Taiwan is the most dangerous flashpoint in U.S.-China relations, says former diplomat

Taiwan is the “most dangerous” flashpoint in the relationship between the U.S. and China — but an outright conflict is not likely, said former Singapore senior diplomat Bilahari Kausikan.

“During the U.S.-Soviet Cold War, which lasted for 40 years, nuclear deterrence kept the peace at least between the two principals. I think it will again keep the peace between the U.S. and China,” Kausikan told CNBC’s “Squawk Box Asia” on Wednesday.

According to the nuclear deterrence theory, the possibility that a country could use its nuclear weapons to retaliate will deter an enemy state from attacking.

Beijing claims Taiwan, a democratic self-ruled island, as a runaway province that must be reunited with the mainland — using force if necessary. The ruling Chinese Communist Party, which turns 100 on Thursday, has never governed Taiwan.

In the last few years, the U.S. has moved closer to Taiwan, angering China which views the island as having no rights to conduct diplomacy of its own.

Kevin Rudd, former Australian prime minister and an astute China watcher, said unifying Taiwan with the mainland remains an “unfinished business” of the CCP.

He said the Chinese military has planned for years to secure Taiwan’s “return,” and China could make a move if President Xi Jinping is reappointed as leader of the party and country at a CCP congress late next year.

Xi, who has been president since 2013, is expected to secure another term after China scrapped limits on presidential term.

“I think what we’ll then be moving into is a period which China will be looking at its options to leverage Taiwan back into a form of a political union with China by the time we get to the late 2020s and into the 2030s,” Rudd told CNBC’s “Capital Connection” Wednesday. “And that’s when I believe it does get dangerous for us all.”

Other observers have warned that the risk of a U.S.-China military clash over Taiwan is rising.

Kausikan, who’s currently chairman of the Middle East Institute at the National University of Singapore, said “accidents can always happen.”

However, he added that both the U.S. and China will likely “do their best to contain such accidents if they do occur.”

Previously, Kausikan was Singapore’s permanent representative to the United Nations, and served as permanent secretary of Singapore’s Ministry of Foreign Affairs.

The U.S. and Taiwan resumed long-stalled trade talks on Wednesday. Such discussions under the Trade and Investment Framework Agreement were last held when former U.S. President Barack Obama was in office.

Taiwan reportedly said it hopes both sides can “gradually” move toward a trade deal.

But Bonnie Glaser, director of Asia program at the German Marshall Fund of the United States, who spoke to CNBC before the talks, said President Joe Biden hasn’t indicated whether he’s interested in an agreement with the island.

“Taiwan is isolated, and we should be willing to negotiate trade agreements with Taiwan, it’s our 10th largest trading partner,” she told CNBC’s “Squawk Box Asia” Wednesday.

Glaser added that as part of the World Trade Organization, Taiwan has the right to negotiate trade deals with other members. She pointed out that Beijing had supported Taiwan’s trade agreements with Singapore and New Zealand in the past.  

But China wouldn’t be happy about trade talks between the U.S. and Taiwan, said Glaser.

Still, Beijing wouldn’t see such negotiations as a signal of U.S. support for Taiwan independence, she added.