If China Invades Taiwan, Commercial Ties Will Be the First to Go
More than 6 in 10 Americans support Taiwan’s independence, rising to an overwhelming majority of 92% among those with an opinion on the matter.
In the event of an invasion, Americans are enthusiastic about severing commercial ties with China. Over half support sanctioning Chinese companies, and near majorities support halting bilateral trade and investment. Smaller shares support military options.
While an invasion remains improbable, it’s no longer the tail risk it once was. Companies with China exposure should accelerate their contingency planning immediately.
Most Americans support Taiwan’s independence but are wary of confrontation
Conflict between the United States and China over Taiwan is less improbable than it once was. China’s furor over House Speaker Nancy Pelosi’s potential visit to the island has made this abundantly clear.
More than 6 in 10 Americans — and an overwhelming 92% among those who have an opinion on the matter — support Taiwan’s independence. Only 6% oppose it, while 32% are unsure. The issue is a rare point of bipartisanship, with 63% of Democrats and 66% of Republicans in favor.
More Than 6 in 10 Americans Support Taiwan’s Independence
But Americans waver over their country’s responsibility to aid Taiwan if China were to invade. Only 45% think the United States has at least some responsibility to do so, and many (31%) remain unsure. The issue is again bipartisan: 50% of Democrats and 45% of Republicans agree that the United States has at least some responsibility to provide assistance to Taiwan, with the figure falling to 40% for independents.
Americans’ hesitancy is warranted. China is routinely among the United States’ largest trading partners, and the two countries are the world’s largest economies. The economic fallout from a conflict between them, both for each other and for the global economy, would be severe. Direct military conflict would likely be even more disastrous.
In the event of a conflict, Americans want to sever commercial ties
If push comes to shove — meaning if China invades Taiwan and the United States opts to retaliate — Americans are more enthusiastic about severing commercial ties than pursuing a military response.
Near Majorities of Americans Support Severing Commercial Ties if China Invades Taiwan
Democrats and Republicans alike prefer sanctioning Chinese government officials and companies, as well as suspending bilateral trade and investment flows, to a wide range of military options involving the deployment of U.S. troops and weapons. Americans are especially eager to avoid a military conflict. Only 16% support a direct attack on China — rising to 23% for cyberattacks — compared with the near majorities who support most types of commercial retaliation. Sending weapons to Taiwan falls in between.
Now is the time for contingency planning
Companies with China exposure can no longer ignore the increasingly material risks linked to a conflict over Taiwan, and should accelerate their contingency planning. Rerouting supply chains elsewhere in Asia is a sensible strategy that companies should pursue more aggressively despite the risk of reputational fallout among Chinese consumers, per our recent research.
Those serving Chinese consumers should anticipate substantial revenue loss if an invasion takes place due to potentially prolonged barriers to market access and/or ongoing reputational risks, and should make efforts to diversify their sales base accordingly.
Jason I. McMann leads geopolitical risk analysis at Morning Consult. He leverages the company’s high-frequency survey data to advise clients on how to integrate geopolitical risk into their decision-making. Jason previously served as head of analytics at GeoQuant (now part of Fitch Solutions). He holds a Ph.D. from Princeton University’s Politics Department. Follow him on Twitter @jimcmann. Interested in connecting with Jason to discuss his analysis or for a media engagement or speaking opportunity? Email [email protected].
Scott Moskowitz is senior analyst for the Asia-Pacific region at Morning Consult, where he leads geopolitical analysis of China and broader regional issues. Scott holds a Ph.D. in sociology from Princeton University and has years of experience working in and conducting Mandarin-language research on China, with an emphasis on the politics of economic development and consumerism. Follow him on Twitter @ScottyMoskowitz. Interested in connecting with Scott to discuss his analysis or for a media engagement or speaking opportunity? Email [email protected].