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Mainland China, G7 responses to Taiwan escalation would harm all parties, research finds

  • A research report has determined mainland China, G7 countries could do severe economic harm to each other in the event of escalation over Taiwan
  • Sanctions similar to those levied against Russia would be damaging, but export-import restrictions in response would also bring global economy to halt

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A study has found G7 sanctions and mainland China’s response to a hypothetical escalation in cross-strait tensions would be devastating to the global economy. Photo: Handout
Ralph Jennings
Mainland China would squelch hundreds of billions of US dollars in trade and investment from Western countries if ever faced with sanctions over a severe worsening of relations with Taiwan, researchers said in a recent report.
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But analysts cautioned that despite that defensive capacity, the mainland’s economy may be too weak to shrug off sanctions of the type placed on Russia, while a Taiwanese business scion called the all-important tech sector on both sides conflict-proof.

If the G7 – the Group of 7, a bloc of seven advanced economies – enacts sanctions against China, Beijing can restrict exports of “critical goods” and the activity of foreign investors, the Atlantic Council think tank said in an April 2 report co-authored with research provider Rhodium Group.

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China passes anti-sanctions law to counter punitive action by foreign countries

China passes anti-sanctions law to counter punitive action by foreign countries

“While still extremely costly in economic terms, these tools are nonetheless likely to be considered in a crisis since the costs of war are far higher,” said the report, titled “Retaliation and Resistance”.

“Just as theories of nuclear deterrence account for the concept of second-strike capabilities, so too must we consider economic retaliatory measures in assessing the deterrence character of sanctions.”

Beijing sees Taiwan as a part of China that will eventually be reunited, by force if necessary. Most countries, including the US, do not recognise Taiwan as an independent state, but Washington opposes any attempt to take the island by force and remains committed to supplying it with weapons.

Cross-strait ties have declined since August 2022, when former US House speaker Nancy Pelosi paid a visit to Taiwan in defiance of Beijing’s warnings. The mainland responded with a week of military drills around the island.

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