Taiwan says Chinese attack would hit global economy harder than Ukraine war

Taiwan’s top trade negotiator told Reuters on Tuesday that a Chinese military attack on the island would harm the global economy more than Russia’s invasion of Ukraine. 

John Deng noted that the world relies on Taiwan for computer chips used in electric vehicles and mobile phones, meaning the implications of a Chinese invasion would be sweeping for any industry that relies on the technology.

China has stepped up its military drills and rhetoric toward Taiwan since Russia invaded Ukraine, adding to global fears that China may feel emboldened to invade the island, which it claims historical control of.

Russia’s invasion has sent economic shockwaves across the world, sharply increasing oil and gas prices and raising fears of famine in multiple countries in light of food export bans and other disruptions within the “bread basket” to much of the world.

“The disruption to international supply chains; disruption on the international economic order; and the chance to grow would be much, much (more) significant than this one,” Deng said, comparing the Russian invasion to a potential Chinese one. 

Reuters reported that Taiwan’s chip exports last year were worth $118 billion. Deng said 40 percent of Taiwan’s chip exports go to China, but Taiwanese officials are attempting to diversify further.

President Biden added fuel to tensions between China and Taiwan when he said last month that the United States would be willing to defend Taiwan if China invaded. The White House clarified that the U.S. was still following the “One China” policy and has not changed its stance. 

The Taiwan Relations Act of 1979 commits the U.S. to helping Taiwan defend itself but does not commit to direct U.S. engagement, and America has maintained a stance of “strategic ambiguity” on the island’s independence.

After Biden made his comments, China announced it would conduct military drills near Taiwan, which a spokesperson said were a “solemn warning to the recent U.S.-Taiwan collusion activities.” 

Defense Secretary Lloyd Austin told Gen. Wei Fenghe, his Chinese counterpart, on Friday that Beijing must avoid “further destabilizing actions” toward Taiwan.