When China invades Taiwan: Where to Stocks and Bonds?

[Garpal Gumnut]

Australia's economy would go into an immediate nose dive.
Without China we are a land of flooding plains.
IF Oz aligned with the USA our major exports would lose their principal customer.

Good point.

No doubt a sudden market decline.

Now just remind me why Menzies was called "Pig Iron Bob" prior to Japanese aggression.

I presume there would be a 6-18 month realignment of markets for our quarries and farms.

Gawd help Melbourne.

gg

 

[Garpal Gumnut]

The only market grouping I can see that will get an immediate push up from the conflict is the Rare Earths Sector.

Pretty much everything else will initially go south on the ASX.

gg

 

[rederob]

The only market grouping I can see that will get an immediate push up from the conflict is the Rare Earths Sector.

Pretty much everything else will initially go south on the ASX.

gg

Healthcare?
Miscellaneous services - funerals?

 

[noirua]

It is easy to say 'When China Invades Taiwan' just like someone might say, 'The Stock market Will Collapse'. It is an ongoing situation in both but maybe it will happen in 2121 when the ASX200 falls from 150,000 to 70,000. Or maybe in 2122 Taiwan will attack China from its base on the Moon and wipe out Beijing. A counter attack on the Taiwan Moon base by forces from China on the other side of the moon, the dark side of course.

Anyway, China does not want to desecrate Taiwan from a business point of view. So they wont bomb Taiwan that is almost absolutely certain.

So China's President is manoeuvring in a game of verbal fisticuffs. He is testing the Americans to see if after the Afghanistan debacle whether they are resolute enough not to back away from a war. Will America go to the expense of building up war ships and aircraft carriers to fight off any efforts by China to just walk into Taiwan from the beeches or dropped off by planes. The test might come when considering whether to directly attack Chinese ships.

The big problem is distance so there will be a need to build up the number of ships and submarines out of Australia. So America may well want a port and base to be able to defend Taiwan from Australia. This position was probably explained by President Biden to President Macron and forced Macron to back down and return its Ambassador.

The position concerning China and Taiwan may have been the principal one as to why America withdrew from Afghanistan.

 

[StockyGuy]

Seems most likely would be a relatively peaceful takeover, ie, no WW3. Would be a hard one for AUKUS and NATO nations to justify to the masses if we made it an absolute line in the sand that we'd nuke 'em over. It's hard to care too much about one Han state rejoining the Han state it was owned by last century, that sits on its coastline. On polls a not insignificant percentage of Taiwanese either want reunification or don't have an opinion either way.

When it comes to the crunch, Taiwan is a high IQ nation so I'm sure they, the broad sweep of the populace, realise it's in no one's interest for their island to be the site of bomb craters and mushroom clouds. They're a nation of business people who want to be rich - say what you will about the social controls China has, they also nowadays believe in a form of market economy as the best way to get rich. Taiwan is not a nation of zealots. The US also know this.

Could cause long bear market as China would become a pariah, kind of an apartheid-era South Africa, for a long time... lotsa trade sanctions for the West to save some face. Obviously our mining sector could hurt as a result. China would probably then have to cultivate stronger relationships with Islamic nations.

Expect a lot of Taiwanese immigrants/refugees to the West.

 

[Sean K]

Good discussion on the topic here.

 

[againsthegrain]

where we going to get our potato chips from then

 

[Sean K]

Vodka Pelosi is probably visiting Taiwan in the next few days. China say they will respond. Not sure what that could mean, but surely not any physical attack, that would be too much of an escalation. Perhaps a fly over the island with a bomber and some fighters, or a cyber attack.

China supporters will be saying that the US have no right to visit Taiwan at this level of representation and they are the one's escalating the situation.

Not sure how markets will be affected once China do invade. Will be bad juju if the semiconductor facilities in Taiwan are collateral damage going forward.

 

[Garpal Gumnut]

Vodka Pelosi is probably visiting Taiwan in the next few days. China say they will respond. Not sure what that could mean, but surely not any physical attack, that would be too much of an escalation. Perhaps a fly over the island with a bomber and some fighters, or a cyber attack.

China supporters will be saying that the US have no right to visit Taiwan at this level of representation and they are the one's escalating the situation.

Not sure how markets will be affected once China do invade. Will be bad juju if the semiconductor facilities in Taiwan are collateral damage going forward.

