Executive Summary

Businesses should now begin making preparatory investments to establish contingency plans in case of a Taiwan invasion, especially if they operate in Taiwan or China, rely heavily on supply chains or shipping in Asia, or are located in countries likely to oppose Chinas geopolitical objectives. While an invasion in the short term (20252026) is currently unlikely, the factors informing Insikt Groups assessment are rapidly evolving. Beginning in 2027 and continuing through the long term (20272049), the risk of an invasion will very likely continue to increase, though it is not inevitable that an invasion will occur. In the short term, China is almost certain to continue its current coercive efforts, including major military exercises and incursions into maritime and air spaces near Taiwan, while seeking ways to incrementally escalate such coercion below the level of an invasion. In these efforts, China is likely to initiate a temporary law enforcement-led quarantine and a disruptive cyber campaign against Taiwans critical infrastructure.

Our assessment is based on a range of behaviors and trends across China, Taiwan, and the United States (US), as described in the Key Findings below, and in consideration of Chinas broader geopolitical context (see Appendix A). Fundamentally, in the short term, we assess that absent a specific catalyst that leads to war (such as if Taiwan were to declare formal independence) the Chinese Communist Party (CCP) leadership is very likely to remain focused on improving domestic conditions and strengthening preparations for navigating tensions with the US, a potential invasion of Taiwan, or other conflict with foreign powers (such as over the South China Sea). In the long term, we assess that China will likely have established a level of preparedness across the military, economic, social, and other domains by 2027 that would enable its leadership to invade Taiwan as a war of choice (rather than in response to a specific catalyst) while minimizing associated costs and risks.

Our assessment is generally aligned with public statements by Taiwan and US government and military officials since the start of 2023, both of which emphasize active preparations regardless of speculation about specific timelines. More specifically, Taiwan officials express that an invasion is currently unlikely despite the potential for a diversionary war to distract from Chinas domestic economic challenges. They also highlight weaknesses in the Peoples Liberation Armys (PLAs) amphibious capability while recognizing the PLA could likely execute a blockade of Taiwan the foremost alternative to an invasion. US officials express that an invasion is not imminent or inevitable, but that the risk is increasing and that Chinas forces are on track to meet their modernization and readiness goals.

An invasion would almost certainly severely impact the global economy, disrupting critical shipping lanes, devastating the semiconductor industry, and imposing broad costs on Taiwan, China, and potentially the US. Businesses likely to be affected by a Taiwan invasion scenario should consider taking steps such as building relationships with potential alternative suppliers outside of Asia, evaluating the purchase of war risk insurance, conducting scenario-based stress tests to identify vulnerabilities in operations and investments, maintaining encrypted offline backups of key computer systems and data, isolating high-value computer systems to limit an adversarys lateral movement in case of a breach, and purchasing a geopolitical threat intelligence capability to support ongoing monitoring of the Taiwan issue (additional recommendations can be found in the Preparing for Potential Global Economic Disruption section of this report). Indicators of escalation to support monitoring are provided in Appendix B. Given the public focus on the impact of an invasion on Taiwans semiconductor industry, Appendix C further offers our assessment of why that industry is not especially relevant to judging if or when China might invade.

Key Findings

Assessments supporting our judgment that an invasion is unlikely in the short term include:

China almost certainly continues to prefer peaceful reunification and very likely continues to invest in a dual-track strategy that combines economic inducements with coercive elements.Chinas economy is facing challenges that are very likely holding the focus of leadership as they strive to attain national rejuvenation. Despite PLA progress in developing capabilities necessary for a successful invasion of Taiwan, Chinas military continues to have limitations in areas that suggest it is not yet ready to undertake an invasion.Chinas leadership has likely not begun telling the public to prepare for war and public support for a war is likely not at levels the CCP would prefer before ordering an invasion. Although long-term public opinion trends in Taiwan are unfavorable to Chinas goals, polling results since 2020 likely suggest to Chinas leadership that its strategy is working to curb preferences for independence in the short term.

Assessments supporting our judgment of rising risk in the long term include:

The CCP has become increasingly assertive and very likely expectant of progress with regard to its goals for Taiwan.Under Xi Jinpings leadership, the CCP has taken administrative and other measures to develop a self-sufficient economy, harden against foreign economic coercion such as sanctions, decrease reliance on the US dollar, and prepare for shortages in strategic resources like grain and critical minerals.China-based cyber threat actors are targeting US critical infrastructure in ways that suggest their goal is to pre-position for a potential conflict. Chinas leadership has intensified its use of lawfare measures against Taiwan, particularly over the past year. The PLA, Chinas wider armed forces, and Chinas defense industry are continuing to improve capabilities that would be needed for a successful invasion of Taiwan, countering US intervention, and other scenarios.The political and social environments in Taiwan are both trending toward potentially permanent rejection of unification.Chinas leadership almost certainly perceives US government behavior as trending toward overturning its (the USs) one-China policy, which is one of Beijings likely red lines that could hasten an invasion scenario.

