RAND Economic Deterrence to Prevent Chinese Invasion of Taiwan

The RAND Corporation examines the potential for economic deterrence to prevent a Chinese invasion or blockade of Taiwan. Led by the United States, a core coalition including Australia, Japan, and the United Kingdom evaluates the feasibility of imposing preemptive or reactive financial and trade restrictions. The text highlights that while the United States possesses the most robust legal authority to issue sanctions, allies face significant constraints due to their deep economic interdependence with China. Detailed macroeconomic modeling predicts that while multilateral sanctions could reduce China's GDP by over 2.5%, they would also cause substantial global disruptions, particularly in the electronics and manufacturing sectors. Ultimately, the report suggests that successful deterrence requires high levels of international cooperation and a strategic balance between economic pressure and the risk of Chinese retaliation.