Category: China

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623: AN AGING GIANT: THE DEMOGRAPHIC CHALLENGE FACING CHINA

 

China’s meteoric rise from an agrarian economy to a global superpower is one of the most significant transformations in modern history. However, beneath the surface of its economic achievements lies a demographic time bomb. The world’s most populous country is now grappling with an ageing population, declining birth rates, and a shrinking workforce, threatening its economic growth and social stability. China’s demographic challenge has multifaceted dimensions.

 

Historical Context of China’s Demographic Policies. China’s historical population control measures largely shaped the current demographic trajectory. In 1979, the Chinese government introduced the one-child policy to curb population growth and alleviate resource pressure. The policy resulted in negative population growth. As recently as 2019, the consensus was that China would reach a peak population of 1.45 billion in 2031. However, to everyone’s surprise, the population peaked in 2021, an entire decade earlier, at around 1.4 billion.  While this policy successfully reduced birth rates, it also led to significant unintended consequences, including gender imbalances, accelerated ageing, and a shrinking labour force. The relaxation of the one-child policy in 2015 and its eventual replacement with a three-child policy in 2021 have so far failed to reverse these trends.

 

The Aging Population: A Looming Crisis. China’s population is ageing at an unprecedented rate. The ageing population presents numerous challenges, including a higher dependency ratio, increased healthcare and social services demand, and a shrinking tax base. In 2022, the proportion of people aged 60 and above reached 19.8% of the total population, and this figure is projected to rise to over 30% by 2050. Several factors contribute to this phenomenon:-

    • The One-Child Policy Legacy. Introduced in 1979, the one-child policy aimed to curb rapid population growth. While it succeeded in lowering birth rates, it also disrupted population dynamics. A preference for male children led to a significant gender imbalance, with millions of men unable to find partners. The policy’s long-term effects include a generation of only children burdened with supporting ageing parents and grandparents.
    • Declining Fertility Rates. Despite the relaxation of the one-child policy in 2015 and the introduction of a three-child policy in 2021, birth rates continue to fall. In 2022, the fertility rate in China dropped to 1.2, lower than that of the US and Japan and far below the replacement level of 2.1.
    • Increased Life Expectancy. Advances in healthcare and living standards have significantly extended life expectancy, which now exceeds 78 years.
    • Urbanisation. Urbanisation has altered traditional family structures and reduced the economic incentives for having multiple children. Urbanisation and changing societal norms prioritise careers and personal freedom over family expansion. Economic pressures, such as the high cost of living, housing, and education, discourage couples from having more children.

 

Implications.

China’s economic miracle was primarily driven by its “demographic dividend,” characterised by a young and abundant workforce that propelled the country’s rapid industrialisation and economic expansion. However, as China’s workforce shrinks, it faces significant economic headwinds, which will have profound financial, social, and cultural implications. The following factors highlight the consequences of China’s demographic decline and how they will shape its future.

 

Labour Shortages. Labour shortages are one of the most immediate consequences of China’s demographic shift. The country currently has a working-age population of about one billion people, but this figure will decline by approximately 100 million per decade. By 2030, China’s working-age population will decrease by over 60 million, leading to severe labour shortages in key industries, particularly manufacturing and technology. A shrinking workforce reduces overall economic productivity and innovation potential, making it increasingly difficult for China to maintain its competitive edge in global markets. As wages rise due to the declining supply of workers, businesses will seek alternative locations for production, favouring countries with younger populations such as India, Vietnam, and Indonesia. This shift may slow China’s economic growth and reduce its influence in global supply chains.

 

Dependency Rate. The increasing dependency ratio presents another significant challenge for China. The ratio of those aged 60 and above to those aged 15-59 will rise dramatically from 30 per cent to 50 per cent in the coming decade. In 2001, this ratio stood at just 15 per cent, highlighting the rapid pace of China’s demographic transformation. A higher dependency ratio means fewer working-age individuals can support the growing elderly population, increasing financial burdens on households and the state. The demographic shift will result in fewer taxpayers and contributors to social security systems, exacerbating economic pressures.

 

Rising Pension Costs. One of the most concerning financial implications of China’s ageing population is the rising cost of pensions. The country’s pension system is already underfunded, and the growing number of retirees will strain resources even further. Without substantial reforms, China could face a pension crisis, forcing the government to cut benefits, raise the retirement age, or significantly increase taxes to maintain the system’s solvency. These changes could spark social unrest, as older citizens, accustomed to state-provided benefits, may protest against reductions in financial support.

