The Chinese have 5,000 years of caring mostly about one thing - good fortune. It's sheer ignorance to believe they'd behave differently, let alone risk a war with America the unpredictable.
It's almost as if America is psychologically projecting its own mindset and tendencies onto the Chinese and then being very fearful of the mirror reflection. In reality though, Chinese culture is totally different from American culture.
With China’s aggressive moves in the South China Sea and its enormous military buildup, it’s not a stretch to believe that they have an ultimate goal of something other than world peace.
- Economic: critical global trade route, 80% of energy imports go through it
- Military: only ocean off China's coast deep enough to hide its nuclear submarines, which means Beijing must constantly monitor it like a hawk to ensure its sea-based nuclear deterrent capability is never neutralized
By comparison, America is lucky with its geography, with deep oceans on three sides: Pacific, Atlantic, Gulf of America.
There's also no question that the proverbial Sword of Damocles they're hanging over Taipei will only get sharper and heavier over time.
"So, the possibility of invasion, the military drills, the missile tests, and the probing of Taiwan's Air Defense Identification Zone (ADIZ) are less about an imminent D-Day and more about maintaining a proverbial Sword of Damocles over Taipei.
Beijing will undoubtedly continue to sharpen this sword to motivate a greater willingness for Taipei to come to the negotiating table. But Beijing is also acutely aware that if that sword were to actually fall, the consequences for the PRC itself could be catastrophic."
China's happy with the equilibrium but the US has been trying to goad it into war for years. Arming Taiwan to the teeth, interfering in elections despite acknowledging its One China status, US empire games endanger the whole world.
I’m not sure that applies here. The best way to prevent a war is to be strong. A weak U.S. invites adventurism. And while the American defense budget is grossly high, it’s a bargain when compared to the multi trillion-dollar cost of a shooting war.
It's hard to separate which aspects of the US defense budget are truly effective and which aspects are pork barrel spending / jobs program where the defense contractor puts a few jobs in every congressional district so that no one votes against it.
I can only speculate that the people if Taiwan get used to a certian level of risk, you can't indefinetly live like you are about to be invaded for decades on end.
I do believe China will use military action as a last resort. The west won't be willing to really confront them either so when it happens it may be quick and hopefully with minimul death and destruction. I hope the best for the people if Taiwan.
You're right that the Taiwanese do not want to have an antagonistic relationship with Mainland China.
Once Taiwan's president switches to a different political party, there will likely be official government-to-government relations between Beijing and Taipei, just like there was under President Ma Ying-jeou (2008-16). That will fully eliminate the risk.
In his book The 48 Laws of Power, for Law 48: Assume Formlessness, Robert Greene states that Western military strategy has been influenced most by chess while Chinese military strategy has been influenced most by go (圍棋 - weiqi).
"Chess is linear, position oriented, and aggressive; go is nonlinear and fluid. Aggression is indirect until the end of the game, when the winner can surround the opponent’s stones at an accelerated pace."
Go is played on a much larger grid than chess, with 6x as many positions as in chess. Go's "strategy is more subtle and fluid than chess, developing slowly; the more complex the pattern your stones initially create on the board, the harder it is for your opponent to understand your strategy."
"A key weiqi concept, for example, is to use the size of the board to your advantage, spreading out in every direction so that your opponent cannot fathom your movements in a simple linear way."
The chess players in the global geopolitical game (West) naturally assume the go players (China) share their aggressive, impulsive style, but the latter is actually playing a totally different, much longer term game.
Case in point as far as the contrasting approaches inspired by chess (West) vs. go (China):
Let’s compare the cost of the primary foreign policy initiatives of the US and China over the past 20 years.
- US wars in the Middle East after 9/11: $8 trillion
- China’s Belt and Road Initiative: $1 trillion
Forget bang for the buck; in absolute terms, the BRI has created far more goodwill and fostered far more cooperation with Beijing around the world than wars in the Middle East have for Washington.
This is the difference between a long term strategy influenced by go and a short term strategy influenced by chess.
Why China Won't Invade Taiwan has become Inverteum's most popular post ever.
It's not easy delivering the case for peace in the Taiwan Strait in a media and political landscape dominated by the insanely powerful and well-funded Washington establishment and military industrial complex.
They don't welcome those who challenge the false narrative they peddle, so thank you to all who liked, commented, restacked, and subscribed.
For those of you who think differently from the mainstream echo chamber, please share your perspective with the world and reply with a link to your post.
Interesting read on why China might hold back on Taiwan. The dollar’s role is a huge part of that equation, even if it’s not front and center. China’s financial lifelines run through a system it can’t fully control, and the risks of it losing their access are real.
But also, don’t get complacent with thinking the dollar’s dominance is unshakeable. It’s quietly shifting, and those subtle moves will shape not just China’s options but the whole global order. I dug into that in The Dollar Is Quietly Declining. Worth a look if you want to understand the bigger picture:
You're right that US dollar dominance will likely weaken over time, with more countries choosing to settle trade in their own currencies. But the USD is unlikely to weaken to the point where China doesn't need it at all, as evidenced by Hong Kong's continued peg to the USD.
Great point on the HKD peg. Tt's a clear example of how deeply embedded the USD still is in regional financial systems, even those close to China. And you're absolutely right that the dollar's role isn't disappearing overnight.
That said, what we’re seeing isn't necessarily about total replacement, but rather a strategic hedging away from overdependence. Even incremental shifts like bilateral trade in yuan, or the build-up of gold reserves can alter leverage over time. And in a high-stakes scenario like Taiwan, even modest financial pressure points could become decisive.
