Quora Answer: Which Global Industries & Markets Will be Most Disrupted if China Invades Taiwan?

The following is my answer to a Quora question: “Which global industries and markets will be disrupted the most if China invades Taiwan?” 

If Chine decides to invade Taiwan, it would crash the global economy.  China is not Russia.  It is the 2^nd largest economy in the world.  You cannot simply sanction it.  China is also the largest manufacturer in the world.  That sort of production base cannot simply be replaced.  We will have supply chain bottlenecks in every industry and almost every market. 

Secondly, the Taiwan Straits is a major waterway for shipping.  This is not some poor, largely landlocked, nation in central Europe.  Ships cross the North Pacific, from the East Coast of North America to Northeast Asia, and then down to Southeast and South Asia, and back.  Cargo from Northeast Asia also comes through the straits, crosses the Indian Ocean, and transits the Suez Canal to Europe.  Any disruption to that traffic would have serious consequences to all those markets. 

Any conflict involving Taiwan would be a major world war.  The United States has given guarantees for Taiwan’s independence.  They would be involved.  This means American staging areas in South Korea and Japan are targets, bringing those nations into the war.  North Korea and Russia will be pulled in, directly, or indirectly.  ASEAN would fragment because some of those countries would support China, and the rest would either be neutral or support the United States.  China has borders with nations in Central Asia, and would put pressure on them to escalate any low-intensity conflict there to keep American assets busy.  China has ports in the Indian Ocean transit, and will disrupt shipping and supplies.  The Americans would do the same, and all commercial shipping would come to a standstill.  Markets do not react well to such a conflict.