134 Comments
User's avatar
Thalor's avatar

Put simply, whether to attack Taiwan isn’t just a military question — it’s even more of a political one.

And once you tally up all the political variables, the expected value goes negative, which is why they’ve held back.

It shows the Chinese government calculates political expected value with remarkable precision.

So… you’re not planning to recruit this elite team of political quants?

Alfred's avatar

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.

Inverteum Capital's avatar

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.

Gary's avatar

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.

Inverteum Capital's avatar

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."

Synchro's avatar

During my stay in China, I seldom hear anything negative from the Chinese people about Taiwan. Most of them profess an admiration and positivity that I at first found surprising. Even the provocations of the DPP is mostly viewed with annoyance than any passion or hatred. Now, it possible my circles are just not wide enough to be representative of the broader Chinese views and feelings about Taiwan. To this day they refer to Taiwanese as 同胞 — “Tong Bao” — roughly translated as “my kind, or someone with common filial ancestry. Neither side has a strong desire or historical baggage of hatred to destroy each other.

Inverteum Capital's avatar

💯 You're precisely right.

Don't worry about whether or not your experiences are "truly representative" of the public's views. As shown by the repeated failure of US election pollsters to accurately track the views of the American people, this is an impossible task.

What the world needs more of are fluent English speakers who understand China to share their perspectives and experiences and educate the rest of the world.

Jacob B's avatar

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.

Barry Morgan's avatar

Well said. Thanks.

HardcoreVeritas's avatar

Because they don’t need to?

Devansh's avatar

Hey man. Really great work. Would you be interested in guest posting on my newsletter. I think more people need to see stuff like this

REPUBLIA's avatar

Cannot afford to? Whilst USD remains the World’s Reserve currency we will continue to enjoy an unlimited debt ceiling (ask the Ratings Agencies). I appreciate your perspective and will continue to actively consume it, though mine on this one is that; we can’t afford not to (keep our promise to the world that is). As the old adage goes, what we standby watching from the balcony, will come home to roost.

Best wishes, R.R.

Inverteum Capital's avatar

On USD as reserve currency: Wars are ultimately fought and won on industrial power, not financial power. The ability to quickly and cheaply produce drones, missiles, and ships is far more decisive than the ability to print dollars.

Iran, a sanctioned pariah state, was able to inflict significant destruction on US military installations and hardware across the Middle East, which suggests the US is no longer the unipolar military hegemon it once was, so the US cannot afford to keep acting like it is.

China is now the world's foremost industrial power and is on track to reach roughly 45% of global manufacturing value added by 2030, while the US is projected to fall to around 11% https://blog.inverteum.com/p/china-will-transcend-its-demographics#%C2%A72-manufacturing-capacity

Given that asymmetry, even though the USD will likely continue to dominate, the most pragmatic path to resolving US-China disputes is diplomacy.

REPUBLIA's avatar
5dEdited

We financed China’s military build-up after dropping two nuclear bombs on poulation centers in Japan, to force the Emperor to reveal where in the Philippines he’d hidden the Gold stolen from the rest of Asia. Money and Finance are the reason JFK was assassinated, Hitler was able to dissolve the German Republic, and according to one of our Contributors who is an ex-international banker, Warsh will Digitize the Dollar, sealing its fate in terms of our Reserve status. Check the the price of Gold, and the disparity between Deliverable and Non-deliverable Forwards for proof that the Four banks (plus one Alternate) which price Gold every morning according to their own positions think we need to stand this administration down. RR

REPUBLIA's avatar

Agreed but Trump is abandoning the seat of American leadership, trading Taiwan for political favors (read; foreign influence), just like he did Hong Kong, while he prepares the Fed to destroy the Dollar and The One Big Beautiful Bill Act (TOBBBA) is set to kick-in next year with Economy collapse destruction of the People's Government *after the Election* in November.

He’s terrified of prison and a traitorous trader upon the American People of this Republic and the Free World, who must be stopped, else the blood with cover our hands and collectively shared futures, that are otherwise unlimited.

Though the Council that manages Xi Jinping is part of the same may be part of the same ethnic group, and if so, it should be OK. We're all Independently Sovereign republicans and Free (Self) Governing democrats, but Trump is a moron. I’m more worried about Korea and the PCBs leaking from the North into the Ocean killing our Ocas, which could very well collapse the food chain on Land AND in the Waters.

