Australia-Taiwan relations: Policy options and priorities for engagement

Executive summary

• For the past five decades, Australia’s engagement with Taiwan has been remarkably consistent, anchored in its One-China Policy. First articulated in a joint communiqué with Beijing in 1972, Australia’s One-China Policy formalised Canberra’s recognition of Beijing as the sole government of the People’s Republic of China (PRC), albeit refraining from accepting or endorsing its position that Taiwan is a province of the PRC. Since, Canberra has pursued its engagement with Taipei within this calibrated ambiguity. In the absence of diplomatic relations, Canberra has encouraged trade, cultural and societal exchanges and supported Taiwan’s participation in international organisations where statehood is not a requisite, even as it has eschewed any support for Taiwan’s independence and avoided any hypothetical commitments.
• Central to Australia’s approach has been a sustained strategic assessment that its national interest is best advanced by preserving the status quo across the Taiwan Strait. For Australia, economically dependent on the PRC and reliant on the United States for its security, the emergence of the status of Taiwan as a major geopolitical flashpoint and strategic linchpin in Sino-US strategic competition has crystallised the structural challenges of navigating Australia’s relationship with both its largest trading partner and its primary security guarantor. The corollary has been that pragmatism and caution have underpinned Canberra’s engagement with Taipei to date.
• Yet, in an increasingly contested Indo-Pacific region, the status quo across the Taiwan Strait is eroding, and regional stability is deteriorating. Beijing’s growing assertiveness in the region, both within and beyond the First Island Chain, has amplified regional concerns about its hegemonic ambitions, with control of Taiwan as an integral and pivotal strategic objective.At the same time, President Trump’s ‘America First’ agenda has cast doubt on the US resolve to treat the Indo-Pacific as its priority theatre or to uphold its security commitments to allies and partners. Together, these regional dynamics are challenging long-held policy assumptions and calling for a review of regional actors’ policy settings towards the Taiwan Strait.
• It is against this background of rapid, uncertain strategic change that this panel of experts provide a careful, deliberate assessment of Australia’s relationship with Taiwan. Far from presupposing a policy shift, such a review takes stock of the benefits and limits of Australia’s engagement to date, while identifying the opportunities and risks in maintaining, expanding or reducing its scope. The following report captures experts’ questions and analyses as they discussed and challenged the continued relevance of the principles, assumptions and engagement strategies underwriting Australia’s policy towards Taiwan.
• This report explores three aspects of the bilateral relationship — economic cooperation, regional engagement, security and defence ties and rests on two central assumptions. First, while acknowledging that the Australia-Taiwan relationship is inherently embedded in the regional strategic landscape, there is value and opportunity in considering it on its own terms. Second, a robust reassessment of Canberra’s policy towards Taiwan requires a multifaceted approach — one that extends beyond the narrow prism of military analysis, and fully accounts for Taiwan’s normative, economic and technological relevance to Australia’s strategic outlook.

It is against this background of rapid, uncertain strategic change that this panel of experts provide a careful, deliberate assessment of Australia’s relationship with Taiwan.

Source: Shutterstock

Introduction

In an era of rapid change across the Indo-Pacific, the relationship between Australia and Taiwan warrants careful reassessment. This report examines that relationship — its scope, limits and opportunities — and considers how Canberra might best manage it in line with Australia’s enduring national interests and commitment to regional stability. Over recent years, Australia’s strategic environment has become more complex, less predictable and more multipolar. It is in that context that this report asks: what is the role of Taiwan in Australia’s strategic calculus? What are the limits of the existing policy architecture and public support underpinning Australia-Taiwan ties? And what realistic avenues exist for maximising the untapped potential of that relationship, while preserving peace and stability in a region characterised by intensifying rivalry and uncertainty?

The importance of revisiting Australia’s engagement with Taiwan is compelling for several reasons. First, Taiwan is a vibrant democracy whose population is of similar size to Australia’s and whose future matters for the open, rules-based order in which Australia seeks to operate. Second, Taiwan is increasingly integrated into global value chains, particularly in high-technology and semiconductors, making it a hub of economic and technological relevance well beyond its size. Third, Taiwan constitutes one of the most acute flashpoints of strategic competition in the Indo-Pacific and therefore its status, security and relationships have direct bearing on Australia’s security, resilience and regional posture. Yet Australia’s policy and public engagement have not kept pace with this growing significance. The broader strategic and economic relationship with Taiwan remains modest and subject to little debate, aside from discussion of the risk of conflict.²

Approach

The report’s starting premise is that Australia should neither treat Taiwan purely as a security liability nor ignore its economic, technological and normative importance. Rather, it seeks to take a comprehensive look across three interconnected domains: trade and economic security; regional engagement in a multipolar Asia; and defence and security. In so doing, the report aims to identify limits and trade-offs in the relationship, while proposing realistic and pragmatic options to deepen engagement in ways consistent with Australia’s national interest, its commitment to a region free from coercion, and the maintenance of peace and stability.

The findings and recommendations of this report rest on a robust and collegial process that nonetheless reflects the diversity — and, at times, spirited debate — of expert views. The research methodology comprised three principal components:

• First, one-day roundtables were convened in Canberra on each of the report’s three themes. In each roundtable subject matter experts from academia, think tanks and civil society met with the panel of eminent experts who have overseen and actively contributed to the report.
• Second, the project’s authors travelled to Taipei in March 2025 to engage directly with Taiwanese government officials, business and industry thought leaders, representatives of civil society and other stakeholders. These engagements provided primary data on the current state of the Australia-Taiwan relationship, potential impediments to institutional and public support, and opportunities for deeper cooperation in technology, trade, people-to-people links and security interactions.
• Third, an all-day concluding workshop was held at the United States Studies Centre (USSC) in Sydney in October 2025, where the expert panel reconvened to review and refine the report’s final recommendations.

It is important to emphasise here that while the process has been highly collegial and respectful, the views expressed in the report are not necessarily held unanimously by all members of the expert panel or roundtable participants. Indeed, there was lively discussion throughout the process. By and large, the recommendations contained herein reflect the majority view of the expert panel, and in those rare instances where there was not a clear majority, that is explicitly noted in the report. Further, while generous funding support for this project was provided by a grant to the USSC from the Taiwan Ministry of Foreign Affairs, Taiwanese government representatives did not participate in the project. They have — commendably — respected the independence of the exercise.

Australia’s engagement with Taiwan under its One-China Policy

Australia’s approach to Taiwan must be seen in the context of its longstanding One-China policy. Since formal diplomatic relations were established with the People’s Republic of China (PRC) in the early 1970s, Australia has officially adhered to the policy articulated in the following key passage:

The Australian Government recognises the Government of the People’s Republic of China as the sole legal government of China, acknowledges the position of the Chinese government that Taiwan is a province of the People’s Republic of China, and has decided to remove its official representation from Taiwan before 25 January 1973.³

Successive Australian governments, including Prime Minister Anthony Albanese himself when standing on the Great Wall of China in July 2025, have reaffirmed that commitment.⁴ That said, the policy contains significant ambiguity and room for manoeuvre. Australia, for instance, maintains unofficial relations with Taiwan through trade offices and people-to-people links, and encourages Taiwan’s participation in selected international fora. In short, the One-China policy has accommodated a degree of engagement that is neither full diplomatic recognition nor complete separation.

That permissible space is now set against a region characterised by increasing geopolitical rivalry, strategic uncertainty and intensifying technology and economic competition. While the Australia-PRC relationship has recently emerged from a period of deep strain, notably reaching a nadir when, during the Scott Morrison government, the PRC imposed sanctions on an estimated A$20 billion worth of Australian exports. The relationship, while officially now ‘stabilising’, remains complex and challenging.⁵ In January 2025, for instance, the PRC Ambassador to Australia, Xiao Qian, asserted in an opinion piece that “The Taiwan question involves China’s core interests… this positive momentum [in China-Australia relations] has been hard-earned. We hope that the Australian side will earnestly respect China’s sovereignty and territorial integrity, honour its political commitment to the One-China policy, be consistent in words and deeds without compromise, and publicly support China’s peaceful reunification.”⁶ In doing so, Beijing reminded Canberra that Taiwan remains a core interest for the PRC — an interest Beijing has said it is prepared to defend, including with force if necessary. While the Australian Government issued a statement to correct the record on its One-China Policy in response, the PRC’s opinion piece served as a reminder that any recalibration of Australia’s approach to Taiwan carries risk.⁷

Interestingly, Australian public opinion reflects the strategic weight of Taiwan. According to the 2025 Lowy Institute Poll, for example, 61% of Australians regarded a military conflict between the United States and the PRC over Taiwan as a “critical threat” to Australia’s vital interests over the next decade. This ranked second only to the risk of cyber-attack.⁸ Equally, modelling shows that the economic cost of a Taiwan Strait conflict would be staggering. Recent projections by Bloomberg Economics estimate a Taiwan war scenario might reduce global GDP by some US$10 trillion, while a blockade could cost approximately US$5 trillion⁹ — that is at least double the cost in the first year alone of the impact of COVID-19. These figures underscore that the future of Taiwan, far from being remote to Australia’s interests, has profound material consequences for trade, technology, supply chain integrity and regional stability.

The report adopts a pragmatic, cost-benefit framing of Australia’s options.

The singular focus on the risk of conflict is polarising and obscures wider dimensions of Australia-Taiwan ties. Australia’s national interest is not merely to prepare for worst-case scenarios; it is also to pursue the conditions in which peace holds, and opportunity is realised. Accordingly, this report seeks to broaden the lens beyond conflict to encompass trade and economic security, technological cooperation, people-to-people partnerships, democratic values, diplomatic engagement (including at state and territory level) and multilateral institutional links. As such, in keeping with the long-standing Australian foreign policy tradition of middle-power realism and strategic flexibility, the report adopts a pragmatic, cost-benefit framing of Australia’s options.¹⁰

At its core, Australian foreign policy has long combined a pragmatic pursuit of national interest with a normative commitment to a rules-based international order, open markets and the autonomy of smaller and middle powers. Taiwan, as a democratic society with a population and economy comparable to Australia’s, brings these themes into sharp focus. The relationship resonates with many of Australia’s enduring foreign-policy principles: reinforcing values of democracy and good-governance; connecting into high-tech and critical-mineral supply chains; linking to Australia’s resilience and economic security; strengthening middle-power diplomacy; and reinforcing the regional rules and norms that Australia regards as essential to an open, stable and predictable order.¹¹

Taiwan’s security and global significance are deeply tied to the past and present role of the United States, as well as Washington’s rising burden-sharing expectations in a shifting strategic landscape.

On that latter point, in particular, any analysis of Australia-Taiwan engagement at present must take account of the United States. Taiwan’s security and global significance are deeply tied to the past and present role of the United States, as well as Washington’s rising burden-sharing expectations in a shifting strategic landscape. For Taiwan, engagement with the United States remains critical. At the same time, however, its value to Australia is also reflected in how Taiwan might support or complement an Australia-led middle power agenda in Asia when US leadership is less certain and its priorities are potentially shifting. In his recent address to the United Nations, Prime Minister Albanese alluded to the significance of middle powers working together with like-minded partners to uphold international norms, represent regional interests and de-risk dependency.¹² In this sense, Taiwan emerges as part of a broader architecture, not simply as a US proxy.

In parallel, it is worth noting how other like-minded states and partners have already adjusted their approach to Taiwan in recent years. For example, the American Institute in Taiwan (AIT) — the de-facto US embassy in Taipei — has significantly expanded its compound and staffing.¹³ Japanese and Taiwanese coast guard vessels conducted maritime exercises for the second year running in October 2025.¹⁴ In April 2025 the Philippines lifted decades-old travel restrictions on Taiwanese engagement by government officials.¹⁵ The United Kingdom and Taiwan signed a “Three Pillar Arrangement of the UK-Taiwan Enhanced Trade Partnership” in June 2025 to deepen engagement in digital trade, renewable energy, artificial intelligence and cyber-security.¹⁶ These developments illustrate that Australia’s peers are recalibrating their Taiwan policies in ways that are responsive to a shifting regional order.

Priorities for Australia-Taiwan engagement

The purpose of this report is not to advocate for an unreflective acceleration of Australia-Taiwan ties, nor to ignore risks or external constraints. On the contrary, the analysis takes seriously the potential costs and hazards of recalibration, including the possibility of Chinese pressure, economic coercion, diplomatic pushback and strategic entanglement. There is no doubt that the preservation of the status quo across the Taiwan Strait remains Australia’s foremost strategic priority. However, this does not mean inaction, and certainly not being passive. Instead, Canberra must ask itself, does change in policy serve its national interest? What costs is it willing and able to bear in evolving Australia’s relationship with Taiwan? Will its stance contribute to strategic stability in the Taiwan Strait and the broader region?

In sum, as Australia navigates a more contested Indo-Pacific, our relationship with Taiwan presents both challenge and opportunity. It demands neither maximalist embrace nor minimalist omission, but calibrated, realistic and forward-looking engagement. By bringing into sharper focus the limits, the levers and the latent potential of Australia-Taiwan ties, this report invites policymakers, business leaders and the broader public to consider how middle powers can exercise agency, support open trade, deepen technology links, preserve democratic values and regional stability, while simultaneously avoiding blind spots and unintended consequences. The analysis that follows seeks to provide an evidence-based framework for that deliberation.

Charting the trajectory of Australia-Taiwan relations

Since Australia sent its first diplomatic envoy to the Republic of China (Taiwan) in 1941, relations between Canberra and Taipei — whether formal or informal — have largely depended upon geopolitical circumstances and relations with and between the United States and China. Despite establishing an Australian Embassy in Taipei in 1966, relations between the Menzies government and the ruling KMT Nationalist party throughout the postwar period remained relatively weak, with many within Australia’s Department of External Affairs¹⁷ expecting Canberra to eventually normalise relations with Beijing along the lines of other countries during the Cold War.¹⁸ In fact, debates in Canberra during the First and Second Taiwan Crises (1954-1955 and 1958) reveal Australia’s wariness of unequivocally backing Washington amid concerns of entanglement under ANZUS. In late 1954, such apprehensions were exacerbated following the signing of the US Mutual Defence Treaty with Taiwan, compelling Prime Minister Menzies to clarify that ANZUS was not applicable to a Taiwan contingency.¹⁹

By 1971, United Nations Resolution 2758 had called for the recognition of the PRC as “the only legitimate representative of China to the United Nations.”²⁰ In December 1972, emboldened by a victory ending 23 years of Liberal rule and encouraged by US President Richard Nixon’s visit to Beijing earlier that year, the newly elected Whitlam government severed Australia’s diplomatic relations with Taipei during its first month in office and formalised ties with the PRC in a joint communiqué with Beijing.²¹ Gough Whitlam, the Prime Minister, had foreshadowed this move by travelling to Beijing in 1971 as opposition leader. Far from following the United States or others in its engagements with Beijing, this decision came seven years ahead of Washington and was largely driven by self-interest, including a belief in the perceived trade and diplomatic benefits of pursuing a more pragmatic foreign policy in Asia.

Then-Leader of the Opposition Gough Whitlam and a delegation of Labor parliamentarians, political advisers and China experts visited the Great Wall of China during a historic trip to the People’s Republic of China in July 1971.Source: Whitlam Institute

Over the past nearly five decades, the Whitlam government’s joint communiqué with Beijing has set the contours of Australia’s enduring ambiguous One-China Policy, with implementation coalescing around two consistent themes. First, it has provided Canberra with the latitude to develop economic, societal and cultural relations with Taipei without affecting its formal recognition of the PRC. Second, it has allowed Canberra to support Taiwan’s inclusion in multilateral fora not limited to recognised states, and to support its participation as an observer in those with a statehood requirement.