Appreciate the thoughtful reply; this is the kind of nuance we need more of in the de-dollarization debate.
"What we’re seeing isn't necessarily about total replacement, but rather a strategic hedging away from overdependence. Even incremental shifts like bilateral trade in yuan, or the build-up of gold reserves can alter leverage over time."
Your use of the term “Taiwanese” is confusing and often inaccurate. Only 51% of Taiwan’s population is Taiwanese, and even the Taiwanese recognize they are Chinese, from the FuJian area.
The issue with using the term "Chinese" to describe Taiwan residents is that the average English speaker wouldn't know the difference between PRC Chinese (中國人) and ethnic Chinese (華人). They would assume "Chinese" implies PRC.
"Taiwanese" is the simplest way to describe those currently living in Taiwan.
The use of demonyms for residents of a certain place don't have to imply sovereignty, e.g. New Yorker, Scottish, Hawaiian, Shanghainese.
By the way, I believe Capt. Kelly wanted us to ask “Are you Taiwanese?” was twofold. He wanted us to see the issue and…
In 1972 folks at the U.S. Embassy were aware there was tension between the Taiwanese and the non-Taiwanese.
In 1953, my friend Bert Frauleigh while working for AID deliberately sought out a Taiwanese person to create Formosa Plastics. Bert chose Wang Yung Ching and the two were still close friends when they visited Formosa Plastics in Texas.
I think moving our Embassy from Taipei to Beijing caused a growing lack of understanding of the issues, and that, I think, is how the U.S. government stumbled into the National Endowment for Democracy and promoting Taiwan insurrection.
I only say “Taiwanese” if the person really is Taiwanese.
If I don’t know, or if I know they are Hakka or Shandong or Polynesian etc, I just say “a resident of Taiwan”. I say “Taiwan people “…
In 1972 we flew to Taiwan and landed at the old airport in downtown Taipei. The Naval Attache to China was Navy Captain William Kelly.
Capt. Kelly wanted to enhance our learning experience and he gave us two tasks:
1. Tell us what the Chinese do at sea. (They sail point to point with no drills)
2. Ask your shipmates “Are you Taiwanese?” I learned that is a very big question, and I learned both Taiwanese and non-Taiwanese can be offended.
On our ship, none of the officers were Taiwanese. I think the % of officers who are Taiwanese is still below 50%. The Taiwan separatists will not get the military to fight to become a Taiwanese military. Taiwanese is still a foreign language to most.
Even if an officer is Taiwanese, he is unlikely to know Taiwanese military vocabulary.
“One” in Mandarin is 一 yi
But in the Mandarin speaking military (both mainland and Taiwan) “one” is “yao4”
The US's role in this issue will likely diminish in importance over time, especially as China's hard and soft power grows. There are big problems domestically in the US, and Americans don't want to be in a conflict with China. Even the trade war earlier this year was unsustainable. Washington politicians know that conflict with China, even over trade, isn't going to win elections.
After the KMT retreated to Taiwan in 1949, there were major tensions between the mainlanders (外省人) and natives (本省人); you saw this when working with the ROC military in the 1970s. Since then, assimilation and intermarriage, democratization, and policies to recruit natives into government and to reduce ethnic discrimination have led to a greater sense of shared identity.
Although some of your ROC shipmates identified as Chinese, the government they represented was very militaristic and anti-PRC and did not seek to create peace in the Taiwan strait. Under Project National Glory (1961-72), Chiang Kai-shek sought to reconquer Mainland China. Paradoxically, this hardline stance made it much harder for Beijing and Taipei to work with the other side in any way.
Thankfully, Taiwan has become far less militaristic and far more peace-loving while the policies Chiang put in place, such as mandating the use of Mandarin, make it easier for people on both sides to understand and work with each other. This is reason for optimism when it comes to cross-strait relations and continued peace, regardless of what demonym is used to describe those who live in Taiwan.
In 1958, Chiang Kai Shek asked for U.S. support to topple Mao. At the time, I believe it could have succeeded, but Eisenhower knew the cost of war on the Chinese mainland, especially in the beginning of mass starvation.
I wrote about the longest artillery battle in human history. The 1961-1972 program was Chiang’s desire to topple Mao after the Great Starvation.
“Taiwan has become less militaristic”. I am mixed on this. I agree but, even when they were very aggressive, so much was theater. My Naval Academy classmates thought it was funny.
The major division today is: Chiang Kai Shek treated the Taiwanese unjustly so today the Taiwan separatists want revenge against all Chinese, including those on the mainland who were not part of Chiang Kai Shek’s rule.
I think the 1992 peace agreement laid out a workable arrangement for folks in Taiwan and the mainland…it gave Taiwan unchallenged autonomy for an unlimited time. That will be the basis of any peace agreement.
Eisenhower is a great example of a military leader who deeply understood the pitfalls of war and thus sought to avoid it when he could.
It is interesting that Taiwan separatism is in response to Chiang's unjust rule under the White Terror. In that case, a critical task for Beijing is to present itself as a foil to the KMT under Chiang by relying more heavily on soft power.
The 1992 consensus will absolutely be critical as the basis for any negotiations between Beijing and Taipei.
True, but one can analyze the statements Xi has made and the specific circumstances Xi is in to determine what course of action is likely in his and the Party's best interest
Like Putin, his own best interest is above everything else. He believes in his place in history and legacy. He bulldozed thru obstacles within the party elite for an unorthodox third term and beyond under the premise that he would “resolve” the Taiwan issue during his tenure. His interest is therefore his continued grip of power and when challenges arise he may have no choice but to deliver on his promise so as to not lose power…
It is precisely Xi's desire to hold onto power and strengthen the Party's position within China that prevents them from engaging in direct conflict in the Taiwan Strait. Quotes are from the post.
