Taiwan Strait Crisis: Case Study, Outlook & Singapore Impact Analysis - Maxthon

Executive Summary

The November 2025 transit of New Zealand’s HMNZS Aotearoa through the Taiwan Strait represents a microcosm of intensifying great power competition in one of the world’s most critical strategic waterways. This case study examines the escalating military tensions, potential conflict scenarios, and particularly severe implications for Singapore as a small trading nation caught between its strategic relationships with both China and Taiwan.

New Zealand’s largest naval vessel, HMNZS Aotearoa, transited through the Taiwan Strait on November 5, travelling from the South China Sea toward Northeast Asia. This was only the second publicly known New Zealand naval transit through the strait since 2017, with the previous one occurring in September 2024.

Chinese Response

China warned against countries stirring up trouble in the Taiwan Strait, with Chinese Defense Ministry spokesman Jiang Bin stating that the military monitored and responded to the transit. The ship was shadowed by seven Chinese warships maintaining what New Zealand described as a safe and professional distance. According to sources, Chinese jets conducted simulated attack runs during the passage Modern Diplomacy.

The Broader Context

The timing is notable as the transit coincided with China carrying out a joint combat readiness patrol around Taiwan on November 6, involving J-16 fighter jets. The Aotearoa, a South Korean-built supply vessel unarmed with heavy weapons, was en route to participate in UN sanctions enforcement missions related to North Korea.

This transit reflects the ongoing tension over the strait’s status. While China claims sole jurisdiction, the US, Taiwan, and their partners maintain it’s an international waterway through which roughly half of global container shipping passes. New Zealand’s participation in such transits, though less frequent than American ones, demonstrates allied commitment to freedom of navigation principles under international law.

Chinese Response

The Broader Context

Case Study: The HMNZS Aotearoa Transit

Background Context

On November 5, 2025, New Zealand’s largest naval vessel, the HMNZS Aotearoa, conducted a rare transit through the Taiwan Strait while en route from the South China Sea to Northeast Asia. This marked only the second publicized New Zealand naval passage through the strait since 2017.

Chinese Response and Escalation

China’s reaction demonstrated the heightened sensitivity surrounding Taiwan Strait transits:

Military Shadowing: Seven Chinese warships tracked the vessel throughout its passage
Simulated Attacks: Chinese jets conducted simulated attack runs on the unarmed supply ship
Diplomatic Warning: Defense Ministry spokesman Jiang Bin warned against “stirring up trouble” and sending “wrong signals to Taiwan independence separatist forces”
Coinciding Operations: The transit coincided with PLA joint combat readiness patrols involving J-16 fighter jets around Taiwan on November 6

Strategic Significance

The incident reveals several critical dynamics:

International Law vs. Sovereignty Claims: The fundamental dispute remains unresolved. China claims exclusive sovereignty over the strait, while the United States, Taiwan, and their partners maintain it is an international waterway governed by the UN Convention on the Law of the Sea. Approximately half of global container ships transit this route annually.

Testing Resolve: New Zealand’s participation, though less frequent than U.S. freedom of navigation operations, signals continued allied commitment to maritime rights despite Chinese pressure.

Normalization of Military Presence: China’s response—shadowing with multiple warships and simulated attacks—has become standard operating procedure, reflecting Beijing’s strategy of normalizing military pressure around Taiwan.

Strategic Outlook: Trajectory of Cross-Strait Tensions

Current Threat Assessment (Late 2025)

The Taiwan Strait situation has entered a qualitatively different phase characterized by:

1. Sustained Military Pressure Independent of Political Triggers

Analysis of PLA operations throughout 2025 reveals a fundamental shift. Military activities around Taiwan now occur at elevated levels regardless of political events or rhetoric from Taipei. During traditionally quiet periods like the 2025 Lunar New Year, China maintained heightened operations, suggesting a strategic move from reactive posturing to proactive operational readiness training.