Canberra’s engagement with Taipei gained momentum in the 1980s and 1990s, and since then, has largely focused on trade liberalisation and economic integration. In 1981, Canberra established the Australian Office in Taipei (formerly known as the Australian Commerce and Industry Office) and the Australia-Taiwan Business Council two years later. In 1990, the Australian Minister for Industry, Technology and Commerce, Senator John Button, formally committed the Australian Government to closer economic engagement with Taiwan through a series of institutional mechanisms, platforms and meetings, such as the 1990 Bilateral Economic Consultations (BEC).²² In 1991, Taiwan’s Minister of Economic Affairs, Vincent Siew, visited Australia — the first visit of a Taiwanese Minister since 1972.²³ Australia’s shift towards Northeast Asia for trade aligned with Taiwan’s efforts to expand its international engagement, which combined with international opprobrium towards the PRC following the Tiananmen Square massacre and Taiwan’s own democratisation and adoption of ‘pragmatic diplomacy’.²⁴ During this period, Taiwan also established the Taipei Economic and Cultural Office in Canberra (1991) and joined the Asia-Pacific Economic Cooperation (APEC) group under the name “Chinese Taipei” (1991).²⁵

In 1996, the outbreak of the Third Taiwan Crisis foreshadowed the challenges facing Australia-Taiwan relations as the PRC began to exert greater power in the region. While the newly elected Howard government welcomed US deployment of two aircraft carrier battle groups in support of Taiwan, Australia-PRC trade came to exceed that of Australia-Taiwan trade for the first time. The emergence of the PRC as Australia’s main trading partner — accounting for almost a third of Australia’s exports as of 2024 — catalysed the Australian Government’s predisposition to divide its thinking on Taiwan along two main lines: Taiwan as a variable of Sino-US relations and Canberra’s relationship with Beijing.

Against this background, Taipei-Canberra engagement in the South Pacific offers a valuable case study to understand how the relationship has been shaped more by external pressures than by any coordinated strategic design. Throughout the late 1990s and 2000s, the emergence of the PRC as one of Australia’s main trading partners coincided with intensified competition between Taiwan and the PRC for diplomatic influence in the region. As part of their efforts to establish diplomatic relations with Pacific Island Countries (PICs), both Taipei and Beijing poured millions of dollars in aid into the region, prompting some PICs to switch recognition more than once. Nauru switched diplomatic alignment three times in 2003, 2005 and 2024. A 2006 Australian Senate Report placed the value of PRC aid in the Pacific at up to A$300 million annually and of PRC Chinese state-owned and private enterprises investments at A$800 million, while exact figures of Taiwanese development expenditure during this period remain unclear.²⁶ Irrespective of the amounts, the Australian Government perceived this use of “chequebook diplomacy” as undermining its governance agenda, characterising PRC and Taiwan competition in the South Pacific as a “bidding war.”²⁷ In turn, the Australian Government’s criticisms of Taipei’s chequebook diplomacy contributed to Taiwanese perceptions of Australia being increasingly pro-Beijing. In contrast, over the past fifteen years, Beijing’s increased assertiveness in the South Pacific has created common ground for bilateral engagement. Australia seeks to maintain its influence in the South Pacific, while Taiwan perceives the region as vital to retain its geopolitical relevance.²⁸ For instance, following Taiwan’s exclusion from the 2025 Pacific Island Forum meeting amid Chinese pressure, Foreign Minister Penny Wong issued a statement in support of the participation of all development and dialogue partners.²⁹ This warming of bilateral ties in the South Pacific attests to the role of strategic realities in once again shaping and driving bilateral engagement.

Lawmakers from the main opposition Kuomintang try to break into Parliament where the Democratic Progressive Party occupied the night to avoid the passing of amendments to the Civil Servants Election and Recall Act at the Legislative Yuan in Taipei in December 2024. Source: Getty

In the public discourse domestically, Taipei-Canberra relations have often been relegated below Australia’s immediate trade interests and largely confined to a binary discussion around involvement in a regional flashpoint. This has contributed to elevating ‘caution’ as Canberra’s primary organising principle for its engagement with Taipei, as threats of an economic fallout with the PRC and of a regional conflict shape Australia’s foreign policymaking. In turn, Taipei’s outreach has historically prioritised the United States and Japan, with bilateral engagement with Australia often left on the back burner. In the background, however, relations have developed quietly, with the number of Taiwan-born people in Australia notably growing sixfold between 1986 and 1991 and by 70% between 2011 and 2022.³⁰ In 2021, Taiwan and Australia celebrated forty years of friendship — an opportunity to spotlight burgeoning people-to-people ties, cultural links and robust trade and energy cooperation. Still, challenges in elevating the profile of these unofficial ties in both Taiwan and Australia have inevitably limited clarity around both sides’ expectations around the scope and ambition of the bilateral relationship.

The history of Australia-Taiwan relations is one that starts prior to 1972, informed and cultivated by close to a century of formal and informal ties. Yet, its trajectory reflects the outsized role of strategic realities in both shaping and inhibiting engagement, with Australian caution contributing to constraining mutual understanding and fostering gaps in each side’s expectations of the other. The following sections set out to fill some of these gaps. As both Taiwan and Australia face heightened strategic pressures and challenges, these sections introduce a layered assessment of the bilateral relationship — both within the context of shifting security and economic dynamics and on its own terms.

The changing strategic landscape: Regional and global influences on Australia-Taiwan bilateral ties

Historically conditioned by their strategic environment, any assessment of the Australia-Taiwan relationship requires examining the immediate events and broader structural trends shaping the current era of geostrategic uncertainty. In the Indo-Pacific, the confluence of increased Chinese assertiveness and intensifying cross-strait tensions, uncertainty around US security commitments, as well as domestic political and economic imperatives in Australia and Taiwan, informs Taipei and Canberra’s strategic calculus in their bilateral relationship, as well as their perceived and actual agency in the region.

The Taiwan flashpoint

Since the turn of the century, a conflict over Taiwan has come to represent one of the likeliest flashpoints in the Indo-Pacific region. Such a conflict would trigger the largest war in the region since 1945, inflicting severe political and economic costs, fracturing regional relationships for generations to come and risking nuclear escalation. Taiwan sits at a vital maritime junction, where the East and South China seas converge, and the Indian and Pacific oceans meet. Further, producing over 90% of the world’s most sophisticated chips and 60% of the world’s semiconductors, Taiwan is a linchpin in global advanced technology supply chains.³¹ Any conflict — be it an invasion, a blockade or a quarantine — would paralyse export flows on which regional economies rely, cripple global trade and threaten energy security.

The Taiwan flashpoint also carries significant risks of a major power war between the United States and the PRC. Located at the crossroads of global trade and energy flows, and along the First Island Chain,³² Taiwan is integral to both the United States and the PRC’s economies, technological leadership and regional power projection. For Washington, the Taiwan issue has come to be perceived as a litmus test for US commitment to Asia, and by extension, its ability and credibility in upholding the regional balance of power. For Beijing, “full reunification” is perceived as a “natural requirement” for achieving “national rejuvenation” by 2049 and therefore inherent to the overarching national strategy that anchors the Chinese Communist Party’s (CCP) political legitimacy.³³ Under Chinese leader Xi Jinping, the Taiwan question has gained strategic salience, repeatedly framed as a generational responsibility.³⁴ Since 2013, he has called for the People’s Liberation Army (PLA) to be ‘combat-ready’, explicitly identifying 2027 as a first milestone for military modernisation and readiness as of 2020³⁵ and perpetuating a sense, among Western analysts, that he has staked his legacy on “reunification.”³⁶

Xi’s campaign to seize Taiwan using all means short of war

With 2027 fast approaching, policy conversations on Taiwan invariably circle back to the critical question of if and when a kinetic conflict with the PRC over a Taiwan contingency will break out — and if so, how it could unfold. While CCP statements or documents rarely link 2027 to the ‘reunification’ of Taiwan per se, the tone of Chinese statements has been more urgent amid intensifying cross-strait tensions and increased PRC military and political assertiveness. Since former Speaker of the House Nancy Pelosi’s 2022 visit, PLA air and naval activity around Taiwan has increased in scope, frequency, duration, cadence and reach.³⁷ In his testimony before the US State Committee on Armed Services, US INDOPACOM Commander Admiral Paparo reported “military pressure against Taiwan to have increased by 300%” in 2024 alone and described PLA military activity around Taiwan as “rehearsals” for a PRC invasion of Taiwan.³⁸

Crucially, this activity has increasingly coincided with other military exercises and drills in the region, reinforced by growing strategic alignment between Beijing, Moscow, and, to a lesser extent, Pyongyang and Tehran. In late February 2025, the circumnavigation of Australia by a People’s Liberation Army Navy (PLAN) Task Group 107 was concurrent with live-fire naval exercises in the Gulf of Tonkin, a surge of PLA aircraft and ships being deployed around Taiwan, as well as a series of sorties by PLA aircraft over the East China Sea and the Philippine Sea.³⁹ A month later, in April 2025, the PLA launched a major military drill around Taiwan simulating a naval blockade, dubbed ‘Strait Thunder-2025A’, in concert with live-fire drills in the East China Sea.⁴⁰ Meanwhile, since the Russian Federation and the PRC declared their “No Limits Partnership” in 2022,⁴¹ their relationship has matured from a largely performative one to greater, albeit still transactional cooperation — delivering operational impact and presenting a coordinated front against US-led institutions. In the Indo-Pacific, Sino-Russian military exercises in the Sea of Japan and East China Sea have increased since 2023, characterised by growing coordination and complexity, and have expanded to include joint naval exercises alongside Iran, as evidenced by the seventh Maritime Security exercise held in June 2025 in the Indian Ocean.⁴²

The PLA’s growing show of force in the region has been underpinned by a gamut of “grey zone” activities. Since 2013, these include activities such as patrols by the Chinese Coast Guard (CCG) in disputed South China Sea territories, disruption of foreign oil and gas operations in Vietnam, Malaysia and Indonesia, deployment of influence campaigns against Pacific Island leaders and development of a network of dual-use infrastructure across the Pacific. Both military and grey zone activities reflect Beijing’s readiness and capability to probe on multiple fronts and join a broader campaign to project power beyond and within the First Island Chain simultaneously. For Taiwan, these amount to a coercion campaign conducted just below the threshold of military conflict, complicating the island’s ability to respond while progressively eroding and fracturing support for the island. For regional countries writ large, this ‘one-theatre’ campaign creates distractions, dispersing focus and resources, and poses challenges for political and operational coordination among the United States, allies and partners.

Nonetheless, while Xi has kept the use of force on the table, he has also signalled a preference for unification by all means short of war.⁴³ This entails “a path to unification in which Taiwan is gradually worn down by sustained and intensifying Chinese coercion.”⁴⁴ It is against this background that the PRC has waged a political and informational campaign to shrink Taiwan’s voice, space and legitimacy internationally. At a multilateral level, Beijing has leveraged its permanent seat at the United Nations (UN) Security Council and economic power to isolate Taiwan diplomatically. It has blocked Taiwan’s eleven bids to join the United Nations and repeatedly foiled its application to join the World Health Organisation (WHO), the International Civil Aviation Organisation and Interpol as an observer.^{45 46}

Further, since the Democratic People’s Party (DPP) came into power in 2016, pursuing a strong ‘Taiwanese identity’ agenda, Beijing has accelerated its pressure campaign to encourage countries to switch recognition from Taipei to Beijing as well as to embrace the One-China Principle.⁴⁷ Central to this effort has been a disinformation campaign to conflate the latter position with the UNGA Resolution 2758. For example, in a position paper released in September 2025, the PRC inaccurately asserted that UNGA Resolution 2758⁴⁸ “confirms and fully embodies the One China principle” and resolves “once and for all the question of the representation of the whole of China, including Taiwan, in the UN, as a political, legal, and procedural issue.”⁴⁹

Still, as a result of this sustained political, economic and informational campaign, as of 2025, Taiwan counts 12 diplomatic allies (down from 22 in 2016), and 62% of UN member states (that is 119 countries) now endorse the One-China Principle — 89 of which have imposed no limits on the use of force to achieve “national reunification.”⁵⁰ Crucially, all 10 countries⁵¹ that severed ties with Taipei over the past decade subsequently endorsed the One-China Principle.⁵² This diplomatic marginalisation of Taiwan, combined with the global socialisation of the One-China Principle, is inevitably shrinking Taipei’s international standing and profile. It is also an attempt to characterise any CCP intervention into Taiwan as a purely ‘domestic affair’ and any foreign support for Taiwan as both illegal and illegitimate. Likewise, while perhaps anecdotal at this stage, in April 2025, Somalia joined a handful of countries that no longer recognise Taiwanese passports.⁵³ Together, this multi-front pressure on Taiwan has created a challenging strategic landscape for its political and defence leaders, grappling with the need to simultaneously prepare for both ‘D-Day’ and ‘every day’ PRC belligerence.

Together, this multi-front pressure on Taiwan has created a challenging strategic landscape for its political and defence leaders, grappling with the need to simultaneously prepare for both ‘D-Day’ and ‘every day’ PRC belligerence.

The PRC and Taiwan fault lines

Taiwan’s now deeply rooted democracy provides a powerful reminder that democracy is not a form of political organisation that is unreceptive to Chinese civilisation. Global indices consistently recognise Taiwan as a vibrant and resilient democracy, ranking 12th overall in The Economist’s 2024 Democracy Index, behind Australia (ranked 11th) and ahead of Japan (ranked 16th) — notably receiving full marks for “electoral process and pluralism.”⁵⁴

Yet, the democratic character of Taiwanese domestic politics provides an important and vulnerable avenue for the CCP to exploit in its campaign for ‘reunification’ using all means short of war. The financing of pro-Beijing political actors, espionage and influence operations via local politicians, religious groups or civil-society organisations are all tactics used by the CCP “to weaken Taiwan from the inside so that the island falls into its lap intact.”⁵⁵

These attempts at subversion have both contributed to and benefited from Taiwan’s highly polarised political landscape — historically divided between the Democratic People’s Party (DPP) and the Nationalist Kuomintang (KMT). While the Taiwanese population is split on socio-economic and energy issues, deep societal divides also manifest in their ideas on how best to engage with Beijing. Simply put, while the DPP rejects unification in favour of a pro-Taiwan agenda, the KMT holds a more conciliatory approach to Beijing.

While polling is an imperfect predictor of outcomes, these figures suggest Beijing’s subversion efforts have failed to curb the emergence of a robust Taiwanese identity, hinting at likely civilian resistance should a conflict erupt.

