War in the Middle East, global terrorism and the Ukraine war pose significant threats to the global economy. However, according to Global Guardian, a leading security solutions firm, a conflict between China and Taiwan would cause the greatest disruption since World War II. Its Taiwan Shock Index (TSI) analyzes the potential global impacts of such a war.
Chinese President Xi Jinping’s (習近平) rhetoric about rejuvenating the People’s Republic of China heavily emphasizes “reunification” with Taiwan. Experts differ on when this might happen. Some point to 2027, the centenary of the Chinese People’s Liberation Army (PLA), as a symbolic and strategic milestone.
Others suggest 2035, aligning with Xi’s vision for modernizing China’s defense and building a world-class military. Some believe it would be 2049, the centenary of the People’s Republic of China, when Xi envisions the country achieving full national rejuvenation.
Consistent with expert predictions, Global Guardian’s analysis assumes a conflict between China and Taiwan would occur by 2049. Their assessment examines the global impact of a Chinese invasion and a blockade. Many experts, including Global Guardian, believe a blockade is more likely.
An invasion would require the PLA Navy and Air Force to cross the 145km of the Taiwan Strait, facing intense defenses from Taiwan, the US and other allies. The high cost in lives and military hardware might outweigh the perceived benefits of taking Taiwan, making a blockade a more feasible strategy.
A blockade would cost China fewer lives and military hardware.
Moreover, Taiwan is particularly vulnerable to a blockade, importing 70 percent of its food, 88 percent of its energy and 50 percent of the chemicals needed to manufacture medicines. Its food storage capacity is only enough for about 10 months, while its energy storage would last just five months. Taiwan also has only 40 days’ worth of coal reserves and 10 days of natural gas.
Either a war or a blockade of Taiwan would have a tremendous, detrimental effect on the world.
Taiwan produces 20 percent of the world’s semiconductors, 37 percent of logic chips and 92 percent of advanced logic chips.
A blockade would disrupt advanced technology development and global production capacity, potentially trimming US$5 trillion off global GDP.
Sector shocks would affect advanced manufacturing, agriculture, consumer goods, energy and mining.
The ongoing decoupling from China would accelerate, with advanced manufacturing firms facing significant hurdles and operations in China being prohibited. Chinese fertilizer and rare earth exports would vanish, driving price increases and further restricting the high-tech sector.
While these effects would be damaging in the short run, other countries would eventually fill the market gaps, solidifying the decoupling.
Global Guardian’s TSI estimates the destabilizing effect of a Taiwan conflict on every country, assigning risk ratings from “low” to “extreme.”
The index combines a country’s political fragility score with its exposure score. The exposure score considers trade with China and neighboring countries affected by a war or blockade, foreign direct investment in China, and the extent to which a nation relies on Chinese weapons, surveillance and censorship technology for stability and control.
The US would be significantly affected due to its high economic integration with China and its politically polarized climate, where the two major parties are in direct conflict over foreign and Taiwan policy.
In South America, the effects would be extremely acute in countries with weak governmental institutions and high dependence on exports.
Sub-Saharan Africa would suffer severely due to unstable governments and heavy reliance on Chinese investment and trade.
The Middle East would be hit hard by the loss of China as an oil export destination.
Europe would be less directly affected, but the Ukraine war and differing opinions on engaging with China could lead to disunity within the EU.
The Asia-Pacific region would be extremely affected, as trade and investment are centered around China. A blockade of the Taiwan Strait, or an effective blockade caused by war, would trigger a crisis in Southeast Asia.
Client states of China, such as Pakistan, Cambodia and Russia, would immediately feel the pinch as economic aid slowed or stopped completely.
The prices of a wide array of goods would significantly increase due to disrupted global shipping and a shift in Chinese manufacturing focus from consumer goods to military equipment, vehicles, weapons and ammunition.
Global companies invested in China would see their revenues drop or reach zero. Additionally, US sanctions would likely be imposed, making it difficult for these companies to repatriate profits earned in China or import replacement parts and components.
Parallel to the TSI, Global Guardian’s Annual Threat Assessment evaluates each country’s risk, considering factors such as crime, health, natural disasters, infrastructure, political stability, civil unrest and terrorism. Mexico, Central America, Venezuela, Peru, Sudan, Niger, Iraq, Papua New Guinea and numerous other countries are already at extreme risk, while Pakistan and Libya are considered high risk.
A conflict between Taiwan and China would exacerbate the already tenuous security situations in these countries, particularly those at high or extreme risk and dependent on China.
A China-Taiwan conflict, whether as a blockade or a war, would be detrimental to the entire world, although some countries would suffer more than others. Analysts differ on when this event would occur, but many believe it is inevitable. Consequently, the US and Taiwan must expand their defense planning to include strategies for withstanding the economic shock caused by the conflict.
Antonio Graceffo, a China economic analyst who holds a China MBA from Shanghai Jiao Tong University, studies national defense at the American Military University in West Virginia.
In the US’ National Security Strategy (NSS) report released last month, US President Donald Trump offered his interpretation of the Monroe Doctrine. The “Trump Corollary,” presented on page 15, is a distinctly aggressive rebranding of the more than 200-year-old foreign policy position. Beyond reasserting the sovereignty of the western hemisphere against foreign intervention, the document centers on energy and strategic assets, and attempts to redraw the map of the geopolitical landscape more broadly. It is clear that Trump no longer sees the western hemisphere as a peaceful backyard, but rather as the frontier of a new Cold War. In particular,
When it became clear that the world was entering a new era with a radical change in the US’ global stance in US President Donald Trump’s second term, many in Taiwan were concerned about what this meant for the nation’s defense against China. Instability and disruption are dangerous. Chaos introduces unknowns. There was a sense that the Chinese Nationalist Party (KMT) might have a point with its tendency not to trust the US. The world order is certainly changing, but concerns about the implications for Taiwan of this disruption left many blind to how the same forces might also weaken
As the Chinese People’s Liberation Army (PLA) races toward its 2027 modernization goals, most analysts fixate on ship counts, missile ranges and artificial intelligence. Those metrics matter — but they obscure a deeper vulnerability. The true future of the PLA, and by extension Taiwan’s security, might hinge less on hardware than on whether the Chinese Communist Party (CCP) can preserve ideological loyalty inside its own armed forces. Iran’s 1979 revolution demonstrated how even a technologically advanced military can collapse when the social environment surrounding it shifts. That lesson has renewed relevance as fresh unrest shakes Iran today — and it should
As the new year dawns, Taiwan faces a range of external uncertainties that could impact the safety and prosperity of its people and reverberate in its politics. Here are a few key questions that could spill over into Taiwan in the year ahead. WILL THE AI BUBBLE POP? The global AI boom supported Taiwan’s significant economic expansion in 2025. Taiwan’s economy grew over 7 percent and set records for exports, imports, and trade surplus. There is a brewing debate among investors about whether the AI boom will carry forward into 2026. Skeptics warn that AI-led global equity markets are overvalued and overleveraged
RSS