Today's Key Points

• Beijing has issued arrest warrants and bounties for two Taiwanese nationals accused of cutting undersea cables, a move Taiwan's Mainland Affairs Council denounces as a political maneuver.
• The US announced an $11.1 billion arms sale to Taiwan, but a domestic constitutional crisis in Taiwan threatens to block the special defense budget required to fund it.
• PLA wargames have expanded to simulate battles near Mexico and Cuba, signaling global strategic ambitions beyond the First Island Chain.
• A flurry of Japanese lawmakers visiting Taiwan and high-level assurances of support have drawn sharp rebukes from Beijing.

Risk Context

As 2025 draws to a close, the nature of risk in the Taiwan Strait is undergoing a qualitative shift. Beijing is moving from purely military pressure to "lawfare" and "long-arm jurisdiction," directly asserting judicial power over Taiwanese citizens to erode Taiwan's sovereignty. Simultaneously, internal political gridlock in Taiwan is materially undermining the strategic benefit of US arms sales, potentially creating a window of vulnerability in the island's asymmetric defense build-up.

Today's Items

1) Beijing Issues Bounties for Taiwanese Cable Sabotage Suspects, Escalating Lawfare

• One-Sentence Summary: Chinese public security authorities issued rewards for the arrest of two Taiwanese men accused of cutting undersea cables, which Taiwan rejects as political manipulation and cross-border repression.
• Simplified Summary: The Weihai Public Security Bureau in Shandong, China, issued wanted notices and rewards for two Taiwanese men, Chien Wen-sheng and Chen Shun-chin. They are accused of leading a smuggling ring and directing a vessel, the Hong Tai 58, to intentionally cut undersea cables connecting Taiwan and Penghu. The Chinese captain of the ship was previously sentenced to prison by a Taiwanese court. China's Taiwan Affairs Office accused the ruling DPP of using the incident to incite confrontation. Taiwan's Mainland Affairs Council and Coast Guard strongly pushed back, stating China has no jurisdiction over Taiwanese people and characterizing the move as a political maneuver to confuse the issue.
• Taiwan Strait Impact: Lawfare/Grey Zone Conflict. Beijing is attempting to extend judicial jurisdiction over Taiwanese citizens and politicize infrastructure sabotage, increasing the risk of cross-strait clashes in maritime law enforcement.
• Watch Point: Whether China will proceed with trials in absentia or issue international notices for the Taiwanese suspects.

Original Title: China reward notice for Taiwanese nationals a 'political maneuver': Taiwan
Source / Date: Focus Taiwan | 2025-12-24

2) US Announces $11.1 Billion Arms Sale; Taiwan Budget Stalled by Internal Politics

• One-Sentence Summary: The US announced its largest-ever arms sale to support Taiwan's asymmetric defense, but Taiwan's legislature may fail to pass the necessary special budget due to a constitutional crisis.
• Simplified Summary: On December 17, the US announced the sale of approximately $11.1 billion in military equipment to Taiwan, including 82 HIMARS systems, 420 ATACMS missiles, and drones, aiming to bolster asymmetric defense capabilities. However, Taiwan is facing a constitutional crisis; Premier Cho Jung-tai refused to co-sign amendments to the Fiscal Allocation Act, leading opposition parties to threaten impeachment. With the Constitutional Court paralyzed due to vacancies, the "Special Budget for Asymmetric War" risks being blocked or delayed in the legislature.
• Taiwan Strait Impact: Defense Capability/US-Taiwan Relations. Budget delays will directly undermine Taiwan's ability to counter a PLA landing and could lead the US to question Taiwan's resolve in self-defense.
• Watch Point: Whether the Legislative Yuan will initiate a vote of no confidence against the Premier, potentially triggering new elections.

