Bloomberg estimates the consequences of the war for Taiwan at $10 trillion

In the event of a possible attack by CHINA on Taiwan and participation in the conflict by the United States , which promised to defend the island, the consequences for the global economy will be much more serious than from military actions in Ukraine and covid , writes BLOOMBERG Mirage 2000-5 Air Force of Taiwan

A likely war over Taiwan could cost the world $10 trillion, which corresponds to approximately 10% of global GDP, Bloomberg writes. That largely dwarfs the economic fallout from the Russia-Ukraine conflict, the COVID pandemic and the global financial crisis: the island is a major producer of semiconductors, which are used in electronic devices around the world, and the Taiwan Strait is one of the busiest shipping routes.

China scholar and expert at the Center for Strategic and International Studies Jude Blanchett said that interest in the Taiwan issue on the part of transnational companies grew after the outbreak of hostilities in Ukraine. American national security experts, as well as global consulting firms, are considering various scenarios: from a naval blockade of Taiwan to a full-scale invasion by China.

Bloomberg Economics analysts modeled two scenarios: a Chinese invasion of Taiwan, which would drag the United States into the conflict (President Joe Biden has promised that the United States would defend Taiwan in the event of a possible attack) and a trade blockade of the island. The most serious blow to large economies and the world as a whole will be the lack of chips and other semiconductors; various industries will suffer significant losses - from the production of laptops, tablets and smartphones to the automotive industry.

Among the consequences of the war, Bloomberg named:

destruction of Taiwan's economy, a 40% drop in GDP; a 16.7% drop in China's GDP due to the breakdown of relations with major trading partners and lack of access to semiconductors; US GDP decline by 6.7%; a 10.2% decline in global GDP, with SOUTH KOREA , Japan and other East Asian countries hit hardest .

In the event of a blockade of the island by mainland China:

Taiwan's economy will contract by 12.2%; for China, the usa and the world as a whole, the decline in GDP will be 8.9%, 3.3% and 5%, respectively.

Under the second scenario, the world would still lose access to semiconductors produced in Taiwan, but the consequences for global trade, shipping and financial markets would be less severe, Bloomberg Economics believes.

Taiwan's future largely depends on the island's elections, scheduled for January 13. The candidate from the ruling Democratic Progressive Party (DPP), Lai Qingde, as well as candidates from the two largest opposition parties - the Kuomintang and the Taiwan People's Party - Hou Yu and Ke Wenzhe are vying for the presidency. The first, as Bloomberg writes, has no plans to disrupt relations with Beijing, but in the past he has called himself a “pragmatic fighter for Taiwanese independence.” For Beijing, which considers the island part of its territory, seeking independence would mean crossing a red line. The other two candidates promise to take steps to improve relations with China "without sacrificing the island's de facto independence."

American officials interviewed by Bloomberg, depending on the outcome of the elections in Taiwan, name among the possible actions of China a military invasion, economic sanctions and cyber attacks.

Chinese leader Xi Jinping spoke about the historical need for reunification with Taiwan in his New Year's address. The current President of Taiwan, Tsai Ing-wen, responded by saying that Taipei's course in relations with Beijing should be determined by the will of the people, and peace between countries should be based on dignity. She also called on China to respect the outcome of the upcoming elections.