1) China's exports to the West
China has an export-driven economy, with the EU and US as its #2 and #3 trading partners. "An invasion of Taiwan would trigger Western decoupling and sanctions on China faster than you can say "geopolitical fallout." Such sanctions would slow the recovering Chinese economy, which is grappling with a 15% youth unemployment rate. The prospect of mass unemployment, fueled by a Western economic boycott, leading to social unrest and potentially destabilizing the Communist Party's hold on power, is not something Beijing would lightly entertain."
Russia's much smaller economy meant that Putin could shift from exporting oil and gas to the West to exporting it to China, India, and the Middle East to fund the Russian war machine. China's much larger economy means Xi doesn't have that luxury and must continue to rely on exports to the West.
2) China relies on the US dollar
Exporting primarily to the West means China must continue to rely on the USD. "The fear of losing U.S. dollar access is palpable. Even Chinese state-owned banks have shied away from doing business with Hong Kong officials sanctioned by the U.S., lest they too find themselves on the wrong side of the American financial system."
3) Access to capital for Chinese companies
"In 2024, President Xi asked a group of Chinese entrepreneurs why the number of new unicorns in the country had been falling."
Despite the fact that China has a larger economy by purchasing power compared to the US, US companies have a collective market cap 4x bigger than China's.
"This is the "China discount" in action, and it has real-world consequences. A lower valuation for Chinese companies means it's harder and more expensive for them to raise the capital they need to grow, innovate, and compete. It directly kneecaps their competitiveness and slows down broader economic development. It is, in short, a direct threat to Xi's grand goal of "great rejuvenation." It’s far more difficult to rejuvenate your nation if your best and brightest companies are perpetually trading at a discount to their global peers, starved of the capital that fuels growth."
"This is where the Taiwan situation gets particularly sticky, in a way that goes beyond formal sanctions or asset freezes. Sanctions are a policy tool announced in reaction to certain events. Capital, on the other hand, is a coward. It doesn't wait for a presidential decree or a UN resolution to get scared. It can and does move in or out of a country based on nothing more than the collective gut feeling of thousands of investors assessing risk at any given moment."
4) There is simply no need for China to invade
"China can afford to play the long game. It can infiltrate Taiwan’s government and military, exploit divisions within Taiwan society, leverage its economic might, and use their shared language to allow its media to create compelling content that influences a generation of Taiwanese to think more positively about China."
I don’t dispute your characterization of the KMT. Neither do I discount most of your analysis or reasons. My concern lies more with the DPP, as they continue pushing the envelope. I believe Taiwan is moving steadily toward independence—a direction supported by the majority of its residents. Yet that path could unfold peacefully or devolve into conflict. The latter, of course, may not even lead to the intended destination.
At present, Taiwan faces an uncertain and potentially perilous future. Rising instability within the CCP’s inner circle could compel Xi Jinping into making a move he views as unavoidable. While Xi outwardly projects firm control, the undercurrents suggest otherwise—which is precisely what makes the situation so dangerous for Taiwan, particularly if the consequences are miscalculated.
Neither you nor me have any control over what happens next. That's why I commented you cannot say for certain China won't invade Taiwan.
In 2024, only 40% of voters supported the pro-independence candidate for president.
"At present, Taiwan faces an uncertain and potentially perilous future."
The only thing that makes its future "potentially perilous" is the lack of official diplomatic relations with Mainland China, which existed under President Ma Ying-jeou.
A more pragmatic and less radical president would seek official ties with the mainland and take this risk off the table.
"Neither you nor me have any control over what happens next. That's why I commented you cannot say for certain China won't invade Taiwan."
There is one group of people who collectively get to decide whether or not China invades Taiwan: Taiwan's people.
Quote from the post: "Taiwan itself holds a powerful key to de-escalation: the choice to negotiate and give up some degree of sovereignty and autonomy in exchange for guaranteed peace."
Based on the results of the 2024 Taiwan presidential election and the Great Recall, Taiwan's voters have decided that they would rather adopt a conciliatory approach with the mainland instead of being antagonistic and risking war.
The Taiwan Public Opinion Foundation released a poll in February 2025 finding that 51.8% of Taiwanese adults preferred Taiwan independence, while 24.2% preferred maintaining the status quo, and 13.3% preferred unification with China. The Great Recall had nothing to do with Taiwan Independence unless you’re also brainwashed by the mainstream media in Taiwan. The DPP started it by accusing KMT lawmakers of being too close to Beijing and potentially jeopardizing Taiwan's national security by obstructing the DPP government's agenda, including defense spending and national security bills. Most KMT lawmakers were merely trying to promote businesses with China for their local constituents. Even pro independent voters still want to make money and that’s the simple truth. Funny thing is, while DPP decries KMT lawmakers of working for the CCP, recent developments have instead brought to light a significant espionage case involving former members of Taiwan's ruling DPP and alleged spying for China with four DPP members indicted in June of 2025.
However, Xi Jinping won’t care about any of the above. He may get to a point where China’s instability mounts and he needs a huge distraction. Mao did it with the Korean War in 1950; Deng did it with the Vietnam war in 1978. Mao surprised even general Douglas MacArthur back in the day. MacArthur did not believe Mao had the wherewithal to do it. Deng surprised the Vietnamese when everyone thought the post Mao focus for Deng should have been to reinvigorate the economy.
