Three scenarios on the future of Taiwan-China relations
Geopolitical tensions surrounding Taiwan are reaching a critical juncture as Beijing increases political and military pressure on Taipei. We present three scenarios that explore the future of Taiwan-China relations and the implications of a potential conflict.
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With an increasingly assertive China flexing its political and military muscle on Taiwan, the threat of a conflict looms large on the island. Taiwan, a vital global chip manufacturing hub, holds strategic importance for the US, setting the stage for a potential US-China confrontation with profound global economic implications. Our team of futurists present three scenarios exploring the future of this geopolitical flashpoint.
While they’re not an exhaustive list of all the possible future directions, the three scenarios below analyse pivotal trajectories, providing a strategic lens for organisations to explore the diverse ways the future might unfold.
In our scenario-building process, we focused on the following set of key driving forces that will influence the future development of the Taiwan-China conflict:
Taiwan’s economic dependence on China
China’s internal pressure to act
The US commitment to protect Taiwan
China’s military capability to conduct an invasion
Taiwanese political willingness towards independence
In each scenario, we examine the different ways these drivers may evolve in the years ahead, as well as the different ways they may interact and influence each other. All three scenario descriptions also include a development timeline section, which lists key events and milestones that could plausibly happen to move us closer to the given scenario. The purpose of this section is to give readers a list of signs and indicators to look out for when monitoring future developments.
Scenario 1: China initiates a new relaxation policy, leading to a de-escalation of tensions in the Taiwan Strait conflict
Amidst the longstanding dispute, the Chinese government unveils a surprising relaxation policy, signalling a shift in their approach towards Taiwan. As Taiwan inches away from China and towards the US, a peaceful unification looks impossible. However, Chinese leaders realise that the political and economic cost of a forced unification is too heavy. It would harm China’s long-term strategic goals of regional stability, global influence, and economic growth.
China’s failed attempts to scale up the production of advanced chips make it dependent on access to Taiwanese chips and supply chains. In addition, China’s already contentious domestic situation becomes a factor in re-evaluating its approach towards Taiwan as the leadership acknowledges the importance of addressing pressing domestic concerns, such as economic disparities and social inequality. To increase its weight globally without threatening others directly, China is expanding its armed forces and industry and military bases around the world. In such a setting, the main approach towards Taiwan shifts to achieving Taiwanese neutrality.
A sudden shift in policy from the Chinese government sets off a chain of events that eases the tensions in the strait. Both sides begin to realise the potential for collaboration and shared prosperity. However, unification as a strategic aim is redefined. Rather than immediate reunification as the primary objective, both China and Taiwan are eager to explore alternatives that allow for a more gradual and inclusive approach. This new perspective emphasises the preservation of each side's unique identity, governance systems, and way of life while still fostering close ties and cooperation in areas of mutual interest.
However, challenges persist, and the road to lasting peace remains rocky. Scepticism and deep-rooted historical grievances threaten to derail progress. A delicate dance of diplomacy unfolds, with diplomats and mediators working tirelessly to bridge the gap and nurture a foundation of trust. Through persistent engagement and diplomatic efforts, the international community ensures that the delicate peace is upheld and fostered into a sustainable, long-term resolution.
Development path for scenario 1
2025: Low global economic growth and reduced exports fuel domestic unrest in China. The economic strain is amplifying dissatisfaction with the Chinese government's handling of the Taiwan situation, leading to a growing desire for change.
2026: Russia de facto loses the war in Ukraine. Its military and economy are in shambles. Russia as a country becomes impoverished and isolated but does not collapse.
2027: China gains control over Russian natural resources, which also largely determines the direction of China’s foreign and domestic policy. As a result, imperialism is no longer a central objective in Russia's goals.
2027: The AUKUS cooperation has expanded into a formidable alliance, gaining momentum and strength in the Pacific region. The invasion of Taiwan seems increasingly costly from the perspective of Chinese leaders.
2028: China initiates détente (cooling geopolitical tensions), including an agreement with Taiwan. China’s diplomatic channels start focusing on building trust, preserving unique identities, and fostering cooperation and new economic opportunities for the Taiwanese people.
2029: A major breakthrough in diplomatic talks paves the way for a significant agreement to ease tensions between China and Taiwan. Both sides agree on a framework emphasising gradual, inclusive approaches and preserving identities.
2030: China becomes the world's largest economy and the absolute leader in several industrial sectors.
2034: China is emerging as a true global leader, both in economic and political sense.
