Chapter 6: Shared Roots, Divergent Paths—The Two Sides of the Strait in U.S.–China Rivalry
“Brothers may quarrel within their walls, yet stand together against insult from outside.”
— The Book of Songs, “The Cherry Tree”
In 1949, the two sides of the Taiwan Strait came under separate governments. A mainland emerged from civil war, while an island took a different course. More than 70 years later, great-power competition again dominates the world, and these two societies with shared roots and divergent paths once more stand at the intersection of geopolitical order.
This time, however, the question extends beyond who unifies whom. On the board of U.S.–China rivalry, who pursues a course of their own—and who is treated as a piece?
1. A historical fork: state-building on one side, transformation on the other
After 1949, the People’s Republic of China was established on the mainland. It adopted a planned economy, entered the Korean War and experienced upheavals including the Cultural Revolution. In Taiwan, the government that had retreated to the island maintained authoritarian rule, then pursued industrial development and modernization under Chiang Ching-kuo.
In 1971, UN General Assembly Resolution 2758 changed the arrangements for China’s representation at the United Nations. In 1979, Washington and Beijing established diplomatic relations. These were separate events. Mainland reforms and opening began around 1978, further differentiating the two sides’ external environments. This period marked a critical intersection in their trajectories.
• The mainland industrialized by exchanging market access for technology and labor for capital.
• Taiwan achieved rapid growth through export-oriented development and cooperation with the United States and Japan, becoming one of the Four Asian Tigers.
By 2000, the mainland’s total economy was substantially larger than Taiwan’s, while Taiwan retained advantages in income per person and some manufacturing fields. Aggregate output, per-capita measures and sectoral capabilities are different comparisons. Over the next two decades, the mainland expanded dramatically, while Taiwan increasingly faced structural concerns over dependence on advanced industries and hollowing out elsewhere.
2. Shifting weight: contrasting economic and national capabilities
For a consistent comparison of military spending in 2023, SIPRI estimated approximately US$296 billion for mainland China and US$16.6 billion for Taiwan. This demonstrates a resource gap, not a battlefield outcome. Geography, training, equipment, mobilization and external intervention all affect actual capability. Total economic size likewise cannot substitute for living standards or industry-specific competitiveness.
Taiwan remains strong in selected advanced sectors, especially semiconductors, but its broader national capabilities increasingly sit outside the central circles reshaping regional order.
The mainland has expanded its influence through the Belt and Road Initiative, cooperation with Russia and internationalization of the renminbi, taking on a dual role as a near-superpower economically and a competitor in institutional arrangements.
In this framing, the mainland has become a player, while Taiwan remains on the board, waiting for others’ moves.
3. Institutional evolution: shaping an order or being enclosed by one
Over the past two decades, mainland China has developed its institutional influence:
• Through the Shanghai Cooperation Organisation, BRICS and the Asian Infrastructure Investment Bank.
• By promoting a “community with a shared future for humanity” as an alternative to Western democratic narratives.
• By building strategic technological infrastructure, including BeiDou and Huawei.
Taiwan, meanwhile, has been more constrained by short-term contests within electoral cycles, struggling to formulate durable national strategy. Even with exceptional semiconductor capabilities, it lacks a sufficiently developed framework for technological sovereignty and is often constrained by international market logic.
Taiwan has also become more dependent on America’s Indo-Pacific strategy without formally joining a corresponding security arrangement. It remains at the edge of strategic ambiguity, in an uncomfortable position of cooperation without equivalent control over the framework.
4. Relations with America: strategic flexibility versus a one-sided bet
As U.S.–China rivalry intensifies, the two sides’ approaches to Washington diverge:
• Mainland China combines competition and cooperation, retaining negotiating room in areas such as AI, climate and finance.
• Taiwan places an increasingly comprehensive bet on the United States, hoping closer alignment will bring international standing and security commitments.
Yet the reality is unsettling:
• Washington and Taipei lack diplomatic relations. Taiwan operates a representative office in the United States. Arms sales have increased, but strategic ambiguity remains.
• U.S. statements have repeatedly required clarification—for example, after President Biden said America would help defend Taiwan if attacked, the White House stated that policy had not changed.
Taiwan aligns with almost every major U.S. initiative, yet lacks comparable institutional integration and security commitments to those found in America’s relationships with Japan, South Korea or, in a different form, Singapore.
5. Taiwanese business investment and cultural ties: division alongside interdependence
Despite political tensions, economic and cultural connections remain close:
• Investment by Taiwanese businesses in the mainland must distinguish cumulative investment, annual approvals and realized flows. A cumulative total above US$200 billion cannot be presented as investment in 2023 alone. Supply-chain integration requires examining trade, production and corporate locations together.
• Taiwanese film, television, games and publishing retain mainland audiences. Works such as Gold Leaf, Seqalu and Detention have followers among culturally engaged viewers.
• Language, food, customs and literature continue to connect the two societies.
This is practical interdependence alongside institutional separation. The combination of division and entanglement remains a key variable in their linked futures.
6. Psychological contrasts: mainland confidence and Taiwanese anxiety
Collective imaginations on the two sides are also diverging:
• On the mainland, stronger national identification and nationalism often frame Taiwan through a sense of historical justice.
• In Taiwan, divided political identities and growing aversion to war among young people create anxiety about institutional futures.
During crises, these differences can intensify miscalculation and emotional polarization. Nancy Pelosi’s visit and military exercises around Taiwan, for example, sharpened opposing narratives and further fractured consensus.
Conclusion: choices remain when the trajectories converge
Shared roots do not require a shared destiny, and divergent paths do not make confrontation inevitable. But if one side becomes an institutional architect while the other drifts within others’ arrangements, the gap extends beyond economics and defense to the capacity to determine a society’s own future.
Taiwan cannot remain only an observer, nor should it merely place bets.
When the trajectories draw closer again, can Taiwan propose rules of its own rather than simply choosing a great-power patron? Can it establish a substantive presence through culture, institutions and technology? That is the real question after decades of shared roots and different paths.