 

Reduced Savings and Investment. Additionally, an ageing population tends to save less, which could reduce the amount of capital available for investment. Historically, China’s high savings rate fuelled domestic investment and economic expansion. However, as elderly individuals rely more on their savings for daily expenses, the overall savings rate will decline, potentially leading to lower investment in infrastructure, research, and technological innovation. This shift could slow the country’s long-term economic growth and weaken its ability to compete with younger, more dynamic economies.

 

Care for the Elderly. The demographic crisis also has significant social implications, particularly regarding elder care. Traditionally, Chinese families have taken responsibility for caring for ageing relatives, but this model is becoming increasingly unsustainable. With the one-child policy leaving many families with only a single child to support two parents and potentially four grandparents, the burden of elder care is immense. This “4-2-1 problem” places enormous financial and emotional stress on younger generations, simultaneously forcing them to balance careers, childcare, and elder care. As a result, many young Chinese face declining quality of life and increased economic pressure, which may discourage them from having more prominent families, exacerbating the demographic crisis.

 

Gender Imbalance. Another major challenge is China’s gender imbalance, a lingering consequence of the one-child policy and a traditional preference for male offspring. As of 2020, there were approximately 34 million more men than women in China. This gender disparity has led to lower marriage and birth rates as many men struggle to find partners. Economic pressures and the high cost of raising children and housing have discouraged young couples from starting families. The decline in birth rates accelerates population ageing and further reduces the working-age population, creating a vicious cycle that deepens China’s demographic challenges.

 

Youth Pressure. China’s youth face mounting pressure as they are increasingly burdened with supporting their children and ageing parents. The “4-2-1 problem” intensifies this strain, as single children are responsible for caring for two parents and four grandparents, all while raising their children. The economic and psychological toll on younger generations could lead to declining mental health, reduced productivity, and lower overall life satisfaction.

 

Geopolitical Ramifications

China’s demographic decline has far-reaching geopolitical implications. As its workforce shrinks and economic growth slows, China may struggle to sustain its ambitious global projects, such as the Belt and Road Initiative (BRI). A weaker economy could limit the country’s ability to provide infrastructure investments and financial aid to developing nations, reducing its influence in regions such as Africa, Latin America, and Southeast Asia. This could create an opening for competing powers like the United States to expand their economic and diplomatic reach.

If economic pressures continue, China may adopt a more aggressive foreign policy to rally nationalist sentiment and distract from internal issues. This could increase tensions in the Taiwan Strait, the South China Sea, and its border with India.

The demographic crisis could also weaken China’s manufacturing dominance, leading to shifts in global supply chains. Countries with younger populations, such as India, Vietnam, and Indonesia, may attract investment and manufacturing jobs that previously went to China. As China’s labour force shrinks and wages rise, multinational corporations may seek alternative production hubs, further diminishing China’s economic leverage.

Additionally, with a declining young population, China may struggle to sustain its technological and scientific advancements. A robust and skilled workforce fuelled the country’s economic rise, but a shrinking talent pool could impact innovation in critical sectors such as artificial intelligence, semiconductors, and biotechnology. If China cannot maintain its technological edge, it may find itself increasingly reliant on foreign technology, undermining its goal of self-sufficiency and global leadership in high-tech industries.

 

Military Repercussions

China’s demographic decline will seriously affect its military capabilities and long-term strategic ambitions. A shrinking workforce will reduce the pool of young, physically capable recruits available for military service, potentially limiting the expansion of China’s armed forces. As fewer young people enter the workforce, the government may face challenges maintaining a large standing army while supporting an ageing population. This could lead to shifts in military doctrine, with greater reliance on technology, automation, and artificial intelligence to compensate for the declining manpower.

Moreover, an ageing population could strain the government’s ability to allocate resources toward military modernisation. As pension costs and healthcare expenditures rise, Beijing may be forced to prioritise social welfare over defence spending. This could slow the pace of military advancements, particularly in areas such as naval expansion, missile development, and aerospace technology. An older population may be less willing to support prolonged military conflicts, leading to shifts in China’s strategic calculus regarding territorial disputes and power projection.

