Taiwan-US relationship has driven assertive China

The prospect of an escalation in the Taiwan straits has gathered steam in recent years, a product of increased Chinese assertiveness, in both rhetoric and military action, over Taiwan.

The Taiwan-American relationship has helped to drive this increased assertiveness from China, with Taiwan and America strengthening their alliance as China's hostility grows. To most financial market participants, a rupture in the status quo seems difficult to imagine, let alone to plan for. But this is not unusual. The outbreak of most wars since 1900 have come as a surprise—except to those who were planning the war. The two exceptions are the German invasion of Poland in 1939, and the American and British invasion of Iraq in 2003.  The escalation scenarios between Taiwan and China b...