Address, Taipei Security Dialogue
“Taiwan Matters”
8 October 2025
Taipei, Taiwan
Thank you General Hugo Shou-Ye for your invitation to participate. It is an honour to be able to join the dialogue and offer my insights.
This is my third visit to Taipei since I ceased to be Prime Minister just over three years ago.
Preserving and protecting the status quo for the security of Taiwan is a threshold issue for peace and stability in the Indo-Pacific. It is an issue of great consequence not only to the people and Government of Taiwan, whose very freedom is at stake, but for all countries in the region who value their own sovereignty and believe in a Free and Open Indo-Pacific.
I come here not as a security policy analyst or academic. Rather, as a former head of Government, who experienced the PRC’s coercion and intimidation first hand. In response I chose for Australia to stand up to these threats and put in place new initiatives and partnerships, such as AUKUS, to boost our combined deterrence against the CCP’s ambitions to establish regional hegemony in the Indo-Pacific.
This morning I wish to make the following points:
a) The future of Taiwan matters. Preserving the status quo in Taiwan is not a matter of convenience for countries like Australia, the United States, Japan and others. It is not one that can be dismissed by a narrow read of our interests. It is essential to our own security, prosperity and sovereignty. It‘s about more than semi-conductors or even the preservation of a vibrant and young democracy. If Taiwan were to be forcibly placed under the authoritarian rule of the CCP, there would not be a corner of the globe that would be unaffected.
b) Conflict over and for Taiwan will come at a terrible cost, not just for Taiwan but for China specifically, and more broadly globally. Once it starts, you can’t go back, and the world will never be the same. The world will be worse off, and so will China, even if they are successful. This is a cost that must be understood, especially by the CCP, and properly factored into CCP’s strategic calculus.
c) For now, the major powers have their own share of challenges, without taking on a potential of conflict over Taiwan. China is beset by serious economic challenges as they make a difficult economic transition and the US is contending with omni-crises abroad and at home. Thankfully, the presence of President Trump of itself likely to deter any hasty action by President Xi in the short term while both countries deal with their more pressing priorities.
d) Taiwan, together with the United States and allies such as Australia and Japan and other like minded countries must take the opportunity to urgently boost resilience and deterrence. This does not just mean military deterrence through much greater defense spending, but dealing with energy and infrastructure security, countering threats in the space domain and winning the global political and PR debate on the Taiwan narrative, to build the global case against tacit endorsement or appeasement of CCP actions.
Let’s take these issues in turn.
I am increasingly concerned about the narrow interest narrative being made in analytical, policy and political circles in the west that given the potential costs of opposing CCP aggression, the west is best to stay out of it and read down their interests. It is better to not poke the ‘Dragon’.
This should be understood as appeasement. But it only will be if we have successfully prosecuted the broader narrative. So let’s be clear about what is at stake and never shrink from making these points. Because if we fail, whatever we believe should be done to build effective deterrence will be academic.
To refresh our minds, in addition to the crime of crushing a vibrant new democracy and the freedom of its population, these are the strategic consequences in the Indo-Pacifc if the CCP imposes its will on Taiwan :
● The first island chain breaks with the US pushed back to the second island chain and beyond, diminishing their ability to provide an effective security counterbalance in the region.
● With Taiwan now under CCP control, the PLA can project air, naval, missile, cyber, and space-enabled ISR through the Bashi Channel and Miyako Strait into the Philippine Sea, turning today’s “fence” into tomorrow’s springboard.
● Maritime and air traffic between Japan and South Korea and Southeast Asia. must pass near and through effectively PRC-controlled waters and airspace.
● Routine peacetime coercion by the CCP against countries gets easier and crisis-time interdiction gets credible.
● The A2/AD bubble moves east, pushing missile arcs deep into the Western Pacific. Long-range SAMs, anti-ship and land-attack missiles based on Taiwan, plus PLA airfields/ports there, extend the no-go envelope toward Guam and the Marianas, complicating US surge and logistics.
