A chorus of officials and experts has been raising the alarm about the increased risk of a Chinese invasion of Taiwan for a while now.
- But the cover story in this week’s Economist – 'Taiwan: the most dangerous place on earth’ – appears to have been a tipping point.
Since it came out, seems I have been on calls, Zooms, and email exchanges, non-stop, with CEOs & directors and institutional investors, all spooked by The Economist’s analysis and wanting to recalibrate their risk models.
- Given the high level of interest and anxiety, I have devoted this issue to the question of Taiwan.
This is a hugely complex situation with a long and complicated history, and I realize that the analyses handpicked here aren’t the full answer.
- But the points in them and the reasoning should give some background for understanding just how great - or not so great - the risk is.
Arthur Kroeber of Gavekal says:
- “Taiwan poses the biggest geopolitical risk in Asia and is likely to only increase, a reason it has to be built into investors’ [and corporates' models].”
- “It’s a very high impact but very low probability event with an uncertain time frame.”
‘China's top priority now and in the foreseeable future is to deter Taiwan independence rather than compel unification,’ note Richard Bush (Brookings (retired)), Bonnie Glaser (German Marshall Fund in America), and Ryan Hass (Brookings Institution).
- ‘Beijing remains confident in its capacity to achieve this near-term objective, even as it sets the groundwork for its long-term goal of unification.’
But don’t relax just yet. Jude Blanchette of the Center for Strategic and International Studies says:
- ‘While the risk of an all-out conflict is still extraordinarily low, there is the risk of an accident, especially as China increases its efforts to deter a de facto independence and its military activity in the region.
- ‘That's the reason investors [and corporations] can’t ignore the risk completely.’
A more immediate risk, however, is highlighted by Bush, Glaser, and Hass:
- ‘China is marshaling its full range of capabilities to intensify pressure on Taiwan below the threshold of conflict.’
‘In recent years, Beijing has unveiled a broad range of tools to deter Taiwan's independence and gradually weaken the will of the people of Taiwan to resist integration with the mainland.’
- ‘China has targeted Taiwan economically, sought to induce a brain drain of Taiwan's top engineers to the mainland, isolated Taiwan on the world stage, fomented social divisions inside Taiwan, launched cyberattacks and undertaken displays of military force.’
- And, like the risk of invasion, these actions and others also have to be factored into investment and corporate models.
All by way of saying, Taiwan is the most dangerous place on earth – regular readers here know that has CHINADebate’s position for years.
- But the danger is nuanced and graduated and can be raised dramatically by a single speech or comment, a change in policy, an accident or an action.
- That’s why it is difficult to assess but still can’t be ignored.