Chinese drills escalate Taiwan tension permanently

Significance

Beijing could have chosen to downplay the visit, but instead responded with an unprecedented display of military power: large-scale, live-fire exercises in waters surrounding Taiwan, which disrupted air and sea traffic.

Impacts

• Any casualties resulting from the Chinese drills and Taiwanese response would be accidental, but could still spark a crisis.
• China's actions will make firms and policymakers take the risk of a Taiwan Strait conflict more seriously, and spur contingency planning.
• The crisis will make Japan's public and elites more receptive to the government's efforts to boost the country's defence capabilities.
• The economic damage resulting from China's sanctions and exercises will probably be minimal.