China Is Battening Down for the Gathering Storm over Taiwan


Chinese war drums beat on as pundits hotly debate if or when Beijing will try to seize Taiwan by force. There is no apparent countdown to D-day for initiating a blockade or invasion, but major strategic indicators clearly show that General Secretary Xi Jinping is still preparing his country for a showdown. Developments under way suggest Taiwan will face an existential crisis in single-digit years, most likely in the back half of the 2020s or front half of the 2030s.

Despite the manifesting peril, China’s recent economic setbacks and faux conciliations suggest to some, including President Joseph Biden, that the danger is passing and China will end up too preoccupied with domestic challenges to focus on a fight and risk global ostracism, leading to further economic calamity. Unfortunately, the opposite is true. Xi is militarizing Chinese society and steeling his country for a potential high-intensity war. China’s trajectory signals deepening danger and a hardening of Xi’s intent to execute an act of aggression similar to Russia’s invasion of Ukraine.



The simple fact is that peace in the Indo-Pacific and even the wider world will be held hostage to one man with totalitarian control, messianic ambition, strategic impatience, and implacable resolve. Xi has made unification with Taiwan the signature issue of his tenure. He now calls it the essence of national rejuvenation. For years, his domestic speeches have been grooming officials, the military, and the public for a “great struggle” and “major test” that will require extraordinary sacrifice. At every turn, he dares them to fight and be good at fighting. At a meeting with Biden in late 2023, Xi stated, “Look, peace is … all well and good, but at some point we need to move towards resolution.”

Xi’s most critical choices reflect a march to war. Leadership changes at the 20th Party Congress in late 2022, for example, turned the Politburo into a body more akin to a war cabinet. Fifteen of its 24 members now have Taiwan-related experience. Included in this cadre is the most recent former eastern theater commander — the general responsible for executing a Taiwan fight — who was leapfrogged to the Politburo without being a prior member of the Central Committee.

As disturbing, the war machine of the People’s Liberation Army continues to modernize at a sprint in every area. China’s hyper-militarization represents the greatest build-up of arms since the end of the Cold War. In 2020, Xi accelerated significant military milestones from 2035 to 2027 because he wanted China’s military to modernize faster and give him Taiwan options earlier. The People’s Liberation Army has since built vast underground complexes, a modernized and proliferated space layer, thick aircraft and air defenses, and the world’s largest navy. China also created a Strategic Support Force, which integrates space, electronic warfare, and cyber capabilities. And it boasts the most active and sophisticated ballistic missile force in the world.

China is concurrently building up its nuclear triad at a gallop. China aims to neutralize any possible American nuclear advantage in a crisis in order to devolve a fight to conventional forces where China thinks it might have the edge. The former commander of U.S. Strategic Command, Adm. Charles Richard, repeatedly called China’s nuclear force advances “breathtaking,” “explosive,” and a “strategic breakout.” Their nuclear missile, warhead expansion, launch-on-warning, silo construction, and orbital bombardment developments are all part of Xi’s broader push through the 2020s to get ready for a potential major power confrontation.

On top of this, Xi has been deploying more military forces nearer to Taiwan to reduce Taipei’s warning time, practice in anticipated wartime areas, demonstrate supposed Chinese military superiority, and slowly exhaust and demoralize the Taiwan military. In U.S. parlance, these acts are akin to warm-start efforts at “softening the battlespace” for follow-on action. Employing a boiling frog tactic, China aims to condition Taiwan to an ever-increasing number of forces surrounding the island. Additional patrol patterns east of Taiwan are a form of psychological warfare attempting to highlight China’s power to cut off resupply lifelines. Meanwhile, the Chinese military has also been intensifying the scope and scale of exercises practicing simulated assaults on Taiwan, which last many months on China’s eastern coast each year.

At the strategic level, China dropped “peaceful reunification” as its longstanding official approach to resolving the Taiwan issue. Xi has passed new laws allowing the nationalization of foreign assets in wartime and stronger measures for nationwide civilian mobilization, including more societal drills, to improve support of the People’s Liberation Army in wartime. Efforts to boost food and energy security are well under way, and China is building overland pipelines and coal-fired plants with renewed fervor in anticipation of limiting the impact of expected foreign maritime interdiction of oil and gas during any conflict. China has been building its strategic petroleum reserves for years in above- and below-ground facilities well beyond nominal nation-state peacetime buffers. At the same time, Beijing has deepened its alliances to secure flows from global energy providers, notably Russia, Gulf Cooperation Council states, Iran, Iraq, Angola, Brazil, and others.

Xi’s absolute prioritization of security over the economy is perhaps the most telling of all war preparation indicators. In the last 18 months alone, Xi has undertaken massive efforts to insulate the Chinese economy from potential external vulnerabilities, stressing self-reliance at the expense of growth. This strategic shift is not just related to trade wars, perceived supply chain vulnerabilities, or de-risking dynamics. Xi seems to have studied the sanctions playbook the West used against Russia over Ukraine and subsequently initiated long-lead protective measures to batten down the hatches of China’s economy to resist similar pressure. In contrast to the milquetoast pushback from the other leading powers after China put Hong Kong under its boot, Xi likely knows attempting to assimilate Taiwan would lead to much fiercer global resistance and harsher whole-of-society repercussions that would likely last years. And he intends to ready China to endure them.

