Russia’s recent invasion of Ukraine has focused investors’ minds on the Taiwan issue and the People’s Republic of China’s potential approach to it. We believe that the risk of war remains low.
The People’s Republic of China sees Taiwan as an integral part of its territory. This stance was shared by the Western allies post-WW2 and confirmed by the general global acceptance of the one-China policy over the last 40 years. Hence, it is reasonable to assume that the PRC would like at some point to reunite the governance of Taiwan under Beijing. Xi Jinping himself said in January 2019 that the political division across the Strait “cannot be passed on from generation to generation”. Some observers believe – rightly or wrongly – that the Chinese leader wants to resolve the Taiwanese issue before his rule ends.
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