Anticipating implications of geopolitical tensions

Taiwan Radar

Keep track of geopolitical developments that affect your China-related activities. At the centre of these developments are the tensions relating to the status of Taiwan. The Taiwan Radar is a scenario-based overview, weekly updated, of recent geopolitical developments related to Taiwan.

The disputed status of Taiwan is at the core of the geopolitical struggle between China and the US. While Taiwan wants to preserve its autonomy, China aims to bring the island under its political control. The US, while not recognizing Taiwan as an independent state, provides the island with weapons to help it defend itself against China. As the rivalry between the US and China increases, tensions between China and Taiwan have been intensifying.

Military Incidents

We will provide a weekly overview of activities by the Chinese military in the airspace and waters surrounding Taiwan. These activities include incursions into Taiwan’s air defense identification zone (ADIZ) and can be seen as an indicator of the level of geopolitical tensions.

55 detected aircraft last week, compared to 54 per week on average over the last two months

Source: Ministry of National Defence Republic of China

Taiwan’s air defense identification zone (ADIZ) comprises of the island’s airspace plus a significantly wider area over water and land. Taiwan’s ADIZ is unilaterally declared and was originally designed by the US military after the Second World War. Although the northwestern portion of Taiwan’s ADIZ covers parts of Fujian and Zhejiang provinces on the Chinese mainland, the Taiwanese government only reports Chinese incursions into the part of the zone that is southeast of the Taiwan Strait median line. The Taiwanese ADIZ overlaps with China’s ADIZ over the East China Sea.

Latest developments

Selection of news articles

Recent developments around Taiwan that have an impact on China’s geopolitical position and regional stability in East-Asia. We have selected and summarised the most important articles for you, so you are fully up to speed. The information we share is fact-based and up-to-date, and is further supported with our own comments.

Direct military conflict

There are two main variants of this scenario. In the first variant, military conflict remains limited to conventional warfare in the Taiwan Strait, and the East and South China Seas. The EU imposes severe sanctions against China, which retaliates with counter-sanctions against the EU.

In the second variant, hostilities between China and the US escalate into a full-scale war, that potentially involves the use of nuclear weapons. European companies are forced to cease operations in, and trade with, all of Asia. 

A Chinese blockade of Taiwan

In this scenario, China establishes a naval, and possibly also an air, blockade of Taiwan’s seaports. Neither Taiwan nor the US takes military countermeasures in order not to escalate into an armed conflict. The US and many other countries respond with imposing severe economic sanctions against China. 

A gradual, incident-driven escalation of Chinese pressure on Taiwan

China and the US have been engaged in a slow-paced process of escalation over the past years. China has been increasing military and diplomatic pressure on Taiwan, while the US has been expanding its support for the island. This scenario can be subdivided into three distinct phases:

Phase 1 (current phase): despite growing tensions, China and the US still accept the framework of agreements that was created in 1972-1982 as the basis for their policies.

Phase 2: One or more of the three parties involved (Taiwan, China, US) clearly move away from the key aspects of the status quo without formally rejecting them.

Phase 3: One or more of the three parties involved (Taiwan, China, US) formally reject the key aspects of the status quo.

Continuation of the status quo without escalation

Cross-Strait relations and US-China relations remain stable. All parties accept the status quo (at least for now). Taiwan remains highly integrated in the global economy, and has close economic ties with China. The strategically important semiconductor supply chains continue to function in a highly efficient way. 

Indicators to watch

We monitor the following criteria in order to assess their impact on the four scenarios and to help companies decide on the right timing to prepare for, and execute, a possible exit strategy.

Efforts by the US and its allies for increased Taiwanese representation within international organisations

Confrontations between China and the US or other countries over Taiwan’s membership or role in international organisations can be a precursor to increased Cross-Strait tensions.

Chinese and American military exercises near Taiwan

A change in the nature, location and frequency of Chinese and US military exercises near Taiwan may indicate a decrease or increase in tensions.

