China Insider | Taiwan’s Recall Campaign Movement, US-China Tariffs, and Apple shifts iPhone production to India
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Welcome to China Insider, a podcast from the Hudson Institute's China Center. I'm Miles Yu, Senior Fellow and Director of the China Center. Join me each week for our analysis of the major events concerning China, China threat, and their implications to the U.S. and beyond. ♪

It's Tuesday, April 29th, and we have three topics this week. First, we discuss the ongoing recall movement in Taiwan and the implications for Taiwan's KMT party and cross-strait relations. Second, we revisit the ongoing tariff war between the U.S. and China and whether China's latest response may have been a play too far. Lastly, we look into Apple's announcement to move iPhone production to India and what this could mean for one of China's largest partners for manufacturing. Miles, great to be with you again this week.

Nice to be with you again, Colin. So we start things off this week with the latest in the recall movement and developments in Taiwan's government. Since a little over a month ago on March 10th, recall campaigns emerged against 34 of 39 KMT lawmakers under Taiwan's Public Officials Election and Recall Act.

Discussions over recalls first began following Taiwan's 2024 election cycle, which saw the DPP retain control of the presidency, but lose the majority of the legislative UN, now facing a KMT-TPP coalition opposition. Miles, could you explain the origin of this recall campaign and bring us up to speed with what's happened since?

Yeah, this is actually pretty amazing happening in Taiwan. It's called the Great Record Campaign, Dabamian. Funny thing is, it's actually a huge political earthquake shaking Taiwan's politics. Yet there's little report in Western media

because everybody's focused on China, the big one. But Taiwan is also a very important part of the whole big picture. So the impetus at origin of the Great Recall Campaign is a little bit complicated, but mostly it's a grassroots movement in response to the small majority in the Legislative Yuan, the Taiwanese parliament.

which is basically composed of KMT, the main opposition party, and the tiny but very crucial like king-making party called the TPP, the Taiwan People's Party. So those were main...

opposition parties, they form a coalition in the parliament, even though very small margin, but they have caused havoc to the Taiwanese political system. That is, they are determined

to paralyze the incumbent President Lai Ching-du's administration. So first of all, in February, they proposed this drastic cut on the budget proposal. For defense, for example, the crucial part of the Taiwanese survival was cut by over 30%. So that led to the popular suspicion of the KMT-TPP coalition's collusion

with the Taiwan's external hostile force, that is China. So because the rhetoric, the obstructionism carried out by the KMT-TPP coalition was stunningly similar to whatever coming out of mainland China. So that basically is the origin of the Great Recall campaign. Now,

The nature of this Great Record campaign is grassroots, nonpartisan move initiated by some of the common folks. Some of them are naturally not common folks or that's non-governmental, led by the billionaire, the founder of the UMC, which Taiwan is a major semiconductor manufacturer, Robert Tsao.

And he led this grassroots campaign and gradually spread across Taiwan, as we said, like a spark that started the prairie fire.

Involvement was pretty massive. This is all basically without the governmental involvement initially. Participants were very enthusiastic, involved teachers, lawyers, dentists, journalists, grandmas, high school and college kids, and particularly housewives and women played a very important role. So that's basically what is going on in Taiwan, which is pretty momentous right now.

So just to get my numbers straight with 113 seats in the legislative UN, the current coalition holds 62 seats with the KMT filling 52 of those. And to achieve the majority, the DPP would need to secure only six seats from its current 51. And it seems, you know, with a potential 34 seats being recalled for election, it's obvious why this would be concerning to the KMT party.

You know, like you mentioned, the DPP seems to be leveraging public discontent given recent scandals involving KMT officials and including disagreements over the latest budget cuts. So, Myles, can you give us a better sense as to the full list of KMT concerns given these recall campaigns? Yeah, let me just, that's a very good question. Before that, let me just figure out, just lay out the path toward total recall.

