China-Taiwan tensions could be about to turn red hot in world's worst flashpoint

This Saturday a major democratic exercise will take place in the island democracy of Taiwan. There will be a recall vote on 24 MPs from the opposition Kuomintang (KMT) party. In Taiwan, the ultimate power is held by President Lai Ching-te of the more nationalist Democratic People's Party (DPP), although the KMT has more seats in Taiwan's parliament. For the DPP and its backers - many of whom are younger - the KMT has moved closer to Beijing and become more amenable to unification with Communist China.

While the KMT supports the "one China" policy, it claims to do so on different terms to the Chinese Communist Party (CCP) which would swallow democratic Taiwan up wholesale. Still, the KMT's case is not helped by the fact a) its lawmakers keep visiting China, b) the party is handicapping efforts to boost Taiwan's defence spending and c) Chinese state propaganda is defending the party and accusing President Lai of "engaging in dictatorship under the guise of democracy".

Why does this matter? Well, democratic Taiwan still represents the biggest potential flashpoint on earth. Should the CCP decide to blockade or invade the island democracy, it would have ramifications far exceeding wars in Ukraine or the Middle East.

For starters, around $1.4 trillion worth of trade flows through the Taiwan Strait - the 110 -mile waterway separating Taiwan from the Mainland - every year.

The fact most of this comes from Communist China might make you think Beijing wouldn't risk a war and damage to its economy. But you could be wrong. If China's zero-Covid policy proved anything, it is that politics trumps economics for the CCP. Why does China want Taiwan? Well, there are scores to settle from the 1940s Chinese civil war (which saw the KMT flee to Taiwan in the first place) and China wouldn't mind having control over its neighbour's world-beating semiconductor sector.

But China's real incentive is cracking the 'first island chain': a network of Western-allied democracies which currently blocks China's People's Liberation Army (PLA) from dominating its backyard in the Pacific. Taiwan sits in the middle of the island chain, with Japan to the north and the Philippines to the south, both host to US troops. Bad news for China: without dominating its backyard, the CCP cannot achieve its longstanding goal of achieving geopolitical parity with America.

This makes the stakes sky high for CCP boss Xi Jinping, who has banked his reputation on what he calls "reunification" with Taiwan. For the Taiwanese and its Asian allies like Japan, a Chinese takeover would be calamitous, forever altering the Asian balance of power.

For the US, the stakes are no less high. Unlike in Ukraine or Gaza, in Taiwan US interests are directly impacted. Aside from the fact a Chinese takeover would decimate America's alliance structure in the region, it could also tank the US dollar (a major reason for dollar dominance - on which so much US prosperity rests - is the US Navy's dominance of the sea lanes, which would be lost if Taiwan fell).

It is in this context that Saturday's people power moment in Taiwan should be seen. As Taiwan's younger generation, in particular, asserts an identity separate from the Mainland, the KMT looks set to be sidelined, albeit the party retains some support among older generations.

Will this catalyse more aggression from the CCP? Who knows. But given that Xi has set a goal of being able to take Taiwan by 2027 - the timing of the next CCP congress - the world should be on notice that the world's biggest potential flashpoint could soon turn red hot.