SINGAPORE — Investors are exaggerating the likelihood of military conflict across the Taiwan Strait, according to Michael DeSombre, the U.S. assistant secretary of state for East Asian and Pacific affairs. Speaking to CNBC at the Milken Institute Asia Summit, DeSombre argued that deterrence measures and the threat of significant repercussions are keeping Beijing from attempting to seize the island by 2027.
While Washington has frequently noted Beijing’s directive for the People’s Liberation Army to prepare for potential operations against Taiwan by that deadline, Chinese officials have never publicly acknowledged the specific timeline. DeSombre suggested that market fears are currently unjustified.
“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 said. “Both China and the U.S. don’t want conflict, and we’re able to deter conflict.”
The remarks come amidst a complex diplomatic landscape. Although China claims sovereignty over the democratically governed island and has not ruled out the use of force, recent talks between President Donald Trump and President Xi Jinping did not produce a public agreement on the issue. Furthermore, the U.S. has paused a $14 billion arms sales package to Taipei, following strong objections from Beijing regarding an earlier $11 billion sale approved last December.
Despite the geopolitical tensions, DeSombre described Xi Jinping as a “very rational actor.” He reasoned that if the Chinese leader understands that unification cannot be achieved without facing substantial consequences, he will likely avoid such a move.
Beijing has recently intensified its military posture near the island. In August, reports indicated an unprecedented sighting of a Chinese military vessel alongside two other ships off Taiwan’s Pacific coast. Additionally, China has been engaging with Taiwan’s opposition Kuomintang party as the island prepares for its 2028 presidential election.
On the diplomatic front, Taiwan’s Foreign Minister Lin Chia-lung recently visited Arizona to inaugurate a new de facto consulate in Phoenix, days after the U.S.-China summit. The U.S. continues to emphasize the importance of maintaining credible deterrence to preserve stability in the region.
So the arms sales pause is the real story here. How do you build deterrence when you are stopping weapon shipments to Taipei?
Rational actors still make emotional decisions during elections. The 2028 context makes this timeline even more unpredictable for the region.
I am surprised by the confidence level here. The military buildup near Taiwan suggests Beijing is preparing, not just posturing.
Interesting to see the 2027 date dismissed so casually. Investors know better than diplomats sometimes, don’t they?
Calling Xi rational ignores the pattern of coercive maneuvers. Deterrence only works if threats are credible, and that is far from guaranteed.