A blockade is considered an act of war under international law, so it would trigger many of the same severe negative consequences for Beijing as a full-scale invasion when it comes to exports to the US/EU, dependence on the Western financial system, capital flight, risking social unrest due to a struggling economy, and potentially triggering US involvement and nuclear escalation.
I believe Xi's calculation in favor of a seablockade could be something like this:
-basically no country officially recognizes Taiwan as a sovereign country
-an isolationist America First president will already not be keen on a major conflict with China
-a blockade doesn't kill anyone making it even harder to sell military action to the american population
-Chinese controlled Taiwan is still much better for the US than a military conflict+trade war with China and maybe you could try to persuade the US that trade and chip production will continue or offer other deals
-it isn't clear to the US whether it could break a blockade even if it tried
The Taiwanese want to negotiate a way to get along with Beijing, preserve peace, and preserve their system, rights, and freedoms. The issue is that their current president doesn't want to.
Inverteum Capital‘s arguments are all quite logical and demonstrate why it would be against either country’s interests to go to war. But Inverteum Capital fails to account for the possibility that one country or the other will not act rationally, or that special interests within either regime may favor war even if it doesn’t serve the national interest. Nor does the essay appreciate the extent to which a simple accident or spark can ignite a war when the parties are sufficiently militarized and trigger happy. In 1914 of course the infamous spark was the assasination of archduke Ferdinand. Today, one could easily imagine one of the PRC’s ever-more-hostile naval exercises leading to an errant lethal missile going from one side to the other. The sword of Damocles hung by a thread, and threads can easily break.
The Great Illusion was ahead of its time but not wrong. It turns out that economic interdependence alone did not ensure peace; what did end up ensuring peace was (paradoxically) the creation of nuclear weapons.
The essay also includes arguments unrelated to economic interdependence.
1) Risk of nuclear war between US and China
"A direct shooting war between the United States and China is the stuff of nightmares, precisely because both are nuclear armed, technologically sophisticated global superpowers. The old Cold War logic of Mutually Assured Destruction (MAD) still holds. The consequences are simply too catastrophic for either side to rationally contemplate initiating such a conflict, so much so that no nuclear power has ever engaged in direct full-scale war."
2) The Taiwanese do not want to fight, which increases the chance of a peaceful negotiated outcome
"When high school students were quizzed on the optimal survival strategy for Taiwan, the overwhelming response was that Taiwan must do everything in its power to avoid provoking a Chinese attack."
"A majority (66%) of Taiwanese are unwilling to pay higher taxes to strengthen the island's military."
"Mandatory military service, currently one year for able-bodied men, is deeply unpopular."
3) The long game
China can "infiltrate Taiwan’s government and military, exploit divisions within Taiwan society, leverage its economic might, and use their shared language to allow its media to create compelling content that influences a generation of Taiwanese to think more positively about China."
----
The reason why WWI escalated so fast was because the dueling pair of alliances in Europe at the time caused a small, limited conflict to rapidly turn into a much larger one. This is precisely why China has zero alliances.
Keep in mind that "the last time a combat-related death occurred between the PRC and the ROC was in 1958".
"Beijing understands the importance of preserving peace in order to have the right starting point for constructive negotiations. Any military attack would unite the Taiwanese against Beijing, a counterproductive action given that Taiwan is a deeply divided democracy."
TLDR nothing ever happens
And that's a great thing
I shared the same viewpoint from a militaristic perspective: https://kainesianmacro.substack.com/p/how-china-will-struggle-to-invade
Interesting read. You're right that "for all its saber-rattling, perhaps China has no true plans to attack at all."
Obvious to anyone with a brain. Meaning nobody in the US.
Yes. Unfortunately, ignorance about international relations is common in the US.
Example: US Senator can't tell the difference between China and Singapore: https://www.youtube.com/shorts/sAkInjju3ww
The Chinese have 5,000 years of caring mostly about one thing - good fortune. It's sheer ignorance to believe they'd behave differently, let alone risk a war with America the unpredictable.
It's almost as if America is psychologically projecting its own mindset and tendencies onto the Chinese and then being very fearful of the mirror reflection. In reality though, Chinese culture is totally different from American culture.
With China’s aggressive moves in the South China Sea and its enormous military buildup, it’s not a stretch to believe that they have an ultimate goal of something other than world peace.
The South China Sea is literally a separate post.
China primarily needs the SCS on two dimensions:
- Economic: critical global trade route, 80% of energy imports go through it
- Military: only ocean off China's coast deep enough to hide its nuclear submarines, which means Beijing must constantly monitor it like a hawk to ensure its sea-based nuclear deterrent capability is never neutralized
By comparison, America is lucky with its geography, with deep oceans on three sides: Pacific, Atlantic, Gulf of America.
There's also no question that the proverbial Sword of Damocles they're hanging over Taipei will only get sharper and heavier over time.
"So, the possibility of invasion, the military drills, the missile tests, and the probing of Taiwan's Air Defense Identification Zone (ADIZ) are less about an imminent D-Day and more about maintaining a proverbial Sword of Damocles over Taipei.
Beijing will undoubtedly continue to sharpen this sword to motivate a greater willingness for Taipei to come to the negotiating table. But Beijing is also acutely aware that if that sword were to actually fall, the consequences for the PRC itself could be catastrophic."
China's happy with the equilibrium but the US has been trying to goad it into war for years. Arming Taiwan to the teeth, interfering in elections despite acknowledging its One China status, US empire games endanger the whole world.
Luckily, China is well aware that any war would be self-destructive and will refuse to play into America's hands.
An excellent article... sound and basic common sense that nevertheless will not be accepted by western media and government.
