TAIPEI (Taiwan News) — The global economy would be majorly affected if China moved to disrupt shipping routes through the Taiwan Strait, with effects most strongly felt in Asia, Africa, and the Middle East, according to a US think tank report published Thursday (Oct. 14).

The Center for International & Strategic Studies (CSIS) report noted its own research suggests a Chinese blockade of Taiwan is more likely in the short term than an amphibious assault. “While lower in intensity, such contingencies could still threaten the trillions of dollars’ worth of trade that moves through the Taiwan Strait each year,” the report said.

If such a blockade of Taiwan did occur, shipping companies may be forced to reroute at significant additional expense, the report said. It said that this has been observed in the Red Sea as Yemeni Houthis attack shipping lanes amid escalating conflict in the Middle East.

“Taiwan produces over 90 percent of the most cutting-edge chips used in smartphones, data centers, and advanced military equipment,” the report read. It said disruptions to this production caused by a conflict in the Taiwan Strait conflict could wipe trillions of dollars from global GDP.   

One fifth of global shipping trade passes through the waterway, the report said. In Asia, Taiwan is most reliant on the strait in percentage terms of exports and imports, and China is most reliant in dollar terms, it said.

More than a quarter of Taiwan’s exports and 34.15% of its imports pass through the strait, representing US$297.90 billion (NT$9,594 billion) worth of trade, according to the report. Meanwhile, it said China receives 32.46% of imports and sends 14.86% of exports through the waterway, representing a value of US$1.298 trillion.

Japan and South Korea also rely heavily on open shipping routes through the Taiwan Strait. It said that these two countries would be among the most affected by disruptions to the route.

“For both (US) allies, their reliance on the Taiwan Strait is crucial for importing raw materials,” the report read. “Each year, tankers and other ships carry vast amounts of oil, gas, and coal through the strait to Japan and South Korea to meet their immense energy needs.”

Australia’s trade with China, which is dominated by the trade of fossil fuels and metal ore, would also be majorly affected, the report said.  “One in every six dollars Australia earns from its global exports comes from selling iron ore to China.”

The report also noted that in percentage terms, Middle East and African countries are the most reliant on the Taiwan Strait for trade globally. It said African countries such as the Congo, Gabon, and Angola export all or the vast majority of their raw materials to China via the strait, while Oman, Saudi Arabia, Iraq, Kuwait, Qatar, and Yemen all send over 30% of their exports through it.

The report said that China’s own economy also stands to take a major hit in the event of a large-scale conflict over Taiwan, such as a blockade or invasion. “Policymakers in Beijing are undoubtedly aware of this reality, which likely plays a role in their decision making regarding the use of force against Taiwan,” the report said.

It said that Beijing does have alternatives to shipping through the Taiwan Strait amid a blockade, but these come with various costs. These costs could include Japan and US imposed blockades in waterways around Japan, according to the report.

The report encourages Washington to work with allies and partners to maintain stability in the Taiwan Strait to safeguard international trade. Doing so is “crucial for the entire economy,” it said.