Partisanship has intensified since the 2024 elections, which ushered in DPP’s President Lai Ching-te and a KMT-led majority in the legislature, resulting in political and legislative gridlock. In 2025, KMT efforts to expand the legislature’s oversight over presidential authority and limit judicial intervention culminated in a large-scale recall campaign targeting dozens of KMT lawmakers accused of being pro-Beijing. While the vote ultimately failed in July, it further entrenched polarisation.⁵⁶ In a Foreign Affairs piece, Taiwan-based scholars Lev Nachman and Wei-Ting Yen explained, “Taiwanese citizens suffer not simply from polarization but from affective polarization, where they actively resent people who hold different views and see them as less trustworthy at best and treacherous at worst.”⁵⁷

Further complicating matters is Beijing’s view of President Lai as “beyond redemption” in his pursuit of de facto Taiwan independence.⁵⁸ While his speeches and policies since assuming office have largely aligned with those of his predecessor, Beijing has accused President Lai of being unnecessarily provocative and of advancing a ‘two-state theory’. Key to Beijing’s grievances is President Lai’s plain rejection of the 1992 Consensus — a tacit agreement between Beijing and the government in Taipei in which both sides agree there is ‘one China’, but each side reserves its own interpretation of what ‘China’ means — describing it as “unfeasible,” and altogether omitting any reference to it in his inauguration speech.⁵⁹ In response, Beijing has repeatedly lambasted President Lai, intensified military pressure following any of his major speeches or political decisions, as well as continuing its freeze of Cross-Strait guardrails and crisis management tools.⁶⁰

The broader backdrop for heightened cross-strait tensions is the tightening of political restrictions in Hong Kong, including the enactment of the National Security Law (2020) — which criminalised subversion, collusion with a foreign or external entity, terrorist activities, as well as secession — and the Safeguarding National Security Ordinance (Article 23) legislation (2024). These followed the series of pro-democracy protests in Hong Kong in 2019 and 2020. Despite international outcry, Beijing has remained undeterred. For Taiwan, this effective erasure of democracy in Hong Kong ended the already faint prospects of unification with the PRC based on the ‘One Country, Two Systems’ concept.⁶¹ Instead, developments in Hong Kong became indicative of the PRC’s more forceful pursuit of its national interests under Xi’s leadership, emboldened by the 2018 constitutional removal of presidential term limits in the PRC⁶² and the entrenchment of his authoritarian rule.

Nonetheless, amid increased political polarisation and increased cross-strait tensions, a distinct Taiwanese identity has emerged and consolidated. Data from the Pew Research Centre in 2024 found that 67% of the population identify as Taiwanese and only 3% as Chinese. Amongst younger people this is 83% and 1% respectively (see Figure 1).⁶³ This marks a sharp increase since the start of Taiwan’s democratisation. In 1992, polling by Taiwan’s National Chengchi University found only 17.6% of the population identified as Taiwanese, 25% as Chinese and 46.4% as Chinese-Taiwanese.⁶⁴ Separate polling by the Chicago Council on Global Affairs in 2024 found 60% of Taiwanese support maintaining the status quo, and only 7% preferred unification (see Figure 2).⁶⁵ While polling is an imperfect predictor of outcomes, these figures suggest Beijing’s subversion efforts have failed to curb the emergence of a robust Taiwanese identity, hinting at likely civilian resistance should a conflict erupt.

Trump 2.0 and Taiwan

Since assuming office in January 2025, President Trump’s policy towards Taiwan during his second term has struggled to reconcile contradictory principles and competing priorities. In part, this is due to his expressed interest in pursuing a trade deal with Beijing as well as to the general absence of an Indo-Pacific strategy. This is also attributed to the heightened sway of certain “realist” and “conservative restrainers” over the second Trump administration’s foreign policy, relative to those of ‘China hawks’ during his first term.⁶⁶

Still, President Trump’s mixed signals towards Taiwan should be viewed within the broader continuity of Washington’s bipartisan One-China Policy over the past five decades. When Washington severed diplomatic ties with Taipei in 1979, it recognised the PRC as the sole, legitimate government of China and, like Australia, ‘acknowledged’ Beijing’s position that Taiwan is part of the PRC. At the same time, Washington never conceded that Taiwan was part of the PRC and stressed repeatedly that the future relationship would have to be determined by people on both sides of the Strait without coercion or unilateral changes by either side. That One-China Policy formula was codified through the three US-China Joint Communiqués, and coupled with the Taiwan Relations Act (TRA) and the Six Assurances,⁶⁷ which have provided the basis for Washington to maintain robust but unofficial ties with Taipei, to resist any coercion used against Taiwan or unilateral declarations of independence by Taiwan, as well as to sell arms to Taiwan despite an absence of diplomatic relations.

This policy has lasted across successive administrations. In 2021-2022, while some of President Biden’s statements around ‘defending Taiwan’ may have signalled a shift towards strategic clarity, the White House and senior government officials quickly reaffirmed that US policy towards Taiwan had remained unchanged. That said, both administrations made US support for Taiwan increasingly clear in response to an expanding and increasingly assertive PLA military pressure on Taiwan. This deepened security and military relations with Taiwan, including accelerating arms sales, supporting military training and reforms, as well as expanding high-level exchanges. Ahead of his inauguration in 2016, president-elect Trump also accepted a call from President Tsai Ing–wen, marking the most senior-level engagement between both governments since 1979.⁶⁸ The consistency and bipartisan support for Washington’s One-China policy reflect the enduring economic and strategic value of Taiwan to US interests. Taiwan is Washington’s seventh largest trading partner in goods, tenth largest export market and eleventh largest foreign holder of US Treasuries.⁶⁹ As the linchpin of global chip production, its semiconductor industry powers US global technological leadership, counting Apple Inc. and Nvidia Corporation among its largest customers. Moreover, Taiwan’s geographic location binds its future to the balance of power of the Indo-Pacific region. In the same way that an independent Taiwan limits Beijing’s power projection, Beijing’s control over Taiwan would severely constrain Washington’s capacity to shape regional dynamics and to support its regional allies and partners.⁷⁰ In 2021, then US Assistant Secretary of Defense for Indo-Pacific Security Affairs Ely Ratner put it plainly that “Taiwan is located at a critical node within the first island chain, anchoring a network of US allies and partners—stretching from the Japanese archipelago down to the Philippines and into the South China Sea—that is critical to the region’s security and critical to the defense of vital US interests in the Indo-Pacific.”⁷¹

Still, President Trump’s second administration stance on Taiwan has been more opaque. In many ways, US Secretary of Defense⁷² Peter Hegseth’s speech at the 2025 Shangri-La Dialogue signalled continuity with US One-China Policy, declaring a forceful commitment to the defence of Taiwan:

“There’s no reason to sugar coat it. The threat China poses is real, and it could be imminent…President Trump has also said that communist China will not invade Taiwan on his watch….if deterrence fails, and if called upon by my Commander in Chief, we are prepared to do what the Department of Defense does best — fight and win — decisively.”⁷³

Likewise, on two occasions, Secretary of State Marco Rubio publicly thanked Taipei’s diplomatic allies, Guatemala and Belize, for their ongoing support to Taiwan. Secretary Hegseth’s Under Secretary of Defense for Policy, Elbridge Colby — author of the 2018 and 2026 US National Defence Strategy — has long advocated for the United States to focus its efforts on enforcing credible deterrence across the First Island Chain. At his Senate confirmation hearing, Colby identified the PRC as the “pacing challenge” and the “most formidable threat” to the United States, calling for Washington to prioritise both its focus and resources to deny Chinese regional hegemony, which in turn requires deterring a PRC invasion of Taiwan.⁷⁴ The 2025 National Security Strategy very much echoes this position, explicitly articulating the strategic value of Taiwan for the United States and underscoring the deterrence of conflict over Taiwan, “ideally by preserving military overmatch” as a priority.⁷⁵

Taiwanese reservists participate in pre-combat training during the annual Han Kuang military exercise in July 2025. Taiwan recently received a delivery of US high-tech rocket systems aimed at preparing the island nation for a Chinese attack.Source: Getty

Nevertheless, some developments during President Trump’s second term point to ambivalence toward Taiwan under his America First Agenda. Significantly, Taiwan was not raised during the October 2025 Xi-Trump Summit prompting speculation that the issue had become a lower priority for the United States, though it was reportedly addressed during a subsequent call.⁷⁶ Washington’s support for Taipei has been further mired by President Trump’s flagrant accusations of Taiwan ‘stealing’ the US chip industry, his refusal to allow President Lai Ching-te’s transit through the United States, the imposition of a 20% reciprocal tariff on Taiwanese goods⁷⁷ or his temporary withholding of more than US$400 million in military aid to Taiwan (noting this was later approved at US$330 million in November and followed by an US$11.1 billion arms package in December).⁷⁸ Doubts around his administration’s willingness to defend Taiwan and to prioritise the Indo-Pacific region writ large have been compounded by President Trump’s use of strong-arm tactics against longstanding allies and partners. Tariffs, the dismantlement of USAID and heightened US pressure on allies and partners to boost defence expenditure — with a target of 10% of GDP in the case of Taiwan — have raised concerns around the United States’ long-standing commitments to the defence of regional allies and partners and to upholding the rules-based international order.

Taiwan-Australia engagement in the current strategic environment

Together, Xi’s impatience for ‘reunification’, compounded by the Trump administration’s unpredictable approach towards foreign policy, have exacerbated anxiety and concern among regional countries around the risks of escalating conflict in the Taiwan Strait. While both Xi and President Trump have both been blamed for intensifying cross-strait tensions and geoeconomic disruptions respectively, such developments are rooted in underlying structural trends over the contested emerging world order.

For Australia, the fluidity of this current era offers an opportunity to break from convention. On the one hand, US policy towards the Indo-Pacific, and to Taiwan in particular, will undoubtedly continue to shape the parameters of Australia’s engagement with Taipei. Equally, any deepening of Taipei-Canberra relations, however incremental, will likely lead to threatened or actual punitive measures by the PRC — that may constrain Canberra’s policy. On the other hand, the disruption created by the Trump administration’s transactional diplomacy in the region as well as Australia’s experience in resisting Chinese economic coercion have affected Canberra’s relationship with both Washington and Beijing — creating a window of opportunity for Australia to at least reassess its role and approach in the region, including on bilateral ties with Taiwan.

Within this changing strategic environment, some of Australia’s closest regional partners have already reappraised their traditional policy settings towards Taiwan. For example, top leaders in Tokyo have increasingly tied the survival of Taiwan to Japan’s national security. In November 2025, this culminated in Prime Minister Sanae Takaichi characterising the prospect of Chinese military action over Taiwan as a “survival-threatening situation” that may trigger the mobilisation of Japan’s Self-Defence Forces.⁷⁹ Such changes carry important implications for Australia, Tokyo’s second closest security partner in the Indo-Pacific region after the United States. Indeed, that Australia’s most important regional strategic partners are recalibrating their own approaches to Taiwan suggests Canberra too may need to challenge its long-standing policy architecture towards Taipei, or at the very least weigh the potential ripple effects of maintaining vs revising it on regional geopolitical dynamics.

That Australia’s most important regional strategic partners are recalibrating their own approaches to Taiwan suggests Canberra too may need to challenge its long-standing policy architecture towards Taipei, or at the very least weigh the potential ripple effects of maintaining vs revising it on regional geopolitical dynamics.

This era of strategic uncertainty increases Canberra’s challenges around simultaneously navigating its relationship with its largest trading partner, its chief security guarantor and with regional countries. When assessing the value of increased bilateral engagement, it follows that strengthening ties with Taipei is likely to incur short-term economic and political risks for Canberra with Beijing. Nevertheless, the deterioration of Australia’s strategic outlook calls for Canberra to explore all policy options that would develop and reinforce an environment conducive to serving its long-term interests. The Australian Government has made clear such an environment is defined as a “peaceful, stable and prosperous” region and a favourable balance of power — one “where no country dominates, and all countries have the freedom to decide their own futures, without interference” — possible through sustained regional engagement and collective adherence to the rules-based order. In this sense, maintaining the status quo across the Taiwan Strait — and so preserving Taiwan’s international space — serves Australia’s interest. As a democracy and an open trading economy, Taiwan’s track record as a willing, capable and constructive actor in the rules-based order supports a favourable regional balance of power as articulated by Canberra.

Australia-Taiwan trade and economic security cooperation

Australia-Taiwan trade relations over the decades

The Australia-Taiwan relationship is primarily based on strong trade engagement underpinned by complementary economies. Since 1992, Taiwan has consistently featured among Australia’s top ten export markets for goods and services (with the exception of 2014 and 2015), and Australia is Taiwan’s largest provider of energy including coal, natural gas and iron ore. Australia and Taiwan have promising and profitable business engagements; people-to-people ties cultivated over time; a strong foundation of democratic values and principles; and shared aspirations to bolster their economic resilience in a time of increased geopolitical uncertainty.

Australia and Taiwan are outward-oriented, high-income economies with comparable population sizes, and each plays a vital role in global supply chains. Trade between the two has grown steadily, with bilateral goods and services trade reaching A$30.6 billion in 2024.⁸⁰ Australia’s exports to Taiwan are dominated by energy commodities and minerals, including coal, natural gas and iron ore, while Taiwan exports refined petroleum, telecommunications equipment and broadcasting devices. In recent years, services trade has surged, rising by more than 50% in 2023,⁸¹ reflecting expanding collaboration in sectors such as education and tourism.

The investment relationship between Australia and Taiwan is also strengthening. Australian investment in Taiwan has trended upward since the mid-2000s, with total investment stock reaching A$35.1 billion in 2024, while Taiwan’s investment in Australia reached A$23.3 billion in the same year — accounting for a 26% increase from 2023.⁸² Recent investments focus on strategic and emerging sectors, including biomedicine, renewable energy, the circular economy and financial services.

However, due to sensitivities in Australia’s relationship with the PRC, deeper economic engagement with Taiwan, such as a free trade agreement (FTA), has not been a priority for successive Australian governments. Yet, with economic security now assuming a central place on Canberra’s agenda, increased economic engagement with Taipei is not only strategically sound — bolstering the resilience of a key regional partner and economy — but consistent with Australia’s One-China Policy.

Moreover, a thorough analysis of additional scope for trade and economic cooperation has not been undertaken for some time. Amid increased geopolitical uncertainty, new structures for a global economic order are forming. Some experts argued these are steering the world towards a bipolar order, featuring two distinct and competing political, economic and cultural models. Others stressed current macro-trends would favour the coalescence of multiple, and at times conflicting, economic models involving increased government intervention in supply chains, the emergence of geographic trading blocks and adoption of industrial policies that ring-fence select industries from market forces. Irrespective of how the global order ultimately settles, Australia-Taiwan trade relations require re-examining as this aspect of the relationship offers the most fertile ground to deepen cooperation.

Exploring deeper trade cooperation

Despite some interest on both sides in establishing an FTA in 2013-2014, negotiations have since stalled under successive Australian governments — in part due to pressure from Beijing and leaving Taipei unsure where Canberra stands on Taiwan.⁸³ The benefits of an FTA for Australia include reduced tariffs on agricultural products to compete with New Zealand (which has an FTA with Taiwan) and reduced barriers to services trade. That said, Taipei and Canberra have signed more than 40 cooperation agreements spanning a range of sectors, including investment, trade, culture, health, tourism, energy — a total second only to the number of agreements between the United States and Taiwan.⁸⁴ As a result, while the overall relationship remains courteous, Canberra’s priority for maintaining stable relations with Beijing has unintentionally eroded Taipei’s trust in Australia as a reliable, strategic partner. In terms of deepening the Australia-Taiwan economic relationship through greater foreign direct investment, one attendee commented that Taipei viewed increased investment in Australia as “ultimately futile” due to the ‘China dynamic’. Should Australia seek to lift the Taiwan relationship to higher levels, it would need to engage in positive signalling at the government level over a sustained period.

