War With China Over Taiwan Would Have ‘Devastating’ Impact, Defense Secretary Austin Says

US Secretary of Defense Lloyd Austin attends the 20th Shangri-La Dialogue summit in Singapore, on June 3, 2023. (Roslan Rahman/AFP via Getty Images)

U.S. Secretary of Defense Lloyd Austin warned China that a war over its democratic neighbor Taiwan would have a “devastating” impact on the world.

“The whole world has a stake in maintaining peace and stability in the Taiwan Strait—the whole world. The security of commercial shipping lanes and global supply chains depends on it. And so does freedom of navigation worldwide,” Austin said during his speech at the International Institute for Strategic Studies Shangri-La Dialogue in Singapore on June 3.

“Make no mistake: conflict in the Taiwan Strait would be devastating,” Austin added.

Taiwan is facing a constant threat of invasion from China, which sees the self-ruled island as a part of its territory. In recent years, the threat comes in the form of China constantly sending military jets into the island’s air defense identification zone (ADIZ). In 2022, China sent 1,727 planes into Taiwan’s ADIZ, up from 960 in 2021 and 380 in 2020, according to the AFP citing data from the island’s defense ministry.

An ADIZ is a publicly-declared area next to a state’s national airspace, in which approaching foreign aircraft must be ready to identify themselves and their location. The area allows time for the military to judge the nature of the incoming aircraft and take defensive measures if needed.

One of the largest-scale incursions this year happened on April 10, when 54 Chinese warplanes entered the island’s ADIZ.

Taiwanese air force pilots run to their armed U.S.-made F-16V fighter at an air force base in Chiayi, southern Taiwan, on Jan. 5, 2022. (Sam Yeh/AFP via Getty Images)

“So we are determined to maintain peace and stability across the Taiwan Strait. And so are a number of other countries around the world—and that number continues to grow,” Austin said. ”Conflict is neither imminent or inevitable. Deterrence is strong today—and it’s our job to keep it that way.”

Austin met with his Japanese, South Korean, and Australian counterparts in two separate meetings in Singapore on June 3. Their joint statements emphasized the importance of seeing “peace and stability across the Taiwan Strait.”

“The United States remains deeply committed to preserving the status quo in the strait, consistent with our longstanding one-China policy, and with fulfilling our well-established obligations under the Taiwan Relations Act,” Austin added. “So we will support our allies and partners as they defend themselves against coercion and bullying.”

U.S. Indo-Pacific Command criticized China for engaging in “unsafe” naval maneuvers on June 3, when the USS Chung-Hoon, accompanied by Canada’s HMCS Montreal, was performing “a routine south to north Taiwan Strait transit.”

A Chinese guided-missile destroyer “overtook Chung-Hoon on their port side and crossed their bow at 150 yards,” the command said. “Chung-Hoon maintained course and slowed to 10 knots to avoid a collision.”

“[China’s] actions violated the maritime ‘Rules of the Road’ of safe passage in international waters,” the command added.

Semiconductors

Despite having spent billions to prop up its semiconductor industry, China currently still doesn’t have the capabilities to produce the most advanced semiconductors, which are tiny chips that power everything from mobile phones and electric vehicles to missile systems and artificial intelligence.

Meanwhile, Taiwan, home to the world’s largest contract chipmaker TSMC, accounts for about 92 percent of the world's most advanced semiconductor manufacturing capacity.

Rep. Michael McCaul (R-Texas) arrives at a caucus meeting with House Republicans on Capitol Hill in Washington, on May 10, 2023. (Drew Angerer/Getty Images)

As a result, Chinese leader Xi Jinping wants to get his hands on Taiwan’s semiconductor industry, according to Rep. Michael McCaul (R-Texas).

“Xi wants that,” McCaul said during a panel at the World Economic Forum in 2022. “And just like [Russian President Vladimir] Putin, it wasn’t a question of if but when to invade Ukraine, I think Xi is looking at Taiwan and it’s a question of when.”

A conflict over Taiwan could play out in a number of scenarios. According to the Pentagon’s 2022 military report (pdf) on China, the Chinese military options range from “an air and/or maritime blockade to a full-scale amphibious invasion to seize and occupy some of its offshore islands or all of Taiwan.”

However, China’s blockade of Taiwan could be costly to the world economy, according to a recent report from the Rhodium Group.

“A rough, conservative estimate of dependence on Taiwanese chips suggests that companies in these industries could be forced to forego as much as $1.6 trillion in revenue annually in the event of a blockade,” the report says, noting that trillions more in economic activity could be lost due to second-order impacts.

“Ultimately, the full social and economic impacts of a chip shortage of that scale are incalculable, but they would likely be catastrophic,” the report says.

Sen. Roger Wicker (R-Miss.) speaks during a hearing with the Helsinki Commission in the Dirksen Senate Office Building in Washington, on March 23, 2022. (Anna Moneymaker/Getty Images)

Sen. Roger Wicker (R-Miss.), ranking member on the Senate Armed Services Committee, predicted that China’s war over Taiwan would “immediately send the global economy into a depression the likes of which we have not seen in a century” during a floor speech in February.

“Americans would lose access to key semiconductors that are in our laptops, phones, cars, and countless electronic products that have become the backbone of daily life,” Wicker added.

If China seizes control of Taiwan’s semiconductor industry, Wicker warned that American supply chains would be “extremely vulnerable to the influence of the Chinese Communist Party.”

“Beijing wants to seize that lucrative industry in order to gain a clear upper hand in the world economy. This could cause massive economic pain for the United States,” the senator added. “If Beijing gains control of Taiwan’s semiconductor industry, it could rewrite the rules of the global economy. Beijing wants to dictate the terms of any negotiations with the United States, costing Americans tens of millions of jobs and stalling our economic growth.”