It was three stages, right? The first stage is the initial recall proposal. That's the first threshold. It has to be sort of a must have a signature of a 1%

of the eligible voters in a particular voting district. So that threshold was easily passed. There were actually 35 KMT legislative members that were on the recall roster. There were 15 of them on the TPP, the ruling party's legislative members.

that's the kind of counter recall by the initiative by the KMT. Now, the first stage was shocking because all 35 of the KMT recallees were passed without a problem. So the second stage was even more shocking. That is the thickness threshold. You must have

a 10% of all eligible voters in a particular district to move to the second stage of recall. And then after that, which is right now, right now of the 35 KMT

recallees, most of them have been sort of passed. That is, most of the voters have reached that 10% threshold and want them gone. And that really basically caused havoc within the KMT and TPP coalition. Now the next stage will be all voters recall vote.

that must have a 25 percent of voters uh yes uh to pass and then the yes vote must be more than no votes uh uh in order for the record to uh to take place so it looks like the kmt will lose at least 15 to 20 of them so that's significant that will keep the balance as you mentioned earlier in the parliament that will give a uh

the ruling party, a minority majority. However, you also must have replacement votes. So the road to the real majority rule in the parliament by the ruling DPP is still have some way to go. But it looks pretty good because the momentum is almost unstoppable.

Yeah, and it certainly seems, you know, it's fascinating with how involved the recall process is here. So at least as far as the KMT is concerned, from their perspective, you know, this seems to be putting them on the verge of political legitimacy. And certainly as far as representation is concerned within the legislative UN. But as with all matters, these recalls will carry significant implications for the future of US-Taiwan relations, as well as cross-strait relations.

And the DPP is attempting to capitalize on this development with a lot of rhetoric employed, like you mentioned, by DPP-backed recall campaigns, thus far labeling KMT officials as, quote, pro-China lawmakers who seek to sell out Taiwan and serve as a, quote, Trojan horse to push through mainland sentiment. So, Myles, what exactly does this all mean for the future of not just the KMT, but also for U.S.-Taiwan and cross-strait relations overall?

let me just say first, what's the impact on the Taiwan domestic political parties? After the second stage was passed, now there's 10% of voters voted for majority of them to move forward. The Green Party's record is pretty much safe right now. The KMT was thrown into total chaos. They panicked.

And until now, both parties, the DPP and KMT were not terribly involved in this. But now the DPP ruling party get really encouraged and animated. So they're participating in this total recall. And then the KMT also began to take action. So they also intensified its efforts to register counter-recall petitions related to their problem.

There are a lot of registration frauds, ghost voters, dead people got registered and they're getting caught. So the police and the prosecution office began to investigate. So the KMT at all levels were investigated. And now they have this outcry for dictatorship, politicalization, weaponization of the prosecutor.

institutions. This is all very sort of silly because a lot of people basically see what is going on. If the investigation goes further and the KMT will be in deeper trouble. Now, the internal fights therefore started within the KMT. Taipei mayor, for example, who is young and pretty sort of appealing to a lot of people in that district.

Now Taipei, the capital city of Taiwan, is the bastion of KMT voters.

and he began to to charter a different path he is now calling for the dissolvement dissolution of the entire legislative UN that means you have to have a re-election of everybody not making many kmt and tpp legislative UN members very unhappy and nervous so that's not going anywhere nevertheless there's a lot of internal disputes and infights going on well uh

What does it mean to Taiwan as a whole? I think this recall movement is really addressing an institutional flaw in Taiwan's election system. That is, unlike in the United States, for example, in between the two major elections, every four years, you have a midterm election.

Every two years, eventually you have a really important election that will change the congressional

layout. In Taiwan, you don't have midterm election. So every legislator serves a four year term. In other words, four years is a long time in Taiwanese politics. And that's why people get nervous. So in essence, this sort of a great recall campaign as it's going on, is really an initiative

to address that institutional flaw. That is, you must put pressure constantly every two years on the elected officials.