"You can’t convince a man when his salary depends on him not understanding it." - Upton Sinclair
The US military industrial complex has a strong incentive to promote absurd claims of a potential invasion.
Agree... I've noted that in all the hoopla about US budget cuts, the military/war budget hasn't been mentioned at all.
I’m not sure that applies here. The best way to prevent a war is to be strong. A weak U.S. invites adventurism. And while the American defense budget is grossly high, it’s a bargain when compared to the multi trillion-dollar cost of a shooting war.
It's hard to separate which aspects of the US defense budget are truly effective and which aspects are pork barrel spending / jobs program where the defense contractor puts a few jobs in every congressional district so that no one votes against it.
As far as deterrence, "a majority (66%) of Taiwanese are unwilling to pay higher taxes to strengthen the island's military."
It's not fair to ask American taxpayers to foot the bill when Taiwan's taxpayers are not willing to pay more for their own defense.
Great article. I agree. I’ve always had the though that if Xi wanted to invade Taiwan, he would’ve already. But he knows the cost.
💯
I can only speculate that the people if Taiwan get used to a certian level of risk, you can't indefinetly live like you are about to be invaded for decades on end.
I do believe China will use military action as a last resort. The west won't be willing to really confront them either so when it happens it may be quick and hopefully with minimul death and destruction. I hope the best for the people if Taiwan.
You're right that the Taiwanese do not want to have an antagonistic relationship with Mainland China.
Once Taiwan's president switches to a different political party, there will likely be official government-to-government relations between Beijing and Taipei, just like there was under President Ma Ying-jeou (2008-16). That will fully eliminate the risk.
There's a proverb in weiqi (what the English speaking world calls *go*, from Japanese), "盘角曲四，劫尽棋亡".
In his book The 48 Laws of Power, for Law 48: Assume Formlessness, Robert Greene states that Western military strategy has been influenced most by chess while Chinese military strategy has been influenced most by go (圍棋 - weiqi).
"Chess is linear, position oriented, and aggressive; go is nonlinear and fluid. Aggression is indirect until the end of the game, when the winner can surround the opponent’s stones at an accelerated pace."
Go is played on a much larger grid than chess, with 6x as many positions as in chess. Go's "strategy is more subtle and fluid than chess, developing slowly; the more complex the pattern your stones initially create on the board, the harder it is for your opponent to understand your strategy."
"A key weiqi concept, for example, is to use the size of the board to your advantage, spreading out in every direction so that your opponent cannot fathom your movements in a simple linear way."
The chess players in the global geopolitical game (West) naturally assume the go players (China) share their aggressive, impulsive style, but the latter is actually playing a totally different, much longer term game.
Case in point as far as the contrasting approaches inspired by chess (West) vs. go (China):
Let’s compare the cost of the primary foreign policy initiatives of the US and China over the past 20 years.
- US wars in the Middle East after 9/11: $8 trillion
- China’s Belt and Road Initiative: $1 trillion
Forget bang for the buck; in absolute terms, the BRI has created far more goodwill and fostered far more cooperation with Beijing around the world than wars in the Middle East have for Washington.
This is the difference between a long term strategy influenced by go and a short term strategy influenced by chess.
Taiwan's voters have chosen peace by voting against EVERY SINGLE recall attempt of opposition Kuomintang lawmakers. https://en.wikipedia.org/wiki/2025_Taiwanese_recall_votes
What a great day for continued peace in the Taiwan Strait.
Why China Won't Invade Taiwan has become Inverteum's most popular post ever.
It's not easy delivering the case for peace in the Taiwan Strait in a media and political landscape dominated by the insanely powerful and well-funded Washington establishment and military industrial complex.
They don't welcome those who challenge the false narrative they peddle, so thank you to all who liked, commented, restacked, and subscribed.
For those of you who think differently from the mainstream echo chamber, please share your perspective with the world and reply with a link to your post.
Interesting read on why China might hold back on Taiwan. The dollar’s role is a huge part of that equation, even if it’s not front and center. China’s financial lifelines run through a system it can’t fully control, and the risks of it losing their access are real.
But also, don’t get complacent with thinking the dollar’s dominance is unshakeable. It’s quietly shifting, and those subtle moves will shape not just China’s options but the whole global order. I dug into that in The Dollar Is Quietly Declining. Worth a look if you want to understand the bigger picture:
https://themarketmaverick.substack.com/p/the-dollar-is-quietly-declining
You're right that US dollar dominance will likely weaken over time, with more countries choosing to settle trade in their own currencies. But the USD is unlikely to weaken to the point where China doesn't need it at all, as evidenced by Hong Kong's continued peg to the USD.
Great point on the HKD peg. Tt's a clear example of how deeply embedded the USD still is in regional financial systems, even those close to China. And you're absolutely right that the dollar's role isn't disappearing overnight.
That said, what we’re seeing isn't necessarily about total replacement, but rather a strategic hedging away from overdependence. Even incremental shifts like bilateral trade in yuan, or the build-up of gold reserves can alter leverage over time. And in a high-stakes scenario like Taiwan, even modest financial pressure points could become decisive.
Appreciate the thoughtful reply; this is the kind of nuance we need more of in the de-dollarization debate.
"What we’re seeing isn't necessarily about total replacement, but rather a strategic hedging away from overdependence. Even incremental shifts like bilateral trade in yuan, or the build-up of gold reserves can alter leverage over time."
💯 Precisely China's strategy
Your use of the term “Taiwanese” is confusing and often inaccurate. Only 51% of Taiwan’s population is Taiwanese, and even the Taiwanese recognize they are Chinese, from the FuJian area.
