Beijing is more likely to launch a ‘cyber-enabled economic coercion campaign’ to force Taiwan’s surrender, according to a Washington-based think tank.
The people of Taiwan will defend the self-ruled island against a potential invasion by the communist party in mainland China, Taiwan’s de facto ambassador to the United States said on Friday.
At the same time, a report warned that Beijing’s annexation may come about in the form of economic warfare.
Earlier this year FDD researchers teamed up with banking and finance experts in Taiwan over two days to simulate likely non-military moves by Beijing.
Researchers explored scenarios in which the CCP restricted or banned the import of Taiwanese products, blocked payments and remittances to and from Taiwan, launched cyber attacks on critical infrastructures, cut undersea cables, used deepfake videos and audio to undermine the public’s trust, or disrupted commercial traffic with missile tests.
In its report, the FDD said the exercise showed that Beijing could leverage great pressure on Taiwan—without tripping any redlines with Washington or other allies.
Tensions have flared in the Taiwan Strait since 2016 when Beijing began to increase diplomatic and military pressure on the island, prompting the United States to step up its support.
Washington, which is obligated under U.S. law to provide Taipei with sufficient military hardware for its defense, has argued that it is in the U.S. interest to keep peace in the strait and to stand with democracies such as Taiwan to maintain the liberal-democratic rules-based world order.
Beijing has demanded the United States stay out of Taiwan, arguing it is a purely domestic affair.
President Joe Biden has indicated he would send troops to defend Taiwan in case of an armed attack from China, but the U.S. government has yet to formulate a plan to respond to non-military tactics, giving Beijing flexibility in working to undermine Taiwan without triggering an outright response from Washington, the FDD researchers said.
In one of the four scenarios tested by FDD, researchers playing the role of the CCP “leaked reports of upcoming military exercises, threatened to occupy offshore islands, bribed media officials, and used influence operations to promote surrender and social unrest,” said FDD China program senior director Craig Singleton.
“Simultaneously, the CCP used contracts in futures markets to short Taiwanese stocks, creating selling pressure and inciting large-scale capital withdrawals. The resulting depreciation of the New Taiwan Dollar triggered a real estate sell-off. Collapsing property prices and insufficient collateral spurred bank runs,” the report reads, adding that multiple Taiwanese players saw the scenario as the CCP’s preferred coercive strategy.
Speaking at a panel discussion of the report, Singleton said Taiwan has already been facing a “low-level economic and cyber coercion campaign” and showed “remarkable resilience.”
But CCP leader Xi Jinping, who views reunification with Taiwan as “an ideological imperative,” will launch a phased and flexible campaign using a mixture of economic, cyber, and military coercion to undermine Taiwan’s resilience.
The report’s recommendations for Taiwan include building up resilience in infrastructure, energy, the economy, and civil society.
Researchers also urged Washington to help Taiwan increase its resilience, as well as improving the response times of allied democracies to push back against the CCP’s authoritarian gray zone coercion.
The Associated Press contributed to this report.
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