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Fall of Taiwan to China could cost US$2.5 trillion annually

Invasion of Taiwan would open first island chain for China, exposing US territory

(YouTube, Hudson Institute screenshot)
(YouTube, Hudson Institute screenshot)

(YouTube, Hudson Institute screenshot)

(YouTube, Hudson Institute screenshot)

TAIPEI (Taiwan News) — U.S. Senator Dan Sullivan on Thursday (March 2) warned that if Taiwan falls to China, it may cost the global economy US$2.5 trillion per year and advocated the "STAND with Taiwan Act" to serve as a deterrent.

Sullivan was speaking at an event hosted by the Hudson Institute titled "A Test of Will: Why Taiwan Matters." Sullivan said the information provided in his speech was based on a question he had posed to intelligence agencies, other think tanks, and combatant commands: "What would the world look like in the aftermath of a successful invasion of Taiwan by the CCP?"

Sullivan said Taiwan produces 92% of the world's most advanced semiconductors. "Imagine what would happen if that was not only taken offline but controlled by the Chinese Communist Party (CCP)?"

He said the Commerce Department estimated the U.S. economy suffered US$240 billion in damage from low-end chip supply shortages caused by the pandemic.

Based on a U.S. State Department report, Sullivan said the global economy would suffer NT$2.5 trillion dollars in losses per year if Taiwan was invaded by China. He said it would also impact U.S. advanced weapons systems such as F-35 fighter jets, radars, and missile defense capabilities.

Citing former President Dwight D. Eisenhower's memoirs, he said the loss of Taiwan would compromise the security of Japan, the Philippines, Thailand, Vietnam, and Okinawa. Sullivan said the fall of Taiwan would be an event that "breaks China out of the constraints of the first island chain."

He warned that a China no longer constrained by the first island chain would then threaten the second island chain, which includes the U.S. territories of Guam and the Northern Mariana Islands. He said that residents of these islands are American citizens and the U.S. has key military bases on Guam.

The senator said that once China takes Taiwan, it will likely seek to gain more territory in the region. He predicted that after an invasion of Taiwan, it would be "very unlikely that that massive force stays put."

He added that Chinese victory in Taiwan would encourage the CCP's brand of authoritarian rule. It would boost the narrative of China's model of "techno-authoritarian control" and lead to new acts of "CCP aggression" both regionally and globally.

The senator then proposed the "STAND with Taiwan Act" with "STAND" an acronym for "Sanctions Targeting Aggressors of Neighboring Democracies." The act would sanction members of the CCP and affiliated institutions and industrial sectors; prohibit U.S. institutions from investing in CCP-affiliated entities; prohibit the listing or trading of such entities on U.S. stock exchanges; and prohibit the imports of goods mined, produced, or manufactured in China.