Taiwan's president is planning another stopover in the US. China will be infuriated

Taiwan's President Tsai Ing-wen waves while registering as the ruling Democratic Progressive Party (DPP) 2020 presidential candidate at the party's headquarter in Taipei on March 21, 2019.

Sam Yeh | AFP | Getty Images

Taiwan's president is expected to transit in the U.S. on Friday for the second time this month, when she returns from visiting diplomatic allies in the Caribbean — a move that will make China very angry.

Tsai Ing-wen, the island's pro-independence leader, is due to make her second stopover in Denver on Friday.

"China opposes official exchange between the US and Taiwan. This position is firm and clear," the Chinese foreign ministry said on July 12. The U.S. should not to allow Tsai's transit and must "stop the official exchange with Taiwan," said Geng Shuang, spokesperson for the Chinese foreign ministry.

The visit comes on the heels of the U.S. State Department recently approving a $2.2 billion sale of weapons to Taiwan— a self-ruled island viewed by Beijing as a breakaway province that has no right to state-to-state ties.

The timing of both is significant and reflects a "much higher risk tolerance from the Donald Trump administration when it comes to growing U.S.-Taiwan ties, " said Kelsey Broderick, China analyst at the Eurasia Group, a risk consultancy.

The U.S. State Department sought to downplay Tsai's visit, describing it as "private and unofficial."

Earlier in July, Tsai transited through New York — another major U.S. city — when she was on her way to the Caribbean. That visit saw her meeting members of the U.S. Congress as well as representatives from Taiwan's 17 remaining diplomatic allies, and speaking at Columbia University. She also addressed a 1,000-strong crowd of supporters, according to the Taipei Times.

Her visits come at a low point in U.S.-China relations. In addition to sparring over trade, the world's two biggest economies are also at loggerheads over Taiwan.

Washington's ties with the self-ruled island are technically unofficial. But under the Taiwan Relations Act, "the United States shall provide Taiwan with arms of a defensive character."

The arms sale and Taiwan president Tsai Ing-wen's stopover trip to the United States this week are a challenge that Xi felt he needed to respond to.

Eurasia Group

The U.S. is the main supplier of arms to Taiwan, which has its own democratically elected government and will be buying tanks, missiles and other military equipment as part of the latest deal.

Beijing has never renounced the use of force against Taiwan and has been ramping up aggressive rhetoric toward the island in a renewed push for reunification, since the two territories were split amid a civil war 70 years ago.

In a speech at the start of the year, Chinese President Xi Jinping emphasized the need for peaceful "reunification" between China and Taiwan. He said the "one country, two systems" framework — with which Beijing governs Hong Kong, a Chinese special administrative region — was the best way for Taiwan.

Xi's comments triggered a strong response from Tsai, who vowed: "Taiwan absolutely will not accept 'one country, two systems.'"

Tsai's expressed defiance against that model of autonomy turned her waning popularity around and helped secure a win in her party's presidential primary.

Beijing's response

Taiwan is the most significant and sensitive issue in U.S.-China relations, the Chinese foreign ministry has previously said.

After the U.S. announced its arms deal, China issued a stern warning.

"We urge the US ... to cancel this arms sale immediately and stop military ties with Taiwan to prevent further damage to China-U.S. relations and peace and stability across the Taiwan Strait," said Geng, the spokesman for the ministry, on July 9.

Beijing also threatened to retaliate, and vowed to impose sanctions on U.S. firms selling arms to Taiwan.

"If China follows through on sanctioning the US companies involved in the arms sale, it will be the first time it has taken this kind of action," the Eurasia Group said. "In the past, China has punished Taiwan for arms sales from the US, while threatening action against the US but keeping actual penalties informal and discreet."

Beijing needs Taiwan's major semiconductor companies to continue supplying to Chinese companies.

Kelsey Broderick

Eurasia Group

The overall impact of sanctions on the U.S. corporate sector will probably be modest but "this is still a very significant action," said Broderick and her colleague, Michael Hirson.

"It shows the degree to which Taiwan is the most sensitive issue for Xi Jinping, " Eurasia Group said. "The arms sale and Taiwan president Tsai Ing-wen's stopover trip to the United States this week are a challenge that Xi felt he needed to respond to."

Importance of Taiwan

Beijing has so far withheld from harsher actions on Taiwan directly, perhaps out if fear that the move could backfire and instead, bolster support for Tsai, who is seeking a second term in January elections.

The Taiwan market has also become increasingly important to China as it suffers from the ongoing U.S.-China trade conflict, wrote Broderick in a separate note.

"Beijing needs Taiwan's major semiconductor companies to continue supplying to Chinese companies and has stepped up its offering of tax and other residential benefits to Taiwan entrepreneurs who shift operations to the mainland," she added. This is especially important since Chinese tech giant Huawei has been placed on a U.S. blacklist, a move that effectively blocks the company from doing business with U.S. companies — even though the restrictions were eventually eased.

And while Beijing desires a trade deal with Washington, it is not so critical to Xi that he is willing to bend on sensitive issues such as Taiwan's independence, said the Eurasia analysts.

"Trump's tariff hikes and especially the U.S. export ban on Huawei has heightened nationalist sentiment in China and made Beijing more skeptical that a deal will bring a lasting ebb in tensions," they added.

— Reuters and the Associated Press contributed to this report.

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