And now for my next crisis…

It is the issue that will not go away; the one that no doubt is most likely to keep the US DoD’s war planners and military strategists up at nights- a Chinese invasion of Taiwan to bring what it sees as a recalcitrant “province” back into the fold.

We have written before about the so-called Thucydides Trap in which a hitherto dominant hegemon feels challenged by a rising power, eventually precipitating a ruinous war- with the US and the PRC now fulfilling the roles previously taken by Athens and Sparta some 2,400 years ago. As Thucydides pointed out, wars are usually fought because of fear, honour and (perceived) advantage. It is no accident that the Chinese military recently chose to wargame an attack on a US aircraft carrier group, while also increasingly violating Taiwan’s airspace.

Of course, the argument is made that it would not be rational for the PRC potentially to provoke a military response from the US by attempting to invade Taiwan (with amphibious invasions generally being seen as the most difficult type of conventional military action to conduct), but a number of questions need to be posed:

– What if the PRC mounts a “creeping coercion” of Taiwan short of actual invasion?
– At what point does that provoke a “kinetic response”, whether from Taiwan and/or the US?
– If President Xi sees himself as the “reuniter” of the Middle Kingdom, what might change his calculation of the risks and mean that he picks the moment to move from threats and rhetoric to action? After all, the PRC’s government has acted in recent years in ways which clearly have an “I dare you to stop me” subtext

Objectively, such an action would make no sense. The PRC is integrated into the global economy; and it would likely bear a heavy price if it “overstepped boundaries”.

However, what exactly are those boundaries? And who has the balance of advantage? The argument that somehow China can be contained in the same way as occurred during what now might better be called the First Cold War with the then USSR is facile to say the least. The economic heft of the USSR never remotely challenged that of the US, and that “competition” was at least one key element in the eventual collapse of the USSR and its “empire”, whereas the size of the PRC’s economy (depending upon how one measures it) now at least approaches that of the US.

The only realistic way to maintain a comparative advantage, and ensure that the PRC’s government continues to think twice about re-incorporation by force, is for the US (and its allies) to out-compete the PRC in economic and geo-political terms, and make it very clear that a “red line” means exactly that. Unfortunately, recent precedents and actions do not yet engender much confidence that such an outcome is likely. There is a credibility gap still.

No country, empire or regime is invulnerable, including that of the PRC. Nevertheless, while the world as a whole has many pressing issues to address, even putting the impact of the pandemic to one side, the idea that a PRC invasion of Taiwan is a risk that is “too far out in the tail” strikes one as the equivalent of being adamant, ex ante, that what happened in the Great Financial Crisis could not happen, because it was not within the parameters of any “realistic” financial model, and so being unprepared for when reality collided with those models. Reality won, not surprisingly.

The Awbury Team

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