Economic implications of a US-China-Taiwan conflict

[pooya87]

I don't think there will ever be any direct armed conflict between US and any of the existing super powers because this is no longer World War 2 and similar wars where US mainland is not reachable. Any war that US starts won't be thousands of kilometers away, but it will be fought inside US soil too.

If you look at all these years US is at war with the rest of the world but through proxies. The Chinese war will also be yet another proxy war like the war with Russian. In other words Taiwan is China's Ukraine. I believe Chinese authorities know this very well which is why they haven't invaded Taiwan to this day despite most of us thinking they would and despite all the tensions US tried to increase like sending 80-year old Pelosi to Taiwan trying to make her cannon fodder.

I posted some thoughts on this conflict last year. I still think that conflict would bring energy price down since it would put one of the biggest consumers out of the market (decreased demand) but we have to consider that US economy depends on Chinese economy more than Chinese economy depends on US economy! Look at the huge US trade deficit that is increasing year by year. In other words it would terribly ruin US economy.

On top of that, everything specially military equipment is ridiculously expensive in US. If they start a war where their economy is already in ruins, they will not be able to keep it up financially speaking whereas it is not nearly as expensive for China to keep fighting.
The US military think tanks are already talking about the fact that US has already run out of a lot of strategic weapons trying to fight the proxy war with Russia and they won't even be able to refill their weapons cash for years specially with the way inflation and recession is hitting US.

From a military standpoint US is too weak and behind in the technology to fight other actual militaries. Check the US airspace in the past decade. It is regularly being invaded and they can't even detect majority of them and the handful they see they can't detect (UFO) and they struggle to bring down. In short US air defense is a joke.
Compare that with what other super powers can and have done. My current avatar is actually a jab at that

[1715593550]

1715593550

[1715593550]

1715593550

[1715593550]

1715593550

[1715593550]

1715593550

[Lamkuthang]

If seen yes, this conflict will have a significant impact on the economy and financial system of each country involved. But are these three countries willing to risk their economies just for the sake of power? That doesn't make much sense in my opinion, It might be more precise that these types of events are more likely to happen in places like Ukraine where military power is more concentrated and perhaps the worst case scenario, is a war involving all of Europe. But in general, we don't need to worry too much about the global economic crisis due to conflicts between China, Taiwan and the US.

[Mauser]

How deep of an impact will a US-China-Taiwan conflict have over the global economy? Do you think there's still a possibility for economic recovery after the crisis? Will this weaken the US in the long run? Or will it strengthen it? Your input will be greatly appreciated. Thanks.

I don't think that any large scale conflict like a China-US war over Taiwan is going to have any positive economic impacts. The world economy is in a fragile state after the covid lockdowns and the sanctions on Russia of the Ukraine war. In my opinion, any additional negative shocks is going to send us into recession. But even the worst economic crisis is not going to be the end of the world. What we have learned from all the major economic crisis in the past there will come a recovery, the economy moves in cycles and will rebound eventually. Which doesn't mean that it's going to painful and a lot of hardship. I think that all the other big countries will be heavily affected by the China-US war and also suffering. The effects in the long run could be positive for the US if they make the right decisions. Bring back home more production facilities could be one way to be less dependent on China in the future. 

[DrBeer]

it is possible and necessary to talk about such a conflict, since its probability is not zero.
To begin with, let's look at the reasons for the possible causes of this potential conflict?
If you dig history, then China's claims to "ownership" dissolve, because. if China takes the starting point when the PRC transferred the Republic of China (yes, that's what it is called, but the word China is not a synonym for the PRC) under external control (but was not included in the PRC), then the question arises - why consider this date as a starting point? In a word, delving into history is useless. But there is another side of the coin. These are China's problems. There are many of them - from an unstable economy, internal tensions, and potential degradation of the export-oriented, and technologically dependent on the West, economy. And to keep a semi-totalitarian state, you need to show a "beautiful picture." But it's difficult .. At least by the fact that after some "vybryki" China, the United States abruptly began to curtail projects where China is supplied with American high technology. Yes, it will look a little funny, but China without Western technology is again an agrarian China of the mid-20th century! Therefore, one of China's directions is to seize high technologies, and even more so in such a sector as microprocessor solutions. Well, in order to "kill two birds with one stone" - to show that Beijing is a powerful country, whose opinion and whose desires in the region are LAW. Taiwan fits this role PERFECTLY. But there are nuances
1. The people of Taiwan categorically do not want to become a province of China and bring them an invaluable gift in the form of their microprocessor segment.
2. The independence of Taiwan is supported by the United States and many other strong Western countries.
3. So-called. Russia's "special operation" to seize Ukraine "by right of the strong" failed, and China saw that the world "thanks" to Russia united against such threats. China did not just choose a passive role in today's terrorist war of Russia against Ukraine - for it, the victory of Russia would become a PRECEDENT, and the whole world would swallow the fact that this can be done. But it didn't work out. The world has shown that such terrorist attacks will be stopped.
4. China understands that in case of aggression against Taiwan, sanctions similar to those against Russia will be applied to it.
5. But the Chinese government has almost no alternative to divert the attention of more than 1 billion Chinese from pressing issues, except for a military conflict with Taiwan, which will clearly escalate into a larger one.

