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Sanctions against China in case of a Taiwan war could exact a US$3 trillion toll on global economy, report predicts
- Research drawing on lessons from Russia’s invasion of Ukraine and its aftermath finds Western countries struggling to coordinate response
- Major industries G7 could target for sanctions include China’s chemical, metals, electronics, shipbuilding and aviation sectors
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Mark Magnierin New York
Full-blown economic sanctions levelled against Beijing by Group of 7 countries in the case of a war over Taiwan would exact a colossal US$3 trillion toll on the global economy – nearly equal to Britain’s annual output – even as it left Western countries struggling to craft a coordinated response, according to a report released on Thursday.
The research by the Atlantic Council and Rhodium Group represents an effort to tease out potential tools, costs and options following any attempt to take Taiwan by force, drawing on lessons from the 2022 attack on Ukraine by Russia, whose economy is one-tenth the size of China’s and far less globally integrated.
“Costs from escalation in the Taiwan Strait are so costly to everyone,” said Charlie Vest, Rhodium’s associate director and a co-author of the report titled “Sanctioning China in a Taiwan Crisis: Scenarios and Risks”.
“But escalation does happen. And we’ve seen that in very clear terms in Ukraine. So it’s just important that people think about and understand the implications.”
The 35-page report outlines three broad targets of G7 sanctions following an attempt to take Taiwan by force: China’s financial sector; industries with ties to the Chinese military; and individuals or companies associated with Beijing’s military and political leadership.
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