Unlike most war games focused on tanks and amphibious landings, Taiwan’s latest tabletop exercise ran by think tankers and experts this week tested how markets, foreign workers and industries would react under China’s gray-zone coercion without crossing into open war.
Instead of focusing on an invasion scenario, the event simulated a 2030 scenario of intensifying great-power rivalry, with a focus on gray-zone threats, blockades and economic resilience with tactics short of a full-scale amphibious assault.
The table top exercise was structured around seven moves:
- Gray-zone military deterrence and patrols
- Gray-zone law enforcement
- Defense resilience at societal level
- Energy security shocks (e.g., disruptions in the Strait of Hormuz)
- Economic stability and financial contagion
- Industrial competitiveness and economic resilience under export controls
- Semiconductor and AI response strategies
Organized by National Chengchi University’s Institute of International Relations, Chinese Nationalist Party (KMT) legislator Chen Yeong-kang (陳永康) and several think tanks, the table top emphasized cross-sector “whole-of-society” responses across political, economic, military and societal dimensions, with modules on energy security, industrial competitiveness and semiconductor strategy. These moves were designed to test cross responses across society, with participants drawn from think tanks, former industrial representatives, former Taiwanese officials, and foreign representatives.
Jason Hsu (許毓仁), a former KMT legislator and senior fellow at the Hudson Institute, praised the exercise’s civilian focus but warned of its optimism, noting that Taiwan currently faces understaffed reserves and gridlock over a major defense bill in the legislature.
“It’s like your house is on fire, but you’re mending fences in the backyard,” Hsu said, echoing a similar criticism delivered by former U.S. Navy admiral Mark Montgomery yesterday. Hsu called for better integration with decisionmakers and U.S.-style briefings to legislators who control budgets.
Commenting on what he thought of the table top exercise, Hsu said Taiwan’s goal should be endurance to allow U.S. and regional allies to mobilize. He said the exercise should have included fact-based scenarios targeting “single points of failure” and redundancies.
Stanford professor Kharis Templeman, in Taiwan to gauge local political dynamics ahead of local elections later this year, noted that the exercise overlooked angles like Southeast Asian migrant workers, a key labor force that could flee during a crisis.
“If Taiwan played it right, trapped foreign nationals could pressure Southeast Asian governments,” he said.
Templeman noted that public table top exercises like this have “performative” limits versus closed-door INDOPACOM-style exercises, where drill specifics are confidential.
Former SinoPac Bank senior vice president Chen Sung-hsing (陳松興) told participants that Taiwan’s financial systems face at least 10,000 Chinese cyberattacks daily, targeting payment infrastructure in what amounts to peacetime economic warfare.
“The first battlefield is financial confidence and payment continuity,” Chen said, which focused on economic stability under external shocks like U.S. tariffs or Strait of Hormuz disruptions. He identified three essentials that “absolutely cannot be interrupted” are payment systems, liquidity supply and market confidence.
The most critical takeaway was speed of response. Chen cautioned that gray-zone pressure could trigger rapid contagion, with banks tightening credit, insurers repricing risks and supply chains slowing within hours. “Markets don’t wait for official signals,” he said, “they price risk immediately.”
Hsu, the former KMT legislator, summarized the strategic imperative that drives this focus on civilian resilience: “Our goal is not to defeat Chinese invasion, but it’s to sustain long enough that the allies in the region can be mobilized and the U.S. can really respond and address.”
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