● The CCP’s undersea advantage also grows bringing with it seabed sensors, passive arrays and ASW aviation on and around Taiwan, tightening PLA tracking of US and other allied submarines transiting the Luzon Strait and into the Philippine Sea.
● Japanese and Korean energy sea lines of communication become more exposed to Chinese leverage, increasing the options for day-to-day “gray-zone” actions to stop, inspect and harass.
● Subsea cables near Taiwan can be monitored, tapped, or threatened, giving Beijing peacetime intelligence gains and wartime disruption options.
Failure by the US and its allies to prevent or reverse the seizure of Taiwan leads regional states to accept PRC primacy and even hegemony in the region. This in turn creates a more conducive environment for the spread of autocratic and authoritarian regimes in the region, under the PRC’s shelter.
This list could be far longer, and I haven’t even mentioned semi-conductors yet, nor the broader economic implications. Further afield we also cannot ignore the encouragement this would give to autocratic regimes such as Russia, Iran and many more to chance their arm.
So there is a lot at stake. As important as Taiwan is in its own right, there are even more substantive issues at stake at a regional and even global level. It will be important to keep allies and partners cognisant of these factors and prevent any retreat into appeasement or isolationism. We have seen the consequences of this before.
In July this year the CSIS released an excellent paper summarising the war game analysis on a potential blockade on Taiwan, titled ‘Lights Out?’(1) . This was preceded by comprehensive analysis by CNAS in their ‘Dangerous Straits’ report in June (2) that wargamed broader conflict scenarios. There have been many such analyses. There will be and should be more. INDSR have participated in many of these exercises. They are instructive regarding potential vulnerabilities and to inform military procurement priorities, joint planning and broader civil responses. Lights out? and Dangerous Straits are no exception.
What I found particularly interesting about the CSIS exercise was how it exposed the fallacy that a Blockade was somehow a benign alternative. I am sure this is how the CCP would like the west to see it, rather than the Act of War it actually is. If considered to be benign it can be more easily dismissed and provide comfort to those making the argument that we should stay out of it. However, what was clear was not only the devastation it would wreak on Taiwan, but the significant costs and losses that would be suffered by the PRC. Such losses would not just be in human casualties, but in a degraded capability, not to mention the economic losses. Others drawn into the episode would similarly be impacted. Further, the exercise would have every likelihood of escalating into something far more serious.The work exposed the myth of an ‘invasion light’ scenario. Initially the US and other allies would be more likely to respond to a blockade with sanctions rather than kinetically, but it only takes one misunderstanding for ‘one shot to be heard around the world’, and the scenario is completely transformed. My point is that once the PRC make a decision to take any hostile action of this nature, you can’t reset the board. There may be off ramps, and hopefully there are, but the world will have changed.
Many of the devastating economic impacts in the event of a full invasion would make the global COVID-19 shutdown look like a sneeze. China would be one of the worst impacted. Even with victory China and, more significantly, the Chinese people would be significantly worse off.
To believe the west would seek to avoid this outcome by yielding to the CCP’s demands is to not understand history.
These are not fresh notions to this audience. My point is that integrated deterrence must not just build the cooperation and capability needed to boost resilience and defeat possible aggression. Such actions must also impact the strategic calculus of the CCP by demonstrating resolve and the potential cost to the CCP on their own population as well as the region and global community more broadly.
For now, I do not believe the strategic calculus for an invasion or a blockade adds up. This could change quickly. The 2027 readiness deadline issued by President Xi to the PLA is real. To be fair, there is not yet any expression of intent to deploy such capability. However, as we all know, that is not a cause for comfort but a call to hasten our own plans and preparations to further and significantly strengthen our collective deterrent, including the resilience of Taiwan itself.