Beyond the two-way trading relationship, there is a strong and growing interest from the Taiwanese business community in Australia as an economic partner. There have been several high-profile visits of Taiwanese business executives to Australia and business engagement, examples include:

• In 2024, 11 Taiwanese companies attended Australia’s largest biotech conference in Melbourne (the largest delegation from any foreign entity).
• In 2022, a Taiwanese business delegation from the Bureau of Energy, Taipower, CPC Corporation, China Steel and Formosa visited Australia to explore trade and investment opportunities in green hydrogen.
• Beginning in 2017, nine Taiwanese banks have commenced operations in Australia with A$65 billion in funds under management.⁸⁵

Moreover, while agriculture and resources continue to underpin Australia-Taiwan trade, growing consumer demand in Taiwan for premium Australian food, beverages and supplements, along with increased Taiwanese investment into future-oriented sectors (e.g. biomedicine, renewable energy, circular economy and recycling, energy storage, tourism infrastructure and financial services⁸⁶), suggest the bilateral relationship is diversifying beyond traditional sectors. Despite progress in economic engagement, discussions among the workshop participants highlighted the trust deficit between Taipei and Canberra. Some suggested Canberra needs to signal its commitment to the relationship to reassure Taiwanese and Australian businesses and encourage more bilateral investment. While Australia is a target country of Taipei’s New Southbound Policy,⁸⁷ experts questioned whether Canberra could have captured greater investment if it had been more forthright in its expression of interest for Taiwanese business.

Both Australian and Taiwanese companies require public affirmation of the desirability of mutual benefits behind trade. Taiwanese companies seek greater confidence and assurance from the Australian Government, while Australian companies need to be reassured that greater engagement with Taiwan will not impact their trade with the PRC. Subsequent discussions explored options for effective signalling. One attendee noted that, while the establishment of an FTA would likely have minimal impact on overall bilateral trade relations (and it was unclear to what extent companies would seek to operate under an FTA framework), such an agreement would hold important signalling value for business. Another suggestion included arranging annual trade minister visits to Taipei (the last Australian trade minister to visit Taipei dates to 2012), especially in view of Australia’s essential importance as a supplier of energy and minerals to Taiwan. However, some attendees advised developing mechanisms to achieve the same substantive outcomes but that do not require the same level of political symbolism. For instance, sub-state level trade ministers could visit Taipei.

Australia’s position on Taiwan’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and a Free Trade Agreement

Australia’s official position on Taiwan’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has been neutrality, which is at odds with a 2021 recommendation by the Australian Parliament’s Committee on Foreign Affairs, Defence and Trade that Australia “work with other CPTPP members to encourage and facilitate the accession of Taiwan to the CPTPP.”⁸⁸ Workshop participants observed that it would be economically beneficial for Taiwan to join the CPTPP and establish a Free Trade Agreement (FTA) with Australia; however, political and strategic considerations continue to outweigh the economic benefits for Australia. Despite Taiwan’s continued compliance with World Trade Organization (WTO) rules and international norms and the potential trade benefits, attendees recognised that Australian support for an FTA with Taiwan or for Taipei’s accession to the CPTPP were not “cost-free exercises.”

Given political sensitivities, attendees proposed that Australia’s position should be less centred on debating Taiwan’s accession per se and more on advocating, within CPTPP deliberations, that it is in all parties’ interests that as many outward-facing economies as possible align with CPTPP standards. Certainly, it serves Canberra’s interests to support the membership of any eligible entity that satisfies the entry requirements. While there is no single, formal document from the CPTPP recognising that Taiwan adheres to all of its standards, both think tank and academic analyses find Taiwan largely meets its requirements — and if not, would be prepared to enforce the necessary legal and regulatory reforms.⁸⁹

Other suggestions included encouraging Taiwan to adopt CPTPP policies, acting as a de facto member, to reap reciprocal benefits — an approach often favoured by Norway on the world stage. This was met with pushback from certain participants recalling Taipei’s interest in joining the CPTPP is to build its global profile as an independent actor, rather than to solely advance its trade interests. One attendee contended that Australia may need to start with initiatives targeting substance before moving towards symbolism to be effective. Any initiative from Canberra on Taiwan’s accession to the CPTPP would necessarily be part of a broader strategic conversation on Canberra-Beijing relations. Regardless, there was largely consensus among attendees that Canberra could at least propose opening negotiations on Taiwan’s accession.

Recommendations

• Work strategically with like-minded countries to investigate opportunities for Taiwanese engagement with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) framework, such as a parallel track outside the CPTPP construct, a related dialogue, or sub-grouping.

Trade without treaties

Outside formal trade agreements, attendees proposed several initiatives to spur trade ties including:

• Increasing sub-national engagement and visits by state ministers.
• Establishing new sister-cities and sister-state relations.
• Leveraging existing cooperation platforms through networked engagement.

These initiatives are explored in further depth below.

Increasing sub-national engagement and visits by State Ministers

Outside of an FTA and CPTPP membership, sub-national diplomacy offers a vehicle to strengthen Australia-Taiwan ties. This was cast as part of a broader effort by Canberra to develop multi-tiered networks with Taiwan, noting sub-national engagement was likely to elicit fewer sensitivities with Beijing. Canberra could consider trade and investment missions involving visits to Taipei by state-level ministers. Similarly, Taiwan should continue sending its senior trade officials to Australia to maintain and grow people-to-people connections.

Currently, Australian states have engaged with Taiwan to varying degrees. The Australian state with the closest ties to Taiwan is Queensland. Queensland has appointed a Trade Commissioner in Taipei,⁹⁰ and its Treasurer and Minister for Trade and Investment have travelled to Taiwan.⁹¹ Queensland offers an example of the trade opportunities arising from greater engagement with Taipei. For instance, the state has benefited from Taiwanese investments in its technology companies, including in agricultural technology, healthcare and general innovation, spurring growth in Queensland’s technology industry. Other Australian states could investigate similar economic opportunities with Taiwan.

Advanced technology, biotechnology and finance have emerged as key areas to operationalise Australia-Taiwan engagement at a sub-national level. Attendees noted these sectors offer Canberra and Taipei an avenue to discuss both conceptually and pragmatically ways of working and best practices to harness and drive innovation. Biotechnology is a burgeoning area of cooperation, with cooperation underway in biomedical and biotechnology sectors, drug discovery and clinical trials. Australian start-ups are also seeking to seize opportunities in working with Taiwan on biotech, as Taipei positions itself as a global biomedical innovation leader.

Australian Government to establish sister-city and sister-state relationships

Another underexplored area of sub-national engagement is sister-city and sister-state relations. These types of diplomatic relations can be underappreciated for the tangible value they can offer. Sister-city relations can provide a foundation from which to build government, business and people-to-people links, as well as being a subtle foreign policy signalling tool. Three cities in Queensland have established sister-city relations with Taiwan — Brisbane, the Gold Coast and Logan. However, other Australian states are yet to take advantage of this opportunity. In addition to the Gold Coast, the city of Canberra could explore a sister-city relationship with Taipei, while Sydney or Melbourne could explore one with New Taipei City or Taichung — Taiwan’s two largest cities. Attendees noted greater leadership and encouragement by the Department of Foreign Affairs and Trade (DFAT) would be welcomed to spur Australian states to establish ties with Taiwanese counterparts.

Leveraging existing cooperation platforms through networked engagement

Acknowledging the challenges of engaging through multilateral institutions — such as the CPTPP’s requirement for unanimous consent from all member states — experts examined alternative approaches to leverage existing cooperation engagement platforms at a bilateral or minilateral level among open market economies. Likewise, other attendees suggested establishing mechanisms to link existing ‘blocks’ such as the Association of Southeast Asian Nations (ASEAN), the CPTPP and the European Union (EU) together, or simply linking Australia to the EU Trade and Investment Dialogue with Taiwan — “knitting up economies with a shared interest in the rules-based order.” As Taiwan has a regular trade and investment dialogue with the European Union, this would further link Taiwan with the members of the other groupings. This would also serve Australia’s interests in stronger networks between countries that support open markets and the rules-based order.

Moreover, attendees overwhelmingly recognised Australia needs to be more strategic in its approach to Taiwan and network its cooperation with Taipei, such as trilaterally with Japan or the United States. Trilateral cooperation would reduce the potential for Chinese reprisal, which could see more support in Canberra for bolstering Australia’s relations with Taiwan. These suggestions were put forward by attendees as pragmatic approaches to facilitate ties, favouring substantive and meaningful engagement over formalised or institutionalised cooperation.

Recommendations

• Leverage existing cooperation platforms, favouring pragmatic, substantive engagement over formalised or institutionalised cooperation.
  – Establish mechanisms to link existing groups together, such as ASEAN, CPTPP and the European Union.
  – Engage with Taipei in tandem with like-minded countries, such as Japan.
  – Conduct trade missions on a national and state basis, focused on areas of Australian advantage.
  – Resume ministerial-level trade visits, recognising the visits of UK Trade Minister, Douglas Alexander, US Under Secretary for Trade and Foreign Agricultural Affairs, Luke J. Lindberg and Japan’s Vice-Minister of Agriculture, Forestry and Fisheries in 2025.
  

Exploring pathways for deeper clean energy cooperation

Taiwan’s energy mix is heavily dependent on fossil fuels, including coal, gas and crude oil. Australia is Taiwan’s largest energy supplier, contributing half of its coal and around 40% of its liquified natural gas (LNG). One participant noted that Australian energy exports effectively power Taiwan’s semiconductor industry, recalling the Taiwan Semiconductor Manufacturing Company (TSMC) may account for 24% of the island’s energy consumption by 2030. This supply of energy is secured via long-term contracts, reflecting deep confidence and trust in this aspect of Australia-Taiwan relations. Yet Taiwan — like Australia — has set ambitious green energy targets, meaning some of this traditional energy trade will be phased out in coming decades.

The clean energy transition opens new areas of Australia-Taiwan cooperation. Taiwan is expanding its production of electric vehicles, large-capacity batteries and other renewable energy technologies, and Australia can provide a reliable, high-quality supply of the raw materials Taiwan needs to manufacture these goods.

Australia-Taiwan clean energy cooperation has an existing strong foundation, including joint ventures. Taiwanese company, Aleees, and Australian company, Avenira, have partnered on the first commercial-scale lithium battery cathode manufacturing plant in Darwin. Further, in 2023, Taiwanese company Green Harvest signed a green hydrogen agreement with the Australian Government that will see Australia transport green ammonia to Taiwan from 2028.⁹² In addition, both the Australian public and private sectors have invested in offshore wind projects in Taiwan. For instance, Macquarie Group purchased a 50% stake in a Taiwanese offshore wind farm project,⁹³ and Export Finance Australia has supported offshore wind in Taiwan, investing A$170 million in 2025.⁹⁴

In the context of existing projects, one expert highlighted two primary sectors for further cooperation: green iron⁹⁵ and offshore wind. To date, much of the conversation has focused on hydrogen cooperation, culminating in the launch of the 2021 Taiwan-Australia Hydrogen Trade and Investment Dialogue.⁹⁶ However, one attendee highlighted promising opportunities in green iron development given Taipei and Canberra’s shared interest in lower-carbon iron markets. In February 2025, the Albanese government established a A$1 billion Green Iron Fund in its efforts to position the country as a world-leading green iron manufacturer.⁹⁷ Meanwhile, Taiwan has adopted ambitious climate policies, including carbon fees and pricing mechanisms to incentivise its private sector — specifically its steel industry — to reduce emissions. Moving forward, an Australia-Taiwan Track 2 workshop on green iron that brings together officials, academics and industry members could help progress cooperation in this space.

Offshore wind is a major and lucrative industrial sector, and Taiwan has set ambitious offshore wind targets. Notably, Taipei’s commitment has led many major EU companies to establish their regional headquarters on the island. This offers promising opportunities for Taiwan and the Australian-Taiwan relationship. While a regional supply chain in this sector is yet to be established, Taipei could be at its crux. Canberra and Taipei’s engagement in this space could be carried out on a bilateral or minilateral level involving Japan or South Korea, or leverage the Asia Pacific Economic Cooperation (APEC) organisation to convene a study group or dialogue series focused on advancing offshore wind development.

Recommendations

• Australia and Taiwan co-host a bilateral or minilateral Track 1.5 or Track 2 energy workshop on green iron and offshore wind technologies, bringing together research, industry, associations, and international organisation stakeholders as relevant.

To progress cooperation on green iron and offshore wind technologies, attendees recommended holding a Track 1.5 or 2 workshop. This sparked a broader conversation on the value-add of such second track diplomacy. Australia could better harness Track 2 discussions to progress its foreign policy interests and objectives in relation to Taiwan and ensure discussions are output oriented. In the case of Taiwan-Australia energy cooperation, for example, Track 2 diplomacy could lead to structured agreements if it brings together relevant stakeholders in research, industry, associations, international organisations and so on.

Discussions around the green energy transition inevitably led to questions around steel. On the latter, experts noted that minilateralism would not be effective in this space and Canberra and Taipei should pursue bilateral cooperation. One expert noted that reorganising the regional supply chain for steel would be easier than other industries (including offshore wind), as steel supply chains involve significantly fewer stakeholders. An effective Track 2 on steel would need to involve major vendors, the global association and steel manufacturers.

Opportunities to expand emerging technology cooperation

In many ways, Australia and Taiwan are seen as natural technology partners, with each having complementary capabilities: Taiwan’s strengths in advanced manufacturing, R&D capacity, semiconductor design and fabrication, and Australia’s strengths in holding vast reserves of indispensable inputs to technology, including critical minerals, its stable investment environment and world-class research institutions. In 2024, Taiwan and Australia signed a Science and Technology Arrangement, upgrading earlier agreements and targeting 22 bilateral programs in areas including semiconductors, biotechnology, net-zero technologies, and Information and Communications Technology (ICT) manufacturing. Despite no formal diplomatic ties, this cooperation is growing steadily through unofficial and industry-led channels. Cooperation on emerging technology is essential for regional resilience, and with a pragmatic approach, deeper Australia-Taiwan technology engagement could become a model of innovation-led cooperation between democratic economies.

There are multiple opportunities for Australia and Taiwan to work more closely on emerging technologies. One area is cybersecurity. Taiwan is on the front line of cyberattacks from the PRC, while Australian government agencies and critical national infrastructure have faced similar threats in recent years. Australia currently provides capacity-building to Taiwan on cybersecurity, and in 2024, Australia’s Cyber Ambassador visited Taipei, marking the first such visit of a senior Australian cyber official in several years. While closer cyber cooperation is not without risks given Taiwan’s links to Chinese ICT systems, there is greater scope for Australia and Taiwan to share cyber threat intelligence and best practice on critical infrastructure protection, conduct cyber drills to harden their respective systems and coordinate policy on cyber norms.

In addition, through increased academic and student exchange, Australia and Taiwan could deepen their development of biotech, space, artificial intelligence (AI) and quantum technologies. Another valuable prospect for cooperation is joint R&D to commercialise dual-use capabilities.⁹⁸ This could include AI and uncrewed systems. However, before deeper cooperation can take place, there needs to be clearer signalling and scope from the Australian Government for Taiwanese businesses to operate in Australia. Until this occurs, the opportunities for deeper cooperation are limited.

Many emerging technologies are dual-use in nature, inevitably introducing sensitivities for bilateral engagement for both Taipei and Canberra. For Taiwanese companies, any commercial activity in Australia appearing to advance defence-related capabilities is likely to attract criticism from Beijing. Likewise, Australia is mindful of any dual-use capabilities that may present security vulnerabilities. For example, Australian government officials have reportedly cautioned some Taiwanese drone companies about operating in the Australian market, causing a chilling effect on Taiwanese business operations overall. Taiwanese companies in emerging technologies do not feel confident operating in Australia or carrying out their business inquiries. This has filtered through to broader Taiwanese industry, which is unsure how best to progress investments in Australia without upsetting the Australian Government. While the Taiwanese business community is aware of the geopolitical sensitivities, it is seeking reassurances from the Australian Government that it will not block deals or reprimand Taiwanese operators.

