West must remind Xi of the economic consequences of threatening Taiwan

The author is a former British diplomat specializing in China. He is now a Fellow of the Council on Geostrategy, the Royal United Services Institute and the Mercator Institute for Chinese Studies

The most common question asked by companies about China is whether Beijing will invade Taiwan. It remains extremely unlikely. But if it were, it would be a global economic and political catastrophe.

There are many good military reasons why the People’s Liberation Army will not invade. The 100 nautical miles of rough seas, only 14 beaches where men and materiel can land, and Taiwan’s mountainous topography favor the defense. After a slow start, Taipei is moving toward a “porcupine” defense that recognizes Chinese superiority in conventional weapons and relies on small, mobile platforms. These are difficult to eliminate and would cause significant losses. Added to this is the fear of American intervention.

Xi Jinping appears to be a rational leader, neither blinded nor desperate like Vladimir Putin. Risking an invasion would mean jeopardizing his entire “China dream,” his ambition that China should replace the US as the pre-eminent global power and reshape the world in accordance with its interests and values. It is an unnecessary risk when he is actually convinced of his own slogan that “the East is rising, the West is falling”. Better wait.

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But ever since the Delphic oracle Croesus warned that an empire would fall if it invaded Persia, leaders have succumbed to the blindness of hubris. It makes sense, then, to champion military deterrence, as William Hague did in May, and be ready to supply Taiwan with the kind of nimble weapons systems that would help stave off Beijing’s advances.

It also makes sense for the US to remind China that, if invaded, it could block the Straits of Malacca and Sunda, through which China’s Middle East oil passes. Even the threat of a ban would be enough to deter shipowners.

But military deterrence is the smaller part of the story. There are good economic reasons why the Chinese Communist Party will not invade. Taiwan Semiconductor Manufacturing Company produces the majority of the world’s most advanced semiconductors. Its CEO has said it must not fall into Chinese hands. This could be achieved with a well-aimed US missile, but that might not be necessary: ​​it would be enough to ban the sale of materials, machinery and parts needed to keep TSMC’s facilities running. China’s reliance on foreign semiconductors is likely to last another decade, maybe even longer.

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As if that weren’t enough, most of Taiwan’s nearly $200 billion exports to China are components of China’s own exports. Their disappearance would cut Beijing’s exports by trillions. Trade and investment from other countries would dry up. Shipping and insurance costs would increase enormously.

Deterrence means strengthening existing restrictions. The governments of free and open countries must make it clear to the CCP that an invasion or a widespread blockade would trigger sanctions. This threat has to be credible (it’s worth noting that even Switzerland has said it would comply with any sanctions the EU imposes on China if it invades). Governments must convey this message to the CCP calmly and now.

The CCP is not good at reading foreigners. But there would be sanctions – and not just in the form of impromptu boycotts of Chinese goods led by civil society. The clamor of ordinary people, the press, parliamentarians and others, many of whom may not understand the consequences of sanctions, will be irresistible to Western governments. The US will lead and expect its allies to follow.

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This is MAD – Mutually Assured Destruction, the foundation of Cold War deterrence. The world economy would collapse. The consequences for everyone would be dire, but especially for China and the CCP. Resources, supply chains and components would dry up. Unemployment, which is already around 20 percent among young people in China, would boom. And without a meaningful social security system, the resulting poverty and desperation would fuel protests and riots.

“The Party leads everything,” as Xi says. It claims credit for all good things. The consequence of this is that when things go wrong, there is no avoiding guilt. Protests and riots would be directed against the CCP. These are not uncommon, but so far the party has been able to isolate them at the local level. The economic collapse would bring suffering on an unprecedented scale. The likelihood is that the protests would converge and cross county, city, and even provincial borders. This would present the CCP with challenges of a different magnitude.

The party’s been here before, in 1989. That look into the abyss was scarred. Xi knows all this – but it doesn’t hurt to remind him.