A reduced recruitment base may also impact military innovation and operational effectiveness. Historically, military forces benefit from a young, technologically proficient population capable of adapting to new combat technologies and warfare tactics. A declining youth demographic may result in fewer high-skilled personnel entering the military, potentially limiting China’s ability to develop and deploy cutting-edge defence systems.

 

Conclusion.

China’s demographic challenge is one of the most pressing issues it faces in the 21st century. Its shrinking workforce and ageing population present significant economic, social, cultural, and geopolitical challenges. Labour shortages, a rising dependency ratio, escalating pension costs, and reduced savings will strain the economy. At the same time, the gender imbalance and elder care crisis will place immense pressure on families and young people. Geopolitically, China’s ability to project power and influence globally may weaken as economic constraints force the government to prioritise domestic concerns. China risks long-term economic stagnation, social instability, and declining geopolitical influence without adequate policy interventions, such as increased automation, higher retirement ages, improved social security systems, and incentives for larger families. The coming decades will test China’s economic model’s resilience and ability to adapt to one of the most profound demographic shifts in modern history.

 

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References and credits

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Disclaimer:

Information and data included in the blog are for educational & non-commercial purposes only and have been carefully adapted, excerpted, or edited from reliable and accurate sources. All copyrighted material belongs to respective owners and is provided only for wider dissemination.

 

References:-

  1. Liu, Yunguo, and Cai, Fang. “China’s Demographic Transition: The End of the One-Child Policy and Future Prospects.” China Economic Review, vol. 49, 2018, pp. 1-13.
  1. Wang, Feng. “The Impact of the Demographic Transition on China’s Economy.” Asian Economic Policy Review, vol. 14, no. 1, 2019, pp. 30-49.
  1. Chen, Wen. “China’s Aging Population: The Economic and Social Impacts.” China Quarterly, vol. 229, 2017, pp. 1075-1095.
  1. Lee, Ronald, and Mason, Andrew. “Population Aging and the Economic Future of China.” Journal of the Economics of Ageing, vol. 2, 2013, pp. 57-65.
  1. United Nations. World Population Prospects: The 2019 Revision. United Nations, Department of Economic and Social Affairs, Population Division.
  1. National Bureau of Statistics of China. China Statistical Yearbook 2023.

7, OECD. China’s Population Ageing: Challenges and Opportunities. OECD, 2021. 

  1. China Development Research Foundation. The Aging Society in China: Trends and Policy Challenges. 2018.
  1. Huang, Yasheng. “The Demographic Challenges of China’s Economic Transformation.” Asia & the Pacific Policy Studies, vol. 6, no. 2, 2019, pp. 222-240.
  1. Duan, Yufei, and Zheng, Yu. “China’s Aging Population and Healthcare: Implications for the Future.” The Lancet Global Health, vol. 7, no. 10, 2022, pp. e1372-e1380.
  1. Cai, Fang. The China Population and Labour Yearbook, Volume 1: Population and Labour. 2011.
  1. Feng, Wang. China’s Demographic Transition and the Family: The Impact of the One-Child Policy. 2021.
  1. Vogel, Ezra F. China’s Hidden Children: Abortion, Adoption, and the One-Child Policy. 2013.
  1. Zhang, Xiaobo, and Li, Hongbin. China’s Economic Growth and Demographic Transition. 2019.
  1. World Bank. “China’s Demographic Transition and Its Economic Implications.” World Bank Group Report, 2020.
  1. McKinsey & Company. “China’s Looming Demographic Crisis.” McKinsey & Company Insights, 2020.
  1. The Economist. “China’s Aging Crisis: How to Manage the Demographic Transition.” The Economist, 2022.
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618: INPUTS TO QUESTIONNAIRE ON CHINESE DAMS

 

1a: What’s the historical legacy of the trans-border Rivers between India and China?

