Good news has been scarce in world affairs this year. So it’s worth noting a conflict zone where the worst-case scenario hasn’t happened: the long-running standoff between China and Taiwan.
Just over a week ago, Taiwan held a free and fair election. China’s least favorite candidate won, but the reaction from Beijing was unexpectedly moderate.
Chinese officials repeated their long-standing vow that Taiwan will be absorbed into China someday. They warned Taiwan’s new president-elect, Lai Ching-te, against moving toward a formal declaration of independence. And they resumed air and naval combat patrols across the “median line” between Taiwan and the mainland.
That response barely qualified as saber-rattling by recent standards, and was far less than many China-watchers had expected.
“It was a dog that didn’t bark,” said Jude Blanchette of the Center for Strategic and International Studies in Washington.
President-elect Lai, a Harvard-trained physician, was notably restrained, too.
“As president, I have an important responsibility to maintain peace and stability in the Taiwan strait,” he said in his victory speech. He added that he doesn’t intend to declare independence because the island is already autonomous in practice.
The United States played a role as well, by offering assurances to both sides.
When reporters asked President Biden for his reaction to the election, he responded with just five words aimed at Chinese President Xi Jinping: “We do not support independence.” Meanwhile, an American delegation visited Taipei to reaffirm the U.S. position that Taiwan’s status cannot be changed without the consent of Taiwan’s people.
There’s no guarantee this calm will last. Xi and China’s other communist leaders are still committed to extending Beijing’s sovereignty to Taiwan. After watching China extinguish democracy in Hong Kong, Lai and a growing majority of Taiwan’s people intend to avoid that outcome.
But for the moment, all sides have taken a step away from military conflict. There’s a straightforward reason for that: The costs of war would be far too high, including for China.
This month, Bloomberg Economics estimated the economic impact of a Chinese invasion of Taiwan and concluded that it would touch off a massive global recession. Under those estimates, a war would shrink China’s economy by almost 17%, the U.S. economy by almost 7% and the world economy by about 10%.
If China imposed an economic blockade on Taiwan — a step just short of a shooting war — that could backfire on Beijing. A yearlong blockade would shrink China’s economy by almost 9% and the U.S. economy by about 3%, according to Bloomberg’s estimates.
In either case, California, which does more trade with China and Taiwan than any other state, would take a disproportionate hit. Technology firms such as Apple and Intel depend on Taiwan for advanced semiconductors and China for manufacturing. California’s agricultural sector relies on China and Taiwan as two of its top export markets.
China watchers say Xi’s top priority is restoring his country’s sputtering economy to the rapid growth it enjoyed in the years before the COVID-19 pandemic. China reported last week that its economy grew 5.2% last year. Many economists believe that number is artificially inflated: It doesn’t appear to reflect China’s challenges of youth unemployment, deflation and a collapsing real estate bubble.
“Their economic problems at home affect how they approach Taiwan,” said Bonnie Glaser, a China scholar at the German Marshall Fund. “Xi Jinping values the fragile stability that has been achieved in the U.S.-China relationship. A crisis over Taiwan would disrupt that.”
One more factor: Xi does not appear confident that the corruption-riddled Chinese military would succeed in a major crisis.
“All those factors have led them to recognize that there are very real risks in using force against Taiwan,” she said.
That doesn’t mean the standoff over the Taiwan strait is over. The status quo is working reasonably well for Taiwan and the United States, but it still doesn’t work for the Chinese Communist Party, which considers the island a renegade province.
“Chinese military pressure is going to continue,” Glaser predicted. “The only question is, at what level?”
Meanwhile, she added, China will continue exerting economic and political pressure on the island, using carrots and sticks to reward China-friendly figures and punish critics.
Last year, China abruptly blocked imports of Taiwanese mangoes, which are grown mostly in southern Taiwan, a stronghold of Lai’s Democratic Progressive Party.
One of Beijing’s aims will be to widen the fissures in Taiwan’s government. Lai won the presidency with only 40% of the vote, and his pro-independence party lost its majority in parliament; if Lai wants to increase defense spending, he’ll need support from other parties.
Blanchette said China is focusing on “gray zone” measures — actions short of military attacks or blockades that would provoke U.S. reaction. Banning mangoes, for example.
“The objective is to create situations where the United States is unable to respond, to convince Taiwan that it is alone and that its U.S. support is very constrained,” he explained. The challenge for the U.S. is finding ways to parry such moves.
That’s a recipe for more years of tension and instability. But a glance at the world map shows that kicking the can down the road is often better than starting another war.