In my experience each time someone has uttered the words "will be bad juju" @Sean K it has been a worrisome few hours or days for me.

gg

 

[Dona Ferentes]

And a timely resuscitation for this thread. Of course, there has been a recalibration to what WAR will look like, now some practical experience of asymmetrical technologies has occurred on the Donbas, steppes and Black Sea. Mr Xi and his cronies will be thinking twice about a flotilla sailing across the strait, with Neptunes and HIMARS and drones and satellites there to pick them off. They do have the advantage of proximity, whereas meaningful assistance for the Taiwanese is an ocean away.

 

[Sean K]

Well, I expected some fly-overs and a cyber attack, both of which occurred, but launching ballistic missiles into Taiwan and Japanese territory was probably an over-reaction. Especially into Japan's EEZ.

I think China is miscalculating here. Japan is the third biggest economy and has an extremely strong 'self defence' force. If you bring Japan into the game you bring in the US, then NATO. And, quite possibly, India.

The only peaceful solution to the Taiwan issue, IMO, is that they remain a self governing 'province' and mainland China leave them alone.

IRT the thread title, 'where to stocks and bonds', I think this would be very different to the feeble and inept Russian invasion of Ukraine and economic fall out. Surely China have seen what globalism of economies, resources and energy means when you are the bad actor.

 

[sptrawler]

Well, I expected some fly-overs and a cyber attack, both of which occurred, but launching ballistic missiles into Taiwan and Japanese territory was probably an over-reaction. Especially into Japan's EEZ.

I think China is miscalculating here. Japan is the third biggest economy and has an extremely strong 'self defence' force. If you bring Japan into the game you bring in the US, then NATO. And, quite possibly, India.

The only peaceful solution to the Taiwan issue, IMO, is that they remain a self governing 'province' and mainland China leave them alone.

IRT the thread title, 'where to stocks and bonds', I think this would be very different to the feeble and inept Russian invasion of Ukraine and economic fall out. Surely China have seen what globalism of economies, resources and energy means when you are the bad actor.

My guess is, a lot depends on how much advanced chip manufacturing equipment and IP is still left there, if it is too difficult to relocate and or destroy, I would think if China gets hold of it the U.S tech sector would take a big hit.
The Chinese could destroy any advantage the U.S has in the AI and high tech space.
Just guessing, as is everyone else.

 

[Garpal Gumnut]

Well, I expected some fly-overs and a cyber attack, both of which occurred, but launching ballistic missiles into Taiwan and Japanese territory was probably an over-reaction. Especially into Japan's EEZ.

I think China is miscalculating here. Japan is the third biggest economy and has an extremely strong 'self defence' force. If you bring Japan into the game you bring in the US, then NATO. And, quite possibly, India.

The only peaceful solution to the Taiwan issue, IMO, is that they remain a self governing 'province' and mainland China leave them alone.

IRT the thread title, 'where to stocks and bonds', I think this would be very different to the feeble and inept Russian invasion of Ukraine and economic fall out. Surely China have seen what globalism of economies, resources and energy means when you are the bad actor.

My guess is, a lot depends on how much advanced chip manufacturing equipment and IP is still left there, if it is too difficult to relocate and or destroy, I would think if China gets hold of it the U.S tech sector would take a big hit.
The Chinese could destroy any advantage the U.S has in the AI and high tech space.
Just guessing, as is everyone else.

I must admit I tend to have a more realist view of The China/Taiwan situation than most and I can see Taiwan returning to Chinese CCP rule very soon and I say that for a number of reasons.

It is closer to China than to any other nation of an equivalent military size or capability, some 130 km at its closest point. This is the equivalent in distance of Melbourne to Wilsons Promontory, Sydney to Newcastle or Brisbane to Noosa.

China has expressed that Taiwan is part of China since the end of the Mao Zedong - Chiang Kai-shek kerfuffle in 1949 and has a majority close to 100% of its population in favour of re-unification. It has a large standing Army, Navy and Airforce capable of a swift and merciless invasion and neutralisation of the government in Taipei. Were it not for a strong USA it would have been completed decades ago. The USA is a power in decline, although still with a fair heft.

The recent blockade of sea lanes and military exercises including all three services and ballistic missiles capable of deterring any Western rescue have all but made any military response "problematic", as Mick Ryan AM would say. The blockade of sea lanes was done merely by the actions of an exercise. In a war it would be total. This would stop all commerce worldwide immediately and lead to a worldwide depression with civil disturbance in many nations on the edge.

Money talks, and the loss of chips and other IT hardware would cripple all Western nations in the event of conflict. The Big Money would stand aside and allow a takeover.

Militarily the USA and its allies including us could have a fallback position to the Spratlys and continue to confine China militarily while the game of monopoly continued with shady heads of government in sunny city states such as the Solomons, PNG and all the other tiny towns bobbling about in a rising ocean.