    • The trans-border rivers between India and China, most notably the Brahmaputra (Yarlung Tsangpo in Tibet), the Indus, and the Sutlej, have long played a crucial role in shaping the historical and contemporary relationship between the two countries.
    • Their legacy is deeply intertwined with colonial-era geopolitics, water resource competition, and the evolving strategic tensions between India and China.
    • The Brahmaputra, Indus, and Sutlej rivers originate in Tibet, historically having fluid sovereignty claims before its integration into China in 1950.
    • British India recognised Tibet as an autonomous region, but the Chinese annexation of Tibet significantly altered the strategic importance of these rivers.
    • The British Raj was concerned about Chinese influence over the water sources and actively sought treaties and diplomatic manoeuvres (e.g., the 1914 Simla Accord, which China never fully recognised) to define border arrangements.
    • Despite British concerns, pre-1947 did not see active contestation over river resources since China lacked the technological and economic capability to alter water flows significantly.
    • After India’s independence and China’s annexation of Tibet (1950), both countries engaged in limited cooperation on water sharing.
    • However, the deterioration of relations in the 1950s, culminating in the 1962 Sino-Indian War, disrupted diplomatic communication on river management.
    • Unlike India and Pakistan (who signed the Indus Waters Treaty in 1960), China never agreed to a formal water-sharing agreement with India.

 

  •  1b: How does this legacy play in contemporary relations?
    • The legacy of these rivers plays a significant role in modern geo-strategic, economic, and environmental disputes between India and China.
    • China controls the headwaters of major rivers flowing into India but has no legally binding treaty on water sharing with India.
    • This gives China an asymmetrical advantage over India, raising fears of diversifying and strategically manipulating river flows.
    • China has constructed multiple dams on the Yarlung Tsangpo (Brahmaputra), including the Zangmu Dam, and plans a mega-dam at the Great Bend near Arunachal Pradesh.
    • India fears that Chinese upstream dams could reduce water flow, especially during dry seasons, affecting agriculture, livelihoods, and ecosystems in Assam and Arunachal Pradesh.
    • China officially states that these projects are run-of-the-river and do not significantly alter flows, but India remains wary.
    • In the event of a military conflict, India fears that China could weaponise water by artificially creating floods or droughts.
    • China has, at times, withheld hydrological data from India during monsoon seasons (e.g., in 2017 during the Doklam standoff), exacerbating flood risks in the northeastern states.
    • Existing mechanisms, such as the annual hydrological data-sharing agreement, are limited in scope and do not address more significant concerns over dam-building and strategic manipulation of river flows.
    • The historical legacy of colonial geopolitics and the asymmetry of water control continue to shape contemporary Sino-Indian relations, making trans-border rivers a critical flashpoint in their evolving rivalry.

 

2: How do dams today define and complicate the disputed border management between India and China?

      • Dams have become critical in the complex and disputed border management between India and China, influencing water security and strategic, military, and geopolitical dynamics.
      • These dam projects, primarily on trans-border rivers such as the Brahmaputra (Yarlung Tsangpo) and the Sutlej, intersect with the broader territorial disputes along the Line of Actual Control (LAC), exacerbating tensions.
      • Dams along the Sino-Indian border are not just hydropower and irrigation projects; they serve as strategic assets with potential military and geopolitical consequences.
      • China controls the headwaters of major rivers flowing into India, including the Brahmaputra and the Sutlej. This upstream control allows Beijing to dictate the volume and timing of water flow.
      • China’s ability to divert, manipulate, or withhold water during crises or conflicts gives it a non-conventional weapon against India.
      • During the 2017 Doklam standoff, China withheld hydrological data on the Brahmaputra, flooding Assam and reinforcing Indian fears of water weaponisation.
      • Any large-scale water diversion could create flashpoints for diplomatic and military escalation.
      • Dams near the disputed borders have also created security risks and military vulnerabilities. If targeted in a military conflict, these could lead to environmental and humanitarian disasters.
      • Dams are no longer economic or energy infrastructure; they are now geo-strategic tools shaping the border dispute.

 

3: Are there any particular dams by China that threaten India?

