A senior U.S. diplomat argues that investors are significantly overestimating the risk of conflict in the Taiwan Strait, citing robust deterrence and the threat of severe repercussions as key factors preventing Beijing from military action by 2027. Michael DeSombre, U.S. assistant secretary for East Asian and Pacific affairs, stressed that both the U.S. and China aim to avoid conflict, despite increased Chinese military posturing and diplomatic pressure. These remarks come amid ongoing tensions, U.S. arms sales debates, and Taiwan’s critical role in the global semiconductor industry.
SINGAPORE – Investors are significantly overestimating the likelihood of conflict across the Taiwan Strait, according to Michael DeSombre, the U.S. assistant secretary of state for East Asian and Pacific affairs. DeSombre emphatically stated that robust deterrence and the prospect of "substantial consequences" would effectively dissuade Beijing from attempting to seize the democratically governed island by its often-cited 2027 military readiness target.
While the U.S. government has frequently alluded to Beijing's directive for the People's Liberation Army (PLA) to be prepared for military action in Taiwan by 2027, this specific timeline has never been publicly confirmed by China.
"I actually think the most mispricing is with regard to Taiwan, where actually I think people are overpricing the risk of something happening across the Taiwan Strait," DeSombre told CNBC on Thursday during an exclusive interview at the Milken Institute Asia Summit. He further elaborated, "Both China and the U.S. don't want conflict, and we're able to deter conflict. Concerns of that perhaps are priced at too high a level."
Beijing considers Taiwan an inseparable part of its territory and has consistently refused to rule out the use of force to bring it under its control. In contrast, Taiwan's government firmly rejects Beijing's claims to sovereignty.
China has actively pressured Washington to modify its longstanding diplomatic position on Taiwan, urging the U.S. to formally "oppose" Taiwan independence. However, a recent summit between U.S. President Donald Trump and Chinese President Xi Jinping concluded without any public consensus on the contentious Taiwan issue.
Adding to the diplomatic complexities, the U.S. President has reportedly delayed approval for a new $14 billion arms sales package to Taipei. This follows an earlier $11 billion arms deal that drew a sharp and hostile response from Beijing in December.
Days after the leaders' summit, Taiwanese Foreign Minister Lin Chia-lung visited Arizona to participate in the opening of a new de facto consulate in Phoenix, signaling Taiwan's continued efforts to bolster its international presence.
In recent months, Beijing has notably intensified its military presence near the island. A Chinese military boat, accompanied by two other vessels, was observed off Taiwan's Pacific coast for the first time in August, according to surveillance reports. China has also been actively courting Taiwan's opposition party, the Kuomintang, since last year, with an aim to draw the island further into its orbit as the 2028 presidential election approaches.
When asked if Beijing's alleged plans to "reunify Taiwan" by 2027 were a cause for concern, DeSombre expressed confidence in Xi Jinping's pragmatism. "Xi is a very rational actor... To the extent that he realizes that it can't be done, or it can't be done without substantial consequences, it won't happen," he affirmed. DeSombre underscored the paramount importance of maintaining credible deterrence, stating, "That's why it's important … ensuring that we have the deterrence in place with our allies and partners to make sure it does not happen."
Taiwan plays a pivotal role in the global technology supply chain, standing as the world's leading manufacturer of cutting-edge computer chips. TSMC, the world's largest contract chipmaker, has invested tens of billions of dollars in new facilities in Phoenix, Arizona. These critical projects have received significant U.S. government subsidies as Washington endeavors to revive and strengthen its domestic semiconductor manufacturing capabilities.