We, the People possess the the Original and Supreme, Legal Right to do it Peacefully. Join us as we men Gather with the "Other Half" of our Republic's Power: Women!

#savetheorcas #reuinitekorea #seasofairs #onerepublic

Enforests of Nature's Design:

https://republia.substack.com/p/native-coequality-is-natural-law-6ef

Inverteum Capital's avatar

On Trump and Taiwan: it’s less about "abandoning American leadership" and more about a logical recalibration. The US cannot afford to keep entangling itself in foreign conflicts, and a posture that leans on diplomatic solutions abroad while redirecting energy and resources toward domestic priorities is a defensible strategic choice.

On the broader economic picture: the US economy remains structurally strong on most aggregate measures (GDP growth, productivity, corporate earnings, dollar reserve status). The real and serious problem is that the gains are increasingly unequally distributed, which is a domestic policy question rather than evidence of imminent collapse.

On "terrified of prison": this is unlikely to be a meaningful driver of his behavior. In Trump v. United States (2024), the Supreme Court held 6:3 that former presidents have absolute immunity for actions within their core constitutional powers, presumptive immunity for other official acts, and no immunity for unofficial acts. In practice, that is a very wide shield for anything done in an official capacity, which makes the "fear of prosecution" theory of decision-making hard to sustain.

On Korea and the PCBs: a primary source would really help here. Transboundary PCB contamination from the DPRK collapsing the marine food chain is an extraordinary claim, and supporting evidence (e.g., a peer-reviewed study, sediment or tissue sampling data, or environmental monitoring from agencies such as NOAA, the EPA, or comparable Japanese, Korean, or Chinese bodies) would be needed before treating it as established fact.

On the linked Republia piece (Native Coequality is Natural Law, Part II): it covers a fair amount of ground, including Alexander Hamilton’s command of the assault on Redoubt 10 at Yorktown on October 14, 1781; the British surrender there five days later on October 19, 1781; Dolley Madison’s actions to preserve Cabinet papers and the Gilbert Stuart portrait of Washington as British forces advanced on the capital in August 1814; and the early hosting circles maintained by Abigail Adams, Lucy Knox, Sarah Jay, and Martha Washington in the first years of the Republic.

REPUBLIA's avatar

Here is model forecasting a reduction in the population of Orcas, which are the apex of all ecosystems of marine life. Thank you for your interest! Most are too heart broken to ask. It will take me a bit to relocate the white paper showing the North as the source. All our best, RR

https://www.nature.com/articles/s43247-024-01327-5

Inverteum Capital's avatar

The absolute mass of PCBs already in circulation globally is dominated by the roughly 1.3 million tons manufactured in the West between the 1930s and 1980s: https://multinationales.org/en/news/toxic-pollution-chemical-giants-free-from-all-liability

It's a huge marine pollution problem. The US EPA lists numerous PCB-contaminated sediment sites: https://www.epa.gov/hudsonriverpcbs/other-pcb-sediment-sites. The Hudson River is among the largest PCB sediment sites in the US by river extent and total contaminant mass, and has been the subject of one of the EPA's biggest remediation projects: https://www.epa.gov/hudsonriverpcbs.

Decommissioning legacy PCB stockpiles and remediating contaminated sediments at the long list of known hotspots in North America, Europe, and Japan will be the best way to save orca populations, but it is a monumental task.

North Korea may well be the last country still manufacturing PCBs, but its industrial base is tiny, so its annual output is almost certainly orders of magnitude smaller than the West's cumulative 1.3 million tons.

REPUBLIA's avatar

This article from 2018 cites production in North Korea, the study I was referring to showed a spike in 2010 so was older. Thank you again for your comments, good Sir!

https://www.bbc.com/news/science-environment-45652149

Kainesian Macro's avatar

I shared the same viewpoint from a militaristic perspective: https://kainesianmacro.substack.com/p/how-china-will-struggle-to-invade

Inverteum Capital's avatar

Interesting read. You're right that "for all its saber-rattling, perhaps China has no true plans to attack at all."

