China's economic growth has slowed, raising the question of whether the country might invade Taiwan in an attempt to reduce the record-high Chinese unemployment rate and absorb the island's booming semiconductor industry. However, Shihoko Goto, the director for Geoeconomics and Indo-Pacific Enterprise and acting director of the Asia Program at the Wilson Center, told Federal Newswire that moving forward with an invasion of Taiwan at this time would likely weaken China's economy even further.
"The Chinese economic slowdown may have shaken Beijing’s confidence in its growth trajectory, and it’s certainly a source of risk for greater social instability," Goto told Federal Newswire.
After three years of "zero-COVID" policies, experts predicted that China's economy would rebound this year, but after a strong first quarter, China's economy slowed, according to an NPR interview with Tao Wang, a former International Monetary Fund economist. A struggling property sector, reduced spending by local governments due to financial challenges, and decreased business confidence in the wake of the pandemic have contributed to the slowdown.
The unemployment rate for Chinese citizens between 16 and 24 years old rose to a record high of more than 20% in June, and the overall jobless rate in China increased to 5.3% in July, BBC News reported. The Chinese government has announced that it will temporarily stop releasing its youth unemployment data and has not provided a date for when the suspension will be lifted.
"High youth unemployment and real estate investment uncertainties are among the systemic challenges facing Chinese growth prospects, and there will be a greater push from Beijing to deflect from the economic woes to rally national unity," Goto said.
Entering a war can reduce a country's unemployment rate by creating jobs in production, but war can also lower GDP through the destruction of human and physical capital and diminished profits from trade, according to a report from the Cato Institute.
"China is unlikely to take any direct military action in response to the economic slowdown, precisely because it would only further weaken its own domestic growth prospects as it would also need to be prepare for war at a time of significant fiscal constraints," Goto said.
China's aggression toward Taiwan has increased in recent years, and Secretary of State Anthony Blinken said in October that a Chinese attempt to annex Taiwan could take place on a "much faster timeline" than anticipated, Business Insider reported. But experts predict that China would suffer heavy losses if countries like the U.S. and Japan come to the island's defense, while any disruption to Taiwan's semiconductor industry would have a significant negative impact on the global economy.
Taiwan's production of semiconductor chips, which are critical components in technologies like smart phones and electric vehicles, accounts for more than 60% of the global supply, including more than 90% of the most advanced chips, The Economist reported. The Taiwan Semiconductor Manufacturing Corporation (TSMC) is responsible for manufacturing a major share of the chips.
Chen Ming-tong, director general of Taiwan's National Security Bureau, said last year that if China invades Taiwan, the U.S. and its allies could prevent China from benefitting from the island's semiconductor industry by cutting off TSMC's supply chains, Business Insider reported. "Even if China got a hold of the golden hen, it won't be able to lay golden eggs," Chen said.