So that's one reason I think it's a very good is going to be very important. I think that this is going to provide some kind of impetus to change that election system so that every two years there must be some kind of accountability of the elected law.

makers another thing is taiwan unlike united states uh which has a bicameral system you have a senate you have the uh the house and which provide more of the checks and balance in taiwan just one legislative u.n and that's really is not really uh uh helpful in some cases so that's why if you have a thin majority in the legislative u.n you can use that majority for four years

to create something very similar to the dictatorship of majority and not basically give people in Taiwan a very uneasy feeling. So I think this is basically a problem there. Now, how does it change? The political dialogue in Taiwan is going to change in a big time because the overwhelming issue, the overwhelming motivation

motivating factor in this great record campaign is about the influence of the Chinese Communist Party over Taiwan. It's about the infiltration. It's about China's influence campaign in Taiwan. So the national dialogue has been changed to overwhelmingly anti-CCP rhetoric.

And that is very important. This is one reason why this Great Record campaign is rearranging Taiwan's political map. That is, it's no longer just a deep blue or deep green. It's about deep blue, which is for the diehard KMT members that came to Taiwan after 1949 and their descendants. Those people are deeply anti-communist.

So the Gregory Court were joined mostly, of course, by the green-leaning people, voters, as well as the deep blue people.

And many of them were retired KMT generals. They were anti-communist. They joined the Great Rekord Movement to isolate the mainstream KMT officials, which remained mostly tone deaf to whatever is going on in Taiwan. And the mainstream KMT's main points are two. One is that the

green is too risky there are pro-independence movement will provoke mainland China to attack Taiwan secondly they're really really rigorous and enthusiastic in spreading this nonsense about the United States cannot be trusted for Taiwan's defense and this is something that is is losing despite the Americans consistent uh

promises to defend Taiwan. So that is basically is changing the dialogue in my view. Now, on the mainland China part,

The Ccp. Also is not pleased with this. Obviously they have issued a whole bunch of very rich visceral attacks on the main leaders of their great record movement, particularly on legislative. You have a member, for example, symbol young, and particularly the the

the ardent supporter of the movement, Robert Cao, Cao Xunyuan, who is highly respected and very eloquent, by the way. So what the CCP is now working hard is to cultivate replacement candidates.

in case of the KMT members in the Legislative Yuan were recalled. So they are going to make sure that whoever replaced this recalled KMT legislator will not be totally anti-communist. So they're working the long game. Yeah, tremendous amount of perspectives and approaches to consider here. And it'll be interesting to see how these recall campaigns progress. And we'll certainly keep an eye on that as we go forward in future weeks with China Insider.

But moving to our next topic today, since we last discussed the US-China tariffs on the show, tensions resulted at least recently in a slate of updates to US tariffs on China. Initially levied at 125%, went up to 245% at their peak, and have now been reduced back to the 145% benchmark with President Trump noting further reductions were likely.

but not confirmed as of yet. While standing firm in its retaliation, China has relied on national expenditure and investment to combat the high tariffs and has recently exempted some U.S. imports from its retaliatory 125% tariff, asking its firms to identify, quote, critical goods they need.

We have yet to see what these goods and industries are that will be included, but nonetheless indicates somewhat of a de-escalation in the ongoing trade war and perhaps more than that. Miles, could you explain a bit more about China's tough talk in response to US tariffs? And did China show too much of their hand here?

Well, China really cannot afford to lose the war, but that they cannot win. And that's the dilemma for China. Number one, they have to talk tough because if they show any sign of being conciliatory to U.S. demands and the Chinese people will be less afraid of China. So

in real sense the chinese communist party's rule over the people in china is really through terror and fear and not fear it's based upon the the fantasy that the party is infallible invincible and it's tough uh in reality the regime is resting on very thin ice it's house of cards uh house of cards in other words so uh because

Under CCP, the Chinese economy is near the bottom. The only way China can get out of this economic mess is to export. Chinese economy is heavily dependent upon export. So it cannot really win the tariff war with the United States.

