How to Deter a War for Taiwan + The Burdens of Occupation if China Wins

“Arguably, more important from Beijing’s perspective should be what an occupation looks like. And ‘one country, two systems’ is not an occupation plan.”

Welcome back to part 2 of our show with Jude Blanchette and Gerard DiPippo on War for Taiwan. Here we discuss:

• How clearer sanctions policy could help deter conflict

• The crushing challenges of occupying Taiwan even after a successful invasion;

• What a Taiwanese insurgency might look like

You can find part one of our conversation about the global political and economic fallout here.

How The G7 Can Deter War

Jordan Schneider: So what’s the takeaway for policymakers and legislators around the world?

Jude Blanchette: We’re positing here, indirectly, that Beijing likely understands the high degree of costs that it would accept — and I think we also have to recognize that you could have made the same assessment about Putin on February 22, 2022, that an invasion of Ukraine was going to result in a poorer Russia. And yet, states make bad decisions all the time.

If we’re seeing increasingly erratic decision-making in Beijing where they’re not able to appropriately balance costs and benefits, that would be fungible across a number of policy areas, not just in this one narrow slice on Taiwan. So we should definitely be looking for erraticism in Chinese policymaking more broadly — that is, a serious degradation of the quality of cost-benefit analysis.

We need to help Beijing understand the costs. We should make more concerted efforts to show Beijing that we’re credibly working the problem of, “How do we build a coalition to punish China if it undertakes this” — so it can understand that Taiwan comes at the cost of being a part of the global economy.

That could come in the form of lower-key credible statements that show the US is working with G7 coalition partners to think about the sanctions piece. I think maximalist statements from the US and trying to strongarm G7 economies into making the most extreme statements are unhelpful: one, the higher threshold of statement you demand from people, the smaller the club will be; and two, they’ll likely be seen by Beijing as not particularly credible. I think what would worry Beijing is if it saw G7 economies having regular meetings — say, a “G7 Sanctions Task Force.” I don’t think you need to come up with much specifically because that will just make this a prolonged effort — but just show Beijing that we are working on the problem. 

Jordan Schneider: Making clear that national greatness on any other dimension besides territorial revanchism will come at the cost of your territorial revanchism — that seems like the calculation you’d want leadership to make. The least you can hope to do is make as clear as possible to Beijing that under no circumstances is a kinetic conflict going to be a military walk in the park, much less an economic or diplomatic one.

Gerard DiPippo: Right. The US and the G7 were rich well before China was integrated into the world economy. So there is a darker world in which China is basically excluded from that path to development, but the G7 chugs along after a period of recovery.

Jordan Schneider: It’s a good point, because I think you can see analysts in Beijing making the mistake that the German chancellor’s showing up to Beijing would lead you to conclude the same thing would likely happen after a war. It’s just not true.

Occupying Taiwan

Jordan Schneider: So it’s 2032. You have your military parade. You get to say that you’ve restored the nation. But what are you left with?

Jude Blanchette: You’ve taken the beaches, but now the hard part starts: the United States would be the first to tell you that military victories do not translate necessarily into prolonged political victories in occupation.

Given the levels of nationalism we’ve seen on Taiwan and the fact that they have been an organizing principle of Taiwan’s foreign policy for a very long time, and especially in a post-Ukraine world, we would have to assume some degree of resolve from the Taipei leadership — which would mean taking the capital and installing a new, functioning, effective government would be a prolonged endeavor.

I think we can imagine some degree of counterinsurgency on Taiwan — and especially given the geographical terrain of Taiwan, this would be  difficult for China to fight. Even if there is very low counterinsurgency, you have to imagine that China is perpetually paranoid about counterinsurgency, and so this is effectively going to be military rule.

Jordan Schneider: Or they’ll rule in a dumb enough way to create that insurgency.

Jude Blanchette: Totally. I think the point that we’re just trying to make here is that it’s hard to imagine a path where the military victory translates into a sustainable, peaceful political victory, given likely realities — and these realities don’t have to be ultra-aggressive Afghan-style counterinsurgency to the Soviet Union; a lower threshold than that already makes this very difficult for China as an occupying power.

I think one of the most frustrating elements of the discussion on Taiwan is that China somehow gets this pristine semiconductor industry, which they can either exploit on the island, or they can pick up the secret TSMC secret sauce, bring it back to China, put the floppy disk in, and then rip and run from there. If China’s semiconductor industry isn’t shattered in an invasion and physically destroyed, you’d also then have the human capital problem: you’d have to round up and keep everyone working at these facilities at gunpoint or somehow co-opted.