The issue with using the term "Chinese" to describe Taiwan residents is that the average English speaker wouldn't know the difference between PRC Chinese (中國人) and ethnic Chinese (華人). They would assume "Chinese" implies PRC.
"Taiwanese" is the simplest way to describe those currently living in Taiwan.
The use of demonyms for residents of a certain place don't have to imply sovereignty, e.g. New Yorker, Scottish, Hawaiian, Shanghainese.
By the way, I believe Capt. Kelly wanted us to ask “Are you Taiwanese?” was twofold. He wanted us to see the issue and…
In 1972 folks at the U.S. Embassy were aware there was tension between the Taiwanese and the non-Taiwanese.
In 1953, my friend Bert Frauleigh while working for AID deliberately sought out a Taiwanese person to create Formosa Plastics. Bert chose Wang Yung Ching and the two were still close friends when they visited Formosa Plastics in Texas.
I think moving our Embassy from Taipei to Beijing caused a growing lack of understanding of the issues, and that, I think, is how the U.S. government stumbled into the National Endowment for Democracy and promoting Taiwan insurrection.
I only say “Taiwanese” if the person really is Taiwanese.
If I don’t know, or if I know they are Hakka or Shandong or Polynesian etc, I just say “a resident of Taiwan”. I say “Taiwan people “…
In 1972 we flew to Taiwan and landed at the old airport in downtown Taipei. The Naval Attache to China was Navy Captain William Kelly.
Capt. Kelly wanted to enhance our learning experience and he gave us two tasks:
1. Tell us what the Chinese do at sea. (They sail point to point with no drills)
2. Ask your shipmates “Are you Taiwanese?” I learned that is a very big question, and I learned both Taiwanese and non-Taiwanese can be offended.
On our ship, none of the officers were Taiwanese. I think the % of officers who are Taiwanese is still below 50%. The Taiwan separatists will not get the military to fight to become a Taiwanese military. Taiwanese is still a foreign language to most.
Even if an officer is Taiwanese, he is unlikely to know Taiwanese military vocabulary.
“One” in Mandarin is 一 yi
But in the Mandarin speaking military (both mainland and Taiwan) “one” is “yao4”
“130” is yao4san1dong4, not yi san ling.
The US's role in this issue will likely diminish in importance over time, especially as China's hard and soft power grows. There are big problems domestically in the US, and Americans don't want to be in a conflict with China. Even the trade war earlier this year was unsustainable. Washington politicians know that conflict with China, even over trade, isn't going to win elections.
After the KMT retreated to Taiwan in 1949, there were major tensions between the mainlanders (外省人) and natives (本省人); you saw this when working with the ROC military in the 1970s. Since then, assimilation and intermarriage, democratization, and policies to recruit natives into government and to reduce ethnic discrimination have led to a greater sense of shared identity.
Although some of your ROC shipmates identified as Chinese, the government they represented was very militaristic and anti-PRC and did not seek to create peace in the Taiwan strait. Under Project National Glory (1961-72), Chiang Kai-shek sought to reconquer Mainland China. Paradoxically, this hardline stance made it much harder for Beijing and Taipei to work with the other side in any way.
Thankfully, Taiwan has become far less militaristic and far more peace-loving while the policies Chiang put in place, such as mandating the use of Mandarin, make it easier for people on both sides to understand and work with each other. This is reason for optimism when it comes to cross-strait relations and continued peace, regardless of what demonym is used to describe those who live in Taiwan.
In 1958, Chiang Kai Shek asked for U.S. support to topple Mao. At the time, I believe it could have succeeded, but Eisenhower knew the cost of war on the Chinese mainland, especially in the beginning of mass starvation.
I wrote about the longest artillery battle in human history. The 1961-1972 program was Chiang’s desire to topple Mao after the Great Starvation.
“Taiwan has become less militaristic”. I am mixed on this. I agree but, even when they were very aggressive, so much was theater. My Naval Academy classmates thought it was funny.
The major division today is: Chiang Kai Shek treated the Taiwanese unjustly so today the Taiwan separatists want revenge against all Chinese, including those on the mainland who were not part of Chiang Kai Shek’s rule.
I think the 1992 peace agreement laid out a workable arrangement for folks in Taiwan and the mainland…it gave Taiwan unchallenged autonomy for an unlimited time. That will be the basis of any peace agreement.
Regarding Chiang’s aggressive attitude toward Mao, I think this will give you a chuckle. https://open.substack.com/pub/bill575555/p/war-with-chinese-characteristics?r=50tspg&utm_medium=ios
Always great to hear your perspective.
Eisenhower is a great example of a military leader who deeply understood the pitfalls of war and thus sought to avoid it when he could.
It is interesting that Taiwan separatism is in response to Chiang's unjust rule under the White Terror. In that case, a critical task for Beijing is to present itself as a foil to the KMT under Chiang by relying more heavily on soft power.
The 1992 consensus will absolutely be critical as the basis for any negotiations between Beijing and Taipei.
Great post! Read and liked it a while back.
“a critical task for Beijing is to present itself as a foil to the KMT”
I am torn on this
Both the KMT and the CCP agree on One China
In a three way fight, should the CCP align with the KMT against the DPP?
Today both the CCP and the DPP refuse to say “Republic of China “…so in that way the DPP aligns with the CCP.
Old habits linger. At least we no longer hear “Mao fei” on Taiwan and little girls on the mainland can be named Plum Flower again.