Recommendations

The panel of experts recommended four primary activities in relation to emerging technology cooperation:

• Institutionalise collaboration through continuing the Science and Technology Arrangement⁹⁹ and create a standing bilateral committee with public and private (1.5 Track) representatives for technology cooperation.
• Establish cyber and semiconductor partnerships using Memorandums of Understanding, Track 2 dialogues and multilateral initiatives.
• Support research and talent exchange through scholarships, R&D funding, and startup exchange programs to deepen ties at the people-to-people level.
• Support Taiwanese businesses in Australia through confidence measures and business certainties.

Critical minerals and the semiconductor supply chain

Australia holds significant reserves of critical minerals, including lithium, copper, nickel and rare earth elements (REEs), and Taiwan relies heavily on imported minerals for its high-tech manufacturing sector, particularly semiconductors and renewable energy technologies. Semiconductors rely on a variety of critical minerals, primarily silicon but also gallium, germanium, and REEs. Australia is already the leading exporter to Taiwan for several critical minerals including cobalt, titanium, and tantalum, although these markets are typically small, valued at between A$10 million — A$100 million annually.

The PRC currently dominates the global supply of critical minerals and has shown its willingness to withhold supply over geopolitical disputes. Despite both Australia and Taiwan’s interests in diversifying their critical minerals supply chains to reduce the risk of disruption, neither has been able to substantively reduce their dependence on the PRC. For example, Australia still exports 95% of its lithium to the PRC for processing, and although Taiwan has established a minerals stockpile and recycles its REEs, it continues to import REEs from the PRC at similar levels to previous years, with more than 95% of its REEs imported from the PRC.¹⁰⁰

Taipei and Canberra could partly reduce their dependencies on the PRC through strategic supply agreements associated with critical minerals for semiconductor manufacture, including joint ventures and hosting arrangements. This would be part of a broader shift toward ‘friend-shoring’ and supply chain resilience among democracies. Australia can support Taiwan by providing critical inputs (such as gallium, silicon and REEs); hosting semiconductor packaging or testing facilities with Taiwanese partnerships; and co-investing in critical mineral processing R&D. It is possible that Taiwanese companies would be interested in such a cooperation with Australia, given its large reserves of critical minerals. Albeit recognising that Australia does not benefit from the same scale as Japan or the United States, TSMC has demonstrated a willingness to offshore its capability in these countries to maintain its market dominance and delay other countries from developing indigenous industries.

Taipei and Canberra could partly reduce their dependencies on the PRC through strategic supply agreements associated with critical minerals for semiconductor manufacture.

Australia would welcome Taiwanese investment in Australian mining companies’ mineral extraction and processing. Taiwan has historically been an investor in Australia’s resources industry, making investments in Australian coal and iron ore mines, and Taiwan is Australia’s third-largest export market for refined copper.¹⁰¹ Other like-minded governments have invested in Australian companies with positive results, like the Japanese Government’s partnership with Lynas Rare Earths. After long-term patient capital invested by Japan, Lynas has become the first company outside of China to process heavy REEs in Malaysia. Attendees noted Taiwanese investment in Australian minerals mining and processing could also be done jointly with other countries, like Japan, to pool resources and technical capabilities.

Recommendations

The Australian and Taiwanese governments should:

• Explore co-investment in one specific critical mineral supply chain, including mining and processing R&D

The rationale for Australia-Taiwan co-investment in Australian critical mineral mining and processing lies in the convergence of their respective interests: Australia has the minerals, Taiwan needs secure mineral supply chains for its technology and energy needs, and both countries are trying to diversify from Chinese supply chains. One attendee noted that while Taiwanese investment was possible, Taiwan’s economic profile is largely composed of small to medium companies; in contrast to South Korean conglomerates that have larger buying power, for example. While Taipei may have the appetite, finding the necessary capital will be challenging. Therefore, attendees noted the need to develop relevant incentives to drive investment in this area. One attendee suggested drawing lessons from the Australia-Taiwan lithium battery cathode manufacturing plant in Darwin as a template for successful commercial engagement.¹⁰²

Experts noted that Australia-Taiwan cooperation in the critical minerals to support the semiconductor industry would need to start small. Initially, cooperation could be focused on discrete projects that can be built on and built up over time. For instance, Australia and Taiwan should focus on securing one critical mineral supply chain, such as one particular REE necessary for semiconductor wafers or magnet production. Considering critical minerals are heterogeneous and have different supply chain stages, any joint Australia-Taiwan investment would require proper mapping of the chosen critical mineral supply chain.

• Explore opportunities for cooperation on R&D in recycling, batteries and emerging and strategic technologies

Lastly, some attendees suggested cooperating in R&D in recycling and batteries. If successful, recycling would have deep repercussions on the overall supply of critical minerals worldwide. This will require technical expertise for the extraction of the base minerals from products that require manufacturing, intellectual property and processing.

A cyclist in front of the logo of the Taiwan Semiconductor Manufacturing Company in Hsinchu, Taiwan. TSMC is the world’s largest dedicated independent semiconductor foundry. Source: Getty

Australia and Taiwan engagement in a multipolar Asia

Australian Foreign Minister Penny Wong has defined Australia’s primary strategic objectives in the Indo-Pacific to lie in “a region that is peaceful, stable and prosperous… where we operate by the same rules and where we have space to agree and to disagree.”¹⁰³ At the crux of these foreign policy objectives lies broad recognition that Australia’s prosperity and democracy have stemmed from the postwar global economic and security architectures. The Taiwan-Australia relationship needs to be considered in light of these objectives, and levels of engagement need to be calibrated to support Australia shaping regional dynamics in line with these enduring national interests. Such framing serves a dual purpose. First, it resists Australian policy tendencies around Taiwan to overly fixate on contingency planning or to adjust bilateral engagement according to its stabilisation policy. Second, it allows Canberra to examine its relationship with Taipei as part of a long-term and proactive foreign policy strategy seeking to influence a favourable Indo-Pacific region that is conducive to Australia’s national interests.

Engagement at the bilateral level

In the absence of diplomatic ties, successive Australian governments have sought to deepen engagement in technical areas with Taiwan since its democratisation, as attested, for example, by the flurry of Memoranda of Understanding signed between the two parties in the 1990s and 2000s to foster and institutionalise scientific and technological cooperation.¹⁰⁴ This has been backed by burgeoning people-to-people ties, as illustrated by the 70% increase in the number of Taiwan-born people in Australia between 2011 and 2021, or by the 14,500+ working holiday visas awarded to Taiwanese young people during the FY2023-2024 alone (albeit below the FY2014-2015 peak of 26,648).¹⁰⁵ Further, cultural exchanges, in particular pertaining to Indigenous Art, have flourished in recent years, accelerating under President Tsai, motivated by her indigenous heritage. Since Australia and Taiwan first hosted a Symposium on Art Exchange between their Indigenous peoples in 2009, cooperation has expanded to institutionalise periodic residence programs, artist exchanges and participation in art festivals.¹⁰⁶

Still, despite various Australian governments’ efforts in identifying opportunities to deepen engagement with Taiwan, experts remarked Australian political leaders have been reluctant to engage with Taipei on areas with a strong political connotation. Much of this cooperation is given minimal visibility and shies away from any symbolic engagement. Notably, while consistent with Australia’s One-China Policy, there have been no recorded visits by Australian ministers to Taiwan since Australian Minister for Trade and Competitiveness Dr Craig Emerson visited Taipei in 2012, and parliamentary visits to Taipei have been largely and purposefully left under the radar. Likewise, established in 1992, the Australia-Taiwan Parliamentary Friendship Group is yet to be formally recognised by the Presiding Officers of the Australian Parliament.

While consistent with Australia’s One-China Policy, there have been no recorded visits by Australian ministers to Taiwan since Australian Minister for Trade and Competitiveness Dr Craig Emerson visited Taipei in 2012.

In addition to recognising trade and investment as the primary area for meaningful cooperation, the panel of experts discussed opportunities to expand people-to-people ties in line with Canberra’s preference for civil society and industry to spearhead bilateral engagement. Of the ideas tabled, strengthening literacy about Taiwan in Australia was among the most popular. Experts conceded the loss of institutional knowledge about Taiwan to be constraining Canberra’s capability to formulate creative policies to engage with Taipei. Various suggestions were put forward — including encouraging universities and the Australian Public Service Academy to examine Taiwan as a transversal or cross-cutting theme, rather than as a case study for a potential flashpoint. This would serve to both bolster Australia’s national expertise on China and Taiwan, as well as to create a safeguard against the spread of disinformation around Australia’s One-China Policy at both public and policy levels. Similarly, one expert suggested increasing and deepening education exchanges via the Global Cooperation and Training Framework (GCTF), a platform that convenes Japan, the United States, Australia, Taiwan and Canada to share and promote Taiwanese expertise on global challenges, such as in public health or disaster relief. This would allow both Taipei and Canberra to share respective expertise, specifically in areas of common interest, such as disaster relief and public health.

A further proposal involved strengthening and developing avenues for civil society organisations (CSOs) specialised in neutralising disinformation to collaborate. Experts suggested Australia would benefit from Taiwan’s experience in countering misinformation and disinformation campaigns, including its sophisticated ecosystem of ‘factchecking’ CSOs. Lastly, a few experts suggested the Taiwanese diaspora in Australia offered an important point of entry to deepen ties at a societal level, recalling its success in furthering greater economic engagement between Queensland and Taipei. Crucially, across these proposals, experts advocated placing business and communities at the forefront of these efforts, with the Australian Government facilitating or catalysing increased societal ties.

Recommendations

• Strengthen literacy about Taiwan in Australia across Australian and sub-national governments, academia and civil society. This aims to deepen understanding of the parameters of Australia’s relationship with Taiwan, including socialising the parameters of the One-China Policy among Australian Public Service (APS), state and territory governments, as well as of the avenues for engagement to drive positive initiatives with Taiwan that serve the national interest.
  – Federal and state-level governments to fund and commission education modules on Taiwan. These modules should highlight Australia and Taiwan’s economic engagement and Taiwan’s economic importance to Australia, as well as address Taiwan’s history, democratic transition, shift towards asymmetric defence, experience of foreign interference, and its Whole-of-Society resilience initiative.
  – Federal and state-level governments to advocate for the inclusion of modules in professional development programs for APS, state and territory employees and parliamentarians, as well as in university courses focused on strategic, defence, energy and security studies.
• Support recognition of the Australia-Taiwan Friendship Group by the Presiding Officers in Australian Federal Parliament, noting that the Australia-Taiwan Friendship Group has been recognised in NSW Parliament.
• Create avenues for Australian civil society organisations to engage with counterparts in Taiwan, including in sharing efforts to counter mis- and disinformation.
• Continue to reaffirm Australia’s One-China Policy at bilateral or international fora, in concert with like-minded countries.

Engagement in Australia’s strategic neighbourhood

Australia-Taiwan engagement in Southeast Asia

Despite shared apprehension over Beijing’s expanding reach in Southeast Asia and the Pacific, Australia and Taiwan engagement within broader regional partnerships or initiatives has to date been limited, if not wholly absent. Experts were mostly of the view that synergising Australia and Taiwan’s outreach to Southeast Asia into a joint initiative or investment would prove impractical given their distinct interests in the region and differing trade portfolios. Taiwan’s engagement with Southeast Asia has largely been guided by its 2016 New Southbound Policy, which focuses on economic integration and people-to-people ties with 18 countries, including Australia. To this end, Taiwan has leveraged its advanced technology sector, investing heavily in digital industries, supply chain partnerships and education cooperation. In contrast, Australia has sought to position itself as both a long-term economic and security partner in its strategic neighbourhood. For instance, Australia’s Southeast Asia Economic Strategy to 2040 features large-scale financial commitments identifying ten priority sectors for growth, from investments in agriculture to energy, to infrastructure, as well as emphasising capacity-building for greater business and people collaboration. Yet China’s outsized economic and diplomatic influence in the region, along with the uncertainty facing Southeast Asian countries in the aftermath of President Trump’s tariffs, introduces new layers of complexity for Taipei-Canberra engagement in the region. Overwhelmingly, attendees questioned if Southeast Asia provided a strategic terrain to operationalise such engagement, though conceded triangulating trade relations between Taiwan, Japan and Australia or good governance initiatives between Taiwan, Australia and regional countries may offer more plausible pathways.

Nevertheless, despite the lack of a clear avenue for Taipei-Canberra cooperation in Southeast Asia, one of the strongest recommendations arising from the panel of experts was for Australia to bolster its regional diplomacy in the Indo-Pacific, noting its partnerships and relations to be “underdone.” Within the context of heightened cross-strait tensions, an improved diplomatic capability could provide Canberra with a stronger foothold to assume leadership to foster collective responses to grey zone activities, as well as to socialise new de-escalation tools. In Southeast Asia, experts noted the use of (un)official dialogues, cultural and digital diplomacy or economic statecraft may offer platforms to develop a common operating picture of grey zone activities. This sets the stage for Canberra, in concert with regional partners, to articulate and sketch out mutual interests, areas of vulnerability and principal threats, as well as underpinning institutional structures for potential security cooperation. In turn, this would provide the bedrock to eventually develop collective responses against grey zone activities, with experts citing models such as the Joint Expeditionary Force in Europe or the Combined Maritime Force in the Middle East as loose guidance.¹⁰⁷

In December 2021, the Japan-Taiwan Exchange Association, in partnership with Taiwan’s Ministry of Foreign Affairs, the American Institute in Taiwan and the Australian Office in Taipei co-hosted the seventh Global Cooperation and Training Framework (GCTF) Joint Committee meeting. Source: GCTF

Moreover, ASEAN’s enduring position of neutrality notwithstanding, experts noted a cross-strait conflict would likely test the grouping’s cohesion. With some 780,000 nationals from Thailand, Malaysia, the Philippines, Indonesia and Vietnam officially living in Taiwan (unofficial estimates place this figure closer to 1 million), the outbreak of a crisis would inevitably precipitate a major regional challenge and even possible casualties. Such a vulnerability offers an opening for Australian leadership to mobilise support for its crisis management agenda, especially in light of its ongoing two-year term on the UN Peacebuilding Commission, as well as to press for thresholds of risk for great power conflict to be increased. In this regard, experts noted that an information and political campaign would need to accompany the deployment of de-escalation tools and mechanisms to alter common narratives that kinetic incidents will necessarily trigger war. To this end, a few attendees proposed convening geostrategic and geoeconomic dialogues assessing the risks of a conflict spilling over into Southeast Asia, highlighting the flow-on impact on regional economies and civilian populations. Recognising the inevitable economic fallout arising from a potential contingency over the Taiwan Strait, some participants identified trade to be Canberra’s premier strategic tool for conflict management. In the immediate term, they suggested conducting a technical mapping of regional economies’ supply chains and food and energy dependencies to pinpoint vulnerabilities and pressure points. This would allow Canberra to better identify and bolster its critical inputs to be leveraged for contingency planning, prevention and de-escalation, while strengthening regional relationships.

