A new report from the German Marshall Fund of the United States (GMF) warns that any military attempt by China to seize Taiwan could impose devastating costs on Beijing, challenging assumptions in many think tank analyses that focus primarily on U.S. shortcomings in defending the island. The study, titled “If China Attacks Taiwan: The Consequences for China of ‘Minor Conflict’ and ‘Major War’ Scenarios,” examines the potential impact on China’s economy, military capabilities, social stability, and international standing, concluding that even limited military actions could be destabilizing.
According to GMF, a limited conflict lasting several weeks could still generate significant economic blowback, while a major war lasting months and ending in a decisive PLA defeat could trigger casualties exceeding 100,000 Chinese military personnel and destabilize the country’s social and political fabric. China’s reliance on global trade—exports account for roughly 20% of GDP—makes it uniquely vulnerable to economic disruption. Long-term consequences could include accelerated global supply chain relocation, withdrawal of foreign investment, and loss of access to international markets critical to sustaining China’s growth model.
The report also stresses the military costs of a protracted conflict. Even a limited engagement would degrade China’s ability to enforce claims in the South China Sea, secure sea lanes, or maintain internal security. A major war scenario modeled by the study assumes prolonged fighting, with the PLA suffering tens of thousands of casualties and forced withdrawal from Taiwan. Analysts warn that a failed campaign would weaken China’s military credibility, complicating future operations both regionally and globally.
Social stability is another critical concern. The GMF study notes that Xi Jinping’s legitimacy is closely tied to economic performance and domestic order. Prolonged or failed conflict could trigger public dissatisfaction, ethnic unrest in regions like Xinjiang or Tibet, student-led protests, and broader challenges to the Communist Party’s authority. “Anything that puts at risk domestic security or stability is probably Xi’s top concern,” said Zack Cooper, a senior fellow at the American Enterprise Institute and one of the report’s authors.
Internationally, the report warns that punitive measures could isolate China diplomatically and economically. Potential consequences include expulsion of Chinese diplomats, severed ties with other nations, recognition of Taiwan’s independence, and withdrawal from China-led initiatives such as the Belt and Road Initiative, BRICS, or the Shanghai Cooperation Organization. Even partial implementation of these measures could significantly constrain China’s global influence.
GMF authors emphasize that while these costs are substantial, they may not be sufficient to deter Beijing entirely. Analysts caution that overconfidence in PLA capabilities, underestimation of U.S. and allied resolve, or fear of inaction undermining domestic legitimacy could still push China toward aggressive action. The study underscores the need for Taipei, Washington, and allies to clearly communicate the potential consequences of military action to Beijing to strengthen deterrence.
The report fills a research gap in understanding China’s risk calculus, which has often been overlooked in studies of cross-Strait conflict. It highlights that decisions in Beijing will not only weigh the benefits of force but also the enormous economic, military, social, and international costs that could accompany a failed operation. Policymakers and analysts now have a more comprehensive framework to assess both the risks and the potential avenues for effective deterrence, according to GMF.
