LOOK FOR THOSE GAINS FROM TRADE.

China's ruling Communists would like to reclaim their "renegade province" a century after the nationalist government fled the mainland to recently liberated Formosa.  That sort of campaign is going to be more difficult in the wake of the ruling Communists abridging, in the name of ideological purity, the freedoms supposedly guaranteed to inhabitants of Hong Kong.  For the same reason, it's unlikely that the ruling party will remove the single largest obstacle to a peaceful reunion with Taiwan, which is their Mickey Mao communist system.

That's at least material for public consumption.  Privately, it has long been the case that Taiwanese investors are major owners in mainland factories.  That's true of other capitalist investors, including some whose strategic interests are at odds with the communists.  "Some major manufacturers that have had to halt operations in Sichuan include the Japanese carmaker Toyota and CATL, the Chinese lithium battery giant."  Hero water projects work out no better under portraits of Chairman Mao than they do with the endorsement of Franklin D. Roosevelt, when the rains don't come.  And letting Taiwanese capitalists run mainland sweatshops is apparently a marriage of convenience.  Much-maligned Foxconn, which has yet to build anything major in Wisconsin, did not envision hiring a highly-skilled work force, and part of that maligning involved stories of suicides in mainland factories.  Foxconn's headquarters, and its major investors, are Taiwanese.

As is the world's largest manufacture of semiconductor chips, TSMC.

The truth is, no part of the world is in a position to do without the chips that TSMC supplies. And that may be one thing that is actually protecting Taiwan from an invasion. Because the reality of an invasion would lead to a disruption to the supply of chips that would cause a global downturn in the economy.

Including chips going to those Toyota works and consumer electronics plants on the mainland.  Any hard-power move on Taiwan is likely to lead to unemployed masses on the mainland.

TSMC may make the world’s most advanced chips, but as I explained here, the machines that make those chips are produced by one company in the Netherlands (ASML) using components and expertise from many other free countries around the world. The moment China seizes Taiwan by force, TSMC’s ability to purchase those machines or even have them serviced by experts from abroad ends immediately. How long could China keep them operating? A few months? Maybe a year or two at best?

And that’s assuming Taiwan doesn’t embrace the “broken nest” approach to discouraging such an invasion. The idea behind that paper from the Army War College was that Taiwan could vow to destroy assets such as the TSMC foundry if the country were invaded, denying China any chance of profiting from the invasion technologically.

The bottom line here is that China continues to put on a good show but there’s no way for them to really win this conflict by force. They could perhaps seize the territory but they can’t seize the assets because Taiwan’s leadership in chipmaking is entirely dependent on continued cooperation with the free world.

At some level, I suspect even the party ideologues understand this. On the other hand, ideologues are people whose priors are sometimes so strong that no evidence will persuade them to revise theirs.