Kinsen Siu's avatar

An excellent article... sound and basic common sense that nevertheless will not be accepted by western media and government.

Inverteum Capital's avatar

"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.

Kinsen Siu's avatar

Agree... I've noted that in all the hoopla about US budget cuts, the military/war budget hasn't been mentioned at all.

Gary's avatar

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.

Inverteum Capital's avatar

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.

Inverteum Capital's avatar

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.

Erik at Dilemma Works's avatar

Obvious to anyone with a brain. Meaning nobody in the US.

Inverteum Capital's avatar

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

Steve's avatar

China’s ‘demographic catastrophe’? A solution?…… stop reading Peter Zeihan. 😂

Steve's avatar

Gary: It’s might be true that China has made ‘aggressive moves’ in the South China Sea, but only if you believe in the ‘logic’ that has China ‘threatening’ US bases that surround it, in a region 6,000 miles from the western seaboard of the USA. That reality does kinda make ‘China bad’ rhetoric sound a bit silly, no?.

Anna Chen's avatar

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.

Inverteum Capital's avatar

Luckily, China is well aware that any war would be self-destructive and will refuse to play into America's hands.

ChinArb's avatar

Inverteum, finally—someone running the numbers instead of banging the war drums.

You have correctly identified that Beijing acts like a Holding Company, not a Suicide Cult. In the ChinArb framework, the "No Invasion" thesis rests on three physical pillars:

1. The "Asset Heavy" Constraint War is a game for players with "Light Assets" (like System A, which exports Dollars and Weapons). System B is built on Heavy Assets (Factories, Grids, Supply Chains). Beijing views Taiwan not as an enemy fortress to be destroyed, but as a High-Value Semiconductor Fab to be acquired.

Rule #1 of M&A: You do not bomb the asset you intend to integrate. You don't shell the clean room. You blockade the driveway until management changes.

2. The Gravity Well (Newton vs. Clausewitz) You mentioned the "Cultural Seepage" (TikTok/Language). This is Orbital Mechanics. As System B's mass (Economy + Military) grows, its gravitational pull increases. Taiwan is a smaller planet in a binary star system.

Past: It orbited the distant star (US/System A).

Present: The nearby star (China/System B) is becoming too massive to ignore. The Strategy: Beijing doesn't need to fire a missile. It just needs to increase its mass until the orbital decay becomes irreversible. Why invade when Physics is bringing them to you?

3. The "Siege" Logic Your update on the KMT is the "Signal." The KMT represents the Pragmatic Wing of the Taiwanese establishment recognizing the shift in gravity. They know that System A offers Ideology, but System B offers The Supply Chain. Beijing is playing Go (Weiqi), surrounding the territory to force a surrender. Washington is playing Boxing, waiting for a knockout punch that will never come.

Conclusion: You are right. War breaks the Balance Sheet. Integration fixes it. Beijing is prepared to wait 25 years for a "Peaceful Merger" rather than risk 25 hours of a "Hostile Takeover." The sword dangles, but the gravity pulls. Gravity always wins. [Stupid! Taiwan is Not Venezuela] https://chinarbitrageur.substack.com/p/stupid-taiwan-is-not-venezuela?r=71ctq6

Stefans Emerging Market Review's avatar

If the Chinese are smart they will try to get a big piece of Russia in the East. Currently they are Leasing huge areas of land there. At some point there could be opportunites to directly purchase land like the US did with Alaska more than a Century ago and make it Chinese.

Inverteum Capital's avatar

Because of China's insistence on territorial integrity, it's unlikely that Beijing will officially turn a part of Russia into China.

But you're 100% right that China will continue to lease and buy up large parts of Russian Far East (with title held as private property), encourage Chinese people to move there, and gain control over the immense natural resources there. This is easy since the total population of the RFE is just 8m, which is less than half of Shenzhen, a typical Chinese megacity.

China's ability to gain de facto control of the RFE is yet another reason why it won't invade Taiwan.

Western geopolitical analysts often believe that China needs control of Taiwan to break out of the first island chain, but if it really wanted to break out, it would be far easier for Beijing to negotiate access to Russian naval bases on the Kuril Islands and the Kamchatka Peninsula than attempt a messy invasion of Taiwan.