Australia-Taiwan engagement in the South Pacific

In the South Pacific, Australia and Taiwan share a chequered history. As mentioned above, Taipei’s use of ‘dollar diplomacy’ once contributed to a perception in Canberra that Taiwan was commoditising diplomatic recognition in the region. Taipei moved away from dollar diplomacy as early as 2008 under President Ma Ying-jeou. Still, experts noted Pacific Island Countries’ (PICs) continued tendency to outsource aspects of their defence to external actors may provide a point of entry for Taipei-Canberra engagement in the region. Such engagement may be well received by PICs, provided it is perceived as sustaining the benefits of the multilateral system that helps preserve their sovereignty. Further, the South Pacific has remained a cornerstone of both Australian and Taiwanese foreign policy. For Australia, the South Pacific is considered its near abroad and its closest strategic neighbourhood. For Taiwan, the South Pacific is considered a critical global stage to assert its visibility. Three of Taiwan’s twelve diplomatic allies, Palau, the Marshall Islands and Tuvalu, are PICs; and Taipei has long participated in the Pacific Island Forum (PIF) — the region’s primary multilateral institution — as a development partner. Nevertheless, experts noted that Taipei’s loss of three diplomatic allies since 2019, its sharp decrease in Official Development Finance (ODF) spending and its exclusion from the 2025 PIF in Solomon Islands are just a few indicators exposing Beijing’s efforts to ensure its decreasing relevance in the region.¹⁰⁸

Still, China’s growing geopolitical and security footprint in the South Pacific has fostered a convergence of Canberra and Taipei’s strategic interests in the region.¹⁰⁹ In both 2020 and 2021, Australia committed to “enhancing donor coordination with Taiwan, with a focus on development assistance to Pacific Island countries” in its AUSMIN statements — both of which were welcomed by the Taiwanese Ministry of Foreign Affairs.¹¹⁰ Moreover, as members of the Austronesian Indigenous people, Indigenous Taiwanese and Torres Strait Islanders share a common cultural and linguistic heritage that is deeply connected to Southeast Asia and the Pacific. Both Taiwan and Australia have committed to reconciliation and sought to develop their indigenous diplomacy. They are cofounders of the Indigenous Peoples Economic and Trade Cooperation Arrangement (IPETCA) — the first multilateral economic forum dedicated to indigenous trade and investment — alongside Canada, New Zealand, and Australia is an observer in Taiwan’s Austronesia Forum, focused on promoting indigenous peoples and cultures. With cooperation already underway, indigenous diplomacy may offer a practical avenue for deeper bilateral and regional engagement that inherently transcends the geopolitical sensitivities and territorial limitations of statehood.

Against this background, experts had mixed views regarding actual opportunities for increased Taipei-Canberra engagement in the Pacific. On the one hand, experts warned against introducing an extra layer of geopolitical sensitivity to the inherently challenging task of delivering effective aid. They noted the practical challenges around engaging in inter-agency cooperation with a partner Australia does not formally recognise and advised instead to favour engagement focused on explicit strategic interests, such as technological cooperation. On the other hand, some experts recalled Australia’s equities and history in the region, along with Taipei and Canberra’s shared commitment to climate action and promoting First Nations’ rights may offer a real opportunity for meaningful and useful engagement. For instance, a few experts noted Taipei’s longstanding experience in delivering disaster relief would dovetail well with Canberra’s development agenda, which requires reaching 80% of its investments valued above A$3 million to include a climate objective.¹¹¹ Likewise, building on recent AUSMIN statements, attendees suggested continued investments in Track 2 dialogues may provide an opportunity to coordinate aid delivery in the region between development partners, including Taiwan and Australia, in an effort to avoid duplication of efforts, to amplify the impact of aid and foster knowledge-sharing.

Recommendations

• Resource and prioritise stronger engagement with diverse partners in the region in line with the Australian Department of Foreign Affairs and Trade document “Australia in the World — 2025 Snapshot.”¹¹² Operationalising this effort may look like:
  – Improve resourcing and staffing of the Australia Office in Taiwan commensurate with the scale and complexity of engaging with Taipei in accordance with Australia’s One-China Policy.
  – Expand and invest in Track 2 dialogues, good governance initiatives, cultural and digital diplomacy and economic statecraft opportunities. Such dialogues help elevate Australia as a leader in engaging regional partners in dialogue, research and messaging, including on the economic and societal consequences of regional conflict.
• Continue to advocate for participation of Taiwan in the PIF via joint statements calling for inclusion of development partners in leaders’ meetings.
• Leverage Australia’s conflict prevention and crisis management agenda and its two-year term on the UN Peacebuilding Commission to foster dialogue and to build regional consensus to:
  – Socialise relevant and innovative de-escalation tools throughout the region.
  – Consider pathways for de-escalation as a viable pathway forward following a kinetic incident.
  Convene dialogues focused on geostrategic and geoeconomic risks and consequences facing Southeast Asia. Such dialogues should not focus on the Taiwan Strait per se but rather highlight the broader implications of a regional contingency on economies and civilian populations.
• In the South Pacific region, build upon existing channels to deconflict and coordinate Australia and Taiwan’s aid policies, particularly in the areas of disaster relief and public health.
  – Establish communication channels beyond the government level (e.g. Taiwan’s National Fire Department) on disaster relief in areas other than the Pacific (e.g. the Philippines).
  – Recognise the GCTF as an existing channel to disseminate Taiwanese expertise in disaster relief.
• Build upon indigenous diplomacy efforts, including membership of IPETCA, to facilitate the visit of Australia’s First Nations Ambassador to Taiwan.
  

Australia’s partners’ evolving stances towards Taipei

Recent years have seen a general trend of increased cooperation between Taiwan and some of Australia’s closest and regional partners, including the United Kingdom, Canada, the Philippines and Japan. Although a comparative assessment of their engagement with Taiwan relative to that of Australia’s lies beyond the remit of this report, it has contributed to a growing sense — perceived or actual — that Australia is lagging in its relationship with Taiwan.

For the United Kingdom, increased ties, ministerial statements and strategic documents have reflected a progressive shift in London’s perception of Taiwan from an economic issue to a critical security priority amid growing PRC assertiveness and tech supply chain vulnerabilities — set against its Indo-Pacific ‘tilt’ in 2021.¹¹³ For instance, London has delivered technical assistance to Taipei to strengthen its strategic communications capability, as well as signed the 2023 Enhanced Trade Partnership arrangement agreement, the first enhanced economic and trade framework between a European country and Taiwan. In May 2025, it welcomed former President Tsai to address its Parliament.¹¹⁴ In parallel, Canada’s cooperation with Taiwan, encouraged by the “two Michaels incident”¹¹⁵ and heightened concerns of PRC political and informational warfare, has also grown. In 2023, the House of Commons’ Special Committee on the Canada-People’s Republic of China Relationship released an interim report on Canadian-Taiwanese relations, outlining over 30 recommendations for improved cross-sectoral engagement.¹¹⁶ At the time, the Taiwanese Representative to Canada stated the report marked “the most significant development in Taiwan-Canada relations since the two nations severed diplomatic ties in 1970.”¹¹⁷ Since, Canada and Taiwan have signed a Foreign Investment Promotion and Protection Arrangement (FIPA) and a Mutual Recognition Agreement on Authorized Economic Operators, endorsed a “Collaborative Framework on Supply Chains Resilience,” as well as lifted legacy trade restrictions. As a result, Taiwanese direct investment in Canada increased from US$1.6 billion to US$7.3 billion, while Canadian beef and veal exports to Taiwan rose by 26.3% from 2023 to 2024.¹¹⁸ In 2024, Canada also joined the GCTF as a full partner, while its House of Commons unanimously passed a motion, akin to that of the Australian Senate, stating UN Resolution 2758 “does not establish PRC sovereignty over Taiwan nor determine Taiwan’s future status in the UN or any international agencies.”¹¹⁹

Beyond Five Eyes countries, partners such as Japan and the Philippines have also deepened informal societal, economic and cultural ties with Taiwan in recent years. As mentioned above, in 2025, the Marcos administration in the Philippines eased travel restrictions on government officials to and from Taiwan with a view of fostering trade and economic ties. The decision opened the door for Taiwanese Foreign Minister Lin Chia-lung’s visit to Manila in August 2025 as the head of a trade delegation amid ongoing efforts by Taipei to link the Taiwan-Philippines Economic Corridor with the US-Japan-Philippines-backed Luzon Economic Corridor (LEC).¹²⁰ This builds on existing attempts to bolster bilateral economic cooperation in strategic industries, such as smart agriculture, maritime infrastructure, energy and semiconductors, accelerated under Taiwan’s New Southbound Policy and notably marked by the presence of nine Taiwanese banks in the Philippines. Meanwhile, the authorisation of visa-free access for Filipinos to Taiwan has dramatically driven up tourism, strengthening people-to-people ties. Filipinos are now Taiwan’s top Southeast Asian tourists, with 476,700 visitors recorded in 2024; triple the number from a decade earlier.¹²¹

Japan and Taiwan have long shared a robust, albeit unofficial, relationship characterised by strong trade relations and deep cultural affinity. Economically, Taiwan ranks as Japan’s fourth largest trading partner, whereas Japan ranks as Taiwan’s third, along with its fourth largest source of foreign investment.¹²² At a societal level, polling consistently reflects mutual affection — parallel surveys conducted in Japan and Taiwan in 2023 found around 75% of respondents “felt close to each other” and viewed bilateral relations positively.¹²³ In 2011, in the wake of the Fukushima nuclear disaster, Taiwanese donations to Japan surpassed US$230 million — the largest contribution provided by any country — while Japan increased its imports of Taiwanese pineapples eight-fold following a 2021 PRC ban; further attesting to political and popular solidarity.¹²⁴ More recently, in response to Beijing’s reprisals against Tokyo over Prime Minister Sanae Takaichi’s characterisation of a PRC attack on Taiwan as a “survival-threatening situation,” President Lai urged the Taiwanese population to increase travel to Japan and their consumption of Japanese products.¹²⁵

From a political standpoint, starting in 2016, the Japanese Government broke its longstanding precedent by publicly congratulating President Tsai Ing-wen following both of her election wins, as well as rebranding its office in Taipei from the ambiguous ‘interchange association’ to ‘Japan-Taiwan Exchange Association’. In 2021, Japan released its Defence White Paper, explicitly recognising the fate of Taiwan as intertwined with its national interest, stating “stabilising the situation around Taiwan is important for Japan’s security and the stability of the international community.”¹²⁶ This both spurred and echoed Japanese support for Taipei’s participation in the CPTPP and its periodic engagement in trilateral strategic forums for parliamentarians alongside lawmakers from Taiwan and the United States. In recent months, Japan’s outreach towards Taiwan has visibly accelerated. In August 2025, Taiwanese Foreign Minister Lin Chia-lung disclosed his visit to Japan, confirming a broader uptick in senior-official and political exchanges. That same month, Japan and Taiwan signed a Memorandum of Understanding on immigration to reportedly coordinate information-sharing on foreign nationals travelling from Taiwan to Japan, with the view of facilitating contingency evacuation planning and mitigating espionage risks.¹²⁷ Lastly, in November 2025, newly elected Prime Minister Takaichi met with Taiwanese presidential adviser and former vice premier, Lin Hsin-i, on the sidelines of the Asia-Pacific Economic Cooperation summit.¹²⁸

Together, these various developments attest to Five Eyes and regional countries’ refusal to shy away from constructive engagement with Taiwan, despite risks of reprisals from Beijing.

Together, these various developments attest to Five Eyes and regional countries’ refusal to shy away from constructive engagement with Taiwan, despite risks of reprisals from Beijing. They reflect a cost-benefit assessment by the respective governments that finds that engagement with Taiwan benefits both their outreach in the Indo-Pacific region and their national interests. In this sense, their increased engagement across multiple domains highlights opportunities for countries to demonstrate resolve and capability to oppose any unilateral changes to the status quo via integrated statecraft amid heightened PRC political and military pressure. For Australia, this creates opportunity. As a middle power, Australia has historically preferred to act in concert with like-minded partners on the international stage. In addition to mitigating risks of unilateral exposure, this amplifies its influence and projects a sense of stability and credibility in its immediate neighbourhood. In the case of Taiwan, Canberra could benefit from coordinating its outreach to Taipei with other Five Eyes countries or regional partners to support economic openness and the rule of law in the region. This ‘safety in numbers’ approach would also provide a measure of strategic cushioning against potential PRC retaliation without diminishing intended and potent policy outcomes.

Recommendations

• Identify opportunities to combine Australian initiatives with Taiwan, Japan, the United Kingdom and the Philippines that serve Australian interests.

Engagement at the multilateral level

Under its One-China Policy, Canberra’s longstanding position has been to support Taiwan’s accession to multilateral architectures or regional groupings where statehood is not a prerequisite, and to support its participation as an observer where it is. Recently, Canberra has multiplied its statements of support, largely issued in concert with like-minded countries, in light of Beijing’s determined obstruction of Taiwan’s participation in international organisations. Amid escalating disinformation campaigns by Beijing to portray Taiwan’s participation in international organisations as ‘illegal’ or ‘destabilising’, the Australian Government has also recently issued multiple statements to clarify and reinforce its One-China policy. In response to Beijing’s systematic conflation of the 1971 UNGA Resolution 2758 with its One-China Principle, the Australian Senate unanimously passed a motion repudiating the PRC’s position that Resolution 2758 settles its claims to sovereignty over Taiwan.¹²⁹

In May 2025, the Australian Office in Taipei, jointly with France, the United Kingdom, Japan, Germany, Lithuania and Czech Republic, issued a statement reiterating its support for Taiwan’s participation in the World Health Organisation (WHO) as well as its observer status in the World Health Assembly (WHA).¹³⁰ More recently, Australian Foreign Minister Penny Wong committed Australia to supporting Taiwan’s meaningful participation or observer status in international organisations in the July 2025 AUKMIN (Australia-UK Ministerial Consultations) statement.¹³¹

Most experts upheld the view that engagement with Taipei in multilateral settings remained congruent with Australia’s strategic interest in preserving an international order based on rules.

At the workshops, experts largely encouraged Canberra to translate this policy stance by opening negotiations to discuss Taiwan’s membership to the CPTPP, not least because it benefits Australian interests to include another market-led export-oriented economy.¹³² A couple of attendees further built on this argument and considered the establishment of a trade agreement between the European Union and CPTPP — sheltered from strategic competition between the PRC and the United States — as offering increased terrain for Taipei-Canberra ties as well as significant guardrails against the dismantling of the liberal economic order. Likewise, some experts flagged that the use of multilateral platforms for global agenda-setting or for catalysing coordinated efforts has become increasingly uncertain amid continued delays and gridlocks and President Trump’s repeated attacks on multilateral mechanisms and withdrawal from UN bodies. Nevertheless, most experts upheld the view that engagement with Taipei in multilateral settings remained congruent with Australia’s strategic interest in preserving an international order based on rules. Conceding multilateralism to be imperfect, some experts asserted that minilateralism may be a stronger path forward, providing engagement that addresses specific areas of common interest, citing indigenous diplomacy, technology, public health or nuclear non-proliferation as examples.

Recommendations

• Continue to advocate for Taiwan’s membership in international groupings where statehood is not a prerequisite, as well as a guest or observer status in multilateral platforms where statehood is required.
  – Issue joint statements with other like-minded countries and partners.
  – Publicly reiterate that support for Taiwan’s participation serves and benefits Australia’s national interest and is consistent with Australia’s One-China policy.

