Marco Garzia | 26 January 2024

Summary

• Bloomberg’s latest report on endemic corruption of Chinese military forces casts doubts on their operational readiness. 

• China’s rocket force (PLARF) is reportedly the most impacted. 

• This could postpone China’s time window for Taiwan’s invasion. 

Following President Xi’s statement on the “inevitability” of Taiwan’s reunification with the mainland, serious doubts are cast on the People’s Liberation Army's (PLA) military readiness. The latest Bloomberg report, gathering insights directly from US intelligence sources, would suggest that endemic corruption still plagues the PLA at large and, especially, their rocket force (PLARF).  

Provided that the PLARF constitutes the largest rocket force on the globe, possessing an arsenal of over 2800 non-nuclear missiles of varying ranges, the doubts on its operational readiness hinder the credibility of Chinese threats of invasion. Specifically, the notorious difficulties related to an amphibious invasion, especially in a very shallow and narrow passage such as the Taiwan Strait, require an effective first strike to eliminate the enemy’s defensive capabilities. In China’s case, this would need to be performed via targeted and precise rocket strikes to Taiwan’s critical armoury of anti-shipping missiles. 

Forecast

• Short-term: Based on the report, complemented by the election of a pro-independence candidate to Taiwan’s presidency, we expect China’s posture to remain aggressive in the foreseeable future. However, assuming microprocessors’ supply chains will continue to rely heavily on Taiwanese manufacturer TSMC in the short to medium term, potential conflict-related price fluctuations are unlikely. Further anti-corruption campaigns and reshufflings in the upper echelons of the PLA are probable.

• Long-term: The rumoured 2024-2028 invasion window will most probably end up being optimistic. Increases in military expenditure are likely.