Threats to Maritime Trade are Spreading to the Indo-Pacific

The Chinese Coast Guard (CCG) and Maritime Safety Administration (MSA) recently conducted a four-day patrol of waters east of Taiwan. Initially justified as a response to Philippine and Japanese negotiations on demarcating their Exclusive Economic Zone (EEZ) boundaries that run through this area, People’s Republic of China (PRC) state media has since announced this is but the first in a series of deployments intended to consolidate its claimed jurisdiction over these waters.

This would therefore appear to be a continuation of PRC tactics used in the South China Seas (SCS), using coastguard and paramilitary vessels to enforce its claims, in a manner designed to minimise international backlash.

From Distant Threat to Dawning Reality

This development is not just business-as-usual, however. PRC statements that this operation included inspection of 198 international commercial vessels making passage through the region (rather than bound for Taiwan), with ‘corrective notices’ issued to three, marks a watershed moment. While not the PRC’s first attempt to interfere with maritime trade around the island, that has hitherto been limited to Taiwan’s vessels operating in the Strait. This latest operation suggests Beijing is increasingly willing to go much further in its efforts to reshape regional and international maritime norms.

These developments are deeply concerning for several reasons.

First, they provide further evidence that the PRC is preparing for a future quarantine of Taiwan, an action similar to a naval blockade of maritime trade reaching the island but using the CCG in the lead and justified under ‘law enforcement’ rather than the law of naval warfare.

While an invasion or other form of military attack remain on the table, the PRC would risk becoming bogged down and triggering an outside response from the US and its allies. A CCG-led quarantine, however, could be presented as an internal domestic matter given the PRC’s claims on Taiwan, and therefore not the business of other regional or global powers. Nonetheless, the pressures a quarantine would place on Taiwan’s society and economy could force Taipei to negotiate on the future of cross-strait relationships on terms favourable to Beijing.

A quarantine as an alternative to invasion has been in development for some time.

The PRC began setting out the legal framework that could be used to facilitate a quarantine in 2021, when it passed domestic laws asserting sovereignty over waters around and well beyond Taiwan while empowering the CCG to enforce them. Those laws included clauses on the control of commercial shipping. The first attempt to enforce these laws followed in 2023, albeit limited to Taiwanese commercial shipping near Kinmen Island.

Subsequent exercises in 2024 and 2025 have seen this tactic developed in coordination with the People’s Liberation Army (PLA) and maritime militia, a paramilitary force of fishing vessels that also perform security roles. More recently, thousands of maritime militia fishing vessels exercised blocking the sea lanes between Taiwan and Japan using swarming tactics.

The most recent patrol should therefore be viewed as part of a wider PRC strategy to control extensive waters in which to conduct a future quarantine.

While existential for Taiwan, this development has significant implications for the region and the global economy.

Any quarantine of Taiwan is likely to have major impact on maritime trade along the First Island Chain. East and Southeast Asian countries would all feel the consequences of any disruption, as would global trading partners. Bloomberg has calculated that a PRC blockade or quarantine of Taiwan could cost the global economy $5 trillion, or 5% of global GDP. That would dwarf the impact of recent crises in the Black Sea, Red Sea, or Strait of Hormuz.

Furthermore, if successful against Taiwan, the PRC might in the future employ a quarantine against any other regional neighbour with which it has a dispute. The Strait of Hormuz crisis has demonstrated that many Asian states are already vulnerable to maritime trade disruption of this kind. Australia and New Zealand also rely on maritime trade along long and exposed routes, with recent PRC manoeuvres in the Tasman Sea demonstrating they are increasingly falling within its reach.

The PRC has previously claimed that its coercive behaviour in the SCS causes no disruption to trade and is therefore not a threat to freedom of navigation. The June exercise reveals that not to be the case. Several factors could explain why Beijing has chosen this moment to unveil its true intent.

While unification by peaceful means remains Beijing’s preference, Taiwan’s population seems unmoved by its overtures. Meanwhile, reports have surfaced that the PLA is not yet confident that any invasion would succeed despite its huge build-up. Both factors could therefore see a coercive quarantine becoming an increasingly attractive next step.

While threatening maritime trade had previously been a taboo for the PRC (itself highly dependent on seaborne imports), disruption happening more frequently elsewhere in the world may be seen as providing cover to change that calculus.

The hard lessons of 18th and 19th Century maritime warfare and the unrestricted blockades of both World Wars led to a post-war order that sought to limit such acts to those authorised by the UN Security Council. While imperfect, the system largely held, helping propel international trade from 25% of global GDP in the early 1970s to 55-60% by 2024.

The PRC has been one of the great beneficiaries of that system. Since 2022, however, the consensus to leave maritime trade alone has come under increasing strain. Naval enforcement of maritime sanctions and attacks on or interference with shipping in the Black Sea, Red Sea and the Strait of Hormuz, have all increasingly normalised what was previously considered beyond the pale.