2. Expanding Scope of Operations

Median Line Crossings: PLA aircraft routinely cross the unofficial median line of the Taiwan Strait, with 199 of 290 detected aircraft crossing this threshold between September and October 2025
Joint Combat Readiness Patrols: These operations, involving coordinated Air Force and Navy elements, have increased in both frequency and scale
Encirclement Tactics: Long-range missions and drone flights now routinely encircle Taiwan
Blockade Simulations: The April 2025 “Strait Thunder” exercises included unprecedented practice of maritime traffic control and onboard inspections

3. Warning Signs from U.S. Defense Officials

In May 2025, U.S. Defense Secretary Pete Hegseth warned at the Shangri-La Dialogue that a Chinese attack on Taiwan “could be imminent,” while simultaneously affirming that President Trump has stated China will not invade Taiwan “on his watch.”

Medium-Term Outlook (2026-2027)

Probable Scenarios

Most Likely: Continued Gray Zone Operations China will likely maintain its current approach of sustained military pressure short of open conflict, gradually eroding Taiwan’s operational space and testing international resolve. This approach allows Beijing to:

Exhaust Taiwan’s military readiness
Normalize PLA presence around the island
Gather intelligence and refine operational capabilities
Avoid triggering a strong international response

Moderate Risk: Quarantine or Partial Blockade A quarantine scenario remains plausible, particularly if Beijing perceives:

Wavering U.S. commitment to Taiwan’s defense
International distraction from other crises
Taiwan moving toward formal independence declarations

Lower Risk: Full-Scale Invasion While China has not renounced force, a full amphibious invasion remains militarily complex and internationally risky. Recent war games suggest China would face severe casualties and uncertain outcomes even in optimistic scenarios.

Key Indicators to Monitor

Taiwan’s Defense Budget: Taiwan announced a $40 billion supplementary defense budget over 2026-2033, with plans to raise defense spending to 5% of GDP
Japan’s Military Posture: Japanese Prime Minister Sanae Takaichi’s November 2025 comments suggesting potential military intervention have significantly angered Beijing
U.S. Policy Clarity: Continued strategic ambiguity versus explicit security guarantees
Frequency of International Transits: Whether allies continue freedom of navigation operations despite Chinese pressure

Long-Term Trajectory (2028-2030)

The structural drivers of conflict risk remain:

Political Legitimacy: For Xi Jinping and the CCP, Taiwan reunification represents a core element of “national rejuvenation”
Military Capabilities: China’s military modernization continues, potentially creating a window where Beijing assesses it has sufficient capability
Domestic Politics: Taiwan’s democratic identity continues strengthening, with younger generations identifying primarily as Taiwanese rather than Chinese
Great Power Competition: The broader U.S.-China rivalry provides a dangerous backdrop for miscalculation

War Implications: Conflict Scenario Analysis

Blockade Scenario: Most Probable Conflict Path

Recent analysis, including CSIS war games and PLA exercises, suggests a blockade represents China’s most likely operational approach:

Phase 1: Maritime Quarantine

Declaration of exclusion zones around Taiwan
Interdiction of commercial shipping
Coast guard operations around outlying islands
Cyber attacks on Taiwan’s critical infrastructure

Phase 2: Energy Starvation

War gaming indicates Taiwan’s greatest vulnerability is energy. A blockade combined with strikes on electrical infrastructure could reduce power generation to just 20% of pre-crisis levels, effectively halting all manufacturing within weeks.

