Assessing the impact of a Chinese blockade of Taiwan

Last week, the Eastern Theater Command of the Chinese People’s Liberation Army (PLA) engaged in “joint combat training exercises” in the northern, south-western and south-eastern waters and airspace off the coast of Taiwan.

This involved the deployment of troops from the Navy, Air Force, Rocket Force, Strategic Support Force and Logistic Support Force.

According to China’s Ministry of National Defense, the activities focused on joint blockade, sea target assault, strike on ground targets, airspace control operation, and joint combat capabilities.

This reportedly involved the firing of 11 ballistic missiles.

The PLA’s exercise also involved air activities around Taiwanese airspace, including the deployment of six Shenyang J-11 and five Shenyang J-16 fighter jets, and 16 Sukhoi SU-30 fighter aircraft.

This was in addition to almost daily breaches of Taiwan’s air defence identification zone (ADIZ).

The military activities followed US House Speaker Nancy Pelosi’s arrival in Taiwan for meetings with senior government and parliamentary officials.

VIEW ALL

Chinese Foreign Ministry spokesperson Zhao Lijian had said the visit would challenge China’s “red line” and would be met with “resolute countermeasures”.

These events disrupted commercial trade and prompted temporary suspensions of commercial flights in the region.

China’s response was interpreted as a rehearsal for a full-scale assault on Taiwan, with President Xi Jinping’s regime publicly voicing plans to absorb the island-state into CCP-control.

But according to David Uren, a senior fellow at ASPI, a prolonged blockade of Taiwan in the event of a full-scale attack would backfire.

“If a real Chinese blockade were challenged by the United States and the Taiwan Strait were designated a war zone, trade finance and insurance would evaporate for all shipping in the area,” he writes.

“Any real-life disruption of the sea lanes to the east and west of Taiwan would have a crippling effect on China’s own economy, since its major ports of Shanghai, Dalian, Tianjin and others are dependent on passage through waters near Taiwan.”

Uren notes the Taiwan Strait serves as a “conduit” for shipping from China, Japan and Korea and provides a direct route from South China to the US.

Additionally, most of Australia’s iron ore exports pass through the region en route to northern Chinese ports.

Uren cites a Bloomberg analysis, which revealed almost half the world’s container ships passed through the Taiwan Strait in the first seven months of 2022.

“Although it is possible for ships bound for North Asia to avoid the strait, which is only 130 kilometres wide at its narrowest, the alternative route to the east of Taiwan through the Luzon Strait with Philippines is vulnerable to cyclones,” he adds.

Uren goes on to flag the world’s dependence on Taiwan’s semi-conductor manufacturing capability, describing the embattled nation as the “undisputed king” of the integrated circuit.

Taiwan accounts for approximately 63 per cent of the global contract manufacture of microchips, with TSMC the major supplier to Apple, Intel, Qualcomm and Nvidia.

“Alongside its fabrication is an ecosystem of integrated circuit design, packaging and supplies such as silicon wafers,” Uren observes.

“Taiwan’s total integrated circuit exports earn around US$140 billion a year, and it is also an important supplier of other high-technology and high-value equipment.”

This bodes poorly for China, which contributes to almost half of Taiwan’s exports of integrated circuits.

“Taiwan-sourced chips are central to China’s exports of electronic goods,” Uren writes.

The impact of chip shortage in response to a China-Taiwan conflict prompted the US Senate to approve a US$280 billion bill to ramp-up its domestic chip production.

“Any sustained blockade of Taiwan would make the disruption to microchip supplies during the COVID-19 epidemic look trivial,” Uren writes.

“An analysis of Taiwan’s microchip sector by the Hong Kong–based Hinrich Foundation notes that integrated circuits are now the fourth most widely traded category of goods, behind crude and refined oil and automobiles.”

As such, any potential blockade of Taiwan would halt the flow of resources into China’s northern ports and significantly disrupt its exports of manufactured goods.

But Uren notes China’s struggle would be shared by the rest of the world, drawing on the ripple effect from Russia’s assault on Ukraine.

“The global impact of the loss of trade through the Taiwan Strait would be incomparably greater than that flowing from Russia’s war in the Ukraine,” he concludes.

Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific region and what you would like to see from Australia's political leaders in terms of partisan and bipartisan agenda setting in the comments section below, or get in touch with This email address is being protected from spambots. You need JavaScript enabled to view it., This email address is being protected from spambots. You need JavaScript enabled to view it., or at This email address is being protected from spambots. You need JavaScript enabled to view it..