In any case, even if China succeeds, China will not get what it wants. He will definitely not receive technology (during the hostilities, this will all be destroyed). China will probably get islands with completely destroyed infrastructure, without a population (I'm sure most of the productive population will leave for the nearest countries / USA). China will receive sanctions and the label of a pariah, along with Russia, North Korea, Iran and a couple of other inadequate countries.
Victory ? Unless it's a Pyrrhic victory...

An alternative option is an agreement on the entry of Taiwan, as an Autonomous Republic, into the PRC, with broad autonomy and guaranteed security, with external control over the implementation of the agreements. To me, this is the most logical way.

It all really depends on which path China chooses...

[NotATether]

Given the way that global demand for personal computers, GPUs and gaming PCs has declined in recent years. I do not think conflict in taiwan would have as much of an impact. While pressure is definitely being applied to taiwan. Its no guarantee of armed conflict or full blown war. Taiwan is probably not a high priority for china or the united states. All eyes at the moment are likely on russia and ukraine. If the war in ukraine escalates, taiwan might easily be forgotten in the background.

It is possible that PC gaming is also on a global decline. Mobile gaming markets are growing, while PC gaming declines. We can see this in new consoles like the playstation 5 not having the all star line up of flagship titles they normally enjoy on release. The economics of the gaming industry is one where PC games are expensive to develop while offering small profit margins. While mobile games offer high revenues with far lower cost of development expense.

Gaming and GPUs do not matter much because it's the ARM microprocessors that are placed in phones and tablets where the real business comes from, because these always want to use the latest fabrications.

In this regard, TSMC is not the only such supplier, because there's also Intel and Samsung (though only Samsung really makes mobile chips).

I'd be more worried about the company that manufactures the machines that make the chips - ASML - a company heavily dependent on US parts but has a monopoly, causing all 3 chipmakers to be dependent on them.

[Argoo]

A possible war between the US and China over Taiwan will not be this year. The decision on the war on the part of China will be made taking into account the consequences of the war between Russia and Ukraine. If Ukraine wins this war, as it is almost certain, then other potential aggressors, such as China, will have to reduce their military fervor.

  Now both the United States and China are studying the tactics and strategy of waging war between Ukraine and Russia, and especially the use by Ukraine of advanced, including NATO military technologies. If earlier China could count on a large number of its armed forces, then the current war in Ukraine has shown that this is not the most decisive factor, and China is now very dependent on the United States and Europe in matters of microcircuits and nanotechnologies. Experts predict that China will not be able to win the war with the United States.
As for the economic side of this possible war, the material damage will, of course, be colossal and will hit the economies of all countries of the world.

[Gyfts]

How deep of an impact will a US-China-Taiwan conflict have over the global economy? Do you think there's still a possibility for economic recovery after the crisis? Will this weaken the US in the long run? Or will it strengthen it? Your input will be greatly appreciated. Thanks.

All wars generally weaken the economy depending on the severity, threat to national security or global stability, and the investment the U.S. makes on fighting the war monetary wise (of course lives are not expendable).

The issue that the U.S. has is they rely on Taiwanese chip production for many of their consumer electronics, and that fact makes Taiwan an attractive target for invasion. Should China gain control of these chips, they U.S. will be even more beholden to China than they already are. Also keep in mind many drugs are manufactured in China. Should a war breakout, who will be supplying the U.S. with pharmaceuticals?

[Abiky]

Economic implications?  If any of the big world powers end up in a war, economics might come down to how many cockroaches you can scrounge up to feed whatever is left of your family, assuming any of us are alive at the end of said war.