I would also argue there is a further factor that could provide more time. Both China and the United States have significant issues on their agenda at present, which leaves little to no bandwidth to be genuinely escalating tension in relation to Taiwan. The performative demonstrations and coercion by the CCP on Taiwan, in the South China Sea and elsewhere in the Indo-Pacific are real, however, by comparison, the next step is a far more significant.
Even if the PLA has or soon achieves the capability to invade or blockade Taiwan, it is difficult to economically sustain an invasion and potential conflict against a peer adversary, supported by a network of allies with proven interoperable capability, when you’re fighting on multiple economic fronts at home, hyper charged by the global economic crisis triggered by your own hostile action.
These developments significantly escalate the potential costs for the PRC as an aggressor in such a conflict.
China’s growth has been fuelled by a debt driven producer led economic model, made possible by a free pass into the global trading system. The revenues and borrowings underwritten by their national growth rates in excess of 10% were poured into build their significant military capabilities.
As the CSIS recently argued in their recently report on China’s economy (3), for the past decade China has been painfully aware of their need to transition their economy and escape the middle income trap, while at the same find a way out from under the mountain of debt they incurred to fund their development model and to overcome their demographic challenges by becoming rich before they become old. Typically, this is achieved by transitioning from a producer led economy to a consumption economy.
The Chinese property crash has caused an inter-generational destruction of middle class wealth triggering a collapse in consumer confidence. At a macro level, discretionary income growth continues to fall, retail sales are contracting, unemployment is rising, especially for youth, and in the absence of a reliable social security safety net, consumers are spending not saving. Rather than back consumers, the CCP leadership have chosen to double down on excess production.
Unfortunately, this depends critically on being able to sell your excess production, and on that front US trade policy under President Trump is resetting the board. US tariffs are forcing China to divert to other markets in the EU, India, South East Asia, and elsewhere across the Global South. However, Chinese intrusion into these markets is not being universally welcomed. China is facing increasing push back in the form of anti-dumping actions and increased protectionism, especially in relation to strategic sectors such as electric vehicles, where China has placed a large bet to back in their producer led model.
In addition, US tariffs on intermediate producers in countries such as Vietnam and Mexico who import Chinese components are now reorganising their supply chains away from China, undermining China’s supply chain strategy to access to the US market.
Chinese manufacturing has been sluggish so far this year, however this will likely improve in the months ahead. However, there is little evidence this will offset the persistent deflationary forces and weak consumer demand in their domestic economy. While I expect the Chinese economy will ultimately push through this transition in some form, failure to transform into a consumer led economy will leave their economy vulnerable and future growth will be unlikely to bank roll the CCP’s geo-political ambitions as it has in the past.
For now, this means the CCP leadership has other issues to focus on. To overextend themselves in Taiwan at this time could prove existential if they fail. In the short term, this means that the economic calculus on Taiwan also doesn’t add up.
President Trump also has immediate competing priorities. While there is hope for a way forward in the middle east, for which the President should be commended, a resolution inUkraine remains elusive, with the situation likely to get worse before it gets better. The President is also in the midst of Government shut down, is fighting a war on drugs in Latin America, is following through multiple bilateral deals on his trade reset and bedding down major economic reforms at home. Civil unrest in relation to immigration policy and potential frustration of Administration measures in the Courts will also continue to demand priority attention, especially with mid term elections just over a year away.
What this means is that it is not the time to force one’s way onto the President’s desk. Better to let actions speak louder than words and to simply get on with the work of deterrence and reinforcing the narrative with key constituencies, both within the US system, key regional players such as Australia, Japan and South Korea as well as key international stakeholders and influencers.
While it would no doubt offer some immediate comfort for the President to be less opaque about these issues, it is reasonable to also draw encouragement from the very positive statements regarding Taiwan made by key US Secretaries Rubio and Hegseth. Equally, any more definitive statements by the President would only elevate and encourage conflation of the issue in any discussions with President Xi on economic issues. It is desirable to keep these issues separate. I believe the red lines on Taiwan are well understood in the US, and there is danger in speculating to the contrary. Remember the policy is strategic ambiguity.