Phase 3: Escalation Dynamics

Even limited blockade scenarios generate strong escalatory pressures:

Taiwan faces pressure to break the blockade through military action
The United States must decide whether blockade constitutes an act of war requiring response
Regional powers face stark choices about supporting Taiwan or accommodating China

Casualty and Loss Projections

Based on various war game scenarios:

Limited Escalation: Thousands of deaths, primarily military personnel
Medium Escalation: Tens of thousands of casualties, substantial infrastructure damage
High Intensity Conflict: Hundreds of thousands of casualties, hundreds of U.S. aircraft lost, dozens of warships damaged or destroyed, catastrophic damage to Taiwan’s cities and economy

Nuclear Considerations

While direct nuclear exchange remains unlikely, the conflict would involve three nuclear powers (China, United States, and potentially Russia as China’s strategic partner). The risk of inadvertent escalation exists, particularly if:

U.S. strikes target mainland China
China perceives existential threat to regime survival
Communication breaks down during crisis

Singapore Impact Analysis

Why Singapore Faces Disproportionate Risk

Singapore’s unique position makes it extraordinarily vulnerable to Taiwan Strait conflict:

1. Economic Exposure

Trade Route Dependency Nearly 22% of Singapore’s economy would be impacted by South China Sea/Taiwan Strait disruptions according to modeling. As a major transshipment hub, Singapore processes vast quantities of goods moving through the strait.

Semiconductor Supply Chains Singapore relies heavily on Taiwanese semiconductor imports for downstream assembly and electronics manufacturing. Taiwan accounts for over 60% of global semiconductor foundry capacity and over 90% of advanced chip production.

Direct Trade Relationships Singapore is one of only two major countries (along with New Zealand) to have a free trade agreement with Taiwan. Bilateral trade between Singapore and Taiwan totals billions annually.

2. Military Entanglement: Project Starlight

Long-Standing Defense Ties Since 1975, Singapore has maintained Project Starlight, rotating up to 3,000 troops annually through three training bases in southern Taiwan. This presence serves multiple functions:

Provides jungle and mountain terrain unavailable in land-scarce Singapore
Offers strategic observation of the Taiwan Strait and northern South China Sea
Symbolizes Singapore’s commitment to maintaining strategic balance

Crisis Liability In a blockade scenario, Singapore faces acute dilemmas:

Approximately 3,000 SAF personnel could be trapped in Taiwan
Singapore’s military infrastructure in Taiwan (airfields, training areas) could give it unique evacuation capabilities
China might demand Singapore cease Project Starlight as price for cooperation
Withdrawal would represent major strategic concession benefiting China

An April 2025 war game exercise revealed Singapore emerged as the critical actor for evacuating up to one million Southeast Asian nationals from Taiwan, precisely because of its military presence and relationships on the island.

3. U.S. Logistics Dependence

Sembawang Naval Installation Singapore’s Sembawang facility serves as the headquarters for U.S. Navy Task Force 73/Commander, Logistics Group Western Pacific. More critically:

The Senoko Tank Farm is the only significant facility storing JP-5 aviation fuel for U.S. Navy operations between the Malacca Straits and the Indian Ocean
A pipeline connects Senoko to Sembawang, enabling fuel transfer to logistics ships
U.S. carriers and amphibious assault ships require continuous JP-5 supply to maintain air operations

Impossible Neutrality If the United States intervenes in a Taiwan conflict, Singapore’s role as the sole significant JP-5 refueling point makes true neutrality impossible:

Denying access would cripple U.S. naval aviation operations
Providing access makes Singapore a legitimate military target in China’s assessment
China could demand Singapore deny U.S. access as condition for maintaining economic relations

4. Financial Market Exposure

Singapore’s status as a major financial center creates additional vulnerabilities:

Severe disruption to regional capital flows
Potential collapse in property values given Chinese investment
Banking system stress from loan defaults throughout region
Capital flight as investors seek safer havens

Impact Scenarios for Singapore

Scenario A: Sustained Gray Zone Pressure (Most Likely)

Economic Impact: Moderate

Increased shipping insurance costs through strait
Some supply chain diversification away from Taiwan
Gradual pressure on Singapore to reduce Taiwan military ties
Manageable but persistent economic headwinds

Strategic Impact: High

Forced to navigate increasingly difficult balance between Beijing and Washington
Pressure to curtail or eliminate Project Starlight
Reduced strategic autonomy

