Instead of engaging in a violent confrontation that might trigger a conflict with nuclear powers, China appears to be trying to seize Taiwan without any direct military action. The strategy seems to involve cutting off the island’s fuel and power until its government capitulates.
According to officials, China’s approach starts with paperwork and patrol ships rather than missiles. This includes “routine” checks, new customs protocols, and cyber intrusions aimed at subtly undermining Taiwan’s imports, all while allowing Beijing to maintain plausible deniability. A recent report suggests that if China manages to restrict Taiwan’s fuel access, the fallout would extend far beyond Asia. Given that Taiwan is a significant producer of advanced semiconductors, a prolonged power disruption could halt global electronics and defense production, adversely affecting U.S. supply chains and markets almost immediately.
“Beijing’s intent isn’t to invade right now but to make Taiwan believe that resisting in the future would be pointless,” explained Craig Singleton, the report’s author. He characterized China’s “gray zone” tactics as a gradual strategy to strangle Taiwan economically, warning that it may lead to a sudden escalation if Chinese ships and aircraft begin to encircle the island.
As China looms large, Taiwan’s energy reliance has emerged as its weak point.
The findings stem from a simulation conducted this past summer by the Foundation for Defense of Democracies (FDD) and Taiwan’s National Chengchi University. In this exercise, dubbed “Energy Siege,” participants from China, Taiwan, the U.S., Japan, and other allies engaged in a months-long war game. The goal was to assess how China might escalate from bureaucratic meddling to complete energy blockades.
During the wargame, Chinese intervention was simulated through measures designed to suppress Taiwan’s fuel imports while still preserving the illusion of deniability via administrative delays, cyberattacks, and misinformation. The exercise revealed that a prolonged restriction on liquefied natural gas (LNG) could cripple Taiwan’s power infrastructure within weeks and trigger a global shortage of semiconductor chips.
The report emphasizes that cyber operations and propaganda are expected to play crucial roles in China’s strategy. Cyberattacks aimed at Taiwan’s energy grid have reportedly doubled over the past year, and the latest concern is the potential embedding of malware in control systems at LNG terminals and power plants to disrupt operations.
Simultaneously, Chinese authorities will likely continue to distort information, spreading rumors about blackouts and fuel shortages to erode trust and undermine morale among the Taiwanese public. “Disinformation isn’t just a distraction for China; it’s a key weapon in their strategy,” the report noted, indicating a campaign that seeks to control narratives and undermine adversaries’ resolve.
A high-stakes game is unfolding as the U.S. and China test military boundaries.
Taiwan heavily relies on imports for nearly all its energy needs—about half from natural gas and 30% from coal—with reserves only lasting a few weeks. The report highlights that the three major LNG terminals and the coal port in Taichung are situated along the western coast, exposed to potential missile strikes from China as cargo is transported through the narrow Taiwan Strait.
This vulnerability makes Taiwan one of the most energy-insecure economies worldwide. Singleton and co-author Mark Montgomery warn that a lockdown could slash power generation by half in a matter of weeks, forcing crucial decisions about energy allocation—for instance, whether to prioritize hospitals or semiconductor production firms like TSMC.
“Coercion, not combat, is how China prefers to operate,” Singleton remarked, adding that a blockade would have far-reaching effects on global markets and stability.
The report urges the U.S. to boost its LNG export capacity, particularly through new initiatives in Alaska, allowing direct support to Taiwan and making American energy pivotal for Taiwan’s resilience.
Taiwan manufactures roughly 60% of the world’s semiconductor chips and about 90% of the most advanced ones. However, TSMC is working on a facility in Arizona to address these disparities. “If industrial capacity slows, the consequences for Taiwan could spiral into a global crisis affecting a significant share of essential chips,” the authors articulated.
The authors also suggest that Taiwan should increase its LNG reserves with more imports from the U.S. and prepare for U.S. Navy escorts for LNG transport. “The Chinese believe that pressure coupled with patience will lead to political collapse,” Montgomery noted. What troubles China isn’t Taiwan’s resistance, but rather the Taiwanese people’s ability to withstand such intimidation.
The report warns that China’s propaganda could even infiltrate American consciousness, sowing doubt about U.S. commitment to supporting Taiwan.
Currently, this contest remains largely theoretical. Yet, the boundary between peace and mounting pressure is narrowing as China develops measures to destabilize Taiwan’s energy supplies and manipulate the narrative on the global stage. This exercise suggests that the first significant move in the next Taiwanese crisis might not involve a shot being fired at all.