Statements by Chinese, American or Taiwanese leaders

Leaders’ statements on the status of Taiwan may be an indicator of the current state of affairs, or may themselves increase or lessen tensions.

Presidential election campaigns in Taiwan and the US

Presidential campaigns in both Taiwan and the US can provide an insight into whether tensions with China might increase as a result of upcoming elections. The elections themselves may also trigger Chinese actions (such as military exercises) that lead to greater tensions.

US arms sales, high-level visits or changing legislation related to Taiwan

An increase in military or political interaction between the US and Taiwan indicates an increase in tensions.

Changes in ties between Taiwan and key allies of the US (Japan, Australia, EU, South Korea, NATO members)

Closer diplomatic coordination with, or a (potential) move towards formal recognition of, Taiwan by the US and its allies would indicate a (minor or major) escalation of tensions.

Chinese troop movements towards Fujian province

A potential Chinese attack on Taiwan would probably involve a large-scale concentration of troops and equipment in Fujian, the mainland Chinese province closest to Taiwan.

New Chinese efforts to decrease the number of countries with diplomatic relations with Taiwan

Efforts by the Chinese government to induce third countries to end diplomatic relations with Taiwan are an indicator of a continuation of the build-up of Chinese pressure on Taiwan. The efforts themselves can potentially also contribute to increased US-China tensions over influence in third countries.

Black Swans

Black swans are sudden, unexpected events that can be major game-changers, but that are rarely considered in the media or by companies. We keep track of developments that could lead to any of these black swan events. The Taiwan Radar will alert you in case we detect an increased likelihood of the occurrence of such an event.

Sudden breakdown of the rule of, or a leadership crisis within, the Chinese Communist Party

A severe political crisis in China would create a high degree of uncertainty regarding China-Taiwan-US relations. The chances of China attacking Taiwan, the US attacking China, or Taiwan declaring independence should then be reassessed.

Rapidly escalating military crisis on the Korean Peninsula, in the East or South China Sea, or between China and India

Taiwan is one among several geopolitical hotspots in the Asia Pacific/South Asia region. A military crisis relating to one of the other hotspots could start a chain of events that could fundamentally alter China-Taiwan-US relations. As a point of reference: the US first became involved in the Cross-Strait relationship when North Korea invaded South Korea in June 1950.

Expansion of the Ukraine War into a direct conflict between Russia and NATO

Both the US and China would need to reassess their mutual relationship, and their position with regard to Taiwan, if war would break out between the US (as a part of NATO) and Russia. A major uncertainty in such a scenario would be whether the war in Europe would spill over into East Asia, given China’s strategic partnership with Russia and US concerns over any kind of Chinese support for Russia.

Re-establishment of formal diplomatic ties between the US and Taiwan, and the end of ties between the US and China

If the US government would reverse, or show signs of intending to do so, the policy that it implemented in 1979, when it switched diplomatic recognition to China and withdrew its troops from Taiwan, this would trigger an acute crisis as the Chinese government would take action to make sure that it would not lose its leverage over Taiwan’s current and future status. A Chinese military attack on Taiwan could be part of this response.

Bilateral agreement between the US and China to stabilise the status quo relating to Taiwan

Similar to what happened in 1972 when then US President Nixon visited China, the two great powers could come to an agreement that would stabilise their mutual relationship without solving the Taiwan issue. Such a development could potentially involve all parties accepting the status quo across the Taiwan Strait.

A radical turn in Taiwanese politics

If a future Taiwanese government would either declare independence or start negotiations with China over a unification process, this would profoundly change the China-Taiwan-US relationship. It could either lead to severe destabilisation, or to greater stability of Cross-Strait relations and China-US relations.

Surprise military attack on China by the US, or on Taiwan by China

Either the US or China could resort to military action if they believed that not doing anything would result in a radical deterioration of their own geopolitical position. A surprise attack would maximise their chances of achieving their strategic aims under such highly risky circumstances.

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