In a statement posted yesterday ahead of New Year’s celebrations in China, President Xi Jinping remarked on the nation’s technological advancement and execution of its latest five-year plan, while calling the reunification of Taiwan “unstoppable.” While the statement in itself is hardly new, there are mounting tensions in the area that may raise the level of concern among multiple interested parties.
China has executed military “drills” around Taiwan on multiple occasions over the past few decades, but the latest “Justice Mission 2025” exercises have raised more than a few eyebrows. The drills in 2022 and 2024 already encircled the island and poked into the Philippine Sea, but according to a map in a Reuters article, the past year’s operations increased in both their scale and intensity.
The exercises prompted an ambassador meeting with representatives from the U.S., Australia, Japan, and India, though there are currently no details on their discussions. Some outlets remark that these exercises are seen as a response to the $11.1 billion weapons deal between the U.S. and Taiwan, announced in December 17. It can be argued that such a large-scale operation would have been decided on and planned much longer ago, though.
China’s Xinhua state agency published an article about the drills, with a key sentence being that they simulate an operation to “press and contain separatist forces while denying access to external interference” – an approach summarized as “sealing internally and blocking externally.”
Some analysts note that the regularity of these drills seems to imply a Chinese tone shift from reaction to regular provocation. Additionally, they consider that the consequences of a war with Taiwan would hurt the larger nation, turning it into a pyrrhic victory.
To state that a Chinese takeover of Taiwan would have major global consequences is an understatement. The vast majority of advanced chip production, particularly but not only 2 nm and smaller chips, comes from Taiwan. There are chipmaking facilities coming online from TSMC, Intel, and Samsung in other countries, but only a couple have very recently started operations (Intel and TSMC in Arizona). And most advanced packaging still happens on the island.
Even with chipmaking fully taking place outside of Taiwan, the nation’s location close to China and its established trade routes and general infrastructure can’t be easily replicated elsewhere, at least for the time being. The advanced EUV lithography machines are exclusively made by Dutch company in ASML, who has noted in numerous occasions that the machines in Taiwan all have remote kill-switches in case the worst happens.
Other countries aren’t sitting by and watching idly, either. In 2023, Congressman Seth Moulton stated that the U.S. could hit TSMC’s facilities in case of an invasion, while Japan’s Prime Minister Sanae Takaichi said that such an event would signal an “existential crisis” for the nation, and allow for military operation under Japanese law. A couple years ago, the Phillipines, who regularly sees the ghost of future China in its sea, has granted the U.S. access to military bases pointing to Taiwan.
Clearly, there’s a path for this situation to become a global conflict, affecting far more than the tech industry and the wider economy. And that’s almost certainly one of the major reasons things haven’t yet escalated further. Because a global economic crisis on top of a region-spanning military conflict isn’t likely to be good for any government, at least in the short term.
