Some US and European officials believe huge global economic damage from a Taiwan conflict is necessary to rally international support for deterring China. US officials and military officers have increasing talked about the threat to Taiwan as there are reports that China has moved up its timeline for "reunification" with Taiwan. President Biden and Xi Jinping are expected to discuss Taiwan when they hold their first in-person meeting as leaders in Bali on Monday on the sidelines of the G20 summit. Over the past year, Biden has said on four occasions the US would defend Taiwan from an unprovoked Chinese attack.
The report said Taiwan would suffer the biggest hit but the economic blow to China would also be immense, and that the fallout would reverberate throughout the global economy. Overall, south-east Asia - a region where many countries want to avoid taking sides and argue that a China-Taiwan conflict has nothing to do with them - would see heavy economic damage.
In terms of industries, supply chains dependent on semiconductors led by automobile, server and PC and cell phone sectors would suffer the biggest disruption. Also, the report warns that trade finance for Chinese companies would dry up the moment Beijing crossed the line to conflict over Taiwan, dealing a severe shock to global trade. Due to the importance of China as an economic partner for developing countries, such a shock could push more than a dozen emerging markets into economic crisis.
The US is still impacted today by COVID's supply chain disruptions, so the idea of a conflict against China would have disastrous impacts on the global economy. When Russia invaded Ukraine on February 24th of this year, my International Relations professor argued that it was a proxy war between China and the US, so I don't think it is that unlikely that we see China making advances in terms of its power over Taiwan. China has never recognized Taiwan as an independent territory, but I am curious how the US's response would differ in this conflict over the conflict in the Ukraine? The US supports the Ukraine, but we have not sent troops over to fight on their behalf. Considering Biden's emphasis on the protection of Taiwan, would we be more willing to go into Taiwan knowing that both aggressors have nuclear weapons?
ReplyDeleteHello Joey D.
ReplyDeleteIt is news to me to hear that the U.S. would back up Taiwan in the case of an attach from the Chinese government. But it is really important to note that if these conflicts were to progressively get worse that it may weaken the Chinese, U.S, and Taiwan economy. In any case lets say the is more conflict and the two countries end up going to war. This would lower growth in all economies because war is very expensive and the government will have to create some sort of fiscal policy in order to fund a-lot of it. Additionally labor in the private sector would likely go down for both Taiwan and China as that labor would be involved in whatever conflict occurs between the two. This would decrease overall output in the private sector and possibly lower GDP. Overall really good job!
China has never recognized Taiwan as being an independent country from them despite Taiwan being governed separately since the mid 1900s. I would not expect China to back down from "reclaiming" Taiwan in the foreseeable future. Supply chain issues are still extremely prevalent from covid and should China take action against Taiwan, it would cause severe disruptions to the already unstable supply chain. It would be interesting to see if the US does send troops to Taiwan to help them because, as Brittani mentioned, the US has avoided sending troops to Ukraine to avoid creating worse conflict with Russia.
ReplyDeleteWe are still seeing supply chain issues throughout the economy in all types/sizes of businesses. The pandemic has greatly impacted the way many people view work. A lot of people work from home now and virtual work / schooling is still fairly prominent. Can this permanently change the supply chain?
ReplyDeleteThe Russia Ukraine crisis has shown us that these massive conflicts have global ramifications. With world economies already weakened, this is a conflict that the world does not need. It is concerning that China has moved up their "reunification" timeline.
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