Defence and security ties between Taiwan and Australia

The most delicate area of Taiwan-Australia relations is that of defence and security. This is not a matter of the lack of dedicated military-to-military ties, but rather an outcome of the long-standing political tension that exists at the heart of the Taiwan-PRC relationship, the declared strategic ambiguity of the United States and key regional states, the regional geo-strategic balance and Taiwan’s desire for the status quo. In her 2023 address to the National Press Club on Australian interests in a regional balance of power, Foreign Minister Penny Wong summarised the Taiwan question as follows:

“Let me be absolutely clear. A war over Taiwan would be catastrophic for all. We know that there would be no real winners, and we know maintaining the status quo is comprehensively superior to any alternative. It will be challenging, requiring both reassurance and deterrence, but it is the proposition most capable of averting conflict and enabling the region to live in peace and prosperity.”¹³³

Because any conflict over the Taiwan Strait would draw in major powers, both the Australian discourse — and that of the broader region — typically centres on the likelihood and scope for such a conflict. In Australia, this one-dimensional debate fails to recognise that securing a favourable outcome for Australia on Taiwan hinges on its capacity to navigate geopolitical tensions in East Asia in multiple ways, standing firm on core interests and principles as well as deterring and avoiding conflict.

Redlines, deterrence and the potential use of force over Taiwan

An assessment of the scope for Australia-Taiwan defence and security ties begins with the Taiwan flashpoint, with at its crux, Xi’s campaign to secure control over Taiwan through means other than the use of force. While the PRC may prepare, strategise and procure for war, a military invasion of Taiwan remains the least favourable outcome in the view of the PRC. Instead, a seemingly more likely scenario is for the PRC to secure unification via “a PRC coercion campaign that remains far short of invasion but nevertheless brings Taiwan under Beijing’s control,” involving aggressive legal, economic and diplomatic measures to both isolate Taipei and force integration.¹³⁴

Nonetheless, these measures to enforce ‘reunification’ are underpinned by the PLA’s unprecedented modernisation across all domains, couched in its aim to become a “world-class military by 2049” and Xi’s sights on 2027 as a milestone for the PLA to be militarily capable and modern.¹³⁵ If non-kinetic coercive and intimidation tactics were to fail, the panel of experts conceded the PLA’s sustained development of its planning and capabilities provide the CCP with credible military options regarding Taiwan. Xi has made plain that Beijing “reserves the option of taking all necessary means.”¹³⁶ During panel discussions, experts further identified four potential red lines that would compel the PRC to launch large-scale military action — including the use of the island as a foreign troop encampment, a declaration of independence by Taipei, indefinite delays in cross-strait dialogue and the acquisition of nuclear weapons by Taiwan.

Nonetheless, the use of force remains the least preferable option for Beijing, with discussions reflecting four strategic realities serving as enduring deterrents for large-scale military action:

1. The United States and allies’ policies of strategic ambiguity require Beijing to at least plan for their military involvement in the event of a contingency.
2. The current military balance between the United States and the PLA, compounded by the complexity of conducting an opposed amphibious assault, precludes the PRC from securing a guaranteed rapid victory across the Taiwan Strait.
3. Europe, Japan, Australia and other power centres’ geopolitical posture suggest a disposition to impose coordinated and collective economic, political and operational costs against Beijing.
4. Beijing may anticipate resilience and resolve of the Taiwanese people to resist a PRC invasion.

Some experts assessed recent lessons from contemporary international events, specifically the Ukraine conflict’s unexpectedly protracted course, as contributing to Beijing’s reluctance to ignite an open conflict. Likewise, others identified questions around the anticipated economic fallout on the PRC and the Chinese population’s capacity to endure pain over a sustained period of time as casting doubt about the PLA’s capacity to secure a decisive victory.¹³⁷

In November 2025, Taiwan handed out a civil defence booklet to millions of households with advice on what to do during disasters and how to respond to “enemy activity.”Source: Getty

Expanding PRC military coercion

This rationale forms the backdrop for a PLA posture backed by increasingly military coercive efforts in the waters and airspace surrounding Taiwan. Its heightened presence and activity around the island have fuelled speculation among the international community that the PRC is rehearsing scenarios akin to a blockade or a quarantine to seize control of Taiwan — or at the very least, isolate it diplomatically.

With both a conventional assault and a blockade more likely to escalate into open conflict, experts found that a quarantine has emerged as Xi’s leading alternative — entailing the declaration of Taiwan under Beijing’s authority for customs purposes and, thus, under its jurisdiction. In such a scenario, Beijing would likely leverage its Coast Guard as well as its ongoing and parallel international efforts to delegitimise the island to minimise international backlash. Notably, the use of its Coast Guard would allow Beijing to frame its actions as domestic law enforcement. In such a context, the quarantine would be cast as an internal customs matter, discouraging countries that adhere to the One-China Principle from raising objections. Both recent drills around Taiwan, along with the growing militarisation of the CGC, suggest such a scenario is increasingly plausible. In recent years, Taiwanese authorities have reported joint operations between the CGC and the PLA’s Eastern Command Theatre, CGC’s sharing of real-time locations to facilitate PLA offensive operations, as well as a hike in the frequency of CGC vessels crossing the median line.¹³⁸

Since 2022, the frequency and scope of PLA military exercises around Taiwan, along with the number of PLA incursions across the Strait’s median, have increased dramatically.¹³⁹ In January 2025, the Ministry of Defence of Taiwan reported 248 PLA sorties, up from 141 recorded in January 2022, with aircraft notably increasingly crossing the Bashi Channel into the Western Pacific.¹⁴⁰ Further, according to the Research Project on China’s Defense Affairs (RCDA), in 2023, PLAN deployed five to nine of its vessels around Taiwan during 168 days (46% of the yearly total), and ten or more vessels over 24 days (6.6%).¹⁴¹ In 2024 RCDA tracked five to nine vessels deployed over 177 days (74.7%) and ten or more vessels deployed over 26 days (11%).¹⁴² This rise in military activity has corresponded with a change in the patterns of these presence operations. While the PLA and CCG historically only crossed the Taiwan Strait in the summer (when the sea is calm), they began to extend their stays around the island following Speaker Nancy Pelosi’s 2022 visit.

Beyond daily incursions or military presence, the PLA has conducted a series of major military exercises around Taiwan since 2022, including a first exercise following Speaker Pelosi’s visit, Joint Sword 2023 in April 2023, Joint Sword 2024A in May 2024, Joint Sword 2024B in October 2024, Strait Thunder‑2025A in April 2025 as well as Justice Mission in December 2025 — each of which reflected the PLA’s growing capability to conduct multi-domain combat operations. Crucially, these exercises, progressively resembling naval and air blockades around Taiwan, have exacerbated concerns of the use of a quarantine or blockade to seize the island. For instance, Exercise Joint Sword 2024B involved PLA vessels “encircling the entire island” — backed by the deployment of 153 aircraft, 111 of which crossed the median line, as well as the direct involvement of the CCG.¹⁴³ This remains the “most recorded [PLA incursions] in a single day” by Taiwanese authorities, marked by an increase in “the CCG’s contribution to 17 vessels from 9 [from Joint Sword 2024A].”¹⁴⁴ Likewise, Justice Mission 2025 involved large-scale military exercises simulating a blockade of Taiwan’s major port cities, with the deployment of the CCG, PLAN amphibious ships and PLA aircraft prominently featured.¹⁴⁵ While Justice Mission fits into the broader, ongoing pattern of PRC rehearsal exercises for a blockade of Taiwan, analysts have singled out various elements bearing strategic importance. First, exercises were conducted closer to Taiwan’s coastline than during previous PLA military exercises, penetrating the island’s contiguous zone.¹⁴⁶ Second, they clearly targeted Taiwanese energy imports, demonstrating the PLA’s capability to isolate the island. Third, PRC propaganda suggests Justice Mission was not only intended to intimidate Taiwan, but conducted in response to the US arms sales to Taiwan in mid-December and to deter Japan from supporting Taiwan in a potential conflict.¹⁴⁷ Fourth, despite PRC propaganda’s emphasis on Justice Mission’s aim to simulate a blockade, analysts suggest it also included exercises relevant to an amphibious invasion of Taiwan.¹⁴⁸ Fifth, and lastly, this was followed by the unprecedented deployment of a military reconnaissance drone into Taiwanese airspace less than a month later.¹⁴⁹

Analysts identify three trends characterising the PRC’s logic in exploiting grey zone tactics and controlled escalation management to project power,¹⁵⁰ including:

• Attempts to normalise military activities by the PLAN and the CCG around Taiwan.
• More complex exercises involving joint combat capabilities, including air, maritime and land forces.
• The surge in propaganda in support of these exercises through the release of clips and information. These highlight such exercises ‘legality’ based on the non-interference principle in the 1949 UN Draft Declaration on Rights and Duties of States, as well as Chinese domestic laws (e.g. Anti-Secession Laws).

Normalising a ‘new’ status-quo

The year 2025 saw the PRC build on the new ‘status quo’ they are attempting to normalise around Taiwan. During the April Strait Thunder-2025A drills alone, the PLA deployed 135 aircraft and 38 vessels over two days.¹⁵¹

Various analysts have noted that these drills — marking the third major “encirclement exercise around Taiwan” since the election of President Lai — carry three important military implications for the security of Taiwan.¹⁵² First, its scale and focus signal the PRC’s implementation of a dual-layer ‘Cabbage Strategy’, entailing the deployment of PLA assets to focus on chokepoints around Taiwan, in which “an inner circle of maritime militia, coast guard, and naval forces surrounds Taiwan while a separate outer circle harasses foreign military forces.”¹⁵³ Second, unlike the Joint Sword Exercises, Strait Thunder-2025A was not conducted in response to a political event or development in Taiwan. This suggests such blockade drills have become systematised and routine — a “standardized series that are now a part of the PRC’s coercion toolkit for it to use at will.” Third, Strait Thunder-2025A exposes the PLA’s three-phase operational plan against Taiwan, involving “joint combat readiness patrols,” “strikes against sea and land targets and achieving overall battlefield dominance,” and lastly “manoeuvres that simulate expelling, intercepting, and detaining ships bound for or departing Taiwan.”¹⁵⁴ This three-point plan reveals a clear sequence of military actions to encircle Taiwan with a dual purpose — at once isolating the island and denying the US Fifth Fleet access to the Strait in the event of a contingency. This encirclement includes denying routes originating from Japan in the East China Sea, Guam in the West Pacific Ocean, Australia in the South Pacific Ocean, and US transits from the Middle East via the Indian Ocean.¹⁵⁵

The PLA has increasingly synchronised its coercion and intimidation efforts around Taiwan with other military exercises and drills in the Indo-Pacific, as evidenced by the simultaneous drills in the Gulf of Tonkin, the Tasman Sea and around Taiwan in late February to early March 2025 or around Taiwan and the East China Sea in April 2025. Aside from demonstrating growing PLA capability, sophistication and confidence to conduct sustained, multi-domain, multi-location operations, the emergence of the PLA’s ‘one-theatre’ approach is deliberately targeted at fracturing cohesion between the United States and its allies and partners. Beijing’s capability to exert military pressure in multiple areas divides allies’ attention, assets and logistics — driving uncertainty around US capacity to commit sufficient forces across the region, exploiting potential gaps in political will, as well as diluting allied posture. For Australia, a key ally of the United States, this campaign has important implications. Aside from signalling Beijing’s readiness to apply pressure beyond the Taiwan Strait, it reflects PLA thinking that any Taiwan contingency would necessarily require it to deny the United States access to its allies’ geography. At a minimum, this suggests PLA planning does not view Australia as a disinterested party in the event of a conflict.

This escalation in military activities further feeds into a wider PRC campaign of grey zone activities, including cyber-attacks, repeated attacks on undersea infrastructure, election interference and ongoing disinformation actions. A key element of this effort has been the rising use of PRC state-sponsored proxies to target Taiwanese officials. In 2024, Taiwanese courts reported a surge in espionage cases charging 64 individuals — outstripping the number of cases from the previous two years combined — two-thirds of which had military backgrounds.¹⁵⁶ Together, these activities seek to exhaust Taiwanese defences without crossing the threshold for direct kinetic conflict, contributing to the normalisation of Chinese coercion and the progressive erosion of Taiwanese institutions and resolve.

These activities seek to exhaust Taiwanese defences without crossing the threshold for direct kinetic conflict, contributing to the normalisation of Chinese coercion and the progressive erosion of Taiwanese institutions and resolve.

In response, in March 2025, President Lai invoked the Anti-Infiltration Act and labelled China as an “external hostile force.” Albeit refraining from formally designating China a hostile foreign state, this statement provided Taiwanese law enforcement with the authority to monitor, sanction and limit activities by entities deemed ‘hostile’. This statement was coupled with President Lai’s announcement to reinstate the military court system, a legacy from the era of martial law, to “handle criminal cases involving active‑duty military personnel accused of treason, aiding the enemy, leaking classified information, dereliction of duty, insubordination and other military offences.”¹⁵⁷ Conspicuously, these announcements coincided with the 20th anniversary of the PRC Anti-Secession Law.

Taiwan has also increased the scope and scale of its annual military exercises in response to PRC intimidation and coercion. In July 2025, Taiwan held the largest and longest military drill since 1984, mobilising a record number of 22,000 reservist troops — reportedly accounting for a 50% increase over the previous year.¹⁵⁸ These drills involved an initial phase focused on responding to PRC grey zone tactics, followed by full-spectrum combat readiness, incorporating joint anti-landing operations, coastal and beachhead defence manoeuvres, layered territorial defence and simulations of protracted warfare. In line with President Lai’s Whole-of-Society Defence Resilience signature initiative, these drills further integrated urban resilience exercises involving civilian participation, including air-raid drills, evacuation exercises in public venues and a simulated mass-casualty response exercise.¹⁵⁹

These expanded military exercises have been accompanied by successive DPP governments’ efforts to increase defence spending and to enhance military readiness. During her tenure (2016-2024), President Tsai’s administration pushed through seven consecutive increases to the defence budget, nearly doubling Taiwan’s defence spending.¹⁶⁰ Her administration further extended compulsory military services from four months to a year, directed a focused investment in the island’s industrial base and its indigenous defence industry (including submarine manufacturing), as well as improved the preparedness of reserve forces, integrating them in the wider defence forces.¹⁶¹

Both these reforms and increases in defence spending support a long overdue shift in Taiwan’s military posture towards asymmetric capabilities, formally endorsed in the island’s 2017 Quadrennial Defense Review¹⁶² and reiterated in subsequent quadrennial defence reviews. These documents laid the groundwork for Taiwan’s enduring ‘erosion strategy’, aimed at achieving “Resolute Defence, Multi-domain Deterrence” (RDMD) and anchored in the Overall Defence Concept (ODC).¹⁶³ First developed by Admiral Lee Hsi-min, Chief of the General Staff of Taiwan Armed Forces from 2017 to 2019, this concept articulates a “holistically integrated strategy for guiding Taiwan’s military force development and joint operations, emphasising Taiwan’s existing natural advantages, civilian infrastructure and asymmetrical warfare capabilities.”¹⁶⁴ Central to ODC is its shift away from traditional attrition warfare and its redefinition of the concept of “winning” within the context of the Taiwan Strait to “foiling the PLA’s mission of successfully invading and exerting political control over Taiwan.”¹⁶⁵

Taiwan’s “erosion” strategy has been encouraged by US administrations across the aisle, spurring Taiwan to invest in “small, distributable, and relatively inexpensive weapons systems” to delay or complicate PRC planning of an amphibious invasion.¹⁶⁶ While both President Tsai and President Lai’s administrations largely embraced this strategy, its implementation has required a major cultural shift within the Taiwanese military, whose traditionally conservative and pro-KMT leadership, shaped by the legacy of the Chinese Civil War, has advocated investment in conventional capabilities.¹⁶⁷

Taiwanese President Lai Ching-te during a visit to a military base in Kaohsiung, Taiwan, in May 2025.Source: Getty

Taiwan’s defence strategy and posture under President Lai

President Lai has largely mirrored the defence policies instigated by his predecessor, maintaining and reinforcing an asymmetric defence strategy and committing to increasing Taiwan’s defence budget. Since assuming office in January 2024, President Lai has pledged that defence spending will reach more than 3.32% of GDP by 2026, and 5% by 2030 — in contrast to 2.4% in 2025.¹⁶⁸ Yet, his efforts have been thwarted by an opposition-controlled legislature, which has exercised its powers to cut NT$8.4 billion (A$394.8 million) and freeze NT$90 billion (A$4.23 billion) of the defence budget in 2025.¹⁶⁹

Meanwhile, the 2025 Quadrennial Defence Review (QDR)¹⁷⁰ reaffirmed Taiwan’s defence posture of “resolute defense and multi-domain deterrence,” supported by enhanced international cooperation, specifically increased capacity-building, military exchanges and intelligence sharing with the United States and partners, and prioritising the adoption of off-the-shelf solutions to improve readiness and cost-effective capability development. Like all strategies, President Lai’s agenda is not without its difficulties. It faces ongoing leadership and cultural headwinds around the move to an asymmetric approach, retention and morale in the armed forces and bureaucratic inertia.¹⁷¹ Other criticisms include a lack of clear prioritisation and transparency.¹⁷²

Crucially, the QDR cements President Lai’s flagship “Whole-of-Society Defense Resilience Committee,” aiming to strengthen overall resilience and civilian resolve. Amid growing PRC threats against Taiwan’s essential public services and infrastructure, Taiwan’s resilience agenda seeks to address vulnerabilities facing its undersea cables, information technology systems, and water and energy networks. It further extends to addressing perceived increased levels of PRC infiltration into a range of areas of Taiwanese society, exposing the island’s public infrastructure and business operating environment.

