NEW YORK, January 9. /TASS/. A potential armed conflict over Taiwan could end up shaving as much as 10% off of the global economy’s GDP, Bloomberg analysts believe.
"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," the financial news agency wrote.
Such large-scale consequences are entirely possible because Taiwan makes most of the world’s advanced logic semiconductors, with the total market capitalization of chip giant Taiwan Semiconductor Manufacturing Co.’s top 20 customers estimated at around $7.4 trillion, the agency said. In addition, the Taiwan Strait is one of the world’s busiest shipping lanes.
As Bloomberg experts note, in case of a military scenario involving the United States, the island's GDP would shrink by 40%, and that of mainland China by 16.7%. The US economy would lose 6.7%, and global GDP would contract by 10.2%. In this scenario, South Korea, Japan and the countries of Southeast Asia would suffer the greatest damage. Under a scenario where military action is avoided but China mounts a blockade of Taiwan, the island's GDP would shrink by 12.2%, with the economy of mainland China declining by 8.9%, the US economy dipping by 3.3% and the global economy shedding 5%.
About Taiwan
Taiwan has been governed by its local administration since 1949 when the remaining Kuomintang forces led by Chiang Kai-shek (1887-1975) fled to the island after suffering a defeat in China’s civil war. Since then, Taiwan has preserved the flag and some other symbols of the Republic of China that had existed in mainland China before the Communists came to power. Beijing regards the island as one of its provinces.
As the Republic of China, Taiwan was a UN member in 1949-1971, but UN Resolution 2758, adopted in 1971, recognized the People's Republic of China (PRC) as "the only legitimate representative of China to the United Nations."
The United States broke off diplomatic relations with Taiwan in 1979 and established them with the PRC. While adhering to a "One China" policy, at the same time Washington continues to maintain contacts with the Taiwan administration and supplies the island with weapons.
Following the visit of then-US House Speaker Nancy Pelosi to Taiwan in August 2022, relations between Beijing and Washington sharply deteriorated, and dialogue between the country’s respective defense departments was suspended.
Last August, representatives of the Chinese and US militaries met in Fiji on the sidelines of a security conference. The American side was represented by US Navy Admiral John Aquilino, head of the US Indo-Pacific Command, while the Chinese side was represented by PRC People’s Liberation Army General Xu Qiling, vice chief of the Joint Staff Department of the Central Military Commission.