Scenario B: Chinese Blockade Without U.S. Military Intervention

Economic Impact: Severe

Global recession likely, reducing trade flows through Singapore by 15-25%
Semiconductor supply chain collapse affecting electronics sector
Need to evacuate Singapore forces and citizens from Taiwan
Shipping reroutes adding costs and delays

Strategic Impact: Extreme

Must negotiate with China for evacuation access
Likely forced to abandon Project Starlight permanently
Long-term reduction in Singapore’s strategic autonomy
Demonstrates limits of small state agency in great power conflicts

Scenario C: Full Conflict with U.S. Intervention

Economic Impact: Catastrophic

Singapore’s economy could contract by 20-22% based on South China Sea conflict modeling
Complete disruption of Taiwan Strait and South China Sea shipping
Semiconductor industry collapse affecting all manufacturing
Potential capital controls hampering financial sector
Access to Malacca Strait potentially contested

Strategic Impact: Existential

Singapore forced to choose between China and United States
If supports U.S. operations, becomes potential Chinese target
If denies U.S. access, ruptures alliance relationships and regional security architecture
Project Starlight personnel potentially trapped or requiring combat evacuation
Post-conflict regional order fundamentally altered regardless of outcome

Singapore’s Strategic Dilemmas

Singapore faces several acute policy challenges:

1. Military Ties Balancing Act Singapore has simultaneously:

Maintained Project Starlight with Taiwan since 1975
Signed expanded defense cooperation agreement with China in 2019
Hosted U.S. military logistics operations

Each relationship creates obligations that conflict in a Taiwan crisis.

2. Economic Diversification Impossibility Singapore cannot realistically decouple from either China (largest trading partner) or Taiwan (critical semiconductor supplier and trading partner). Geography and economic model create structural vulnerability.

3. ASEAN Cohesion Limits While Singapore might prefer unified ASEAN response to Taiwan crisis, the regional grouping’s consensus model and varying China dependencies make coherent action unlikely. Individual Southeast Asian nations will make separate calculations.

4. Long-Term Strategic Autonomy Any Taiwan conflict resolution likely reduces Singapore’s room for maneuver:

Chinese victory would dramatically increase Beijing’s regional dominance
U.S. victory would likely demand clearer alliance commitments
Stalemate would perpetuate dangerous instability

Policy Recommendations for Singapore

Near-Term (2025-2026)

Accelerate strategic stockpiling of critical semiconductors and components
Develop detailed contingency plans for Project Starlight personnel evacuation
Engage quiet diplomacy encouraging cross-strait de-escalation
Strengthen ASEAN coordination mechanisms for crisis response
Maintain studied ambiguity on Taiwan issue while preserving all relationships

Medium-Term (2026-2028)

Support diversification of global semiconductor production capacity
Develop alternative shipping routes and logistics arrangements
Enhance domestic resilience including food and energy security
Quietly prepare for potential U.S. requests for expanded military cooperation
Build diplomatic capital with both Beijing and Washington

Long-Term (2028+)

Work toward regional security architecture reducing conflict risk
Support initiatives strengthening economic interdependence as conflict deterrent
Maintain credible defense capabilities as insurance
Preserve Singapore’s reputation as reliable, pragmatic partner to all sides

Conclusion

The November 2025 New Zealand naval transit illustrates the Taiwan Strait’s role as the most dangerous flashpoint in contemporary international relations. For Singapore, the intersection of economic dependency, military commitments, and geographic proximity creates an impossible strategic situation. Any serious Taiwan crisis would force Singapore to make choices fundamentally affecting its sovereignty, prosperity, and security—choices between powers it has successfully balanced for decades but may no longer be able to in a Taiwan conflict scenario.

The optimal outcome for Singapore remains avoiding conflict entirely through effective deterrence and continued cross-strait dialogue. However, current trajectories suggest conflict risk remains elevated and possibly increasing, necessitating serious contingency planning despite the catastrophic implications for Singapore’s interests.