Opportunities and limits for Australia and Taiwan defence and security cooperation

For decades, Australia has been in the grips of a myopic debate over the security risks involving Taiwan fixated on the possibility of Australian involvement in the event of a Taiwan contingency. This has been the result of the inherent risks of conflict over Taiwan and its centrality to Asia’s security, married with domestic media sensationalism, the perceived missteps of former political leaders and a national tendency to conflate regional security issues with Australia’s immediate security.

Such discourse has been amplified by a loud but minority view of anti-US and alliance critics who perceive ANZUS primarily as a trigger to ensnare Australia in potential regional entanglements. This has resulted in a stunted debate, both politically and publicly, on Australian-Taiwan relations, which fails to consider Taipei’s role in regional security or the interests and equities of Australia and its allies and partners over the Taiwan Strait.

Rightfully, the Albanese government has rejected this debate. As Foreign Minister Penny Wong has noted, “It is the most dangerous of parlour games.”¹⁷³ This is not to suggest that hypotheticals should be excluded from policy conversations, but rather that such conversations should not be captured by one overriding position, above of all when such a position is far less about Taiwan, and more about using Taiwan as a stalking horse for a debate about entrapment and abandonment issues in the US-Australia alliance.

Such conversations should not be captured by one overriding position, above of all when such a position is far less about Taiwan, and more about using Taiwan as a stalking horse for a debate about entrapment and abandonment issues in the US-Australia alliance.

Instead, a more constructive avenue for public engagement is to foreground the far-reaching economic, societal and regional consequences of a potential conflict over Taiwan. Such framing would enable the Australian Government to highlight the imperative for Australia to craft an integrated policy approach aligned with like-minded states and that serves its strategic objectives: reinforcing deterrence, sustaining a regional balance and preserving the status quo over the Taiwan Strait. After all, the Australian Government’s strategy of deterrence by denial is at its core a ‘status quo strategy’.

Despite its enduring caution towards Taipei, Australia has displayed some efforts at signalling, actions consistent with supporting the status quo. In September 2025, Australian guided-missile destroyer HMAS Brisbane transited through the Taiwan Strait, alongside a Canadian frigate.¹⁷⁴ This followed the transit of HMAS Toowoomba in November 2023 and of HMAS Sydney in September 2024 through the Strait. In addition, while there is no direct military cooperation, civilian defence exchanges between Taiwan and Australia have increased in recent years, with Taipei welcoming improved intelligence and cyber cooperation and Canberra appointing a civilian defence official to the Australian Office in Taipei as of 2020.¹⁷⁵ Moving forward, the panel of experts of this Australia-Taiwan research project advocated for greater and clearer communication channels between Taipei and Canberra, noting the inevitable backlogs created by channelling communications via DFAT and the importance of effective points of entry for informal ties to flourish effectively. Further, most experts advocated for the appointment of a de facto defence attaché in Taipei and Canberra, drawing on similar approaches adopted by Japan, the United Kingdom, the Philippines and the United States. That said, a few experts cautioned this would signal Australia’s readiness to establish a defence relationship. Suggestions for more conservative alternatives included appointing an analyst from the Office of National Intelligence or the Australian Signals Directorate to catalyse people-to-people intelligence networks or embedding a Taiwanese academic, close to the Defence establishment, within an independent Australian institute or think tank.

Furthermore, most of the members on the panel of experts urged Canberra to synergise its signalling with like-minded and regional partners’ defence and security engagement with Taipei. Since 2021, US-Taiwan cooperation has expanded — or at the very least has become increasingly systematised and visible — as notably highlighted by the recent announcement of the US$11.1 billion arms package to Taiwan. Furthermore, while still not widely publicised, both US and Taiwan authorities have confirmed that the Pentagon has been delivering capacity-building to the Taiwanese military through the International Military Education and Training (IMET) program since 2023, as well as through military education and training in the United States and participation, including participation in military exercises.¹⁷⁶ In addition, in 2025, a retired senior US official confirmed the presence of over 500 US military personnel on the island, over ten times the previously reported figure,¹⁷⁷ reflecting a shift in US security and military engagement with Taiwan from ad hoc support to sustained, institutionalised and publicly acknowledged cooperation.

In parallel, despite an absence of diplomatic ties, other regional countries have sustained security and defence cooperation with Taiwan. Though carefully and deliberately maintaining neutrality, Singapore still rotates thousands of troops annually through Taiwan for capacity building purposes as part of the ‘Project Starlight’ arrangement. Established in 1975, this pragmatic, strategic military partnership provides Singapore with access to space to conduct large-scale military training and war simulations. Meanwhile, the Philippines has been quietly deepening its security cooperation with Taiwan, as both islands face increased pressure from Beijing’s grey zone activities. In 2025 alone, Manila and Taipei reportedly conducted joint coast guard patrols through the Bashi Channel and facilitated high-level exchanges between academics and military experts. In July, Taipei reportedly also sent observers to a US-Philippines-Japan joint exercise, known as Kamandag, in the Batanes islands, prompting a PRC spokesperson to claim that the Philippines had “tied itself to the US war chariot, and become a co-conspirator in destabilizing the region.”¹⁷⁸

In recent years, Japan’s increasingly overt outreach towards Taiwan has mirrored growing recognition that peace and stability across the Taiwan Strait are central to its security and national defence. In December 2021, the late Prime Minister Shinzo Abe declared “A Taiwan emergency is a Japanese emergency and therefore an emergency for the US-Japan Alliance.”¹⁷⁹ This followed the release of both the 2021 Japanese Defence White Paper and the US-Japan Summit Statement, which notably included “peace and stability across the Taiwan Strait” as a priority for the US-Japan alliance — the first reference to Taiwan in a leaders’ meeting since 1969. In 2022, the Japanese National Security Strategy recognised Taiwan as “an extremely important partner and precious friend of Japan, with whom Japan shares fundamental values” — a marked shift in tone from earlier strategies, which referred to Taiwan as an “important partner.”¹⁸⁰

While Japan continues to avoid formal military cooperation with Taiwan, it appointed a serving government official as the de facto defence attaché to Taipei in 2023, conducted joint Coast Guard patrols in 2023 and 2025 respectively, and deployed a Japan Self-Defense Forces vessel through the Taiwan Strait in 2024.¹⁸¹ Prime Minister Takaichi’s announcement before Parliament that an attack on Taiwan would classify as “a situation threatening Japan’s survival” reaffirmed a strategic position that Taiwan’s security is inherently linked to that of Japan’s. Admittedly skirting the boundaries of strategic ambiguity, her remarks are consistent with Japan’s 2015 reinterpretation of Article Nine of its Constitution, which expanded the conditions for collective self-defence to include the provision of aid to an ally under attack. Beijing’s ensuing backlash against Tokyo, including its economic retaliation, has not only illustrated the risks of making support for Taiwan too visible, but also the increased readiness of Australia’s closest regional security partner to weather retaliation in defence of its interests.

For Australia, projecting its posture in the Taiwan Strait effectively requires a delicate balancing act vis-à-vis the PRC in a policy environment that is far from risk-free. Conversely, Australia should not self-deter on Taiwan policy. The desire for stability with the PRC must be offset by carefully calibrated policy stances that assert Australia’s strategic interests. Nonetheless, these instances of diplomatic posturing must reflect a long-term, deep commitment to the status quo and deterrence, providing the basis for Australia’s defence and security engagement with Taipei. Here, there is much to be learned from key Five Eyes partners’ engagement with Taiwan, or key regional partners such as Japan and the Philippines.

Australia’s policy position on the status quo is clear. Its policy positions now need to be as clear in support of that position. Deterrence is neither cost-free nor risk-free. As former Prime Minister Bob Hawke noted in 1984, “Australians cannot claim the full protection of nuclear deterrence without being willing to make some contribution to its effectiveness.”¹⁸²

The policy recommendations below are aimed at expanding Australia’s narrow debate on Taiwan and positioning the country as a more actively engaged and strategically responsible actor in the region. They are based on the need to reframe Australia’s position in a nuanced and sophisticated manner consistent with its policy principles and national strategy. They call for increased focus on civil preparedness and national resilience, identifying and responding to grey zone activities against Taiwan, engaging in civil preparedness and developing effective deterrence in the region.

Recommendations¹⁸³

Engagement at the national level

• Accelerate a national conversation around Taiwan focused on the implications of Sino-US strategic competition, the PLA’s conventional and nuclear modernisation and a Taiwan contingency; and the impacts of various scenarios.
• Strengthen the Australian Government’s understanding of the Australian community’s perspectives regarding Taiwan and PRC military coercion, including the views of younger Australian generations.
• Continue to highlight grey zone activities and support statements condemning actions in concert with allies and partners.
• Operationalise Australia’s whole-of-government approach to deterrence and encourage cross-agency conversation around regional contingencies, including engagement with Australian states and territories.
  – Organise a high-level closed-door meeting involving different agencies to discuss contingencies.
• Conduct inter-agency contingency planning that:
  – Accounts for US leadership and decision-making in the event of a crisis.
  – Accounts for a US limited engagement.
  – Accounts for the views of critical partners in the region, including Japan, the Philippines and South Korea
  – Accounts for PLA modernisation and capacity.
• Consider bilateral engagement to focus on supporting Taiwan’s resilience and operationalising its erosion strategy.
• Increase capacity-building to both Australian military personnel and public service employees in areas such as joint operations planning, cyber and space capabilities, strategic and military studies and intelligence analysis.
  – Invite Taiwanese military officials to Track 2 conferences.
• Provide logistical and material support around dual-use technology to Taiwan’s military in close concert with the United Kingdom, Canada and the United States.
• Consider appointment of a de facto defence attaché consistent with arrangements adopted by Canada, the United Kingdom, the Philippines and the United States, all of whom consider this as consistent with their individual One-China Policies.
• Consider removing policy direction that prevents TECO from reaching out to Defence without first engaging via DFAT, if appointment of a Taiwanese defence attaché in Canberra is unpalatable.

Engagement with the region

• Conduct a technical mapping of regional economies’ energy and food security dependencies to identify vulnerabilities and pressure points in the event of a contingency, as well as opportunities for Australian leadership to manage a crisis.
  – Sustain coordinated planning with like-minded countries on potential supply chain disruptions, building upon existing work conducted by the Maritime Trade Office, for example.
• Work with European partners to strengthen security, recognising alignment with the European Union would be critical to impose effective sanctions against China in the event of a contingency.

Concluding remarks

In Australia, the use of caution as the default framework for engagement with Taipei, along with our longstanding reductionist debate, has fundamentally hampered any crafting of a sophisticated long-term policy position on Taiwan. Critical issues such as regional trade, cybersecurity, democratic governance, foreign interference, and trade and economic dependency in and around Taiwan have been largely overlooked, and consideration of our allies’ and partners’ strategic imperatives has been omitted.

This is inconsistent with Australia’s declared policy of preserving the status quo, of maintaining deterrence and contributing to the strategic balance. A new public and policy debate is needed on Taiwan — one that extends beyond a narrow hypothetical about a near-term invasion and considers the medium- and long-term implications of PRC hegemony. Framing for this debate should draw from the strategic interests outlined in Senator Penny Wong’s Foreign Minister’s 2023 speech on Australia’s engagement in the region¹⁸⁴ — recognising the contours, scope and constraints of Australia’s One-China Policy should ultimately serve national strategic, diplomatic and defence efforts to shape a favourable regional balance of power.

Acknowledgements, co-chairs and panel of experts

Acknowledgements

The United States Studies Centre and the authors wish to sincerely thank the experts who generously lent their expertise and time to this project over the course of 2025. Their significant and continued investment attests to the importance of this issue for Australian foreign policy and the need for candid, respectful and robust debate to continuously refine and improve our policy settings. The authors are grateful to Rowan Callick OBE and Richard McGregor for developing the Taiwan factsheet, which appears in the appendix of this report.

All opinions herein should be understood to be solely those of the authors. No government officials were involved in either the workshops or the preparation of this report.

This report was made possible with the generous support of the Taipei Economic and Cultural Office (TECO) in Canberra.

Co-chairs

• Professor Peter Dean, Senior Defence Adviser, United States Studies Centre
• Professor Bec Strating, Director, La Trobe Centre for Global Security

Panel of experts

All members of the panel of experts participated in an individual capacity, not as representatives of their respective organisations.

• Lieutenant General Gregory Charles Bilton AO CSC (retd.), former Chief of Joint Operations, Australian Department of Defence
• Professor Nick Bisley, Pro Vice-Chancellor for Research and Professor of International Relations, La Trobe University
• Dr Carolyn Bull, Executive Director, RAND Australia
• Professor Caitlin Byrne AM, Pro Vice Chancellor (Business), Griffith University
• Mr Rowan Callick OBE, Industry Fellow, Griffith University’s Asia Institute; Expert Associate, ANU National Security College; Vice Chair, Australia Taiwan Business Council
• Ms Susan Dietz, Distinguished Advisor, ANU National Security College
• Dr Huong Le Thu, Deputy Director of the Asia Program, International Crisis Group
• Ms Martine Letts, CEO, Asialink Group
• Mr Richard McGregor, Senior Fellow for East Asia, Lowy Institute
• Professor Rory Medcalf AM, Head, ANU National Security College
• Ms Rachel Noble PSM (retd.), former Director-General, Australian Signals Directorate
• Ms Bec Shrimpton, Senior Vice President, The Asia Group
• Mr Peter Varghese AO, Chancellor, The University of Queensland