President Trump knows this. That's why he had tough and tougher than China. Think about this. China is export globally is a very impressive. It has over a trillion dollar export each year, maybe bigger than that number. However, of all China's exports, close to 40% of them are to the United States.

That's the leverage the US has. So China in no way could win this tariff war if trade with the United States completely caught up. So they have to make a compromise without losing its face.

And that's the issue. So China definitely kind of before its intransigence in go over. That's why the United States definitely is having an upper hand. You read the Indian mainstream media in the United States, mostly renounces. Most of the people are, much of the news is pushed.

by the corporate interest that have heavy investment in China already so it shows somehow you know the United States does not have the upper hand that's not the case now China of course uh does import some American products mostly in the tech sector that is a high-end chips machine tools

So of course it's to their benefit. Those are the areas where China has not really imposed tariffs. They said those were exempt because that's what China needs. So our way to talk about this is basically to impose high tariffs on China to see how China can sustain. They cannot. So you mentioned about this rate. Listen,

If a tariff rate is about 30%, which looks pretty low right now, that is untenable for China, a country with the biggest surplus of trade with the United States, with most of the countries in the world.

So anything above 30% doesn't mean anything. 145, 245, 75%, it doesn't mean anything. So this is a numbers game. So what I'm saying here is the United States definitely is winning the war of tariffs on China. So are there secret talks going on? Definitely. China will never openly say, ah, Xi Jinping and Trump talk. And I can guarantee you, even if Xi Jinping would call Trump,

the absolute condition for China is that United States would not disclose this call actually takes place because it looks bad on Xi Jinping so this is basically a uh a very very uh uh silly game to play on China they've been doing this for over 70 years and I do think though the Chinese uh finance minister

is now conducting some kind of talks with the treasury officials in the United States because the Chinese finance minister led the delegation to attend the IMF and the World Bank talk last week. So I think there's something going on in there. As a matter of fact,

a South Korean news agency photographer took shots of Chinese officials entering the US Treasury building, but that's remained unverified. But I think that's probably something that must be going on. Yeah, I'm glad you brought that up because it seems like there's been a lot of rumors at least circulating regarding ongoing talks, whether informal calls between high-level officials or even between President Trump and Xi Jinping.

But I would imagine that there is at least on some level discourse exchange between the two. And while, you know, at least domestically, the CCP's Politburo has prioritized efforts to maintain domestic stability through supporting its own firms and state-owned enterprises most affected by the tariffs.

And we've seen that with a list of economic policy injections over the past couple of weeks here. But this leads to the natural question, Miles, can China afford to keep talking tough in the face of these tariffs? As I said, they cannot. They cannot. So how can you win a tariff war when you're the number one trade surplus country? It's just the basic common sense. Another thing is that the

the percentage of China's global trade

that comes to the United States is huge. As I say, it's about 36 to 40%. They cannot really hang on top. That's why they must really calm down their rhetoric and at least be quiet. And China, the Chinese Communist Party never know when and how to shut up. That's the problem. So, but you say, you know, is this high rate tariffs really necessary?

I just want to supplement what I said earlier. Anything above 30% is just number of scan. Yes, the high tariff rate, 145%, 245% actually is also functionally good because for example,

The US imposed 245% tariffs on selected items coming from China that will impact the United States greatly. For example, the 245% tariffs were not for everything, but for particularly the Chinese medical supplies, like the

medical gloves and Chinese made syringes, for example, and pharmaceuticals. Those were dumping in the United States at great disadvantage of the United States. Those were few items that will be imposed with 245% tariffs because the whole purpose is to stop it. And of course, electric vehicles from China

now is 100% tariff. That will not change at all. So I would say the higher tariffs from the baseline

cross-border tariffs will be used for selective targeting. And I think that is very selective. That has been going on actually for several years, except this time the stakes are much higher, the rate is much higher. Yeah, we'll continue to stay with the latest on the tariff developments in exchange between U.S. and China, especially if Trump announces further reductions in tariffs from the 145% level.

