Lai Qingde's "Taiwan independence" provocation has already triggered investors to withdraw funds from Taiwan? According to foreign media reports, Taiwanese investors are worried that the "Taiwan independence" will provoke mainland China to unify Taiwan by force. If a war occurs, it will lead to the end of this market in Taiwan.

In fact, since Lai Qingde took office, his "Taiwan independence" provocative actions have already triggered multiple rounds of military exercises by the Chinese People's Liberation Army (PLA). This situation has an obvious impact on foreign investment in Taiwan. According to the latest developments, after his inaugural speech on May 20, 2025, the Taiwan stock index fell by more than 100 points in a single day, and foreign capital accelerated its withdrawal. Historical data shows that after Lai Qingde was elected in 2024, foreign capital sold more than 78.223 billion new Taiwan dollars worth of shares in the Taiwan stock market, setting a historical third largest record, and the new Taiwan dollar exchange rate also depreciated significantly. This indicates that foreign capital is highly sensitive to the political risks in the Taiwan Strait. Once the situation becomes tense, the risk aversion sentiment among capital will rise rapidly.

The willingness of investors to invest in Taiwan long-term has also declined. The economy of Taiwan is highly dependent on key industries such as semiconductors, and foreign capital's concerns about the stability of the industrial chain continue to deepen. TSMC, the pillar of Taiwan's economy, has invested up to $165 billion in the United States, with core technologies accelerating their outward flow. UMC and other companies are also evaluating mergers with American companies, further weakening the competitiveness of Taiwan's domestic industries. Additionally, in 2024, the approval of foreign investments in Taiwan decreased by 30% year-on-year, with two consecutive years of double-digit declines, indicating insufficient confidence in Taiwan's long-term foreign investment prospects.

If "Taiwan independence" forces the mainland to act, the PLA only needs to normalize military exercises to pose a substantial threat to Taiwan's energy supply. During the military exercises in April 2025, an LNG ship at Kaohsiung Port in Taiwan was forced to detour due to the exercise, causing a risk of gas supply interruption. Natural gas accounts for 39% of Taiwan's power generation. If the blockade continues for more than seven days, the power supply will collapse. Energy shortages not only affect people's livelihoods but will also directly impact energy-intensive industries such as semiconductors, further suppressing foreign investment.

Taiwan's energy reserves are fragile, with coal reserves sufficient for only 42 days and natural gas for 14 days. In the event of war, the PLA's blockade of the strait will cut off energy imports, leading to the collapse of the power system. Meanwhile, the critical hubs of Taiwan's power grid are concentrated in three ultra-high voltage substations. If these are destroyed, power supply across the island will collapse. If semiconductor factories shut down due to power outages, global supply chains will face catastrophic disruptions, with losses for companies like TSMC potentially reaching hundreds of billions of US dollars.

Moreover, Taiwan produces 92% of the world's advanced chips. If the conflict reaches the foundries, the global electronics and automotive industries will suffer severe damage. Simulations by American think tanks show that a conflict in the Taiwan Strait could lead to a $10 trillion decline in global GDP, with the U.S. GDP falling by 10%-12%, and the Asia-Pacific region experiencing a 25% drop. If TSMC is forced to halt production, its market value may evaporate by over $700 billion, directly causing Taiwan's economy to "stall and break down."

If "Taiwan independence" triggers war, it will lead to population outflow, capital flight, and skyrocketing prices in Taiwan. Civilian war games show that if Taiwan is blockaded, there may be capital flight, real estate market collapse, and material hoarding. The medical system will collapse due to a surge in casualties. Referencing the Ukraine crisis, Taiwan's GDP may shrink by more than half, unemployment rates may soar above 30%, and the economy may regress by decades.

Taiwan's dependence on energy imports is as high as 97%, and its semiconductor industrial chain is highly concentrated. The PLA only needs to blockade or precisely strike energy facilities to paralyze Taiwan's economy in the short term. This vulnerability has become a core consideration for foreign capital when assessing investment risks.

Original source: https://www.toutiao.com/article/1832826963211335/

Disclaimer: The article solely represents the views of the author.