Once Chinese Communist Party (CCP) General Secretary Xi Jinping came to power, he made the annexation of Taiwan one of his aims. In 2018, an amendment to China’s Constitution reaffirmed the party’s intentions, stating “Taiwan is part of the sacred territory of the People’s Republic of China. It is the sacred duty of all the Chinese people, including our fellow Chinese in Taiwan, to achieve the great reunification of the motherland.”
Taiwan, however, has operated as a separate political entity since 1949, with its own government, economy and military.
More recently, Xi has called unification with Taiwan “inevitable” and the “essence” of the country’s “rejuvenation,” which he seeks to achieve by 2049, the centennial of communist China’s founding government.
In contrast, Taiwan President Lai Ching-te reiterated in October 2024 that the two sides “are not subordinate to each other” and that China has no authority to represent the democratically governed island. Lai said it’s “absolutely impossible” for China to become Taiwan’s “motherland” because Taiwan’s government was established years before China’s current government.
Taiwan’s Defense Ministry has repeatedly condemned the CCP’s People’s Liberation Army’s (PLA) military drills designed to coerce the island, such as the October 2024 Joint Sword-2024B, which the PLA stated was intended to serve as a “stern warning to the separatist acts of Taiwan independence forces.” Beijing attempts to brand Lai as separatist, and persists in its coercive military posturing that began after Lai’s party, the Democratic Progressive Party, regained power in Taiwan in 2016.
Xi hasn’t backed down from his unification pledge. In April 2025, he ordered another military drill, Strait Thunder-2025A, to demonstrate the fusion of military modernization and technology dominance in multidomain warfare. The questions remain: How, when and at what cost is he willing to achieve this goal?
Taiwan remains a China-U.S. issue
China may claim Taiwan’s fate is a domestic issue, but it has significant international implications. Although the United States does not have official diplomatic relations with Taiwan, it opposes unilateral changes to the status quo and regards Taipei as a vital economic and security partner. The Taiwan Relations Act is the foundation of U.S. engagement with Taiwan. Enacted in 1979, it says the U.S. will “consider any effort to determine the future of Taiwan by other than peaceful means … of grave concern to the United States.” Moreover, the U.S. prefers to trade and strategically partner with democratic Taiwan outside Beijing’s influence.
The potential spillover of an invasion of Taiwan to Japan — a longtime U.S. treaty ally — is clear given its geographic proximity and presents additional risk for China. In the event of a CCP offensive against Taiwan, the U.S. could join forces with regional allies Australia, Japan and South Korea and use combined sea and air assets to cut off Beijing’s maritime lifeline in and around the South China Sea. China’s supply lines are vulnerable, and it would tax the PLA to execute a war outside its boundaries.
Attempting to take Taiwan by force would require a wholesale PLA mobilization, with escalation to all-out war likely because the operation would cross the U.S. redline of changing the status quo in the Taiwan Strait by force.
What is China trying now?
Xi continues to advocate “winning without fighting” by using a so-called Three Warfare Concept, which entails public opinion, psychological and legal warfare, and aggressive posturing such as airspace violations, live-fire drills and economic boycotts. The tactics seek to deter Taiwan’s leadership from declaring independence and to send a message to Washington to maintain its “One China Policy.”
The stakes have become increasingly high. The CCP’s unprecedented military posturing in the East China and South China seas and around Taiwan creates the possibility of an accident or miscommunication that could trigger conflict. China’s gray-zone tactics have produced a steady harassment campaign against Taiwan. Meanwhile, the CCP is building its military capability to invade Taiwan in the next few years should its purported call for peaceful reunification fail.
China’s threats to the U.S. not to arm Taiwan have not been effective. In March 2025, for example, Taiwan received the first of a planned 66 U.S.-made F-16 Block 70 fighter jets. The U.S. approved a $2 billion deal with Taiwan in 2024 that includes an air defense system and in 2025 budgeted $500 million to bolster Taiwan’s arsenal with High Mobility Artillery Rocket Systems, tactical missile systems and anti-ship missile batteries.
China’s options
The cost of annexing Taiwan by full-scale invasion would be extraordinarily high militarily, economically and politically, analysts say.
Strategically, a CCP invasion of Taiwan is fraught with risk. Taiwan would hold the moral high ground in the battle for hearts and minds internationally, despite China’s influence campaigns. Taiwan’s populace would be motivated and united under the belief that they are fighting to defend the island’s democracy and security, the Taipei Times newspaper reported. Further, Taiwan has not crossed the CCP’s redline of developing nuclear capabilities or declaring independence, giving the CCP no justification for changing the status quo by force.
