Bloomberg: Possible conflict over Taiwan to cost $10 trillion

War over Taiwan would have a cost in blood and treasure so vast that even those unhappiest with the status quo have reason not to risk it, Report informs referring to Bloomberg.

Bloomberg Economics estimate the price tag at around $10 trillion, equal to about 10% of global GDP — dwarfing the blow from the war in Ukraine, Covid pandemic and Global Financial Crisis. China’s rising economic and military heft, Taiwan’s burgeoning sense of national identity, and fractious relations between Beijing and Washington mean the conditions for a crisis are in place. With cross-Strait relations on the ballot, Taiwan’s January 13 election is a potential flashpoint.

Few put a high probability on an imminent Chinese invasion. The People’s Liberation Army isn't massing troops on the coast. Reports of corruption in China’s military cast doubts on President Xi Jinping's ability to wage a successful campaign. US officials say tensions eased somewhat at the November summit between President Joe Biden and Xi, who pledged “heart-warming” measures to woo foreign investors.

Still, the outbreak of war in Ukraine and Gaza are reminders of how long-simmering tensions can erupt into conflict. Everyone from Wall Street investors to military planners and the swathe of businesses that rely on Taiwan’s semiconductors are already moving to hedge against the risk.

National security experts in the Pentagon, think tanks in the US and Japan, and global consulting firms are gaming out scenarios from a Chinese maritime "quarantine" of Taiwan, to the seizure of Taiwan's outlying islands, and a full-scale Chinese invasion.

Taiwan makes most of the world’s advanced logic semiconductors, and a lot of lagging edge chips as well. Globally, 5.6% of total value added comes from sectors using chips as direct inputs — nearly $6 trillion. Total market cap for the top 20 customers of chip giant Taiwan Semiconductor Manufacturing Co. is around $7.4 trillion. The Taiwan Strait is one of the world’s busiest shipping lanes.