But before the nukes start flying, I'd expect severe sanctions to be imposed on all sides, just like with Russia.  As far as the US is concerned, if China were to impose sanctions like that, it'd cripple our economy (or at least put a big ding in it).  I'm hoping none of this happens--for the sake of generations to come, because a war between China and the US would probably wind up as a full-blown world war, and as you probably all are aware we've got much more powerful weapons now than during the last world war.

And yet we have all of these UFOs flying around....kinda makes you wonder if the rumors Abiky referenced are true.  I don't suspect they're from outer space; they're probably Chinese spy-things gathering intel.  Ugh.

I don't think it's in both the US and China's best interests to start a war. It would cause a major blow to the global economy. China's economy has been severely affected because of the pandemic and the Russo-Ukraine war, so I'd expect it to delay its plans to invade Taiwan by a few more years. But if it does happen by 2025 as predicted, then all hell will break loose. The Chinese spying satellite tells us China has ambitions to conquer the world. It is analyzing each country's weaknesses to make a move in the future. Maybe the "New World Order" is upon us (with China and Russia ruling the world)?

I've seen the global situation worsen ever since the COVID-19 pandemic began in 2020. One catastrophe after the other is happening before our every eyes. First it was COVID-19, then the Russo-Ukraine war, and now a possible conflict between the world's leading superpowers. I hope things go back to normal soon, but it seems we're heading into a new reality. I'd be surprised if the US no longer exists in the future due to the accelerating rate of American decline. Who knows what lies ahead for the rest of hunanity? Just my opinion

[tiCeR]

I don't think there will ever be any direct armed conflict between US and any of the existing super powers because this is no longer World War 2 and similar wars where US mainland is not reachable. Any war that US starts won't be thousands of kilometers away, but it will be fought inside US soil too.

If you look at all these years US is at war with the rest of the world but through proxies. The Chinese war will also be yet another proxy war like the war with Russian. In other words Taiwan is China's Ukraine. I believe Chinese authorities know this very well which is why they haven't invaded Taiwan to this day despite most of us thinking they would and despite all the tensions US tried to increase like sending 80-year old Pelosi to Taiwan trying to make her cannon fodder.

I posted some thoughts on this conflict last year. I still think that conflict would bring energy price down since it would put one of the biggest consumers out of the market (decreased demand) but we have to consider that US economy depends on Chinese economy more than Chinese economy depends on US economy! Look at the huge US trade deficit that is increasing year by year. In other words it would terribly ruin US economy.

On top of that, everything specially military equipment is ridiculously expensive in US. If they start a war where their economy is already in ruins, they will not be able to keep it up financially speaking whereas it is not nearly as expensive for China to keep fighting.
The US military think tanks are already talking about the fact that US has already run out of a lot of strategic weapons trying to fight the proxy war with Russia and they won't even be able to refill their weapons cash for years specially with the way inflation and recession is hitting US.

From a military standpoint US is too weak and behind in the technology to fight other actual militaries. Check the US airspace in the past decade. It is regularly being invaded and they can't even detect majority of them and the handful they see they can't detect (UFO) and they struggle to bring down. In short US air defense is a joke.
Compare that with what other super powers can and have done. My current avatar is actually a jab at that

Nobody really knows how much Xi Jinping actually knew about Russia's plans to invade the Ukraine. Since Putin and Xi Jinping met or talked right before the invasion happened, it is likely that he knew about this plan or at least received some obvious hints from Putin. It makes a lot of sense that Xi Jinping was very interested in seeing how the Western world would react to the invasion.

It is good to see that the West now supports the Ukraine the way they support them, but who knows what would have happened if the West decided to not support the Ukraine. Do you think that could have been an additional incentive for Xi Jinping to take action against Taiwan as well? Now that the support for Ukraine is constantly growing stronger and we are probably even going to see fighting jets being delivered, Xi Jinping is probably going to at least think twice before he decides to invade Taiwan. I think there is no doubt now that the US is going to stick to their word and protect Taiwan as well.

[Lubang Bawah]

Of course we hope that the conflict between China and Taiwan will not happen again, China has great economic power for the world, and Taiwan certainly has US and European allies so that if there is a conflict it will have a big impact on the world economy, but I'm sure the conflict will never be serious until war, and maybe just intimidation or war statements from China and Taiwan.