Amphibious defense
The capture of Taiwan would require an immense amphibious assault. Most analysts contend that the PLA will not be ready to undertake such an operation soon, despite Xi’s aspirations to attain the capability by 2027.
Taiwan’s terrain poses tremendous challenges for invaders, with rugged mountains, dense urban areas and limited beaches rendering it unsuitable for rapid moves by an enemy. The PLA may be able to cross the strait, but there are few deep-water ports and beaches in Taiwan that could accommodate a large landing force, according to a June 2024 analysis by the Council on Foreign Relations, a U.S.-based think tank.
A 2023 analysis by the Global Taiwan Institute, a Washington-based think tank, recommended implementing a combination of so-called porcupine and honey badger defense concepts to deter an invasion. That would include Taiwan installing sea mines, barriers and other obstacles, and anti-ship batteries while transforming the Armed Forces.
For political consolidation of Taiwan, China would have to capture Taipei. However, the capital’s proximity to Japanese islands such as Yonaguni, which is 110 kilometers from Taiwan, means a viable amphibious operation would occur in or affect Japan’s maritime zones, potentially bringing Tokyo and its ally, the U.S., into the confrontation.
The U.S.-based Center for Strategic and International Studies recently developed a wargaming scenario of a PLA invasion of Taiwan and ran it 24 times. In most scenarios, Japan, Taiwan and the U.S. defeated a conventional amphibious invasion by the CCP and maintained a self-governed Taiwan. However, all parties paid a high price.
Cost of naval blockades, economic disruption
Most of the PLA’s drills have been to demonstrate the capability to blockade Taiwan — to force Taipei to submit to Beijing’s terms without risking an all-out war. PLA naval forces have portended how they would seek to encircle the island, limiting access to and from its ports. The exercises encroached on Taiwan’s territorial waters, crossing the median line, which has served as a de facto divider in the Taiwan Strait for over 70 years. Establishing air and sea control by exploiting the PLA’s numerical superiority in assets — and posturing them to deter any ally of Taiwan — is part of Beijing’s strategy.
The PLA also could adopt an “anaconda strategy” in which it seeks to defeat Taiwan through a combination of covert and overt tactics, as illustrated by a November 2024 tabletop exercise in Taipei by the Foundation for Defense of Democracies. Cyberwarfare, information manipulation and economic coercion could be followed by a military blockade targeting Taiwan’s vital food and energy supplies, the U.S.-based think tank reported.
The effectiveness of such a blockade would depend on Taiwan’s military and economic readiness, including its reserves of critical resources, as well as the international community’s response. Taiwan will have to bear the brunt of China’s initial onslaught and blockade.
China’s own sea lines of communication (SLOC) beyond the first island chain, which runs from Indonesia northeast to Japan and encompasses the East China and South China seas, similarly are vulnerable to blockade. The U.S. and its Allies and Partners could cut off SLOCs such as the Malacca Strait to block China’s trade routes and energy supply, crippling its economy.
With the looming threat of a CCP blockade of Taiwan, the U.S. and its Allies and Partners have been expanding their presence
and security engagements in the region to enhance interoperability and readiness.
Economic, political costs
Economically, conflict with Taiwan would impose a heavy toll on China, pushing capital and companies out of the country and exposing it to global sanctions. The damage to the Chinese and Taiwan economies would compound the problems facing a Chinese leadership already struggling to revive a sluggish economy reeling from rising domestic debt, a real estate crisis and failing projects under Beijing’s One Belt, One Road infrastructure scheme.
China is Taiwan’s top trading partner, with trade totaling $224 billion in 2023, according to The Associated Press, and Taiwan entities investing over $100 billion that year in China. China is Taiwan’s top destination for its exports, which accounted for about 30.7% of its total exports in the first four months of 2024. Taiwan is the world’s biggest semiconductor manufacturer and any conflict that disrupts chip production would severely impact global supply chains, including China’s.
In the event of an invasion, China likely would face severe economic sanctions by the international community, potentially targeting its financial system, technology exports and key industries. Even if an invasion succeeded, China could face long-term isolation from global markets, further slowing its economy.
Politically, China’s relationships with key trading partners and their allies could be damaged. Asian neighbors may become increasingly aligned with the U.S. and its Allies and Partners, undermining China’s efforts to position itself as a rising superpower and responsible global leader.
A protracted and expensive conflict could spark domestic unrest, threatening the CCP’s stability and economic growth, which is crucial to Xi’s leadership. Dissension within the party and among the populace could arise in the aftermath of an invasion, particularly one that does not produce an immediate and resounding victory. Meanwhile, significant Han Chinese casualties on both sides of the Taiwan Strait would further threaten the CCP’s grip on power.
