The world faces threats of huge economic losses in case China attacks Taiwan. There is a high possibility of major powers drawing into the conflict, which would disrupt global trade and cost the world its 10 percent of GDP.[1] The Taiwan Strait is crucial for global cargo transport as over 50 percent of cargo ships pass through the region.
The economic impact of the Taiwan blockade is expected to be bigger than that occurred during the Covid pandemic, said Ely Ratner, the US assistant secretary of defence for Indo-Pacific security affairs. “The global economy falls through the floor… There will be no one immune from the economic pain that the PRC (China) would place on the world through doing that,” he said earlier.[2]
The China-Taiwan clash would lead to blockades and attacks on vessels, which would disrupt the global supply chain. Several countries have raised concerns over the developing situation and appealed for peace and regional stability as China is getting assertive about the forceful annexation of Taiwan.[3] China has been holding military drills near Taiwan. Moreover, it simulated maritime and air blockades, amphibious assaults and counter-intervention operations.
The Chinese invasion would be more devastating than what has been estimated, said Lieutenant General Stephen Sklenka, Deputy Commander of US Indo-Pacific Command. “At stake would be untold numbers of lives, trillions of dollars in global economic damage, and maintenance of an international order that has delivered relative peace and stability over the past 80 years,” he said.[4]
There have been a few clashes – Russia-Ukraine, Armenia-Azerbaijan and Israel- Iran— in recent years. Fortunately, they could be prevented from snowballing into broader global conflicts. These were however restricted to regional clashes. China-Taiwan conflict however is different. Since the US is legally bound to defend Taiwan, there would be a serious military conflict in the Taiwan Strait in case Chinese invasion.
Even if the US does not intervene, the clash between China and Taiwan will have a more devastating and profound impact than that of the Ukraine war. Since both countries are deeply integrated into the global economy, said international political economist Min-Hua Chiang. “Even without direct military intervention from the United States, a Taiwan-China war would devastate the global economy like a weapon of mass destruction,” he said.[5]
A group of military and defence strategy experts used a simulation to conclude that China would be defeated by the US and its allies if Taiwan was attacked. However, it would come at an enormous cost.[6] Newly appointed Chinese defence minister Adm. Dong Jun has hinted at military action saying the prospects of peaceful reunification were increasingly eroded. He even warned the US and allies against intervention saying the external forces supporting Taiwan would “end up in self-destruction.”[7]
If China invades Taiwan, it will destroy global trade, said James Cleverly, the UK’s home secretary, since the Taiwan Strait is the important shipping route for half of the world’s trade. “No country could shield itself from the repercussions of a war in Taiwan,” he said.[8] Bloomberg Economics estimated the cost of the war over Taiwan would be USD 10 trillion, which means 10 percent of the global economy.[9]
No matter where it lies on the global map, every country’s economy would be affected. “A war across the Strait would not only be a human tragedy, it would destroy world trade worth USD 2.6 trillion. No country could shield itself from the repercussions,” Cleverly said.[10] Observers estimated huge losses to the US, undermining its global leadership for years. At the same time, China will be more affected, posing risks to the communist party’s rule.
It is China opting for forceful annexation of Taiwan. The Chinese military action would certainly draw major powers into the conflict as they would seek to retain Taiwan’s autonomous or independent status. Singapore Deputy Prime Minister Gan Kim Yong called the China-Taiwan conflict
“one of the most dangerous flashpoints” with severe implications for the global economy. “Any clash in the Taiwan Strait will have dire consequences not just for the parties involved, but the entire world,” he said.[11]
END.
[1] https://www.bloomberg.com/news/features/2024-01-09/if-china-invades-taiwan-it-would-cost-world-economy-10-trillion
[2] https://asia.nikkei.com/Politics/International-relations/Taiwan-tensions/Taiwan-blockade-s-cost-would-be-felt-wider-than-COVID-U.S.-official2
[3] https://theprint.in/world/singapore-vietnam-call-for-peace-amid-chinese-military-drills-around-taiwan/2101923/
[4] https://www.reuters.com/world/asia-pacific/chinese-military-practiced-taiwan-invasion-manoeuvres-2023-says-us-general-2024-05-23/
[5] https://www.heritage.org/asia/commentary/one-year-after-the-ukraine-war-economic-implications-potential-war-the-taiwan
[6] https://www.resilinc.com/blog/what-would-happen-if-china-invaded-taiwan/
[7] https://edition.cnn.com/2024/06/01/china/dong-jun-china-defense-minister-shangrila-intl-hnk/index.html
[8] https://www.theguardian.com/world/2023/apr/25/if-china-invaded-taiwan-it-would-destroy-world-trade-says-james-cleverly
[9] https://www.bloomberg.com/news/features/2024-01-09/if-china-invades-taiwan-it-would-cost-world-economy-10-trillion
[10] https://www.theguardian.com/world/2023/apr/25/if-china-invaded-taiwan-it-would-destroy-world-trade-says-james-cleverly
[11] https://www.bloomberg.com/news/articles/2024-05-24/singapore-sees-taiwan-as-one-of-most-dangerous-flashpoints
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