While ostensibly a threat for the PRC, recent events have instead demonstrated its growing resilience to disruption. This has been a key focus for Beijing since the Covid-19 pandemic. Steps taken include significant stockpiles of energy and other critical commodities. More recently the PRC has been highly active in Russia’s ‘shadow fleets’ that are seeking to circumvent sanctions. Maintaining close relationships with Iran and Russia has also ensured Beijing receives preferential treatment when maritime trade is threatened.

Many Western and Indo-Pacific countries, by contrast, remain far more vulnerable to such interruptions. These crises have also demonstrated a paucity of Western naval assets with which to protect trade, previously considered a core role for Navies.

If the PRC is more able to withstand the consequences of disruption to maritime trade, and the wider context is becoming more permissive of such actions, that could make military planners in Beijing more willing to consider similar strategies against Taiwan.

This development represents a threat not just to Taiwan but to all Indo-Pacific states, and the global economy in general.

Increasing the Resilience of Indo-Pacific Maritime Trade

Currently, the Indo-Pacific is not well prepared to manage this problem.

Maritime trade protection works best when orchestrated under a multilateral security umbrella. In the Euro-Atlantic that is provided by NATO which, during the Cold War, developed pre-planned Atlantic routes for the reinforcement of Europe and would regularly exercise their defence.

In the Middle East and Indian Ocean, transnational threats like piracy saw NATO, the EU and the US-led coalition develop security frameworks to meet these challenges. Some of these constructs have since underpinned responses to state-based threats to trade in the Red Sea. The idea of a ‘coalition of the willing’ on standby to restore order in the Strait of Hormuz, should US-Iran negotiations prove successful, can also be traced back to these earlier multinational arrangements.

In the Indo-Pacific, conversely, historic mistrust as well as hedging and balancing of economic and security interests has stymied any efforts to develop an equivalent architecture. Nevertheless, the region’s growing number of minilateral arrangements could form the basis for systems that protect maritime trade in a crisis. The Philippines and Japan, for example, now regularly exercise with Australia and the US. These minilateral partnerships could add maritime trade protection rehearsals to their military exercises. Other regional minilateral security constructs, of which there are many, could do likewise, helping build resilience.

Three areas any security arrangement should focus on include: alternative routing options; communications between commercial shipping and navies; and developing and honing convoy and escorting tactics in the light of recent global crises.

In the Atlantic and Red Sea, maritime trade has few alternative routing options. Land-based substitutes to the Strait of Hormuz are also some way off, making it an absolute bottleneck.

While much of the Indo-Pacific’s maritime trade currently takes direct and exposed routes, the region’s seas offer many alternative passages which could make any efforts to block or disrupt commerce far more difficult to execute. These include around and through Asia’s archipelago states as well as on the peripheries of the Indian and Pacific Oceans. These could all be developed as alternative seaways for use in a crisis.

As the Red Sea crisis demonstrated, commercial shipping will re-route anyway (in that case around the Cape of Good Hope). Far better to have plans in place to do that in a controllable and advantageous manner rather than trying to corral commercial fleets after they have scattered.

To improve crisis coordination, regional states should invest in shipping reporting centres to aid communication between naval forces and their commercial counterparts. The Middle East and Indian Ocean already have three major centres of this type, the UK Maritime Trade Organisation, EU’s Military Security Centre Indian Ocean and the US Joint Maritime Information Centre. They have been a key source of guidance in the Red Sea and Strait of Hormuz crises.

By contrast, Asia currently has only one regional centre of this type, in Singapore, with a mandate limited to transnational crime within a defined geographical area. As part of an enhanced maritime trade protection security architecture, Indo-Pacific partners might develop other coordination centres with a broader mandate to cover the whole region, including during major crises.

Finally, Indo-Pacific states should work to develop their capacities to protect maritime trade from coercion and attack. While crewed platforms will play a key role in any future operations, there are important lessons to be learnt from the Black Sea, Red Sea and the Strait of Hormuz, regarding the mix of capabilities now required. Those include protection from, but also use of, cheap uncrewed platforms as part of a hybrid fleet approach to maritime operations.

These are all areas where Western navies have significant experience and could work with Indo-Pacific counterparts to develop the types of capacities required.

Such a lessons exchange programme could also include the key role played by global shipping cities like London, Singapore, Athens, Oslo, New York, Hamburg, Copenhagen and Dubai (as well as Shanghai Hong Kong). Early engagement with the better-disposed commercial centres will be critical to building and retaining confidence ahead of a crisis.

Cities like London and other shipping hubs are also central to the provision of maritime insurance. In a crisis, withdrawal of insurance can become a limitation, as happened in Ukraine in 2022. As that event also demonstrated, however, the industry can move quickly and flexibly to put restorative measures in-place. The Indo-Pacific should not wait for a crisis to start developing its own maritime insurance contingency plans.

Acting with Urgency

The norms that have protected maritime trade for decades are increasingly breaking down in the Euro-Atlantic and Middle East. With the PRC starting to experiment with coercive operations targeting regional trade while enhancing its resilience to withstand any fallout, Indo-Pacific nations and their partners should act with urgency to prepare for this possibility. The recent news that Taiwan’s government conducted a detailed table-top exercise to look at this issue is a welcome first step, but there is much more the region as whole now needs to do.

© RUSI, 2026.

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