[Darker45]

I don't see it coming, not in 2025, not in the next decade or two. But the situation in Ukraine will probably give us an idea. If Ukraine succumbed to the Russian invasion, it will surely be a cue for China to invade Taiwan. If the US and Europe and their allies failed to stop Russia from annexing Ukraine, the more they can't stop a more powerful country from annexing a tiny island nation.

So, in a way, the fate of US-China-Taiwan conflict will be determined by the fate of Ukraine's battle for survival against a weaker bully. China, the stronger bully, is just observing. The US, which is now facing financial troubles within, and its allies will have to give as much as possible for Ukraine to come out victorious. Otherwise, another bully will be joining in causing much bigger problems.

[Bttzed03]

~ Will this weaken the US in the long run? Or will it strengthen it?

It could weaken some sectors but it will strengthen the US businesses that are into arms manufacturing (the biggest companies are from the US right?).

The US is playing it smart not allowing wars to reach its shores by encircling China (having bases in China's neighboring countries - EDCA). It's like what they (US/NATO) have done in surrounding Russia. In case China losses its patience with what it perceives as US aggression, it is the Asian countries that will be severely affected. The US will definitely feel the effect of the war but it can recover faster.

[yhiaali3]

I do not expect the United States of America to consider waging an all-out war against China. This is unlikely for the time being at least, but yes, economic war has existed for many years.

Perhaps the scenario is worse for the United States in the event that China and Russia unite together to form a military economic power in the face of the United States, then the world could be on the brink of an abyss, because the occurrence of such a war will turn into a third world war and could eventually turn into an all-out nuclear war portends the destruction of the world.

No one wishes such a scenario to occur, of course, but this possibility remains present, given that the economic war can eventually turn into a military war.

[pooya87]

~
It is good to see that the West now supports the Ukraine the way they support them, but who knows what would have happened if the West decided to not support the Ukraine. Do you think that could have been an additional incentive for Xi Jinping to take action against Taiwan as well? Now that the support for Ukraine is constantly growing stronger and we are probably even going to see fighting jets being delivered, Xi Jinping is probably going to at least think twice before he decides to invade Taiwan. I think there is no doubt now that the US is going to stick to their word and protect Taiwan as well.

Well the West has to support their own proxy in a war they started! If they did anything else you should have been surprised. That is exactly what they would do with Taiwan too, they will give them weapons to fight China as a proxy and die for the Western warmongers.

[MusaPk]

I don't think there will ever be any direct armed conflict between US and any of the existing super powers because this is no longer World War 2 and similar wars where US mainland is not reachable. Any war that US starts won't be thousands of kilometers away, but it will be fought inside US soil too.

After seeing the horrible effects of Ukraine Russia conflict (despite the fact that my country was not part of that conflict), I strongly believe that there should be no more full scale war as that will bring more disaster to this world. It is imperative to mention that war these days doesn't effect only the countries fighting rather it has global impact. Counties are punished for siding or not siding with big powers. Both US and China are big powers they both must act wisely.

[DrBeer]

I don't see it coming, not in 2025, not in the next decade or two. But the situation in Ukraine will probably give us an idea. If Ukraine succumbed to the Russian invasion, it will surely be a cue for China to invade Taiwan. If the US and Europe and their allies failed to stop Russia from annexing Ukraine, the more they can't stop a more powerful country from annexing a tiny island nation.

So, in a way, the fate of US-China-Taiwan conflict will be determined by the fate of Ukraine's battle for survival against a weaker bully. China, the stronger bully, is just observing. The US, which is now facing financial troubles within, and its allies will have to give as much as possible for Ukraine to come out victorious. Otherwise, another bully will be joining in causing much bigger problems.

This is one of the reasons why the West, led by the United States, is helping Ukraine in countering the terrorist attack from Russia. China is using Russia as guinea pigs. He looks at how the West will react to the annexation of foreign territories, looks at how the West will react to a terrorist attack, how the world will resist this evil. Why ? Because China planned to play exactly the same scenario with respect to Taiwan - a fake reason to "unite one people", "historical Chinese lands", "saving the Chinese population from the clutches of the wild west", "saving historical values and way of life".
China was well aware of Russia's plans for 2022.
And so China chose the passive side for a reason. China wanted to observe the development of the situation on the "guinea pig" in the form of Russia, without unnecessary risks, in order to understand how acceptable such a path would be for China. Apparently, the Kremlin agreed on this issue with the "big brother". But as always, he deceived, having built his plans, describing himself on his fake greatness and the fake power of his army.
The result for China was not very positive - the whole adequate world united against Russia and began to help Ukraine. For China, this is a bad "bell". Now China needs to invent another way, because. a full-fledged confrontation with the West will lead to very negative consequences for China itself, in the event of the same stupid, direct aggression against Taiwan.