Indicators an Invasion Is Unlikely in the Short Term

There are several elements of Chinas behavior that support our assessment that a Taiwan invasion is unlikely before 2027. These include Chinas almost certain continuing preference for peaceful reunification, indicators that it very likely continues to pursue a dual-track approach to Taiwan, economic challenges that very likely take priority given Chinas other ambitions, shortfalls in PLA capability, and limited indication that China has begun mobilizing its populace to brace for wartime hardship. Additionally, public opinion polling results in Taiwan since 2020 likely suggest to Chinas leadership that its coercive strategy is working to deter independence in the short term. In totality, we assess that absent a specific catalyst that leads to war (such as if Taiwan declares formal independence or China assesses foreign military interference in Taiwan) the CCP leadership is very likely, in the short term, to remain focused on improving domestic conditions and strengthening preparations for navigating tensions with the US, a potential invasion, or other conflict with a foreign power (for example, over the South China Sea).

Trends in China

China almost certainly continues to prefer peaceful reunification and very likely continues to invest in a dual-track strategy that combines economic inducements with coercive elements. While the coercive elements of the CCPs strategy including large-scale military exercises (reportedly with cyber components), air defense identification zone (ADIZ) incursions, and expanding law enforcement patrols around Taiwans outlying islands receive the most attention, examples of the other side of CCP strategy include the following: a June 2024 plan to deepen cross-strait innovation and development cooperation in Dongguan city, January 2024 reforms in Fujian that created new government offices for Taiwan work, and a September 2023 plan to build a cross-strait integrated development demonstration zone in Fujian province, and 68 other preferential policies and measures targeting Taiwan businesses in China between 2018 and 2020. Xi Jinpings activities in October 2024 also very likely signal this dual-track approach, omitting references to peace in statements relevant to Taiwan and visiting locations significant to Chinas civil war history while also calling for greater integrated development. On January 15, 2025, a spokesperson for the Taiwan Affairs Office reiterated that integrated development is a focal point for the coming year. Additionally, there is almost certainly still no strict deadline for achieving unification.

Chinas economy is in a period of transition, volatility, and struggle, facing challenges that are very likely holding the focus of leadership as it strives to attain national rejuvenation and continue preparing for potential armed conflict. Chinas challenges include a depressed property market, deflation, high local government debt, declining foreign investment, elevated youth unemployment, and lingering dependence on critical foreign technology like semiconductor production tools (for more on the relevance of semiconductors in Chinas likely Taiwan invasion calculus, see Appendix C), while shifting toward a green, high-tech structure. These and other challenges have led to arguments that China could invade Taiwan to distract from domestic troubles (1, 2, 3, 4), but this is unlikely. First, diversionary war has not been the CCPs method for managing domestic crises since 1949. Second, the economic challenges are likely not great enough to derail the PLAs ongoing modernization in ways that would limit Chinas option to use force in the future. During this period, Xi Jinping is very likely to focus on solving domestic economic problems while strengthening the military to support conditions for achieving national rejuvenation by 2049 a goal with an economic component and to prepare for unifying with Taiwan through force if doing so is deemed necessary.

Despite PLA progress toward developing capabilities necessary for a successful invasion of Taiwan (discussed further below), Chinas military continues to have limitations in areas that suggest it is not yet ready to undertake such a high-risk operation. These limitations very likely include a lack of sealift capacity for an invasion of Taiwan, inadequate rapid runway repair capabilities to restore air operations following enemy assaults, difficulty integrating submarine forces into joint operations, and helicopter forces that have readiness and operational capacity limitations. Corruption also continues to be a major challenge for the PLA and Chinas defense industry, potentially disrupting the militarys organizational command, the quality of its personnel, its preparedness for warfare, and the attainment of its modernization goals.

Chinas leadership has likely not begun telling the public to prepare for war and public support for a war is likely not at levels the CCP would prefer before ordering an invasion. This point is debated, with some analysts focusing on Xi Jinpings warning that the stormy seas of a major test are looming, his emphasis on worst-case scenario thinking, and the CCPs escalating rhetoric targeting Taiwan. However, when asked about this language during a US Congressional hearing in 2024, multiple experts from the US, India, and elsewhere assessed that available evidence likely does not point to warnings of an imminent invasion specifically, but rather to the rising risks of Chinas volatile economic and geopolitical context generally (see Appendix A). In particular, these experts focus on the lack of state content demonizing Chinas would-be opponents in Taiwan and likely the US. Moreover, only about 50% at most of the Chinese public likely supports a use of force to unify Taiwan under certain conditions; Chinas leadership would likely prefer a stronger base of popular support before initiating a high-risk and potentially costly invasion, for reasons related to PLA reliance on civilian systems and because failure could threaten at least the current CCP leadership if not wider party legitimacy (1, 2, 3).

Trends in Taiwan and the US

Although long-term public opinion trends in Taiwan indicate the majority of people are very unlikely to ever willingly support unification (discussed later in this report), polling results since 2020 likely suggest to Chinas leadership that the military and other elements of its strategy are working to curb preferences for independence in the short term. Since 2020, support for maintaining the status quo has increased while moving toward independence has trended downward (an uptick in June 2024 notwithstanding). Further, support for maintaining the status quo indefinitely has risen since 2020 from 25.8% to 33.6%. Support for "independence as soon as possible has also fallen from 6.6% to 3.8% in this same period. These results likely decrease the likelihood of an invasion given Chinas very likely preference for solving domestic challenges and further preparing in case an invasion is deemed necessary.

Insikt Group has not identified any trends in the US that would, in our assessment, decrease the likelihood of invasion in the short term.

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