      • Several Chinese dam projects on trans-border rivers, particularly the Brahmaputra (Yarlung Tsangpo) and Sutlej rivers, pose potential threats to India.
      • The Great Bend Mega-Dam, a massive hydropower project, is planned at the Great Bend of the Yarlung Tsangpo, near where the river turns into the Brahmaputra and enters India. This project could be one of the largest hydropower plants in the world, with a capacity of 60 GW, nearly three times the size of the Three Gorges Dam. India fears the dam could reduce water flow into Arunachal Pradesh, impacting agriculture and drinking water supply. China could suddenly release excess water, leading to catastrophic floods in Assam and Arunachal Pradesh. The project is close to the disputed Arunachal Pradesh border, reinforcing China’s territorial claims over the region. India has raised strong diplomatic objections, but China has refused to provide assurances that it will not alter natural water flows.
      • China’s Zangmu Dam (510 MW), commissioned in 2015, is the first large-scale hydropower project on the Yarlung Tsangpo. It is part of a cascade of six dams, including Jiexu, Jiacha, and Dagu, which China is building upstream of Arunachal Pradesh. While officially a run-of-the-river dam, multiple reservoirs upstream could be used to control water release. China could store water in the dam during monsoons and release it suddenly, causing flash floods downstream in India.
      • Dagu, Jiexu, and Jiacha Dams. These three dams, built in succession along the Brahmaputra’s upper reaches, further increase China’s capacity to regulate and potentially divert the river’s flow before reaching India. The combined effect of multiple dams allows Beijing to control water release precisely, creating a hydrological choke point for India. These projects could permanently reduce water flow into India, especially in dry seasons.
      • Lalho Dam, completed in 2019, is built on a major tributary of the Yarlung Tsangpo, holding back over 295 million cubic meters of water. While it is not on the main course of the Brahmaputra, its operation reduces tributary inflow into the river. Less water reaching the Brahmaputra in Tibet means lower flow into Arunachal Pradesh and Assam. This dam is part of China’s broader plan to harness Tibetan water resources, raising fears of future large-scale diversions.
      • Proposed North-to-South Water Diversion Project (Long-Term Threat). China has long debated a massive water diversion project to transfer water from Tibet to its arid northern regions. If implemented, this project could significantly alter the flow of the Brahmaputra before it even reaches India.
      • China is also building smaller-scale hydropower projects on the Sutlej River (which flows from Tibet into Himachal Pradesh). These dams have not been widely publicised, but they could potentially affect seasonal water flow into India’s northern regions.

4 Are any specific Indian states more threatened by the Chinese dams on the border?

      • Several Indian states are particularly vulnerable to the impact of Chinese dams on trans-border rivers, with Arunachal Pradesh and Assam facing the highest risks.
      • Arunachal Pradesh is most directly threatened. It shares a long border with Tibet, and the Brahmaputra (Yarlung Tsangpo) enters India here. China’s Great Bend Mega-Dam and Zangmu Dam could alter or reduce water flow into Arunachal Pradesh. Sudden water releases from Chinese dams could flood Indian villages, disrupt agriculture, and damage infrastructure.
      • Assam faces severe economic and ecological Threats. The Brahmaputra enters Assam from Arunachal Pradesh and is vital to the state’s agriculture, fishing industry, and transportation. Assam has a history of devastating floods, and any Chinese dam activity upstream could worsen the situation. Assam faces catastrophic flooding if China releases excess water (as suspected in the 2000 and 2017 floods). If China holds back water, it could impact agriculture, drinking water, and hydropower production. The Brahmaputra, including the Majuli River Island and Kaziranga National Park, supports a rich ecosystem. Flow changes could harm biodiversity and fisheries. Reduced or erratic water flow threatens rice farming and fishing-dependent communities. Infrastructure Damage: Increased flood risks make roads, bridges, and urban areas more vulnerable.
      • Sikkim faces moderate risk, as it depends on tributaries of the Brahmaputra, including the Teesta River, which could be affected by China’s upstream water management. Though not directly on the Brahmaputra, Chinese water diversion projects could impact Sikkim’s river networks. If China diverts water from Tibetan rivers feeding into Sikkim, it could impact the Teesta and Rangit rivers. Many of Sikkim’s rivers are fed by Himalayan glaciers, which are melting due to climate change. Chinese dams could exacerbate water shortages in dry seasons.  Sikkim has multiple hydropower projects on the Teesta, which could suffer from erratic water flow.
      • Himachal Pradesh faces a more minor, indirect risk because the Sutlej River, which originates in Tibet, flows into it. Chinese dam-building on the upper Sutlej could reduce water flow into the state. India has reported fluctuations in the Sutlej’s water levels, which could be linked to upstream Chinese activity. Reduced Sutlej flow could affect irrigation and hydropower projects. Farmers and hydropower plants depend on steady river flow, which could be disrupted. Unlike Assam or Arunachal Pradesh, Himachal Pradesh faces a long-term risk rather than an immediate crisis.
      • Ladakh faces a lesser-known, potentially serious threat, as the Indus River, which originates in Tibet, flows into Ladakh. Chinese upstream projects could impact the Indus water flow, affecting Ladakh’s water availability. China has previously explored diverting Tibetan rivers to supply its drier northern provinces. Ladakh is an arid region, and any reduction in Indus water could harm local farming.
      • Arunachal Pradesh and Assam are the most threatened, with risks of floods, water shortages, and geopolitical disputes.
      • Sikkim and Himachal Pradesh face indirect threats, mainly related to water flow disruptions.
      • Ladakh could become a flashpoint, especially if China diverts the Indus tributaries.

