Suggested Citation: Gabriel Collins, “U.S. Corporations and China-Taiwan War Risk,” Collins Research Portal Note #9, 24 October 2022, https://collinsresearchportal.com/2022/10/24/u-s-corporations-and-china-taiwan-war-risk/
I had the privilege last week of being a panelist at an excellent OSAC (Overseas Security Advisory Council) event where multiple China-centered risk factors came up. Having reflected a bit on the session, I’m sharing four additional thoughts that corporate managers and their security staffs should consider as tensions over Taiwan rise.
Item 1: A shooting war between China and the U.S. and/or its allies is an uncomfortably real possibility in the next decade. China’s reaffirmation of its intent to displace the US in Asia means that competition will likely intensify and potentially escalate into direct physical conflict.
As General Secretary Xi Jinping told the world in his opening speech to the 20th Communist Party Congress on 16 October 2022: “Taiwan is China’s Taiwan. Resolving the Taiwan question is a matter for the Chinese, a matter that must be resolved by the Chinese. We will continue to strive for peaceful reunification with the greatest sincerity and the utmost effort, but we will never promise to renounce the use of force, and we reserve the option of taking all measures necessary.” [emphasis added]
The PRC is telling us that it will never recognize an independent, democratic Taiwan. It will instead use whatever means may be necessary to subjugate it and reincorporate it into the PRC. China’s leaders are making their strategic intent clear and have a track record of achieving ambitious goals ahead of time. We thus face a decade of maximum danger in U.S.-China relations. A PRC attack on Taiwan is a real possibility and as U.S. Chief of Naval Operations ADM Mike Gilday recently put it, “we need to be ready to fight tonight.”
Beijing’s rising belligerence over Taiwan—reflected most recently in its response to Speaker Pelosi’s August 2022 visit to the island—presents a stark challenge for American policymakers. Either the U.S. ensures it is ready to fight tonight and prepares itself and Taiwan accordingly or else it accommodates Beijing and in doing so cedes the initiative and undermines its regional position. Muddled policy approaches will not deter Beijing and in fact, could increase the risk of miscalculations that devolve into war.
As the U.S. military prepares to “fight tonight,” corporate security departments should likewise rush to completion their own preparations to ensure that Taiwan-based staff can access hardened air raid shelters, maintain connectivity through services like Starlink if subsea cables are cut, and have sufficient provisions to shelter in place for 30 days or longer.
Item 2: Your company is a PRC target in more ways than you may appreciate and many of the core risks are “here and now” propositions. Even if it generates no revenue from the Chinese market, it has downside exposure. A grid-management vendor or wind/solar operator may have software and/or hardware worth stealing. For instance, iron salt or solid-state batteries and nuclear technologies will attract pilferers’ attention.
A utility company’s granular data offers a wealth of intelligence and warning indicators–especially if military facilities are among its customers. Same for a company selling diesel and jet fuel. If war erupts, your firm’s energy assets will become valuable targets for destructive cyber and in some cases, physical attack. Russia can already threaten the US homeland with long range submarine and air-launched cruise missiles and we should anticipate the PRC being able to hit the US mainland with conventional long-range precision weapons by 2025-to-2030.
Corporate cyberdefenses should be brought to war footing and if management does not already engage with law enforcement on counter-espionage measures, it should consider urgently doing so to ensure employees are better prepared to fend off attempts at recruitment, sabotage, or technology pilferage.
Item 3: If a war starts, evacuation from Taiwan will likely be impossible. If China chooses to attempt invasion, one of the key lessons the PLA has likely learned from Russia’s debacle in Ukraine is that an invader needs to bring a massive firepower hammer, swing it early, and swing it hard. Chinese forces will have the capacity to fire on targets in Taiwan at a much greater intensity than what Russia has done in Ukraine and Taiwan is physically about 20 times smaller, which would make the effective “explosions per square kilometer” coefficient far higher.
For perspective, Russian forces have already fired close to 4,000 strike missiles against Ukraine and about 300 long-range kamikaze drones in the past month alone. This approaches twice what the US military expended during the 2003 invasion of Iraq, which itself was a high firepower operation.
Source: U.S. Defense Department, Ukrinform, Suspilne, Defence.ua, other local media
Taiwan is an island separated from the Philippines, southern Japan, and other non-PRC havens by hundreds of miles of open sea. Airports and seaports are thus irreplaceable evacuation assets—but will be among the hardest hit infrastructure on Taiwan if the PRC attacks. Companies should pre-position resources (food, water, generators, etc.) to help their Taiwan-based staff shelter for a minimum of 30 days if war erupts.
Item 4: A PRC attack on Taiwan will not give much of an evacuation window. Firepower blockades sufficient to shut down air and sea traffic to and from Taiwan can be launched with just hours’ notice. For a maritime quarantine or formal blockade, PLA Navy and Coast Guard vessels can arrive at their stations rapidly, especially if preemptively sortied under the guise of performing an “exercise.” Even a full-scale invasion would likely allow less evacuation time than anticipated.
The advance buildup of an invasion force will be enormous and visible. But this does not mean it will be straightforward to determine whether to evacuate staff and take other protective measures. Russia built up forces over the span of approximately one year prior to invading Ukraine yet was able to obscure its intent until very late in that period. China could use a similar technique and forward-position men, ships, and materials and launch feints characterized as “exercises” that tire out, or even worse, render complacent, those in a potential invasion’s path.
Beijing’s ability to mobilize capabilities but disguise intent and timing until attack is imminent pose exceptionally tough questions for corporate security staffs. For instance, How does management respond if the company mobilizes to evacuate employees from Taiwan (and the PRC) after a first major “exercise” does not materialize? Will management listen to the security staff on the 6th iteration that leaves a scant 48 hours before the invasion kicks off? There are not easy answers to these dilemmas.
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