Taiwan Strait conflict could hit global economy harder than World War Two, US envoy warns

Taipei: Any conflict across the Taiwan Strait ​would have a bigger ​impact on the global economy than World War Two, ​and the upcoming U.S.-China summit is an opportunity to avoid miscalculations, the top U.S. diplomat in Taipei said on Wednesday.

While the U.S., like most countries, has ‌no formal diplomatic relations ⁠with ⁠Chinese-claimed Taiwan, it is the democratically governed island's most important international backer and arms ​supplier.

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Speaking at a defence forum in Taipei, Raymond Greene, director of the American Institute in Taiwan, said there was no topic more timely or important than how to secure peace in the Taiwan Strait.

"Beyond the human ​toll, any conflict across the Taiwan Strait would ⁠have a ‌bigger impact on the global economy than ​the Second World ​War," he said.

"The United States under the Trump ⁠administration has made preserving peace in the Indo-Pacific one ​of its top priorities," Greene added.

That includes "vigorous" diplomacy, especially ​at the highest levels, he said.

"The upcoming U.S.-China summit is an opportunity to further advance a relationship of strategic stability, on the basis of fairness and reciprocity, that can avoid misunderstandings and miscalculations," Greene added.

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Chinese President Xi Jinping is expected to travel to the United ‌States later this month for a meeting with President Donald Trump.

Greene said that the U.S. was also reinforcing ​its presence and ​partnerships in the ⁠Indo-Pacific region to maintain a "favourable regional balance of power".

"Third, and especially relevant to today's discussion, we are supporting Taiwan's work to enhance its ​ability to defend itself."

Taiwan President Lai Ching-te's administration has made stepped-up defence spending and military modernisation priorities, given the threat level from China.

The government, which rejects Beijing's sovereignty claims, has budgeted defence spending for next year to exceed T$1 trillion for the first time.