But that brings us to our final topic for today, actually, where we visit Apple has recently announced plans to potentially move its entire line of iPhones for the U.S. market specifically. For decades now, Apple has relied on Chinese manufacturing for the vast majority of iPhone production via Foxconn. And while they say they will keep it,

roughly 15% of its sales in China. Apple seems to be responding to the current US-China tariffs and perhaps has identified greater long-term costs to keeping the majority of its production based in China. Miles, how big of an announcement is this? And how likely are we to see this completed by the end of 2026?

I think that's actually not determined by Apple sales, determined by the Chinese government. Because the Chinese government has adopted a policy of doing everything it can to prevent companies like Apple to get out of China. And so

it's almost like a hijack, in other words. You can only go into China, but you want to get out of China, it's very difficult. So government will not allow. So whenever you put your money inside China as an investment, the Chinese government's overwhelming mentality is that the government owns you. So Apple's move

of its production of iPhone to India, it's basically something that Apple has to take. They have no choice because of high tariffs.

And you will hear Tim Cook talking about all the Chinese workers is not because we focus our manufacturing capability in China, not because of the cost of labor, but because of the technological capability of Chinese workers. That's all nonsense. The Chinese slave laborers is making iPhone, pure and simple. So you can make the same thing

somewhere else, but slightly labor costs is a little bit more. But Chinese labor is costing more and more right now. So that's one of the reasons why Apple is moving away, mostly because of American production. Apple is an American company. It's a big company. And the ideal way to do it is to move this manufacturing capability back to the United States.

You might say labor costs more, that's true. But also this kind of iPhone and smartphone manufacturing business is one of the areas that can have the biggest opportunity for automation. So, I mean, this Apple is one of the greatest companies in the world. And I think right now it has to take action, not because of its own sudden awakening of

a morality but because of uh it has no choice uh i think india is very good and indian workers are making great phones are making great electronics i mean you have the india version of silicon valley over there you got very very good engineers in training in india and 20 united states they're back to india working there so if apple really cares about the technology aspect of the labor

there's more reason for Apple to move stuff to countries like India. So I think, you know, that diversification

of Apple's manufacturing capability overseas is a smart move. And I only see this probably is, I only hope this is the beginning of a total recall of Apple from China. - Yeah, and I would think that this is a strategic move that would benefit Apple, and I'm sure has at least been somewhat concerning news for China, but what exactly has been their reaction to the announcement so far? And what does this also mean for potential US investment in China going forward?

all there are really really negative uh on this move they try to do all kinds of legislative ways and also as was a regulation regulatory uh barriers to stop this move and it caused as much trouble as possible so uh I mean for example to move the equipment from China to India that's been delayed

and that has been halted in a certain way because China would not allow you to do that kind of stuff. It's really bizarre action by the government. Now Foxconn is a Taiwanese company which is a major Apple phone assembler

uh in the world i mean you say 80 percent of iphones sold in the united states are made in in just one foxconn factory in zhenzhou china in central uh chinese province of hona that's true so this kind of concentration of manufacturing capability is no good foxconn is taiwanese based company the chinese policy toward taiwanese companies were even worse

they literally prevent you from taking your investment and your profits out of China so if you have money in China one of the biggest problem right now for Americans for Europeans and Taiwanese is how to get your money out of China because China wants to keep all the hard currency uh uh to itself and this is something that uh we should address this is one of the

many aspects of economic engagement with China. And hopefully this problem will be addressed by world leaders like President Trump and Secretary of Treasury Scott Besant. Well, we've unfortunately reached our time for today. Miles, as always, thank you for this week's conversation and lending us your perspective on these critical issues. And we'll check back with you again next week. All right. Chat with you next week.