In addition to the extraordinary measures Xi has already undertaken to protect Chinese supply chains, cyber security, and critical infrastructure, China may be quietly reducing exposure of its foreign exchange reserves. Steady declinesin Chinese holdings of U.S. Treasury bonds since 2018 (from $1.2 trillion to less than $800 billion) roughly parallel year-on-year increases held by Belgium and Luxembourg, suggesting China may be shifting the financial custodianship of its American bonds. If true, this would presumably serve as a layer of protection against Washington directly capturing China’s reserves in wartime. It remains unclear if China’s shift to U.S. agency bonds (held by government-sponsored enterprises instead of the U.S. Treasury) may also be a protective measure. These moves would make sense considering Xi’s order to Chinese banks in May 2022 to reevaluate risk and insulate against possible “severe U.S. sanctions.” Guidance like this might also explain other curiosities such as why China, as the world’s largest producer of gold, has been buying gold on global markets for 16 straight months. Economists who tend to attribute these financial moves solely to diversification, de-dollarization, or increasing the yuan’s value may be missing the forest for the trees. These measures would also help shock-proof China from cyclopedic sanctions stemming from a Taiwan conflict.

All strategic war preparation indicators are brightly lit, but the most telling is Xi’s willingness to breach the Chinese Communist Party’s covenant with the Chinese people established 45 years ago to allow China the freedom to get rich. Xi has deliberately switched the party’s mandate from enabling China’s economic vitality and building up comprehensive national power in a stable ecosystem to the securitization of everything and tightening down in anticipation of “reunifying the motherland” and preparing to recover Taiwan at the expense of that power. Xi’s charm offensive with the White House and attempts to curry favor with U.S. corporate leaders reflect less a re-prioritization of economic imperatives to the top billing than an experiential insight that many profit-myopic Americans can still be played to China’s advantage and induced into business-as-usual complacency during Xi’s crucial combat preparation years. China would classically call this approach wielding “a hidden knife behind a smile” and ultimately “killing with a borrowed sword.”

Xi’s elevation of geopolitics and security over China’s economic well-being might make sense in an era of strategic competition where paranoias about encirclement and containment abound. But the choices he is making today leading to domestic wealth destruction portend his willingness to countenance even greater wealth destruction on a global scale. Although estimates suggest a war over Taiwan would wreck China’s economy, cost 10 percent of global gross domestic product, and devastate worldwide supply networks for years to come, Xi may not care overly much given the inescapable backsliding of his economy even in the absence of any war. In the coming years, he may conclude he has everything to gain and nothing to lose by waiting any longer.

In fact, a strong case could be made that Xi might need a nationalistic “wag the dog” issue to restore the legitimacy of the Chinese Communist Party. A rechanneling of public passions could prove essential as criticisms surge over a self-induced economic downturn created by greater state interference in private industry, dulled investor confidence, demographic graying stemming from the party’s one-child policy, after-effects of harsh pandemic lockdown policies and “long COVID” impacts, youth unemployment, a high debt-to-gross domestic product ratio, poor domestic consumption rates, and de-risking by enlightened foreign companies that see both greater geopolitical and financial risk in China’s future.

Even in a so-called “war of choice,” where Beijing can carefully select when to move against Taiwan free of any domestic pressures, Xi’s age (70) matters. He only has ten reliable years of vitality to conduct a major operation and then lead China through the inevitable multi-year recovery from anticipated international retribution. Based on how Xi appears to be interweaving his legacy with assimilating Taiwan, it seems unlikely he would leave it up to a successor to absorb the forever glory of overseeing a long-sought unification and subsequently re-stabilizing China’s place in the world, a feat that could put Xi on par with Mao Zedong.

Following traditional Chinese decision-making that emphasizes advancing when the propensity of factors flows favorably in one’s direction, Xi will likely be inclined to wait opportunistically before making a major decision on Taiwan. He is more likely to make a big move when the People’s Liberation Army is deemed more ready and when domestic and international dynamics unfold in a way that is more conducive to success. Given the stakes for his leadership mandate of China, his power, his reputation, his legacy, and probably his very life, Xi knows he must do more to load the iron dice before he rolls them on a Taiwan crapshoot. International views of Chinese power may weigh heavily on Xi’s decision-making calculus. He may be tempted to act before China is seen as beyond the apex of its power, so that he can still overleverage coopted nations to remain compliant in the face of Chinese aggression.

A storm from Beijing is heading to Taiwan. Although hopes were high that the Russo-Ukrainian War might deter Xi from folly over Taiwan, nothing in his behavior, speech, or actions so far suggests he is learning anything other than how to better prepare to subjugate Taiwan. Xi’s internal views and decisions matter more than Beijing’s outward-facing guile that is threaded through the latest rounds of leader, business, or military talks. Washington ought to engage for many reasons, but the wise should see these so-called “stabilization” measures as Beijing likely does: devices to buy time and regain a sense of normalcy while hiding Xi’s true designs.

Xi’s worsening domestic economic troubles in coming years may only increase his temptation to take extreme action, especially as the true limits of Chinese coercion become apparent. U.S., allied, and partner political unity in defending Taiwan’s democracy and maintaining the current political status quo, coupled with substantial material strength forward where it matters, when it matters, remains the best hope for deterring Xi and confounding his expansionist agenda. The effectiveness of deterrence will probably swing on the extent to which Washington and allies field more capabilities that can make real the Indo-Pacific Command’s “hellscape” plan to wreak havoc on hostile forces threatening Taiwan. Deep magazines of long-range fires and more forces forward — especially many small, mobile, lethal, persistent, and uncrewed types — will not increase the chance of war, as some mistakenly fear. Rather, they would dissuade a would-be aggressor from a strategic blunder of epic proportions.  In facing the rising danger of a country that seems only to respect muscular opponents, not being fully prepared for war will be the surest invitation to naked aggression across the strait.



Mike Studeman was the former commander of the Office of Naval Intelligence and director for intelligence (J2) of the Indo-Pacific Command. He is a member of the National Bureau of Asian Research advisory board and is MITRE’s first national security fellow. 

Image: Sgt. Amber Smith