Separated from mainland China by a narrow strait, Taiwan faces a constant threat from a powerful neighbor that claims the island as an inseparable part of its territory. Taiwan is armed to the teeth and has powerful friends, but with China growing stronger and more aggressive, the risk of armed conflict is climbing higher.
Beijing continues to view the island’s democratic government as a challenge to its authoritarian rule, and has never taken the use of force off the table to get what it wants. In October, US Secretary of State Anthony Blinken said China might take steps to annex Taiwan on a “much faster timeline” than previously thought.
Whether it’s 2030, 2027, 2025, or even this year, experts say it could wreak havoc on the global economy and take a devastating toll on the militaries involved.
The US, which has armed Taiwan with everything from air defense systems to anti-ship missiles to fighter jets, is not required to intervene if China invades Taiwan. But President Joe Biden has broken away from strategic ambiguity and said that the US would come to the island’s defense if China invaded, meaning that if a fight breaks out over Taiwan, it could get messy in a hurry.
War games say China likely loses, but nobody wins
Beijing has noticeably “intensified” its military, diplomatic, and political pressure against Taiwan and increased its “provocative and destabilizing actions,” the US Department of Defense wrote in a 2022 report on China’s military.
The Chinese People’s Liberation Army is spending more time carrying out drills focused on seizing islands by force and flying more bombers, fighters, and other aircraft near Taiwan, the Pentagon reported.
Though China’s actions have stirred fears of a possible Chinese attack, the US military assesses that an invasion of Taiwan would prove extremely difficult for the Chinese military. It would likely invite intervention from other militaries, strain the Chinese People’s Liberation Army, and create political and military risks for Chinese leader Xi Jinping and the ruling Chinese Communist Party.
The Center for Strategic and International Studies recently ran war games looking at how a large-scale Chinese invasion of Taiwan might play out, and the outcomes were bleak for China, but also for everyone else involved.
China would start by bombing Taiwan’s air force and navy before using its own naval forces to surround and lay siege to the island. Meanwhile, Chinese air assault and airborne troops would land on Taiwan’s shores as tens of thousands of soldiers head to the island on civilian cargo ships and military amphibious vessels.
But Beijing’s efforts would likely not be enough, CSIS found. Chinese troops would struggle to strengthen their supplies and move inland from the beaches, where they would be met by stiff resistance from defending Taiwanese forces.
US and Japanese forces, assuming they came to the island’s aid, would likely be able to take out China’s amphibious fleet, but at tremendous cost.
Taiwan would probably remain unconquered but heavily damaged, CSIS concluded. For example, the island would struggle to maintain basic services and electricity, and its military would be significantly depleted. China, on the other hand, would be left with tens of thousands of soldiers killed, wounded, or captured, a navy in total ruins, and a shattered amphibious force.
One important condition for Taiwan’s survival, the Washington-based think tank noted, is that the island must be able to withstand the initial Chinese assault and avoid surrendering before US and partner forces can get involved.
“In most scenarios, the United States/Taiwan/Japan defeated a conventional amphibious invasion by China and maintained an autonomous Taiwan,” CSIS summarized in its report on the simulations. “However, this defense came at high cost. The United States and its allies lost dozens of ships, hundreds of aircraft, and tens of thousands of service members. Taiwan saw its economy devastated.”
The CSIS report added that “the high losses damaged the US global position for many years” while noting that “China also lost heavily” and that the failure to occupy Taiwan led to instability within the Chinese Communist Party.
Threats to one company could spell catastrophe
Looking at this situation from an economic perspective, a Chinese invasion of Taiwan could mean trillions of dollars in losses and a serious global recession. Taiwan is home to TSMC, the world’s biggest chipmaker. Given that no other company makes such advanced chips at such a high volume, a conflict could mean the production of everything from cars to iPhones grinds to a halt.
“If China would invade Taiwan, that would be the biggest impact we’ve seen to the global economy — possibly ever,” Glenn O’Donnell, the vice president and research director at Forrester, previously told Insider. “This could be bigger than 1929.”
While US businesses can take some steps to reduce their reliance on Taiwan chipmaking, including bolstering their chip inventories and diversifying their supply chains, this is unlikely to mitigate the full risk of a Taiwan crisis.
“Given how predominant Taiwan is in the global semiconductor value chain, even with adjustments, any type of disruption to access to Taiwan semiconductor output is going to have tremendous consequences for the global economy,” Martijn Rasser, a former senior intelligence officer at the CIA, who is now a security and technology expert at the Center for a New American Security, told Insider.
If the US and its allies, for instance, imposed significant sanctions on Chinese imports following an invasion, there could be a “huge impact on American consumers and the US economy generally,” William Alan Reinsch, a senior advisor at the Center for Strategic and International Studies, a national security think tank, told Insider.
While the US and its allies have imposed strong sanctions against Russia following its invasion of Ukraine, “It would be much more challenging in the China context,” Rasser said, “just because of the economic interdependencies that are there” between the countries.
In the event of an invasion, there’s been speculation the US would consider evacuating TSMC’s engineers — or even destroy the company’s facilities — to prevent China from having sole access to TSMC’s chip production.
But Chen Ming-tong, director-general of Taiwan’s National Security Bureau, said in October these steps would not be necessary. The US and other countries could simply cut off TSMC’s access to supply chains it needs to keep production running, he said, resulting in a situation in which there is “no way TSMC can continue its production.”
“Even if China got a hold of the golden hen, it won’t be able to lay golden eggs,” he added.
The potential economic consequences of an invasion for both China and the rest of the world, as well as the possibility that China lose access to TSMC’s semiconductors, could serve to deter an invasion in the short-term.
A crisis in 2023 is probably unlikely
While the risk of a conflict in the medium term appears to have increased, there’s a good chance the countries avoid a conflict in 2023.
“We’ve seen increased surface vessel activity around Taiwan,” US Secretary of Defense Lloyd Austin said during a press conference Wednesday. “But whether or not that means that an invasion is imminent, you know, I seriously doubt that.”
“I don’t think Xi will make a move until and unless he is absolutely sure that an invasion will be successful,” Gen. James Clapper, who led the intelligence community under President Obama, previously told Insider. “And right now, I don’t think he has the degree of certitude.”
“China will defer moves that could possibly provoke military conflict until the balance of power is decisively in its favor,” the political research and consulting firm Eurasia Group said in its 2023 top risks report, “or until the US is ruled by a president who is clearly unwilling to defend Taiwan. None of this is remotely possible in 2023.”
Expectations are largely that China would not take such a risk until later this decade at the earliest.
Others have argued it’s in the self interest of both China and the United State to overplay the likelihood of a Taiwan invasion. The threat gives China negotiating power, they say, and justifies additional military spending in the US.