Modeling Economic Warfare Between the West and China Over Taiwan

Tensions in Asia have risen over the past few years as China has become more bellicose toward its neighbors. Nowhere have relations been more strained than across the Taiwan Strait. Speculation has grown with regards to China’s plan to invade Taiwan. In this project, the Capstone team modeled geoeconomic warfare between the U.S. and China after the latter crosses an American “red line” with regards to Taiwan. The project proceeds in 6 phases: 

• In Phase 1 and 2, the team reviewed literature on economic statecraft and weaponized interdependence and, informed by the lessons of Western actions against Russia, developed a menu of geoeconomic tools that the West is likely to draw upon to respond to China. 

• Phase 3 of the project mapped the economic, financial, and technological interdependencies between the U.S. and China, highlighting specific U.S. and Chinese vulnerabilities that can be leveraged by both sides in a hypothetical geoeconomic game. 

• Phase 4 identified three possible Chinese actions against Taiwan, each scenario varying in severity. The analysis of U.S.- China geoeconomic warfare was based on cyberattack, blockade, and an amphibious invasion. 

• In Phase 5, the Capstone team developed a logic model for response selection within a geoeconomic game. The framework examined the intent of sanctions under each scenario and evaluated specific actions that can be employed by each actor.  

• In Phase 6, applying the map of U.S. and Chinese vulnerabilities as well as the framework for response selection, the team conducted a geoeconomic “game” for each of their three scenarios. This exercise generated specific U.S. sanctions and Chinese countermeasures.