This would lead to a new world order which hopefully might be more stable although this is not part of my polemic and one on which I will not in argument engage.

The result of my scenario would be a Taiwan integrated as a Chinese province, the continuation of the West's over-reliance for IT hardware on China/Taiwan and a shift away from globalisation to remedy the latter.

Sea and Air Traffic would resume after the takeover and a world-wide depression would be avoided. The results for the markets would be a boom rather than a bust should the present state of a Vodka Peolosi, as @Sean K so aptly described an otherwise elderly lady who with her
President should really be out to pasture, muddying the waters from the USA which is replete with its own existential problems.

gg

 

[Sean K]

My guess is, a lot depends on how much advanced chip manufacturing equipment and IP is still left there, if it is too difficult to relocate and or destroy, I would think if China gets hold of it the U.S tech sector would take a big hit.
The Chinese could destroy any advantage the U.S has in the AI and high tech space.
Just guessing, as is everyone else.

I'm not sure if China would target the semiconductor industry when they bomb Taiwan as it would be self defeating. And, I don't think China can actually take Taiwan by force. Taiwan's 100km+ moat protected from the N, E and S is too much.

 

[sptrawler]

I'm not sure if China would target the semiconductor industry when they bomb Taiwan as it would be self defeating. And, I don't think China can actually take Taiwan by force. Taiwan's 100km+ moat protected from the N, E and S is too much.

China would want to take the semiconductor industry intact, it definitely wouldn't want to damage it but the U.S might, just a thought.
If China did capture it intact it would be a major step forward for China in a technology sense and a major blow to the U.S tech sector dominance, I may not have explained myself well in the last post.

 

[Sean K]

*Thinking grand strategic planning*

I think the US is baiting China into a war against Taiwan. This will result in crippling sanctions and huge economic cost to China. The international community, less the autocratic States and those beholden to the B&R debt trap, will shun China for decades and severely weaken China. This could possibly lead to internal strife in China and the ultimate breakdown of the country resulting in the US emerging once again as the single superpower.

Just a thought.

 

[sptrawler]

I think the Russia/ Ukraine thing is a play, to see what the U.S has, the U.S isnt showing.
So China is stepping it up in Taiwan, but China is still not sure what the U.S has got and they are $hit scared they start something that gets their ar$e sent home in a basket, that would be the end of Xi.
Big gamble and he knows it. Just my opinion.

 

[mullokintyre]

*Thinking grand strategic planning*

I think the US is baiting China into a war against Taiwan. This will result in crippling sanctions and huge economic cost to China. The international community, less the autocratic States and those beholden to the B&R debt trap, will shun China for decades and severely weaken China. This could possibly lead to internal strife in China and the ultimate breakdown of the country resulting in the US emerging once again as the single superpower.

Just a thought.

The war mongerers that really run the USA would happily sacrifice Taiwan to the Chinese if it caused crippling sanctions against China.
They already have form.

From The evil Murdoch Empire comes an interesting analysis by recently deposed Lib Candidate Dave Sharma.Throughout 1973, Egyptian forces along the Suez Canal regularly engaged in military exercises. Israel had captured the Sinai Peninsula during the 1967 war and Israeli forces were stationed along the canal’s eastern bank. During the spring and summer, on six occasions, Egypt conducted exercises that resembled genuine military operations. On two of those occasions Israel was sufficiently concerned that it mobilised its defence force, at great expense, only to stand down.Then on October 6, 1973, Yom Kippur in the Hebrew calendar, Egypt went further. Egyptian forces laid down pontoon bridges across the Suez Canal, breached the Bar Lev line, Israel’s defensive fortifications, and struck deep into the Sinai Peninsula.It remains Israel’s worst military disaster. Though the tide eventually was turned, the invasion stunned Israel. Israel suffered significant casualties and losses of equipment, and had to scramble to stop the joint Egyptian and Syrian advance. Asked afterwards why he had not mobilised Israel’s defence forces in October, Moshe Dayan, the defence minister at the time, conceded to having been tricked. Having already mobilised the defence forces twice, at great expense and for no purpose, he did not wish to be duped again.Egyptian president Anwar Sadat had succeeded in normalising high-intensity military operations in proximity to the de facto border. This was why, when he eventually chose to strike, it came as a surprise.