5: Is ‘Dam for a dam’ the only way out between India and China?

      • A “dam for a dam” strategy, where India builds its dams to counter Chinese upstream projects, is not the only way to address the water security threats posed by China’s control over trans-border Rivers. While building dams can provide some leverage, it is neither a long-term solution nor a risk-free strategy.
      • Excessive dam-building could worsen floods by altering natural river flow. The Northeast is a seismically active zone, and excessive dam construction increases the risk of earthquakes and landslides.

6: What are your recommendations for India to counter China’s dam Aggression?

      • India must adopt a multi-pronged approach that includes diplomacy, technological advancements, international cooperation, and legal mechanisms.
      • Diplomatic engagement should try to reach a water-sharing agreement. India must push for bilateral negotiations on water flow guarantees, especially for the Brahmaputra. A possible framework could include year-round data sharing on water flows, a dispute resolution mechanism, and prohibitions on unilateral water diversion projects.
      • India should resort to technological and intelligence-based monitoring, using satellites, drones, and AI-based hydrological models to track Chinese dam activity in Tibet. Early warning systems could help predict and mitigate sudden water releases or drought-like conditions. Sensor networks along Indian rivers could provide real-time data on water levels, quality, and possible upstream activity.
      • India must work with Bangladesh, Bhutan, and Nepal, which depend on trans-border rivers. A joint water-sharing agreement with downstream countries can increase diplomatic pressure on China. India can engage global institutions like the UN Water Conference and Indo-Pacific Alliances (QUAD) to raise concerns over China’s water militarisation.
      • India could take the “China Dam Issue” to international forums such as the International Court of Justice (ICJ) (though China is unlikely to comply), UNESCO, and the Mekong River Commission (as precedents for cross-border river management). India can also push for a South Asian Water Treaty, similar to the Mekong region’s agreements.
      • Developing India’s water infrastructure, such as innovative water storage projects that can absorb excess water from floods and small-scale hydropower projects that reduce risk while ensuring water security.
      • Instead of relying on a reactionary “dam for a dam” approach, India should pursue a balanced mix of diplomacy, surveillance, legal pressure, and selective dam-building.
      • While building some dams is necessary, it should be part of a broader water security strategy.

 

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617: INPUTS FOR QUESTIONNAIRE ON INDIA-TAIWAN RELATIONS

 

1: How important are semiconductors between the India-Taiwan bilateral ties?

    • Taiwan dominates semiconductor manufacturing, and India aspires to initially become self-reliant and a semiconductor hub in the long run.
    • Semiconductor cooperation can be a key element in India-Taiwan’s bilateral relations.
    • Taiwan is home to TSMC (Taiwan Semiconductor Manufacturing Company), the world’s leading contract chip manufacturer, and other key semiconductor firms like UMC and MediaTek.
    • Taiwan accounts for over 60% of global semiconductor production, making it indispensable in the global semiconductor supply chain.
    • India strives to become a major semiconductor manufacturing and design player with government initiatives like the Semiconductor Mission and incentives under the PLI (Production-Linked Incentive) scheme.
    • However, India lacks advanced fabrication facilities and relies on imports for its semiconductor needs.
    • Taiwanese firms, including TSMC and UMC, have been in discussions about establishing semiconductor plants in India.
    • India and Taiwan have explored partnerships to set up semiconductor packaging and testing facilities.
    • The most prominent initiative in the past was Foxconn’s joint venture with Vedanta to set up a semiconductor fab in India. However, this project faced setbacks, and Foxconn later withdrew.
    • Taiwan’s MediaTek has R&D operations in India, and more companies are eyeing design and software collaborations.
    • Taiwan faces increasing pressure from China, while India has border tensions with Beijing. Strengthening semiconductor ties helps both nations reduce reliance on China.
    • Amid U.S.-China tech tensions, India is a potential alternative for Taiwan to de-risk its semiconductor supply chains. However, due to pressure from China, Taiwan’s firms may hesitate to invest heavily in India.
    • Semiconductor cooperation offers mutual benefits in economic growth, technological advancement, and strategic realignment.