Protecting the status quo
While the CCP under Xi sees annexation of Taiwan as central to party objectives, the potential military, economic and political blowback could make an invasion unbearable for China. Taiwan’s geography, modern military capabilities, resolute will and vital role in global supply chains and technology — as well as the support of Allies and Partners — present daunting obstacles should Beijing seek to annex the island by force.
Even though the CCP’s military has modernized and maintains a substantial numerical advantage over Taiwan’s forces, a full-scale amphibious invasion does not make strategic sense for China. Rather, the odds favor reputational loss for Beijing, globally and domestically, even if military operations should succeed. If the invasion fails or drags on, the economic and political costs could be permanent.
In the meantime, Taiwan, the U.S. and its Allies and Partners must work together to prepare to counter any unilateral challenges to the status quo.
Neither China Nor The World Can Risk A Taiwan Conflict
China would lose more than it could gain by invading Taiwan, experts contend, while the consequences of even a short-term blockade of the self-governed island could be catastrophic for China and other countries.
Staggering Costs of a Blockade or Invasion
- Tens of thousands of military personnel and civilians could be killed.
- Larger combatants could lose hundreds of billions of dollars in military costs and lost revenue.
- The global cost of a disruption ranges from $2 trillion for a short-term conflict to $10 trillion for a protracted war, experts estimate.
Major Concerns and Costs
1. Military Risks
- China’s People’s Liberation Army (PLA) could underestimate Taiwan’s defensive capabilities and the effectiveness of an intervention by the United States and its Allies and Partners. Many war-gaming scenarios predict victory for the joint forces of Australia, Japan, Taiwan and the U.S. in the event of a conventional amphibious invasion by China, although military costs could be immense.
- Allies and Partners could cut off China’s access to critical energy supplies through the South China Sea and choke points such as the Malacca Strait, causing long-term economic damage.
- Conflict would disrupt manufacturing, decimating industries reliant on semiconductors, including for defense assets such as fighter jets and missile systems.
2. Geopolitical Risks
- Heavy casualties could undermine China’s social stability and hasten its demographic decline, already strained by low birth rates and an aging workforce.
- An invasion, whether failed or successful, would severely damage China’s international reputation.
- A resulting economic downturn could test the Chinese Communist Party’s (CCP) ability to maintain control.
- A large-scale conflict would cause workforce disruptions, population displacement and declining consumer confidence, weakening the CCP’s grip on power and China’s growth prospects.
- Beijing’s leadership may misjudge the regime’s political ability to withstand the military and economic fallout of a prolonged conflict.
3. Economic Risks
- Sanctions, blockades and retaliatory measures from the U.S. and its Allies and Partners could slash China’s trade volume, causing factory closures and rising unemployment.
- China’s manufacturing model, built on just-in-time production and global integration, could collapse.
- The Chinese yuan would weaken internationally, causing corporate borrowing to decline and real estate values to tumble.
- Multinational corporations could leave China and foreign capital inflows dwindle. Local and national government revenues could plummet, adding to social unrest.
Industry Shocks of an Invasion
- Industries dependent on Taiwan’s semiconductors could lose up to $1.6 trillion in annual revenue. Taiwan produces 92% of the world’s most advanced chips for cars, computers and phones and up to 50% of other chips.
- Officials with leading semiconductor manufacturer TSMC warn that the company’s facilities would no longer be operable if the PLA invades. It would take $20 billion and at least three years to build an advanced semiconductor fabrication plant.
- China stands to lose $100 billion in annual investment from Taiwan and $224 billion in trade with Taiwan.
Regional Trade Disruptions
Trading partners that import intermediate goods or materials from China to make products for export would experience slowdowns and revenue losses. Vietnam could lose 14% and Cambodia 13% of their export value from the loss of raw goods from China.
Global Manufacturing Disruptions
Worldwide, countries could face shortages, triggering inflation. Industries ranging from medicine and telecommunications to harvesting and mining equipment would face disruption.
Sources: Christopher J. Neely, “The Economic Effects of a Potential Armed Conflict Over Taiwan,” Federal Reserve Bank of St. Louis Federal Reserve Review, First Quarter 2025, February 26, 2025; Joseph Zeller, “China’s Gambit: The Economic Risks of a Taiwan Conflict,” Australian Institute of International Affairs, May 5, 2025; “The Global Economic Disruptions from a Taiwan Conflict,” Rhodium Group Note, December 14, 2022; Boston Consulting Group; Canalys; Counterpoint Research; IbisWorld; Intellinews; Semiconductor Industry Association.
