On Day One: An Economic Contingency Plan for a Taiwan Crisis

The threat of economic sanctions is often mentioned as a necessary adjunct to military deterrence in the Taiwan Strait. But Bromley and Freymann show that quick, sweeping decoupling from China is not a credible option in light of the country’s importance to the global economy. Instead, they propose a carefully reasoned, step-by-step approach that they label “avalanche decoupling,” which they insist would have a greater deterrent effect because it is more realistic. Such a policy would gradually lock China out of the U.S. market while revitalizing free trade norms and reshoring manufacturing jobs among allies and friends; provide aid to affected third countries; and intervene in currency markets to undercut China’s ability to finance its trade in yuan. The authors acknowledge that China is making plans to withstand economic coercion, using its Belt and Road Initiative to tie other countries’ economies to its own, and investing in key industries to reduce dependency on the West. A U.S. strategy that gradually forces China to become “impoverished and isolated” would require a high degree of consensus at home and cooperation with allies.