A lot of people assume the challenge is day zero, the invasion. But actually our argument is that, just from a functional-governance perspective, it’s day one to day n. Occupations are hard.

Gerard DiPippo: Adding to that — let’s say months or years after the occupation starts, we’re talking about a middle-income economy trying to absorb a high-income economy, while also policing it and having to rebuild parts of it, while also having to rebuild its own country and dealing with massive financial or fiscal crises.

I suspect that the Chinese population would object to spending a lot of money rebuilding their former enemy. When the US does this type of thing, the US is usually fighting countries that are substantially poorer. But this is the case of the middle-income guy trying to take the rich guy — and I think that’s going to be a massive burden for the Chinese fiscal system.

Jordan Schneider: On the domestic side, social stability will be a real question mark — when you’re going through an economic crisis, digest and move past the nationalist sugar-high of taking Taiwan, and then all of a sudden people are left with lives that are substantially worse than they were before the war started. I think people forgot the potential of this before late November 2022, and this is going to be a risk to the CCP when they’re looking at Taiwan. 

Gerard DiPippo: I find it extremely difficult to imagine, under these circumstances, that the Chinese government would pursue anything like economic liberalization. I don’t think their economic policymaking is going to get better. I think they’re basically going to be in wartime-economy mode for years.

So the Chinese economy is going to be at best stagnant, if not in severe contraction. And because of those repressive mechanisms, China is definitely not going to be hospitable to foreign investment, at least from advanced economies.

Jordan Schneider: It’s one thing to live through that coming out of a civil war — say, the 1950s through 1970s (not that those years were particularly socially stable). But it’s another to have spent decades really engaging with the world and the global economy, seeing how much better your life gets growing at ten, seven, five, even three percent GDP per year — and going from that to this state-owned wartime, ration-driven shrinking growth. That’s not going to make a lot of people happy, now that there’s this huge mess on your hands of what to do with what to do with Taiwan.

Jude Blanchette: I think your point about the sugar high was well-put. I think it’s important to remember that abstract nationalism is cheap, and I would imagine that even the most hardcore nationalist is not willing to trade off China as a growing, strong, prosperous country, increasingly engaged and in many ways helping to shape international order — all that to get Taiwan and then to revert back to this anarchic, wartime economy.

The protests in China which began in November 2022 are important in that respect, because they show that for all the discourse in Beijing about a people’s war and sacrifice, most people just want to live a good life.

Nationalism in the US is cheap because we’re usually fighting wars in far-flung places where the cost is really concentrated on very small number of communities here in the United States. I bet that US nationalism would decline precipitously if we were paying the full cost — both in geographic proximity and in economic terms — for all our costly foreign-policy mistakes.

I would imagine Beijing has some concept of this. As external observers I hear people say, “The Chinese people would love to take Taiwan.” But they don’t say the next part: “But at what price?”

Jordan Schneider: Let’s conclude with some homework for grad students out there. If folks are interested in continuing this scenario analysis, what homework do you want to assign?

Jude Blanchette: It would be worth thinking about the proximate reasons China would carry out an invasion or blockade. Right now, we have this lumpy conception that Xi Jinping wakes up in the middle of the night, has to pee, and on his way to the bathroom thinks, “You know what? Tomorrow’s the day!” Or he flips over the calendar in 2027 and says, “Today’s the day we’re going in, boys.” So thinking through what the lead-up to an invasion could look like would be a really important thought exercise — it’s just so we start getting the wheels spinning.

The other thing: I’ve wanted to do a study of occupations, envisioning what an actual occupation would look like — in other words, taking that final section of what we did and really building that out. The problem set we think Beijing is trying to solve is the actual invasion. Yet arguably, more important from Beijing’s perspective should be what an occupation looks like. And “one country, two systems” is not an occupation plan; making Taiwan a SAR is not an occupation strategy.

Jordan Schneider: I’m going to close by recommending a fantastic and totally wild book: Hawaii Under the Rising Sun: Japan’s Plans for Conquest After Pearl Harbor, by John J. Stephan, who dove into the archives: apparently Japan thought they were going to take Hawaii. It didn’t work out that way — but if it did, it would’ve been a real mess and under no circumstances play out in the timeline that Imperial Japan thought.

Outro Music: 水哥 ft. 蛋堡, by 李英宏 aka DJ Didilong