I would also observe that one should not discount the potential growing awareness in Beijing of President Trump’s peace through strength approach. It is not unreasonable to assume a deterrent effect from the presence of President Trump himself. However, that only takes us constitutionally to the end of 2028.
The task now therefore is to take advantage of potential extra time and get on with the work of resilience and deterrence. I believe President Lai is demonstrating a strong understanding of what is required.
Earlier this year at the London Defence Conference I spoke to the need for Taiwan to refocus on mobile, asymmetric denial; survivability; and mobilisation readiness, rather than traditional force-on-force parity. I noted this especially required enough stocks to inflict crippling losses on amphibious forces within the first 72 hours, neutralising or disrupting landings before a beachhead is established. These points are all reinforced by the wargame analyses conducted by CNAS and CSIS.
None of this can be achieved without further significant increases in defence spending, including beyond current commitments. Three years ago Israel was at 4.2%. This and more will be necessary to establish a credible deterrent and maintain the committed support of US allies and partners. This will require greater cross party unity from the political system in Taiwan than has been demonstrated to date, despite the efforts of the Government and President Lai.That said, Taiwan is making progress in enhancing its defence capabilities through procurement and collaboration with the US. This includes Javelins, Stingers, mass production of HF-III antis ship missiles, Harpoon coastal defences, HIMARS launchers, mine laying, Switchblade loitering munitions and development and deployment of Taiwan’s indigenous Sky Sword II missiles.
Aerial and sub-sea drones have been prioritised but there is still a long way to go. Critical in this endeavour is developing an indigenous production capability, The same is true for missiles.
However, as the Taiwanese Government understands, resilience and hardening of civil infrastructure is also a priority. The CSIS work on a blockade especially highlighted the significant vulnerability on energy infrastructure and the need to re-engage Taiwan’s nuclear energy capacity, while ensuring security of supply on LNG with shipping and resource partners.
I also want to highlight the need to build resilience and capability to address threats in the space domain. This includes resolving single point/provider SATCOMs dependence, acquiring satellite/in-the-air backbones and high-altitude assets to compensate for undersea cables becoming compromised, filling ISR/earth observation gaps, countering PNT jamming and spoofing, hardening and increased mobility of ground stations and mission control systems, and gaining access to counter ASAT capabilities.
Action in countering AI threats is a topic all of its own and there is not time here to go into these issues. However, I would note that proposed action in the space domain is an important precursor to any such response.
In conclusion I want to return to the need to not just build resilience and be able to deter hostile actions, but to win the PR war that will need to be won in advance. Taiwan is today’s equivalent of West Berlin during the Cold War. The extraordinary response by the the US and allies to engage in the air lift to countermand the Soviet Blockade and to ultimately ‘tear down’ that wall, was enabled by the resilience and defiance of the people of West Berlin, but also the collective sense of appreciation by allies of what was at stake.
This cannot be assumed or taken for granted. The best thing Taiwan can do to attract the necessary support from those it will need, particularly the US, as well as regional allies in Japan, Australia, the Philippines and South Korea, is to do all within its power to prepare itself, and for its people to demonstrate their resolve. This must be communicated with sophisticated information operations that harness the good will and support that is present amongst like minded supporters.
Taiwan matters and has a just story to tell. It is a society and democracy that speaks of hope and progress. I look forward to continuing to support Taiwan tell that story of freedom and engage the support needed to prevail.
(1) https://www.csis.org/analysis/lights-out-wargaming-chinese-blockade-taiwan
(2) https://www.cnas.org/publications/reports/dangerous-straits-wargaming-a-future-conflict-over-taiwans
(3) https://www.csis.org/analysis/chinas-economic-transition-debt-demography-deglobalization-and-scenarios-2035