 

2a: How’s the development of an AI-technology innovation ecosystem linked to semiconductors?

    • This relationship between AI and Semiconductors is symbiotic.
    • Developing an AI-technology innovation ecosystem depends on robust, specialised chips for computation. On the other hand, advances in AI drive semiconductor innovation.
    • AI is revolutionising the semiconductor industry.
    • AI workloads like machine learning (ML), deep learning, and generative AI require enormous computational capacity, which is powered by advanced semiconductor technologies like Graphics Processing Units (GPUs).
    • Application-Specific Integrated Circuits (ASICs) and custom chips (e.g., Google’s TPUs) are optimised for AI workloads, enhancing performance and efficiency.
    • Future AI applications would demand breakthroughs in semiconductor design (Neuromorphic & Quantum Chips), mimicking brain-like processing or leveraging quantum computing.
    • AI-enabled devices (smartphones, IoT, autonomous systems) require power-efficient chips for real-time AI inference.
    • A thriving AI ecosystem requires cutting-edge semiconductor technology, while AI drives semiconductor innovations.
    • Countries investing in AI are also focusing on semiconductor self-sufficiency.
    • To stay competitive, nations aiming to lead in AI must also invest in advanced semiconductor capabilities.

 

2b How’s Taiwan important for Indian AI?

    • Taiwan is Important for Indian AI development, and it can play a critical role in India’s AI ambitions due to its dominance in semiconductor manufacturing, expertise in AI hardware, and potential for technological collaboration.
    • Taiwan is home to TSMC, MediaTek, and other key players; India’s AI growth is closely linked to its semiconductor partnerships with Taiwan.
    • Taiwan’s MediaTek supplies AI-driven smartphone processors, the key to India’s mobile AI market.
    • Taiwan’s semiconductor firms could help India build chip fabrication and packaging infrastructure, supporting India’s AI industry.
    • Taiwan’s expertise in embedded AI, 5G chips, and smart sensors can enhance India’s AI-driven IoT industry.
    • Taiwan has top research institutions (e.g., Academia Sinica, ITRI) specialising in AI-chip co-development, with which India can collaborate.
    • India’s AI Software Strength – India excels in AI/ML software development, while Taiwan specialises in hardware. This complementary relationship can lead to co-innovation in AI applications.
    • Taiwan and India can expand cooperation in AI-powered automation, fintech, and healthcare solutions.
    • India relies on Taiwan for high-end GPUs and AI chips, which are essential for AI supercomputing and cloud AI services.
    • Taiwan is vital for India’s AI ecosystem due to its semiconductor leadership, AI hardware expertise, and potential investment in India’s chip industry.

 

2c  Is ‘AI bias’ one sphere in which India and Taiwan should collaborate? I think AI bias will be used in narrative warfare by China. So, it sounds logical that India will look towards Taiwan for it. That’s why this question.

    • Yes, AI bias is a critical area where India and Taiwan should collaborate, especially considering how China could leverage AI for narrative warfare, disinformation, and ideological control.
    • Given Taiwan’s experience in countering Chinese propaganda and cognitive warfare and India’s strength in AI software development, a partnership between the two could be mutually beneficial.
    • AI models learn from data, and if this data is manipulated, it can shape narratives in ways that serve geopolitical agendas. China has a history of AI-enabled information control.
    • Chinese AI firms develop models that filter, distort, or suppress certain narratives (e.g., Tiananmen Square and Uyghur issues).
    • AI-driven bot networks and deepfakes help China push state-controlled narratives globally.
    • AI-powered language models can spread biased historical or political perspectives on global platforms.
    • Given these threats, India and Taiwan must proactively develop AI systems that resist bias and manipulation to safeguard their information sovereignty.
    • India (with its AI research institutions like IITs, IIITs, and NITI Aayog) and Taiwan (via Academia Sinica, ITRI) can create joint frameworks for identifying and countering AI bias.
    • Instead of relying on U.S. or China-dominated AI models (GPT, ERNIE), India and Taiwan can work on regional AI models trained on neutral or diverse datasets.
    • Taiwan is already a leader in countering Chinese misinformation; India can integrate these capabilities into its AI-driven news verification systems.
    • India and Taiwan should limit dependency on Chinese AI tools, chips, and cloud services to avoid hidden biases and surveillance risks.
    • China can manipulate AI models. India and Taiwan must ensure independent, bias-resistant AI tools.
    • Both countries face Chinese psy-ops through TikTok clones, AI-driven chatbots, and misinformation on global platforms. Collaboration on AI-driven digital hygiene strategies is essential.
    • AI bias is not just a technical issue but a geopolitical weapon. Given China’s advancements in AI-enabled narrative control, India and Taiwan must collaborate to develop AI models that are transparent, unbiased, and resilient to manipulation.

