Chinese e-commerce applications in the lead up to the June 18 mid-year shopping festival. Clockwise from top left: Alibaba Group’s Taobao, Pinduoduo, Alibaba, Alibaba’s Tmall, JD.com and Alibaba’s Idle Fish.
Chan Long Hei | Bloomberg | Getty Images
Tensions with the U.S. and its allies mean that China “will have problem in accessing the high end of things like robots and the high end, in particular, of semiconductors,” said Roche.
At the same time, Chinese regulators have stepped up scrutiny on some of the country’s largest tech firms — including e-commerce giant Alibaba and ride-hailing app Didi. Roche said the crackdown adds uncertainty and makes companies, such as those in the financial technology space, less profitable and less attractive to investors.
Investment case for Taiwan
While China aims to become self-reliant in tech — particularly semiconductors — it will take years before the country can catch up to industry leaders such as Taiwan, said the veteran strategist.
Roche said Taiwan produces 70% of all “really high-end” chips in the world, while China only accounts for about 5% of the global share. That’s one factor underpinning the investment case for Taiwan on a two- to three-year horizon, he added.
“The big asset of Taiwan is … its research and technological ability to produce high-end chips,” the strategist said.
“So essentially, Taiwan is the golden egg for China. It is also the golden egg for the United States because it supplies the United States, which has lost its leadership in this section. So, that puts Taiwan in a very special place,” added Roche.
But he warned that Taiwan is geopolitically very vulnerable.
The ruling Chinese Communist Party in Beijing has never controlled Taiwan, but it claims the self-ruled, democratic island as a renegade province that must be one day reunited with the mainland. The CCP doesn’t rule out the use of force to take over Taiwan.
Roche said a move by Xi on Taiwan is “most definitely on the cards for the next five years, but it is probably not on the cards for the next two to three years.”