by Bill O’Grady | PDF
In Part I of this report, we covered the history of Taiwan along with current relations between the People’s Republic of China (PRC) and the Republic of China (ROC), and discussed the end of strategic ambiguity. In Part II, we analyzed the geopolitical importance of Taiwan and China’s military options. In this final report of the three-part series, we will examine the importance of Xi Jinping’s ascendency to power and how he may react. Lastly, we will conclude with market ramifications.
The “Known/Unknowns”: The Issue of Xi Jinping
After laying out several scenarios in Part II discussing actions that China might take, we determined the quarantine/blockade scenario had the greatest benefits compared to the risks. However, our assessment is from the perspective of an analyst, not from a leader. The calculus of a leader can be different based on the experience of that leader and the political conditions they operate within. In other words, our task now is to assess how Xi will behave in this situation. While we have no personal insight into General Secretary Xi’s decision-making, we can observe his behavior and current circumstances to estimate the risks stemming from his actions.