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Taiwan: A war is not imminent, but the risk is high in the medium and long term – Danske Bank

Tensions soar with growing fear of a Chinese invasion of Taiwan in the not too distant future. Although the risks are increasing, economists continue to see a fairly small chance of a Chinese invasion of Taiwan in the next two years. However, the risk of war in the medium and long term is highin your opinion.

No immediate risk of Chinese invasion of Taiwan

“Despite the current tensions, we do not see a high risk of war in Taiwan in the short term, since all parties have an interest in maintaining the status quo. Nevertheless, the risk is real in the medium and long termas China may end up choosing a non-peaceful path of reunification if it sees no other way out.”

A risk within the next two years may come around a possible change of government in the US. in 2024 if a newly elected US president wants to change the status quo.”

“We expect tensions to remain elevated for the foreseeable future as we hope that the US and the EU will continue to expand their relations with Taiwan and maintain a high military presence around Taiwan and the South China Sea. In response, China is willing to continue high-level military exercises. This may be a new status quo with a higher level of tension than before.”

“In the end, both sides have a deterrence strategy. But with tensions so high, the risk of miscalculation or unintentional accidents triggering an ‘eye for an eye’ spiral could also end in a military confrontation.”

Source: Fx Street

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