By Ben Blanchard

TAIPEI (Reuters) – U.S. House Speaker Nancy Pelosi visited Taiwan and met Taiwanese President Tsai Ing-wen in August in defiance of Chinese warnings for the trip not to take place.

Angered at what it perceived as U.S. support for Taiwan’s de facto independence – a red line for Beijing – China launched war games near the island it claims as its “sacred” territory shortly after Pelosi left.

China’s military for the first time fired missiles over Taipei, flew waves of drones over some of Taiwan’s offshore islands near the Chinese coast, sailed warships across the median line of the Taiwan Strait and surrounded the island in what Taiwan’s military said amounted to a practice “blockade.”

Military tensions had not been so high between Taiwan and China since Beijing fired missiles into waters off Taiwan’s coast ahead of the 1996 Taiwanese presidential election, as the Chinese government tried to dissuade people from voting for Lee Teng-hui who it viewed as a separatist.

That backfired and Lee handily won the election.

China likewise views Tsai as a separatist for refusing to accept Beijing’s long-standing position that China and Taiwan both belong to “one China”.

The government of Taiwan – formally the Republic of China – maintains that as the island has never been ruled by the People’s Republic of China its claims of sovereignty are void.

Tsai says only the island’s 23 million people can decide their future through democracy, and that while she wants dialogue and peace with China and will not provoke, Taiwan will defend itself if attacked.

Since Pelosi’s visit, China has continued with its military activities near Taiwan, though on a reduced scale. Taiwan meanwhile continues to bolster its defences.

WHY IT MATTERS

Any war over Taiwan, a major producer of semiconductors, has the potential to crash the global economy. It could draw the United States and its allies into direct confrontation with China’s People’s Liberation Army, the world’s largest military, which is increasingly well-equipped.

China has long said Taiwan is the most important and sensitive issue in its relations with the United States, a message Chinese President Xi Jinping reiterated to U.S. President Joe Biden when they met in Bali last month.

The United States, like most countries, has no formal diplomatic ties with Taiwan, but is bound by law to provide the island with the means to defend itself.

The United States has long stuck to a policy of “strategic ambiguity” and not making clear whether it would respond militarily to an attack on Taiwan. However, Biden said in September U.S forces would defend Taiwan in the event of a Chinese invasion, his most explicit statement on the issue.

China has never renounced the use of force to bring Taiwan under its control, which Xi reiterated at the 20th congress of the ruling Communist Party in October.

WHAT DOES IT MEAN FOR 2023?

Anti-China sentiment continues to build in the United States, and in its newly Republican-controlled House, along with support for Taiwan.

If the probable new U.S. House Speaker Kevin McCarthy follows in Pelosi’s footsteps and visits Taiwan that would trigger yet more fireworks across the Taiwan Strait and between Washington and Beijing.

Next year, both Taiwan’s main political parties will also be gearing up for presidential and parliamentary elections in early 2024.

The main opposition party the Kuomintang, or KMT, which traditionally favours close ties with China but vehemently denies being pro-Beijing, hopes it can get back into office after two terms in opposition following a strong showing at local elections in November.

Explore the Reuters round-up of news stories that dominated the year, and the outlook for 2023.

(Reporting by Ben Blanchard; Editing by Lincoln Feast.)

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