Taiwan is not Ukraine. Neither are you Xi Jinping. No one can say for certain what Xi will or will not do…
True, but one can analyze the statements Xi has made and the specific circumstances Xi is in to determine what course of action is likely in his and the Party's best interest
Like Putin, his own best interest is above everything else. He believes in his place in history and legacy. He bulldozed thru obstacles within the party elite for an unorthodox third term and beyond under the premise that he would “resolve” the Taiwan issue during his tenure. His interest is therefore his continued grip of power and when challenges arise he may have no choice but to deliver on his promise so as to not lose power…
It is precisely Xi's desire to hold onto power and strengthen the Party's position within China that prevents them from engaging in direct conflict in the Taiwan Strait. Quotes are from the post.
1) China's exports to the West
China has an export-driven economy, with the EU and US as its #2 and #3 trading partners. "An invasion of Taiwan would trigger Western decoupling and sanctions on China faster than you can say "geopolitical fallout." Such sanctions would slow the recovering Chinese economy, which is grappling with a 15% youth unemployment rate. The prospect of mass unemployment, fueled by a Western economic boycott, leading to social unrest and potentially destabilizing the Communist Party's hold on power, is not something Beijing would lightly entertain."
Russia's much smaller economy meant that Putin could shift from exporting oil and gas to the West to exporting it to China, India, and the Middle East to fund the Russian war machine. China's much larger economy means Xi doesn't have that luxury and must continue to rely on exports to the West.
2) China relies on the US dollar
Exporting primarily to the West means China must continue to rely on the USD. "The fear of losing U.S. dollar access is palpable. Even Chinese state-owned banks have shied away from doing business with Hong Kong officials sanctioned by the U.S., lest they too find themselves on the wrong side of the American financial system."
3) Access to capital for Chinese companies
"In 2024, President Xi asked a group of Chinese entrepreneurs why the number of new unicorns in the country had been falling."
Despite the fact that China has a larger economy by purchasing power compared to the US, US companies have a collective market cap 4x bigger than China's.
"This is the "China discount" in action, and it has real-world consequences. A lower valuation for Chinese companies means it's harder and more expensive for them to raise the capital they need to grow, innovate, and compete. It directly kneecaps their competitiveness and slows down broader economic development. It is, in short, a direct threat to Xi's grand goal of "great rejuvenation." It’s far more difficult to rejuvenate your nation if your best and brightest companies are perpetually trading at a discount to their global peers, starved of the capital that fuels growth."
"This is where the Taiwan situation gets particularly sticky, in a way that goes beyond formal sanctions or asset freezes. Sanctions are a policy tool announced in reaction to certain events. Capital, on the other hand, is a coward. It doesn't wait for a presidential decree or a UN resolution to get scared. It can and does move in or out of a country based on nothing more than the collective gut feeling of thousands of investors assessing risk at any given moment."
4) There is simply no need for China to invade
"China can afford to play the long game. It can infiltrate Taiwan’s government and military, exploit divisions within Taiwan society, leverage its economic might, and use their shared language to allow its media to create compelling content that influences a generation of Taiwanese to think more positively about China."
In July, Taiwan's voters voted against EVERY SINGLE recall attempt of opposition Kuomintang (KMT) lawmakers. https://en.wikipedia.org/wiki/2025_Taiwanese_recall_votes
Today, in Taiwan's politics, "the KMT is the strongest advocate for closer, more amicable relations with Mainland China."
I don’t dispute your characterization of the KMT. Neither do I discount most of your analysis or reasons. My concern lies more with the DPP, as they continue pushing the envelope. I believe Taiwan is moving steadily toward independence—a direction supported by the majority of its residents. Yet that path could unfold peacefully or devolve into conflict. The latter, of course, may not even lead to the intended destination.
At present, Taiwan faces an uncertain and potentially perilous future. Rising instability within the CCP’s inner circle could compel Xi Jinping into making a move he views as unavoidable. While Xi outwardly projects firm control, the undercurrents suggest otherwise—which is precisely what makes the situation so dangerous for Taiwan, particularly if the consequences are miscalculated.
Neither you nor me have any control over what happens next. That's why I commented you cannot say for certain China won't invade Taiwan.
"I believe Taiwan is moving steadily toward independence—a direction supported by the majority of its residents."
If this were true, the Great Recall would've succeeded. Instead, not a single KMT lawmaker was recalled. https://en.wikipedia.org/wiki/2025_Taiwanese_mass_electoral_recall_campaigns
In 2024, only 40% of voters supported the pro-independence candidate for president.
"At present, Taiwan faces an uncertain and potentially perilous future."
The only thing that makes its future "potentially perilous" is the lack of official diplomatic relations with Mainland China, which existed under President Ma Ying-jeou.
A more pragmatic and less radical president would seek official ties with the mainland and take this risk off the table.
"Neither you nor me have any control over what happens next. That's why I commented you cannot say for certain China won't invade Taiwan."
There is one group of people who collectively get to decide whether or not China invades Taiwan: Taiwan's people.
Quote from the post: "Taiwan itself holds a powerful key to de-escalation: the choice to negotiate and give up some degree of sovereignty and autonomy in exchange for guaranteed peace."
Based on the results of the 2024 Taiwan presidential election and the Great Recall, Taiwan's voters have decided that they would rather adopt a conciliatory approach with the mainland instead of being antagonistic and risking war.