 

3: Do you think Taiwan will determine the QUAD’s Indo-Pacific policy? Do you think Taiwan will be included in QUAD Plus?

    • Taiwan is strategically important for the Indo-Pacific.
    • Its inclusion in QUAD+ or any official QUAD policy is highly sensitive due to geopolitical constraints, primarily the One-China policy followed by QUAD members.
    • However, Taiwan is already a de facto part of the Indo-Pacific security architecture, and its role may increase informally without direct QUAD membership.
    • Taiwan plays a key role in significant aspects of the Indo-Pacific strategy.
    • India, Japan, and Australia have quietly increased economic, diplomatic, and military engagement with Taiwan.
    • The U.S. openly supports Taiwan’s defence and maintains strong military ties with Taiwan (e.g., arms sales, intelligence-sharing).
    • Joint statements focus on ‘peace and stability in the Taiwan Strait’, a veiled warning to China.
    • This suggests Taiwan is a silent but critical factor in QUAD’s Indo-Pacific strategy.
    • The idea of QUAD+ (expanded QUAD partnerships) includes countries like South Korea, Vietnam, the Philippines, and European allies. Taiwan’s inclusion is politically tricky but possible in indirect ways.
    • QUAD could integrate Taiwan into its semiconductor, AI, and cyber initiatives without direct military ties.
    • Taiwan is already working with the U.S. and Japan on cyber defence against China.
    • QUAD’s Indo-Pacific Economic Framework (IPEF) could involve Taiwan in trade and investment deals.
    • Taiwan’s inclusion could provoke Chinese military aggression, making regional stability harder to maintain.
    • India’s stance on Taiwan is cautious but evolving, with no diplomatic recognition (it follows the One-China policy but doesn’t reaffirm it actively), expanding economic & tech ties, and a measured stance on security issues (India doesn’t directly engage on Taiwan’s defence but is watching U.S.-China tensions closely).
    • Taiwan will likely play a more significant role in QUAD’s Indo-Pacific policy, but formal membership in QUAD+ is unlikely in the near future due to China’s geopolitical sensitivities.

 

4. Do you think,  that Taiwanese TSMC’s $100 billion investment in the US has any lessons for India-Taiwan bilateral ties?

Taiwan Semiconductor Manufacturing Company’s (TSMC) $100 billion investment in the U.S. offers several lessons for India-Taiwan bilateral ties, particularly in the semiconductor sector.

TSMC’s investment in the U.S. is not merely a business move but a strategic decision driven by geopolitical concerns, primarily supply chain resilience and U.S.-China tensions. Similarly, India must recognise the strategic value of deepening semiconductor cooperation with Taiwan, not just as an economic initiative but as a crucial aspect of national security and self-reliance (Atmanirbhar Bharat).

Taiwan seeks to diversify its semiconductor production due to concerns about a potential Chinese invasion. The U.S. has emerged as one alternative, and India could position itself as another. New Delhi can present itself as a stable and growing economy with skilled labour and a commitment to semiconductor self-sufficiency.

The U.S. successfully attracted TSMC by offering massive incentives under the CHIPS Act, including subsidies, tax breaks, and infrastructure support. Under its Semiconductor Mission, India is offering similar incentives, but the challenge is ensuring a competitive ecosystem, covering land acquisition, power supply, and water availability (all crucial for fabs). If India wants Taiwanese firms like TSMC or UMC to invest, it must streamline regulatory processes and enhance the ease of doing business.

 

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