China seeks to ‘wear down Taiwan’s reliance’ with covert economic and cyber operations, US wargamers say

KAOHSIUNG, TAIWAN - Over the next few years, the People’s Republic of China (PRC) will continue to target democratic, self-ruled Taiwan with "gray zone" tactics and an "anaconda" strategy—slow-strangulation efforts that seek to force Taipei to bow to Beijing without drastic measures such as an invasion. 

Experts say China will escalate its efforts to disrupt the island’s economy by targeting critical industries and infrastructure and scale-up covert cyberwar operations that provide Beijing with just enough cover to maintain plausible deniability. 

A recent U.S. wargame team from the Foundation for Defense of Democracies (FDD), a nonpartisan research institute, visited Taiwan in early August to hold the first-ever tabletop exercise focusing on economic and cybercoercion from China against Taiwan. The FDD team pointed out that the cost of launching a cyberattack, for example, is significantly lower than the cost of defending against it. This asymmetry allows China to exert considerable pressure on Taiwan without triggering a direct U.S. military response. 

TAIWAN REACTS TO TRUMP’S THEY 'SHOULD PAY US FOR DEFENSE' COMMENTS

Black Hawk helicopters prepare to land at Taoyuan International Airport as part of the annual Han Kuang military exercise in Taoyuan, Taiwan, in July 2023. (Reuters/Ann Wang)

Local experts agree that Taiwan has its work cut out for it in defending against cyberwarfare and disinformation campaigns, especially at a time when artifical intelligence is making "truth" much harder to define. 

A trailer for a soon-to-be-released Taiwanese television series that dramatizes a People’s Liberation Army attack on Taiwan has surprised some here with its portrayals of deep fake videos, as well as massive cyberattacks that take over electronic billboards across the island and display false info. 

The Guard of Honor of the Chinese People's Liberation Army performs a flag-raising ceremony at Bayi Square to celebrate the 97th anniversary on China's Army Day on Aug. 1, 2024 in Nanchang, Jiangxi Province of China. (Ma Yue/VCG via Getty Images)

RADM (Ret.) Mark Montgomery, the FDD’s senior director of the Center on Cyber and Technology Innovation, took part in the Taiwan wargames. In an online talk to the media shortly after returning to the United States, he noted Taiwan faces challenges with economic continuity. "How do you keep things going during a series of interlaced critical infrastructure failures? Where electrical power drives a problem with financial services, things like that."

Dean Karalekas, author of "Civil-Military Relations in Taiwan: Identity and Transformation," told Fox News Digital that "The Russian invasion of Ukraine has been something of a double-edged sword in terms of Taiwanese preparedness." Karalekas pointed out that, on the one hand, it has opened many people’s eyes to the realistic likelihood that Chinese President Xi Jinping will follow Russian President Vladimir Putin’s lead and make good on his promises to annex the island, and the Taiwanese have taken it upon themselves to train in preparation. Karalekas was not involved in the tabletop exercise.

Taiwanese soldiers are deployed during a war and disaster drill as part of the annual Wan-An Air Raid Drill, at a seaport in New Taipei, Taiwan, on July 23, 2024. The drill, which coincides with the annual Han Kuang Exercise, is a joint exercise by nearly 2,000 individuals from government agencies including the military, fire fighting and rescue services. (Daniel Ceng/Anadolu via Getty Images)

On the other hand, Karalekas and other experts agree that many of the skills some in Taiwan are developing are designed to survive kinetic combat of the sort seen in Ukraine – combat, Karalekas and others think, is very unlikely. "It is far more likely that China will begin with a blockade, and soften up the Taiwanese citizenry by depriving them of food, electricity, and all the other imports upon which their economy, and their lives, depend," Karalekas opined. "No one can read Xi’s mind, but this seems more likely—and more likely to succeed—than an all-out invasion of the sort Putin launched."   