Former ASPI Executive Director Peter Jennings says Beijing wants to push the key message “nothing is going to stop” China from taking Taiwan. Mr Jennings said Beijing is hoping Taiwan will be coerced into accepting an offer… of unification. “The risk of an aggressive action on the part More

The People’s Liberation Army now is engaged in the same preparation phase with respect to Taiwan. China has exploited the visit by US House of Representatives Speaker Nancy Pelosi to expand the dimensions of its military activity and normalise aggression across the Taiwan Strait.
In the initial four days of the PLA’s live-fire exercises, according to Taiwan’s defence ministry, 41 Chinese vessels and 110 Chinese aircraft crossed the median line of the Taiwan Strait. Eleven ballistic missiles were fired into waters north, east and south of Taiwan. The drills subsequently were extended by the PLA by two days. These exercises served a valuable military purpose for the PLA: increasing preparedness, improving interoperability and providing valuable lessons for future operations across the Taiwan Strait. But they also served a more important strategic purpose.

Through these exercises, the PLA has effectively obliterated the median line across the Taiwan Strait as the unofficial buffer zone.
The PLA now will operate with greater frequency and intensity across the median line. This will impose continued stress on Taiwan’s military readiness and preparedness, and impose sustained psychological pressure on Taiwan’s leadership and civilian population. And just as Sadat stepped up the frequency of Egyptian exercises to dull the senses of Israel before launching a genuine attack, China will be in a position to do the same.
While an attack remains unlikely in the near term, the episode has shortened the time horizon for potential Chinese military action against Taiwan and lessened the warning of such an attack.

The United States military said on Tuesday (August 16) that it had carried out a test of a Minuteman III intercontinental ballistic missile, delayed to avoid escalating tensions with Beijing during China's show of force…

The PLA exercises also provided a vivid demonstration of China’s capability to operate militarily up to and beyond the first island chain, showing the relative ease with which Taiwan could be blockaded. Indeed, this is the way any forcible attempt by China to take Taiwan is likely to start: with a blockade that seeks to force Taiwan to negotiate some form of reunification. Taiwan and its allies will have to acquiesce or seek to break the blockade militarily.
Pelosi’s visit, the most senior by a US politician since Newt Gingrich visited Taiwan as US Speaker in 1997, was an attempt – seemingly without Biden administration support – to alter the status quo in favour of Taiwan. (When Gingrich, hardly an appeaser, made his visit in 1997, he made sure to stop in Beijing beforehand.)
But China’s response to the Pelosi visit, and to this week’s two-day visit by a five-member bipartisan congressional delegation led by Senate foreign relations committee member Ed Markey, also has succeeded in altering the status quo, and in a way deeply unfavourable to Taiwan.
Taiwan has emerged in a more precarious position because of Pelosi’s visit. Any greater international legitimacy afforded by the Pelosi visit, which is slight, has been more than outweighed by China establishing a new military norm across the Taiwan Strait that has gone largely unchallenged, to the detriment of Taiwan’s strategic position.
When China last conducted exercises of this intensity across the Taiwan Strait in 1995, the US military sent an aircraft carrier battle group through the Taiwan Strait. This time no such decisive response will be forthcoming.

Former ASPI Executive Director Peter Jennings says a “weak United States” is the “best opportunity” for China’s victory. “I think the Chinese conclude that with a weak United States the best opportunity they may have to pull…

Australia has been right to criticise the PLA’s aggressive military action against Taiwan. But as the Chinese ambassador’s speech to the National Press Club in Canberra last week made clear, we should be under no illusions that this will alter Beijing’s behaviour.
Taiwan’s unique position within the international system is fragile. It depends on the maintenance of a high degree of ambiguity: that Taiwan remains part of “one China” but that any attempts to unilaterally alter the status quo and reunify by force are illegitimate. Thoughtful strategy and Taiwan’s survival demand that such ambiguity be preserved.
Pelosi’s intent may have been laudatory, but she has managed to undermine Taiwan’s security and bring the prospect of military action from Beijing closer. In doing so, she has damaged the security of allies such as Australia and Japan.
Our interest remains the preservation of the peaceful status quo in the Indo-Pacific, with all its ambiguities, not diplomatic adventurism that increases the risk of conflict.
Dave Sharma is the former Australian ambassador to Israel.

​

Mick

 

[mullokintyre]

With the twin distractions of the US/Russia proxy war, the Israel /Iran proxy war, now would be the perfect time for China to launch a quick attack on Taiwan.
I would not be surprised at all.
Mick

 

[Dona Ferentes]

The war mongerers that really run the USA would happily sacrifice Taiwan to the Chinese if it caused crippling sanctions against China.

.

With the twin distractions of the US/Russia proxy war, the Israel /Iran proxy war, now would be the perfect time for China to launch a quick attack on Taiwan.

I'm confused .. who's the warmonger?