Synopsis: Taiwan faces growing challenges amid rising tensions with China, economic shifts, and military threats. With President Lai’s new security strategies, TSMC’s massive U.S. investment, and China’s potential retaliation, Taiwan must navigate a precarious path. This article explores how Taiwan can adapt key lessons from Lee Kuan Yew’s leadership—economic diversification, military deterrence, strategic diplomacy, national unity, and political stability—to secure its future while avoiding direct confrontation with China.
Introduction: A Nation at a Crossroads
Taiwan faces mounting pressure on multiple fronts. President William Lai Ching-te has announced 17 strategies to counter China’s infiltration efforts, including reinstating military courts and tightening immigration policies for individuals from China, Hong Kong and Macau. Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC) has pledged a staggering $100 billion investment in U.S. semiconductor manufacturing. The move reflects Taiwan’s shifting economic strategy but also raises concerns about the long-term impact on its domestic economy and bargaining power. China has increased military activity near Taiwan’s borders and issued economic threats. The island must find a way to defend its sovereignty, secure its economy and maintain political stability without provoking an existential crisis.
Economic Diversification: Strengthening Independence Without Isolation
Lee Kuan Yew transformed Singapore into a global trade hub by reducing reliance on any single economy. Recognizing the threats from larger neighbours like Malaysia and Indonesia, he adopted an open economic strategy that attracted multinational corporations through tax incentives and favourable investment policies. Under his leadership, Singapore became a significant player in shipping, finance, and high-tech manufacturing, building relationships with major economies such as the U.S., Europe, China, and Japan. By creating free trade agreements, Singapore strengthened its economy against global fluctuations, resulting in a robust, competitive, and diverse economic landscape that lessened geopolitical risks.
Taiwan, in contrast, remains deeply intertwined with China, with nearly 30% of its exports dependent on the mainland. This dependency leaves Taiwan vulnerable to economic coercion. China has already used trade as a weapon, blocking Taiwanese agricultural imports and cutting off certain semiconductor supplies.
Taiwan must act strategically. Cutting ties with China overnight is not realistic. Businesses like TSMC and Foxconn have deep roots in the Chinese market and will resist abrupt shifts. Instead, the government should offer tax incentives and investment programs to encourage companies to expand operations in ASEAN, India, and Europe. Taiwan’s exports to ASEAN countries reached $65 billion in 2024, showing significant potential for further growth. Expanding its financial sector and digital economy can reduce dependence on semiconductors, which now make up over 40% of total exports. Singapore followed this path, securing economic resilience without antagonizing its neighbours. Taiwan can do the same.
China is not an immovable force. Taiwan plays a vital role in global supply chains, especially in high-tech manufacturing. If Beijing applies too much pressure, it risks pushing global companies toward diversifying away from China. The world depends on Taiwan’s semiconductor industry. That gives Taiwan more leverage than it often realizes.
Military Deterrence: Building Strength Without Inviting War
Lee Kuan Yew believed in military strength as a deterrent but avoided provocation. Taiwan has extended its compulsory military service from four months to a year, but this is only the beginning. Strengthening asymmetric defense is key. Taiwan must invest in cyber warfare, drone technology, and mobile missile systems to make a Chinese invasion costly and impractical.
Taiwan’s defense budget stood at $17 billion in 2024, accounting for 2.3% of GDP. Raising it to 3% would bring Taiwan closer to Singapore’s levels, allowing for the development of more advanced defensive capabilities. The challenge is public skepticism. Many young Taiwanese view military service as outdated. The government must modernize training, focusing on cybersecurity, AI-driven warfare, and unmanned defense systems. A tech-savvy military would not only strengthen national security but also attract young talent.
Ukraine’s defense strategy offers valuable lessons. A smaller force can resist a much larger adversary with the right mix of weapons, training, and international support. Taiwan must learn from Ukraine’s use of drones, missile defense, and mobile anti-aircraft systems to complicate a potential Chinese invasion. Defensive alliances also matter. Taiwan must quietly deepen cooperation with the U.S., Japan, and Australia, just as Singapore maintains strong military ties without openly challenging China.
Strategic Diplomacy: Influence Without Recognition
Taiwan lacks official recognition from most of the world, but that does not mean it lacks influence. Lee Kuan Yew mastered the art of balancing relations between superpowers. Taiwan should take a page from Singapore’s playbook. Instead of pushing for formal diplomatic recognition, which often provokes China, Taiwan should focus on strengthening unofficial ties through trade, technology partnerships, and strategic dialogues.
Taiwan should deepen economic ties with ASEAN, Japan, and the European Union. It must also solidify its role in global supply chains, ensuring that its technological contributions remain indispensable. At the same time, Taiwan must expand soft power initiatives. Humanitarian aid, educational exchange programs, and cultural diplomacy can enhance its global standing. Singapore has used these tools effectively to maintain influence despite its small size. Taiwan must do the same.
South Korea offers another relevant example. It navigates tensions between China and the U.S. while maintaining a strong economic and security posture. Taiwan can follow a similar approach, ensuring economic resilience while strategically reinforcing its military alliances.
National Unity: Overcoming Division in a Democratic Society
Singapore fostered national unity through bilingualism, civic nationalism, and firm governance. Taiwan, however, is deeply divided. Political discourse is dominated by the independence-versus-unification debate, with the Democratic Progressive Party (DPP), Kuomintang (KMT), and Taiwan People’s Party (TPP) locked in ideological battles. This fragmentation weakens national resilience.
Taiwan must find common ground. Shaping a national identity around democracy, technological leadership, and economic strength can unify the country beyond historical disputes. Reforming civic education to emphasize these values is one step forward. Creating bipartisan national security and economic councils would ensure that crucial policies remain stable regardless of election outcomes. Unlike Singapore, Taiwan cannot enforce unity through authoritarian measures, but it can cultivate a shared vision through bipartisan cooperation and civic engagement.
Political Stability: Ensuring Continuity Amid Democratic Change
Lee Kuan Yew’s leadership ensured Singapore’s economic and security policies remained stable despite global uncertainties. Taiwan, on the other hand, faces frequent political shifts that disrupt long-term planning. Elections bring rapid policy reversals, undermining Taiwan’s ability to execute sustained strategies.
Taiwan needs structural reforms. Establishing cross-party agreements on national security and economic policies would create stability. Singapore maintained consistent economic policies across decades, allowing for long-term investments and infrastructure development. Taiwan can achieve similar continuity by ensuring bipartisan commitment to defense, semiconductor leadership, and foreign policy.
Partisan gridlock is a challenge. Taiwan’s democracy is a strength, but excessive polarization weakens resilience. Encouraging coalition-building and institutionalizing long-term planning mechanisms can help Taiwan navigate its future with greater stability. The goal is not to sacrifice democracy but to make it work more effectively in the face of external threats.
Conclusion: Pragmatic Adaptation, Not Blind Imitation
Taiwan cannot replicate Singapore’s model exactly. The island’s democracy, economic structure, and geopolitical threats are fundamentally different. But the principles of pragmatism, economic resilience, and strategic deterrence remain relevant.
Diversifying the economy, strengthening military capabilities without unnecessary provocation, deepening unofficial diplomatic ties, fostering national unity, and ensuring political stability will all be crucial. Taiwan must act decisively but carefully, securing its future without inviting catastrophe.
Lee Kuan Yew once said, “Between being loved and being feared, I have always believed Machiavelli was right.” Taiwan must neither be feared nor abandoned. It must be respected. The choices it makes today will shape its survival tomorrow. Will it rise to the occasion?
