China can make the global market blockade Taiwan

Share current article via Email Share current article via Facebook Share current article via Twitter Share current article via LinkedIn Mobile missile launchers on display during Taiwanese President Lai Ching-te's visit to a military base in Taoyuan, Taiwan, in response to Chinese military drills. The writer says a government does not have to physically stop the vessels if it can make the market decide that sailing is no longer worth the risk. Picture: For decades strategic assessments of a potential Taiwan crisis have been dominated by cinematic scenarios: amphibious landings across a contested strait, missiles raining down on military bases, and People's Liberation Army troops laying siege to Taipei. That imagination may be missing the more consequential possibility. China may not need to physically move on Taiwan to make the strait function as a closed waterway. It may only need to make the risk of navigation sufficiently expensive, uncertain and legally ambiguous that commercial operators begin withdrawing on their own. The decisive weapon in that scenario would not be a warhead. It could be an insurance policy. The events witnessed in the Strait of Hormuz in the past year demonstrate how maritime commerce can be disrupted even in the absence of an attack on every ship. When geopolitical risk rises sharply, insurers can raise war risk premiums, impose additional conditions or reconsider whether particular voyages remain commercially viable. Shipowners, charterers and lenders then respond to the altered economics. The result is a powerful form of coercion: a government does not have to physically stop the vessels if it can make the market decide that sailing is no longer worth the risk. The Taiwan Strait is particularly vulnerable to this dynamic. It is one of the world's most important commercial arteries, carrying virtually all advanced-node semiconductors driving the AI boom and linking Asian economic powerhouses to global markets. Its importance extends far beyond Taiwan itself. A prolonged disruption would hardly be confined to the Far East. It would ripple through manufacturing, technology, vehicles, telecommunications and consumer markets globally. For Beijing, this creates an obvious dilemma. A conventional blockade would damage China's economy because Chinese trade is deeply integrated into the very system it would be attempting to disrupt. This is one reason China's growing use of grey-zone maritime tactics matters. The deployment of China Coast Guard vessels and other government ships allows Beijing to create pressure while maintaining a degree of ambiguity. Actions can be presented as law enforcement, administrative enforcement or the exercise of supposed Chinese jurisdiction rather than an act of war. That distinction matters enormously to commercial actors. A naval blockade presents an unmistakable military threat. Grey-zone coercion creates something more difficult: uncertainty over what is permissible, who has jurisdiction and what might happen to a vessel that refuses an instruction from a Chinese government ship. A ship captain is not a maritime law scholar conducting a test case for an international tribunal. A corporate board does not have any standing to decide on whether a particular Chinese demand constitutes a lawful exercise of jurisdiction. Its obligation is to protect the company's cargo, balance sheet and shareholders. That is where insurance becomes strategically important. If Beijing can steadily increase the perceived legal and operational risk of navigating the Taiwan Strait, insurers will have no choice but to price that risk. Even without a formal blockade, higher premiums, additional exclusions or more restrictive underwriting could change the commercial calculation. The objective would not necessarily be to make passage impossible. It would be to make passage sufficiently unattractive that companies begin choosing the safer alternative. That is a fundamentally different conception of maritime coercion. The battlefield moves from the bridge of a warship to an underwriter's boardroom, and it exposes a weakness in how democratic governments think about deterrence. Military planners naturally prepare for naval vessels, missiles and aircraft. Governments also need to prepare for the less visible infrastructure that allows global commerce to function: insurance, finance, shipping contracts, ports and supply chain logistics. If China can use administrative pressure to manufacture maritime risk, and that risk can then be translated by private markets into higher costs and reduced commercial activity, the distinction between military coercion and economic coercion begins to disappear. • Kajee is a lecturer at Southern Utah University, a nonresident research fellow at the Korea Institute for Maritime Strategy, and a researcher for the SeaLight maritime transparency initiative at Stanford University's Gordian Knot Center for National Security Innovation.