China may never “reunify” with Taiwan now that the central government in Beijing has tightened its control over Hong Kong, one strategist said on Monday.
“In a sense, the big price that China’s paying for Hong Kong is actually Taiwan,” David Roche, president and global strategist at consultancy Independent Strategy, told CNBC’s “Squawk Box Asia.”
China claims Taiwan as part of its territory and sees the democratic self-ruled island as a runaway province.
The Chinese Communist Party has never governed the island, but has sought to push Taiwan to accept Beijing’s rule under a “one country, two systems” framework.
Hong Kong is a former British colony now governed by China under a “one country, two systems” principle, which grants the Chinese territory a largely separate economic and legal system, and allows those living there limited election rights.
Large-scale pro-democracy protests — which sometimes turned violent — engulfed Hong Kong for much of last year. That partly led China to implement a national security law in Hong Kong, which raised concerns among the city’s opposition politicians and activists
Roche said those developments in Hong Kong could push Taiwan further away from China.
“What has happened in Hong Kong has lost Taiwan for China forever,” he said.
Even though China has never renounced the use of military force to bring Taiwan under its rule, Roche said he doubts Beijing would go down that route. That’s because China risks worsening ties with the U.S. if it takes Taiwan by force, said Roche, who likened current relations between the world’s two largest economies to a cold war.
U.S. and China relations have deteriorated in recent months, with both sides clashing over a wide range of issues including the origin of the coronavirus, Hong Kong’s autonomy and national security concerns over Chinese tech companies.
Taiwan has also remained a contentious issue in bilateral ties between the two countries. Washington does not have formal diplomatic relations with Taipei but is bound by law to provide the island with the means to defend itself.
“Despite the non-existence of a formal treaty between the U.S. and Taiwan for mutual defense – or defense of Taiwan by America – in reality, if there was any such move by China militarily against Taiwan, the U.S. would most definitely act,” said Roche.
That would move U.S.-China relations “from cold war to hot war,” he said.