US intelligence officials estimated that a Chinese invasion of Taiwan or an attack on the island nation as early as 2025 could cost the global economy $1 trillion, according to Taipei Times.
Avril Haines, the director of national intelligence for the US, spoke before the Senate Armed Services Committee on Thursday and gave what she described as a “general estimate.”
“A Chinese invasion of Taiwan could halt production by the world’s largest advanced chipmaker, wiping out up to USD 1 trillion per year from the global economy in the first few years,” said the top US intelligence official.
The advanced semiconductors produced by Taiwan Semiconductor Manufacturing Co (TSMC) are used in 90 per cent of “almost every category of electronic device around the world,” said Haines.
Haines said that Chinese President Xi Jinping is leaning toward unifying with Taiwan in a “peaceful” manner, but is also preparing possible military action to achieve that goal, reported Taipei Times.
“I think we continue to assess that he [Xi] would prefer to achieve unification of Taiwan through peaceful means,” she said.
If a Chinese invasion stopped TSMC from producing those chips, “it will have an enormous global financial impact that I think runs somewhere between USD 600 billion to USD 1 trillion on an annual basis for the first few years,” she said.
“It will also have an impact on [US] GDP if there was such an invasion of Taiwan and that [TSMC’s production] was blocked,” Haines said.
According to Taipei Times, Haines claimed that it would also have a significant effect on China’s economy.
At the urging of Washington, TSMC is spending USD 40 million to construct two highly advanced wafer fabs in Arizona in order to mitigate that risk.
According to Taipei Times, two fabs, one using the more sophisticated 3-nanometer process and the other using the 4-nanometer process, are slated to start mass producing chips in 2019.
After US Senator Rick Scott expressed concern about a possible Chinese invasion of Taiwan, citing Xi’s comments from the previous year that seemed to indicate he was preparing the Chinese people for a war against Taiwan, Haines responded.
Xi has directed the Chinese military to “provide him with a military option, essentially, to be able to take it without concern of [US] intervention,” which is expected to “have a meaningful impact on his capacity to do so,” Haines said.
Also at the hearing, US Defense Intelligence Agency Director Scott Berrier appeared to have greater concern than Haines about a possible invasion of Taiwan, saying that Xi’s rhetoric has been “picking up” after he assumed his third term as president, reported Taipei Times.
Berrier provided a list of possible invasion dates ranging from 2025 to 2049. “I think the bottom line is he’s told his military to be ready,” Berrier said.
According to Taipei Times, Haines stated that the relationship between the US and China has grown “more challenging,” citing a speech given by Xi in March in which he accused Washington of repressing Beijing, demonstrating his mistrust of the US and his conviction that Washington was attempting to contain his nation.
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