The Taiwan Public Opinion Foundation released a poll in February 2025 finding that 51.8% of Taiwanese adults preferred Taiwan independence, while 24.2% preferred maintaining the status quo, and 13.3% preferred unification with China. The Great Recall had nothing to do with Taiwan Independence unless you’re also brainwashed by the mainstream media in Taiwan. The DPP started it by accusing KMT lawmakers of being too close to Beijing and potentially jeopardizing Taiwan's national security by obstructing the DPP government's agenda, including defense spending and national security bills. Most KMT lawmakers were merely trying to promote businesses with China for their local constituents. Even pro independent voters still want to make money and that’s the simple truth. Funny thing is, while DPP decries KMT lawmakers of working for the CCP, recent developments have instead brought to light a significant espionage case involving former members of Taiwan's ruling DPP and alleged spying for China with four DPP members indicted in June of 2025.
However, Xi Jinping won’t care about any of the above. He may get to a point where China’s instability mounts and he needs a huge distraction. Mao did it with the Korean War in 1950; Deng did it with the Vietnam war in 1978. Mao surprised even general Douglas MacArthur back in the day. MacArthur did not believe Mao had the wherewithal to do it. Deng surprised the Vietnamese when everyone thought the post Mao focus for Deng should have been to reinvigorate the economy.
What about a blockade? That is not the same as an invasion, but not soft power either.
A blockade is considered an act of war under international law, so it would trigger many of the same severe negative consequences for Beijing as a full-scale invasion when it comes to exports to the US/EU, dependence on the Western financial system, capital flight, risking social unrest due to a struggling economy, and potentially triggering US involvement and nuclear escalation.
I believe Xi's calculation in favor of a seablockade could be something like this:
-basically no country officially recognizes Taiwan as a sovereign country
-an isolationist America First president will already not be keen on a major conflict with China
-a blockade doesn't kill anyone making it even harder to sell military action to the american population
-Chinese controlled Taiwan is still much better for the US than a military conflict+trade war with China and maybe you could try to persuade the US that trade and chip production will continue or offer other deals
-it isn't clear to the US whether it could break a blockade even if it tried
#1-3 are already the case.
But the use of military tactics like a blockade fundamentally misunderstand the Taiwanese people.
Taiwan is a deeply divided democracy with pro and anti-China elements.
60% of Taiwanese did not vote for the anti-China DPP president who is currently in power. The problem was that their vote was split between two candidates. https://en.wikipedia.org/wiki/2024_Taiwanese_presidential_election
The Taiwanese want to negotiate a way to get along with Beijing, preserve peace, and preserve their system, rights, and freedoms. The issue is that their current president doesn't want to.
Excellent analysis, thank you
Glad you found it informative
This essay is basically Norman Angell’s argument about why war between the PRC and Taiwan is impossible, except that Angell was writing about rival European powers in 1910. https://worldpeacefoundation.org/blog/the-great-illusion-114-years-on/
Inverteum Capital‘s arguments are all quite logical and demonstrate why it would be against either country’s interests to go to war. But Inverteum Capital fails to account for the possibility that one country or the other will not act rationally, or that special interests within either regime may favor war even if it doesn’t serve the national interest. Nor does the essay appreciate the extent to which a simple accident or spark can ignite a war when the parties are sufficiently militarized and trigger happy. In 1914 of course the infamous spark was the assasination of archduke Ferdinand. Today, one could easily imagine one of the PRC’s ever-more-hostile naval exercises leading to an errant lethal missile going from one side to the other. The sword of Damocles hung by a thread, and threads can easily break.
The Great Illusion was ahead of its time but not wrong. It turns out that economic interdependence alone did not ensure peace; what did end up ensuring peace was (paradoxically) the creation of nuclear weapons.
The essay also includes arguments unrelated to economic interdependence.
1) Risk of nuclear war between US and China
"A direct shooting war between the United States and China is the stuff of nightmares, precisely because both are nuclear armed, technologically sophisticated global superpowers. The old Cold War logic of Mutually Assured Destruction (MAD) still holds. The consequences are simply too catastrophic for either side to rationally contemplate initiating such a conflict, so much so that no nuclear power has ever engaged in direct full-scale war."
In the event of a conflict in the Taiwan Strait, Washington could decide to deploy nuclear weapons against Beijing. Xi is not going to risk nuclear war over Taiwan. In fact, he is the one who has been restraining Putin from deploying nuclear weapons in Ukraine: https://hongkongfp.com/2024/11/20/china-urges-restraint-after-russian-president-vladimir-putin-issues-nuclear-threat/
2) The Taiwanese do not want to fight, which increases the chance of a peaceful negotiated outcome
"When high school students were quizzed on the optimal survival strategy for Taiwan, the overwhelming response was that Taiwan must do everything in its power to avoid provoking a Chinese attack."
"A majority (66%) of Taiwanese are unwilling to pay higher taxes to strengthen the island's military."
"Mandatory military service, currently one year for able-bodied men, is deeply unpopular."
3) The long game
China can "infiltrate Taiwan’s government and military, exploit divisions within Taiwan society, leverage its economic might, and use their shared language to allow its media to create compelling content that influences a generation of Taiwanese to think more positively about China."
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The reason why WWI escalated so fast was because the dueling pair of alliances in Europe at the time caused a small, limited conflict to rapidly turn into a much larger one. This is precisely why China has zero alliances.
The PRC naval exercises around Taiwan are choreographed, with the precise locations of ships and missile targets announced in advance: https://chinapower.csis.org/wp-content/uploads/2024/05/1-2.png
Keep in mind that "the last time a combat-related death occurred between the PRC and the ROC was in 1958".
"Beijing understands the importance of preserving peace in order to have the right starting point for constructive negotiations. Any military attack would unite the Taiwanese against Beijing, a counterproductive action given that Taiwan is a deeply divided democracy."