#1 - We Need to Deter a Taiwan Crisis, Not Just a War
Xi's aim is to win without a kinetic fight
In July 2017, China’s leader Xi Jinping visited for a dramatic inspection. Riding in an open-top jeep, dressed in military fatigues, Xi addressed thousands of troops in combat garb. "Always listen to and follow the party’s orders," he ordered. "And march wherever the party points." This was the first time Xi had reviewed troops in the field, symbolizing his deep personal commitment to military modernization. “Today, we are closer to the goal of the great rejuvenation of the Chinese nation than at any other time in history,” Xi said as bombers and fighter jets flew overhead.
“Follow the Party!,” the troops shouted back. “Fight to win!”
Yet beneath Xi’s swagger lies uncertainty. “We need to build a strong people’s military more than any other time in history,” he added, betraying lingering doubts about the PLA’s readiness to meet his ambitious goals.
Our goal this week: understand Xi’s strategy, and what it means for U.S. deterrence.
Xi at Zhurihe, July 2017
Xi’s emphasis on military modernization is part of a broader vision for China’s “national rejuvenation,” a term he uses to encapsulate the CCP’s domestic and global ambitions. By 2049, the centennial of the People’s Republic of China, Xi aims to:
Solidify CCP control
Transform China into the dominant power in the Indo-Pacific
Restructure the global economy to serve CCP interests.
Dominate the development, manufacturing and deployment of emerging technologies—including AI, which must “adhere to the core values of socialism.”
Taiwan is the most dangerous potential flashpoint, but Xi’s project could also lead to crises in the South China Sea, Korean peninsula, and elsewhere.
Taiwan is a hot zone because it occupies a unique position in Xi’s grand strategy. Taiwan is a litmus test for U.S. resolve. It is a production hub for the world’s most important technological hardware, and a gateway to regional and ultimately global dominance. As Xi describes it, “reunification” with Taiwan is not only essential to national rejuvenation, but it is “inevitable.”
Xi’s desired endgame is “peaceful reunification” (和平统一). By “peaceful,” Xi means a largely bloodless but coerced settlement in which Taiwan submits fully to CCP rule under a fig leaf called “One Country, Two Systems.” In the meantime, he is likely to keep escalating pressure in the “gray zone”—a space between peace and war that includes tactics like economic coercion, cyberattacks, disinformation, and military intimidation.
Gray zone operations allow Beijing to erode Taiwan’s resolve and redefine the status quo without triggering a conventional military response. They are ongoing and could step up dramatically at any time. Note: some analysts disagree that gray zone pressure is Xi’s “Plan A.” The most famous argument for this is Elbridge Colby’s Strategy of Denial. In future weeks, we’ll go deep into crisis scenarios short of war that would test U.S. and Taiwanese resolve.
Xi’s first option for major escalation in the gray zone is a “quarantine”: a PRC move to seize control of Taiwan’s international trade under the guise of legitimate customs enforcement. A quarantine by my definition would not involve cutting off shipments of food, fuel, and other essential civilian goods that comply with PRC law. It would push the burden of disrupting trade flows onto the United States. It would try to make Washington own the economic crisis that inevitably followed.
His second option a coercive mobilization of PLA air-naval forces for a potential invasion. This would effectively dare other countries to evacuate their citizens from Taiwan and give Xi the option to strike if Taiwan and the United States showed signs of weakness.
Meanwhile, Xi is preparing a more bellicose backup plan: a fully-developed military option for a “joint blockade operation” to starve Taiwan out during an outright war, possibly culminating in an amphibious invasion. He is systematically building a defense industrial base, strategic stockpile system, financial system, and domestic police state capable of waging war with the United States. In recent years, he has used dark language that strongly hints to his CCP compatriots to be ready for such a scenario.
The United States does not seek conflict over Taiwan. Its longstanding One China Policy, guided by the Three Joint Communiqués, the Six Assurances, and the Taiwan Relations Act, opposes Taiwan’s independence while maintaining an abiding interest in peace and stability in the Taiwan Strait. The United States supports the resolution of cross-Strait differences peacefully and without pressure and intimidation, with any outcome acceptable to the people of Taiwan. More broadly, Washington and its allies believe that the Indo-Pacific region must remain free and open.
There is a place for a powerful and prosperous China in this U.S. and allied vision of regional order—so long as China abides by international law and refrains from coercing its neighbors with threats of violence. It’s important to keep hammering this message.
However, aspects of Xi’s strategy are fundamentally incompatible with vital U.S. interests. These include his efforts to undermine the security of U.S. allies, seize the lead in key AI applications that could threaten strategic stability, and reshape the international economic order to serve China’s interest at the expense of the United States.
Taiwan’s role as a leading semiconductor producer, producing 99% of the most advanced AI chips, raises the economic and strategic stakes. But it is not fundamentally about chips.
The most profound concern is the precedent that would be set if China is allowed to dictate how Taiwan engages with the global economy. A forced takeover of Taiwan—whether by blockade, quarantine, or invasion—would damage or destroy the international economic system, undermine key U.S. alliances, and risk instability and challenges including but not limited to nuclear proliferation. A failure to defend Taiwan would signal a U.S. retreat. It would embolden China to resolve future disputes with U.S. regional allies through extreme economic coercion, backed by an implicit threat of military force.
The stakes extend far beyond Taiwan itself. If Xi subjugates Taiwan while the United States falters, China will be on a clear path to achieving its broader global ambitions by 2049. If Xi moves against Taiwan in any way, and fails, the result could be a prolonged conflict that threatens his grip on power but also risks vital U.S. interests. Either way, the consequences will reverberate globally. Simply abandoning Taiwan isn’t an option because there is no way to escape catastrophic consequences should it fall.
Despite his aggressive posturing, Xi has likely not made up his mind to risk everything in a full-scale war with the United States. Notably, during his twelve years in power, Xi has avoided fomenting any crisis that could seriously risk such a war. This suggests that—for now—he views the potential costs as prohibitively high. According to former CIA Director Bill Burns, Xi has instructed the PLA to develop the capability to seize Taiwan by 2027. This is an alarming assessment, but it also confirms that Xi thinks the PLA isn’t yet ready for a full-scale invasion.
There is no credible evidence in open sources that Xi has made a decision about whether or when to move. He has twice said that the Taiwan issue “cannot be handed down to the next generation,” implying that he would like to achieve “reunification” in his lifetime. However, Xi will be 96 years old in 2049, and presumably no longer in power. The 2049 deadline can probably be fudged if the CCP fails to meet it.
Moreover, if Xi can build robust invasion and blockade capabilities, he doesn’t have to implement them to get coercive value out of them. If America concludes that it would surely lose any war with China, it will back down when Xi forces the crisis. Xi can then complete his “rejuvenation” project unobstructed.
It therefore isn’t too late to shore up deterrence—but the United States must still brace for Xi to force a crisis. China undeniably has an advantage in momentum. Over the next several years, China is likely to gain ground in key areas of the military balance relative to the combined forces of Taiwan, the United States, and their other potential partners, which include Japan, Australia, and the UK. This will make Xi more risk-tolerant.
The window of greatest risk may well be between between the 21st Party Congress in autumn 2027, where Xi will secure his fourth term and lock in party approval for his agenda, and the inauguration of the next U.S. president in January 2029.
On current trends, the United States and China are barrelling towards a major brinkmanship event, if not an outright war. Washington should seek to deter both a crisis and a war. But it must also prepare for both.