoeconomic competition to serve its national security agenda. However, how the semiconductor industry has been integrated into the geoeconomic strategies of the Taiwanese state has been highly contested. Since the 2000s, long before the Taiwan-based leading semiconductor companies were caught in the latest US-China tech war, their business investments in China had aroused fervent political disputes within Taiwanese society (Lin, 2016). With constant attempts to re-embed its production to mainland China, the industry had been viewed as a trouble maker to Taiwan before they turned to be dubbed the ‘national industry’ or the ‘silicon shield’, serving as the critical component of Taiwan’s prosperity, security and identity in the current conjuncture.

Even with the celebration of the geostrategic importance of the semiconductor industry to Taiwan, there have been inherent contradictions between the information, communication and technology (ICT) industrial policies of the Taiwanese state, the global-oriented and networked nature of such industries, and the discursive construction of a ‘national industry’. This leads to unexpected moments, such as when the semiconductor industrialists express ambivalent attitudes towards their attributed role as ‘national capitalists’ and continue to pursue global deployment, as with TSMC’s latest investment in Korukawa, Japan. Tensions also exist among capital factions, between high-tech industries and other economic sectors competing for state resources, and over concerns about widening economic polarization due to uneven industrial development.

The complexity and contradictions demonstrated in Taiwan’s position and positioning in the global chip war reveal the convoluted ways geopolitics and geoeconomics reconfigure each other through the interweaving of territorial and networked spatialities, local and international politics, and old and new geostrategic deployment. Taiwan’s case poses an intriguing challenge for the ongoing writing of the genealogy of geoeconomics, both from critical geoeconomics and other critical scholarship.