When it comes to the so-called DC foreign policy “blob”, few scenarios have been more sketched out, analyzed and wargamed than a potential Chinese invasion of Taiwan. President Xi Jinping’s calls for national rejuvenation coupled with Taiwan’s coalescing autonomous identity apart from the mainland is raising the stakes for both sides and the world writ large.
Given Taiwan’s centrality to global supply chains, I wanted to understand how the world’s economy would transform if a crisis in the Taiwan Strait were to escalate, and few people understand the topic better than Gerard DiPippo. He’s the Senior Geo-Economics Analyst for Bloomberg Economics, and his research centers on the Chinese and Taiwanese economies and their interlinkages with global value chains.
DiPippo and host Danny Crichton walk through different scenarios of what could take place in the Taiwan Strait — from an outright war to a soft embargo — and how we might model the global economic costs of each scenario. We also discuss some of the second-order effects of any conflict in the Strait, from additional sanctions to what goods might substitute for those lost to conflict. Along the way, DiPippo highlights some surprising and counterintuitive findings from his macroeconomic analysis that changes the calculus for all parties involved.