A senior U.S. diplomat in Taiwan has warned that any conflict across the Taiwan Strait could have a devastating impact on the global economy, potentially exceeding the economic consequences of World War II.
Raymond Greene, director of the American Institute in Taiwan, made the remarks on Wednesday while speaking at a defence forum in Taipei. He said preventing conflict and maintaining peace in the Taiwan Strait should remain a top priority.
Greene said the United States under President Donald Trump was placing strong emphasis on diplomacy and stability in the Indo-Pacific region. He added that an expected meeting between Trump and Chinese President Xi Jinping later this month could provide an opportunity to reduce tensions and prevent misunderstandings.
“The upcoming U.S.-China summit is an opportunity to further advance a relationship of strategic stability,” Greene said, stressing the importance of fairness and reciprocity between the two countries.
The United States does not have formal diplomatic relations with Taiwan but remains the island's most important international partner and a major supplier of military equipment.
Greene also said Washington was strengthening its partnerships and military presence across the Indo-Pacific while supporting Taiwan's efforts to improve its ability to defend itself.
Taiwan has been increasing defence spending and modernising its military amid growing concerns over China's military pressure. The government has proposed defence spending of more than T$1 trillion for 2027, marking the first time the annual budget has crossed that level.
Taiwanese Vice President Hsiao Bi-khim, who also addressed the forum, said Taiwan had a responsibility to strengthen its defence capabilities and prepare society for a range of security challenges.
She said the goal was to preserve peace and ensure that the people of Taiwan could determine their own future.
China claims Taiwan as part of its territory and has repeatedly refused to rule out the use of force to bring the island under Beijing's control. Beijing says it prefers peaceful reunification under a “one country, two systems” framework, a proposal rejected by Taiwan's major political parties.
Chinese officials reiterated their position on Wednesday, with Chen Binhua, spokesperson for China's Taiwan Affairs Office, describing reunification as an “unstoppable historical trend.”
The growing tensions over Taiwan remain one of the major security concerns in the Indo-Pacific, with any military confrontation potentially disrupting global trade, supply chains and financial markets.
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