Bloomberg warns that if China were to militarily invade Taiwan, it could lead to a global loss of approximately $10 trillion, equivalent to over ten times the current market value of Bitcoin, which is around $916 billion. This potential loss is significant and alarming.
With the upcoming presidential election in Taiwan this Saturday, Bloomberg warns that the growing economic and military influence of China, the increasing national identity of Taiwan, and the tense relationship between Beijing and Washington have created conditions for a potential crisis. The election on January 13th could become a potential flashpoint.
If China were to invade Taiwan, Bloomberg estimates that approximately $10 trillion would be wiped out, equivalent to around 10% of global GDP. Calculated based on the current market value of Bitcoin, this would result in a loss of over ten times the value of Bitcoin, which is extremely concerning.
According to data released by Bloomberg Economics, the impact of the Ukraine war, the COVID-19 pandemic, and the global financial crisis would pale in comparison.
Bloomberg Economics simulated two scenarios:
1. China’s invasion dragging the United States into a geopolitical conflict.
2. China blocking Taiwan’s trade with the rest of the world.
We know that Taiwan’s semiconductor supply chain has a significant impact on the global market. If a war were to occur, companies producing laptops, tablets, and smartphones globally could face stagnation as Taiwan’s advanced chips cannot currently be replaced. Additionally, industries using lower-end chips, such as the automotive industry, would also be severely affected. The interruption of shipping, trade sanctions and tariffs, and the impact on financial markets would further exacerbate the situation.
Bloomberg Economics estimates that Taiwan’s GDP would be heavily impacted, with a 40% reduction. The concentration of population and industrial bases along the coast would increase labor and economic costs. China’s GDP, due to the disruption of relationships with major trading partners and the inability to obtain advanced chips, would suffer a 16.7% blow.
For the United States, although it is geographically distant from the conflict, there are still many risks. For example, due to Apple’s reliance on the Asian electronic product supply chain, its GDP would decline by 6.7%.
Globally, GDP would decline by 10.2%, with South Korea, Japan, and other East Asian economies being the most affected.
The Ukraine war serves as a warning for Taiwan. Although currently, not many people believe that China is highly likely to invade Taiwan, the lack of concentration of People’s Liberation Army forces along the coast and internal power struggles in China have raised doubts about whether Xi Jinping would initiate a war.
However, recent outbreaks of the Ukraine-Russia war and the Israel-Palestine conflict remind us that we cannot ignore the possibility of significant conflicts sparked by small sparks. Currently, from Wall Street investors to military planners, as well as numerous businesses relying on Taiwan’s semiconductor industry, actions are being taken to hedge against risks.
Jude Blanchette, an expert on China at the Center for Strategic and International Studies, stated that since Russia’s invasion of Ukraine in 2022, the interest of multinational companies he consults with regarding the Taiwan crisis has “surged.” Around 95% of conversations mention this topic.
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