Why has China been so aggressive about US House Speaker Nancy Pelosi’s (D-Calif.) visit to Taiwan? Given that the island nation is usually considered small and inconsequential the minds of most Americans, many are probably scratching their heads about why China is almost threatening war over this visit. While Taiwan is rarely on the minds of most North Carolinians, Taiwan does have one critically important export: semiconductors.

From cars to iPhones, computers and so much more, the United States essentially runs on semiconductors—and the world’s biggest developer of semiconductors is Taiwan. Whoever controls Taiwan could have considerable influence over the rest of the world.

Given that Taiwan operates mostly as an independent nation, with its own government and military, it should be able to mostly create and manage its own domestic and foreign policy, but it’s not that simple.

Taiwan is technically called the Republic of China, not to be confused with mainland China’s the People’s Republic of China. In 1949, about 1.2 million people from China relocated to Taiwan during a civil war. Needless to say, the communists under Mao Zedong took control of the mainland but the island nation remained independent.

The problem is that China wants Taiwan back, under what it calls the “One China” policy, and the world has remained in a rather strange detente ever since. The West placates China by not officially recognizing Taiwan, while simultaneously arming it and helping it maintain its status at the world’s 22nd-largest economy.

What makes Taiwan especially critical to the international markets is its production of semiconductors, which makes so much of the advanced technology in the world possible. If China was able to absorb Taiwan, like it has done with Hong Kong, it would be devastating for the United States and most of the rest of the world.  

As The Atlantic explains: “Despite its limited international presence it is difficult to overstate Taiwan’s strategic importance to both the United States and an increasingly assertive China. The island’s location, economy, and security are all essential to American interests, and if Taiwan were to become part of China, as Beijing has insisted it must, China would instantly become a Pacific power, control some of the world’s most cutting-edge technologies, and have the ability to choke off oil shipments to Japan and South Korea—leverage it could use to demand the closure of U.S. military bases in both countries. In effect, Beijing would likely be able to achieve its goal of forcing the U.S. out of Asia.”

As Speaker of the House, Pelosi is the highest-level US official to visit the country since Newt Gingerich 25 years ago. Needless to say, the visit has sparked immense backlash from Beijing. 

In a propaganda video show by the People’s Liberation Army’s Eastern Theater, it urged troops to “stand by in battle formation, be ready to fight upon command, bury all incoming enemies.”

Chinese foreign ministry spokesperson Zhoa Lijian reiterated similar threats, stating that “there will be serious consequences if she insists on making the visit,” though he was unclear what he meant.

He also said, “We are fully prepared for any eventuality. The People’s Liberation Army [PLA] will never sit by idly. China will take strong and resolute measures to safeguard its sovereignty and territorial integrity.”

The visit, which is expected for Tuesday and has all but been confirmed by US government officials, comes at a time of considerable instability for China and it’s defacto dictator Xi Jinping, who is currently seeking another term at the 20th National Congress of the Communist Party. The country is also heading into another economic slump and is still struggling with its “zero-Covid” policy.

For most North Carolinians, these tensions seem like a world away and completely removed from life here in the Tar Heel State—but likely the phone, computer or smart pad you’re reading this article on was developed using a semiconductor from Taiwan. Given the interconnectedness of the markets, what happens abroad eventually comes home, and China has becoming increasingly aggressive on the international stage, especially when it comes to Taiwan. 

And if the Chinese government were to gain control of the island nation, the world’s economy would change overnight. No longer able to gain access to semiconductors easily, the already stagnating economy here in the US would grind to a halt. 

That’s why it’s time for the United States to start developing its own semiconductor production facilities, and North Carolina is on the front lines. Potential deals for facilities could be worth northwards of $30 billion and create as many as 10,000 jobs, in addition to protecting the West from Chinese aggression. At least one deal has already been announced, with an unnamed manufacturer on board to create 1,800 jobs and invest millions more in the state.

To learn more about how North Carolina incentivizes companies to invest in the state, check out this article here.