Britain could grind to a halt within months if China invades Taiwan, a disturbing new report has warned, highlighting the UK’s critical dependence on Chinese manufacturing and global supply chains that would be severely disrupted by conflict in the Indo-Pacific. The Policy Exchange study describes Britain’s reliance on China and other Asian countries as an “economic-strategic vulnerability”, urging the Government to take steps to insulate the country from the devastating impact of a potential war.
It states: “The UK economy will rapidly slow down, tipping into a recession within weeks as prices rise, transport becomes difficult, shipping costs increase, and the general transport of goods is disrupted. The danger, however, is that absent proper preparation, a significant depression would be the least of British issues. If the UK lacks the ability to replace lost food, energy, transport, medical, and manufacturing/repair capabilities, the country is likely to shut down over several months. If the UK does not prepare now, the consequences could be catastrophic.”
The report comes amid growing concerns that Beijing may be emboldened by Russia’s war in Ukraine and mounting global instability.
Chinese President Xi Jinping has described reunification with Taiwan as “inevitable,” and US officials have warned that China is preparing to blockade the island before the end of the decade.
Taiwan, a self-governing democracy, has long been a flashpoint in US-China tensions. Beijing views it as a breakaway province that must be brought under its control by force if necessary.
While Washington has traditionally pledged to defend Taiwan, fears have grown that Donald Trump’s return to the White House could see the US take a more isolationist stance.
Policy Exchange highlights the risk of a major global realignment, warning that “the Second Trump administration has already signalled a significantly more aggressive trade policy that integrates tariffs into broader political moves.”
Mr Trump’s imposition of heavy tariffs on China during his first term triggered retaliatory measures, and an escalation in hostilities could disrupt critical supply chains even before an invasion takes place.
The report argues that Britain must immediately mitigate its exposure to supply chain shocks, including stockpiling vital goods such as medicines, semiconductors, and critical minerals.
In the report’s foreword, Sir Crawford Falconer, the UK’s former chief trade negotiation adviser, said: “These developments have brought home the essential fragility of international supply chains, particularly evident in such sectors as food, pharmaceuticals, industrial manufacturing and energy technology.”
China currently controls 29% of the global machine tools market, while Japan has 14%.
Any disruption in Asia would severely impact British manufacturing and repair capabilities. The report warns that the UK’s reliance on imports and relatively small manufacturing base leaves it particularly vulnerable.
It also suggests that Britain should explore new supply chain routes in central and eastern Europe, including Finland, the Baltic states, Poland, Romania, Bulgaria, and post-war Ukraine, to reduce its dependence on China.
In addition to stockpiling essential goods, the report recommends creating a dedicated supply chain unit within the Cabinet Office to coordinate efforts across Whitehall.
It also calls for supply chain resilience to be considered in the upcoming Strategic Defence Review and National Security Review.
The Covid-19 pandemic and the war in Ukraine have already exposed weaknesses in global supply chains, and policymakers are increasingly concerned that Britain is ill-prepared for further shocks.
The report’s stark conclusion is that failure to act now could leave the country facing economic catastrophe if tensions in the Indo-Pacific escalate into full-scale war.
It adds: “The UK, as a small island state largely reliant on imports and now out of a major trading bloc in the EU, must quickly assess its international supply chain vulnerabilities – and feed this assessment into economic and military policy.”