[DOH!]

China is using Russia as guinea pigs. He looks at how the West will react to the annexation of foreign territories, looks at how the West will react to a terrorist attack, how the world will resist this evil. Why ? Because China planned to play exactly the same scenario with respect to Taiwan - a fake reason to "unite one people", "historical Chinese lands", "saving the Chinese population from the clutches of the wild west", "saving historical values and way of life".

Exactly.  China's moves are wise, they quietly monitor and support Russia in the Ukraine conflict, but watch out for the US and West's reaction and limit tough moves towards the West.  In other words, the situation may change when Russia is dependent on China (some important electronic components, weapons, semiconductor chip industry ..).  This makes the motivation / reason for the scenario of a violent conflict with Taiwan to be realized - the global supply of semiconductor and electronic chips has more than 60% of the export market share from Taiwan.  Russia has also calculated clear options when diversifying its allies and economy with Turkey, Iran, the Middle East.  No matter how the Russian-Ukrainian war ends, I think its influence and impact will last a long time.  The US and China will be the biggest beneficiaries.  Anyway, China still has another backup scenario of blockade and strangulation instead of direct military conflict like Russia did.  China is still beneficial party, they are in no hurry and are fully proactive towards Taiwan to achieve the most favorable situation.

[kryptqnick]

There are rumors that the US will enter a full-scale war with China once it invades Taiwan in 2025. If we thought the Russo-Ukraine war was coming to an end, then we ain't seen nothing yet. Such a catastrophe within the world's biggest economies (US and China) could lead us to a very dark future where the global economy collapses for good. After all, the US is the biggest economy in the world followed by China. Things will get worse if Russia is still at war with Ukraine by the time this happens. It seems like both China and Russia have ambitions to rule the world, so maybe a "New World Order" is upon us?

How deep of an impact will a US-China-Taiwan conflict have over the global economy? Do you think there's still a possibility for economic recovery after the crisis? Will this weaken the US in the long run? Or will it strengthen it? Your input will be greatly appreciated. Thanks.

I really hope my country will be done with Russia by that point, and if Russia loses against Ukraine, it can be a great deterrent for China because that can show that a smaller and objectively weaker country (in terms of initial personnel, forces, military rankings, economies) can defeat a bigger one, and that there are enough countries in the contemporary world that are strongly against military invasions and are willing to help the one defending oneself. China isn't stupid, and while they might want to get Taiwan back, they also don't want to lose to Taiwan and lose any grip on the world over a small part of land. If the China-Taiwan war occurs, I think it will be a bigger stress factor for the world economy than Russia vs Ukraine because of stronger economies directly involved and the worldwide impact of both China as a leading manufacturer of so many things and Taiwan's importance for technological progress.

[pooya87]

Things are getting scary and out of hand in United States as it is. The most recent shitshow is in Ohio which is like one of those end of the world scenarios with the chemicals spreading slowly infecting and killing everyone on its path. Livestock and wildlife is already perishing and nobody is giving any answer to why the train crashed in first place! Or do anything about it...

[Flexystar]

How to put this? May be the war rumors is actually a rumor to keep things tidy and neat for the years to come. Most of the USA's import is coming from China and most of the world's leading brands are relying on China for their virtually unlimited workforce. How cheap other countries can go when they have to finish the work? There are multi national companies which already have biggest conglomerates with the US base and China base together. They definitely have bigger commercial relationships rather than political one's. The war can broke out for any dumb reason and that's not the point here. But USA knows very well they have more than 50% reliance on the China's assets which includes raw materials as well.

I might be speaking in terms of commercial aspects here but let us not forget, world revolves around the money and money only trades when you have real stuff to sell.

Whenever brands like Tesla, Apple, Microsoft tried to move their giant manufacturing faculties elsewhere they were first slammed by various rules and regulations. However, china is country with only one goal and thats to produce and get those dollar funds in their treasury. The dominance is huge.

It's like both the ends are tieing the knot and no one wants to let go. War? Pretty sure its gonna take while.