Scenario 2: Unification through war
The presidential elections of both the US and Taiwan cause instability. In the US, the presidential elections lead to a constitutional crisis and political chaos, leaving the nation without a clear chain of command. The US is also still heavily involved in the Ukrainian and Israeli wars. For China, it seems the US is temporarily weak, tied up, and unable to act decisively. China is also afraid that Taiwan will start to prepare an independence declaration. Amid the confusion, China starts a large-scale naval drill, which, to the surprise of the US and Taiwan, turns out to be an invasion force.
The sudden conflict between China and Taiwan draws in the US despite its domestic problems and involvements elsewhere. Soon after, other nations, such as Japan, Australia, South Korea, and most European military powers, follow with promises of varying forms of aid for Taiwan and the US.
China is able to take over large areas of the Taiwanese coast, and it destroys much of its naval and air forces in its surprise attack. The US Navy, which is in proximity to the war zone, gets involved in the conflict from the beginning. This slows down the Chinese land forces' deployment and causes major damage to its navy and air forces. The US delays its Pacific forces’ full deployment partly due to its own political turmoil. However, once the nation is at war, the US swiftly resolves its internal issues and promptly organises an alliance, assembling an invasion force for the conflict in Taiwan and preparing for a potential strike on mainland China as well. By this point, China has already gained control over a significant portion of Taiwanese territory.
The US begins negotiations with China while its armada begins to approach Taiwan. By this point, it becomes evident to China that its surprise attack has not achieved its objectives, and that the country wasn’t prepared well enough for a long war. The majority of its naval and air forces have already been incapacitated, and there is no way for China to fight the US main forces successfully.
Consequently, Beijing agrees to peace talks, resulting in an arrangement where Taiwan integrates into China while retaining a significant degree of autonomy in its political and economic systems. To ensure the longevity of this autonomy, the US is granted permission to establish a military base on Taiwanese soil.
However, as a result of initiating the war, China faces isolation from trade and collaboration with the world’s democratic nations. This leads to a significant global economic downturn, plunging the world economy into a severe recession.
Development path for scenario 2
2024: Both the US and Taiwanese presidential elections trigger instability, with neither of the US candidates conceding and the transfer of power remaining uncertain. Concerns arise in China that Taiwan might contemplate declaring independence. Amid uncertainty, China starts a large-scale naval drill, which, to the surprise of the US and Taiwan, turns out to be an invasion force.
2025: China is able to take over large areas of the Taiwanese coast in its surprise invasion, but its navy and air forces attain major damages that hinder the country’s ability to deploy its mainland forces to the Taiwanese island.
2025: China consents to peace talks with the US and Taiwan, which lead to a treatment where Taiwan becomes a part of China but can maintain full autonomy with most characteristics of its political and economic system intact. The US is allowed a military base in Taiwan to guarantee that the autonomy is respected.
2025: The Taiwanese chipmaking facilities are critically damaged in the Chinese invasion of the island. This has significant repercussions for the global economy, given that semiconductors and microchips are crucial drivers of various industries worldwide. The prices of consumer electronics rise massively while e-waste and circular economy strategies become even more important.
2026: China is shut off from trade with the world’s democratic countries. The world economy falls into a huge recession.
Scenario 3: China and Taiwan inching towards peaceful reunification
China rises to a dominant position in the world economy, and its influence over Eastern Asian countries reaches new heights. At the same time, the United States becomes increasingly protectionist, resulting in a diminishing military hegemony in various regions around the world. This results in a weakened U.S. presence in the East and South China Sea, and a less clear commitment to Taiwanese security.
As a result, Taiwanese youth gradually becomes more immersed in the influence of Chinese culture and economic life, leaving the nation with few feasible alternatives for its economy beyond deepening integration with China. The Beijing-Taipei relations begin to improve on multiple fronts, and the political maneuvering space for Taiwan becomes narrower. Over time, the population loses interest in pursuing independence, paving the way for the possibility of peaceful unification by the mid-21st century.
Development path for scenario 3
2025: Beijing-Taipei relations enter a period of thaw, primarily due to the fact that a military invasion would be too costly.
2028: The US and Europe successfully develop their semiconductor industries to a self-sufficient level, diminishing their reliance on the Taiwanese market. Consequently, the United States' interest and influence in the East and South China Sea region start to wane.
2030: China emerges as the world's largest economy, wielding the capacity to control major areas of the global economy and establish dominant technological standards.
2032: The US becomes increasingly protectionist, resulting in a diminishing military hegemony across various regions. This shift also leads to a weakened commitment to Taiwanese security, among other consequences.
2034: China accounts for half of the Taiwanese exports.
2036: Taiwan's manoeuvring space becomes increasingly limited as a result of China's growing influence on its economy.
2050: Taiwan remains a distinct political entity from Beijing, yet its deep integration into the Chinese-led East Asian system makes the prospect of peaceful unification increasingly appealing to Taipei.