FOR CHINA'S MILITARY PLANNERS, TAIWAN IS NOT AN EASY ISLAND TO INVADE

Tawianese soldiers on board an amphibious ferrying vehicle release oil drums onto Tamsui River during river defense exercise as part of the annual Han Kuang military drill in New Taipei, Taiwan, on July 22, 2024. (Daniel Ceng/Anadolu via Getty Images)

The U.S.-Taiwan Partnership: A Crucial Factor

In both Taipei and Washington, there is a consensus that both U.S. political parties are committed to supporting Taiwan’s defense, which poses the largest deterrent to China. However, suggestions for improvements include a more entrepreneurial approach to military hardware and software procurement. 

Taiwan’s defense budget is constrained by the fact that it can – realistically – only purchase equipment from the U.S. However, the experts said, if smaller, innovative companies were added to the list of those supplying Taiwan’s military, the island could receive necessary tools for asymmetric defense faster and perhaps also cheaper. 

Taiwan and US subject matter experts take briefing on Chinese economic coercion moves in initial stage of multi-move tabletop exercise in Taipei. ( TABF (Taiwan Academy of Banking and Finance).)

A roughly 100-mile stretch of water separates China from Taiwan, and as Matt Pottinger suggested in a recent book, titled "The Boiling Moat," Taiwan and its major ally, the United States, should look for more innovative ways to turn the Taiwan Strait into a death trap for any PRC invasion attempt. 

Put simply, it is easy to neutralize a few submarines, but much harder to kill thousands of small, "kamikaze" drone subs that could swarm Chinese ships and vessels, sending them to the bottom of the shallow Taiwan Strait long before they reach the shores of Taiwan.   

Taiwan’s Internal Challenges: Reserves and Energy

The Chinese People's Liberation Army's Eastern Theater Command launches large-scale joint military exercises around Taiwan with naval vessels and military aircraft in China on May 24, 2024. (Photo by Feng Hao / PLA / China Military/Anadolu via Getty Images)

U.S. and Taiwanese experts agree that reforming Taiwan’s military reserves is essential. At present, they are insufficiently trained and sorely ill-equipped. Building a robust reserve force is no easy feat, however, and will require a multi-year plan backed by significant financial resources and political will.

INSPIRED BY UKRAINE, TAIWAN SEEKS TO BOLSTER MILITARY PREPAREDNESS AS CHINA THREAT CONTINUES

Taiwan’s reliance on imported liquefied natural gas (LNG) was also singled out by the FDD team as a potential weakness. Around 40% of Taiwan’s power generation is fueled by LNG, and the country has only a reported 10-plus-day inventory. The fact that Taiwan’s LNG must be transported by sea, means that no matter if it comes from Australia, a U.S. ally, or Qatar, generally seen as more pro-China, LNG shipments are vulnerable to a maritime blockade or "quarantine." 

Complicating matters, the Democratic Progressive Party, which has ruled Taiwan since 2016, refused to extend the life of Taiwan’s existing nuclear energy reactors (the last of which will go offline in 2025) and has instead pledged resources toward wind and solar. However, green power sources may not provide meaningful or resilient power, as FDD China Program Director Craig Singelton pointed out in the same previously-mentioned media briefing, "I think it’s quite clear in every war game I’ve ever participated in … that Chinese pilots use the wind turbines for target practice."

The November 2024 Election’s Impact: A Looming Question

The FDD team noted that some Taiwanese officials are concerned about the potential impact of the upcoming U.S. presidential election and worry about the possibility of a more transactional approach from a second Trump administration. Former President Donald Trump made headlines not long ago for saying that Taiwan should "pay us" for defense and that Taiwan "doesn’t give us anything." 

Trump is known to use hyperbolic statements to help convey his insistence that allies – from Taiwan to NATO – contribute more financially to defense. Members of the U.S. wargame team suggested that Taiwan should proactively address the concerns raised by the former president about its defense budget, essentially "showing the receipts" in a public manner to showcase its previous spending while continuing to commit to increased spending, all while gently reminding the U.S. public and Washington of the benefits of a strong U.S.-Taiwan partnership.

Eryk Michael Smith is a Taiwan-based correspondent who since 2007, has worked both as a broadcast journalist for the island's only English-language radio station, ICRT, as well as with numerous other publications and local news outlets. Smith's journalism focuses on Taiwan-China relations, local politics, as well as science and technology developments in the greater China region. He is based in Taiwan's largest southern city, Kaohsiung. He can be followed @ErykSmithTaiwan