Original Title: China & Taiwan Update, December 23, 2025
Source / Date: AEI/ISW | 2025-12-23

3) PLA Wargames Expand to US Backyard, Simulating Battles Near Cuba and Mexico

• One-Sentence Summary: A CCTV report revealed PLA wargaming simulations involving combat scenarios near Mexico and Cuba, demonstrating ambitions for global military projection.
• Simplified Summary: Footage from a report by Chinese state broadcaster CCTV showed PLA wargaming exercises with screens displaying conflict scenarios in the Gulf of Mexico, Caribbean Sea, and near Cuba. Red and blue forces were shown maneuvering off the coast of Houston, Texas. Although China's physical military presence in Latin America is minimal, these simulations suggest the PLA is modeling potential conflicts with the US on a global scale, rather than confining operations to the Taiwan Strait.
• Taiwan Strait Impact: Strategic Deterrence/Area Denial. The PLA is signaling a capability to threaten the US homeland as a lever to deter American intervention in a potential Taiwan conflict.
• Watch Point: Whether PLA naval vessels will increase actual deployments or port visits in the Western Hemisphere.

Original Title: Chinese military simulated battles near Mexico, Cuba and Taiwan, CCTV report shows
Source / Date: SCMP (PRC official) | 2025-12-24

4) Intense Japanese Legislative Diplomacy with Taiwan Angers China

• One-Sentence Summary: High-level visits by Japanese ruling party officials and lawmakers to Taiwan have reaffirmed that Taiwan's security is linked to Japan's survival, sparking strong protests from Beijing.
• Simplified Summary: Senior LDP official Koichi Hagiuda visited Taiwan and met with President Lai Ching-te, describing relations as the "best ever." This follows Prime Minister Sanae Takaichi's earlier remarks that a Taiwan contingency would threaten Japan's survival. Despite Beijing's protests and partial economic countermeasures, around 30 Japanese lawmakers plan to visit Taiwan soon. Analysts suggest Japan is attempting to maintain the status quo and signal that it will not be cowed by Beijing's pressure.
• Taiwan Strait Impact: Regional Alliances/Diplomatic Maneuvering. Japan's explicit linking of Taiwan's security to its own national security raises the external costs and barriers for any Chinese military action against Taiwan.
• Watch Point: Whether Beijing will escalate economic sanctions against Japan or conduct more aggressive military activities near the Senkaku Islands.

Original Title: Japan's growing engagement with Taiwan angers China
Source / Date: DW | 2025-12-24

5) Foxtron Launches Bria EV Model, Targeting Overseas Markets

• One-Sentence Summary: Foxtron, a Foxconn-Yulon joint venture, launched its first Taiwan-made EV for global export, aiming to build a complete electric vehicle value chain.
• Simplified Summary: Foxtron Vehicle Technologies unveiled the "Bria" EV model, priced between $28,600 and $36,540, marking the first EV manufactured in Taiwan for global export. The company also announced the acquisition of the Luxgen brand to integrate sales and service networks. This move highlights the Taiwan tech sector's effort to pivot from contract manufacturing to brand ownership and complete vehicle exports, enhancing industrial resilience.
• Taiwan Strait Impact: Economic Resilience/Supply Chain. Successfully internationalizing Taiwan's high-tech manufacturing beyond semiconductors helps diversify economic risks and increases Taiwan's geoeconomic value.
• Watch Point: The actual sales performance of the vehicle in international markets and whether the supply chain faces geopolitical hurdles.

Original Title: Taiwan's Foxtron launches Bria EV model, eyes overseas markets
Source / Date: Reuters | 2025-12-25

Trends and Scenarios

• China's Chip Breakthrough vs. Silicon Shield Erosion: Chinese researchers claim to have created a prototype EUV light source. While mass production is distant, this breakthrough suggests gaps in Western tech containment, which could eventually weaken the "Silicon Shield" deterrence provided by Taiwan's semiconductor dominance.
• New Diplomatic Fronts: In a dispute over islands between Iran and the UAE, Iranian officials and media have unusually cited the Taiwan issue to criticize China's double standards, indicating that Taiwan is becoming a rhetorical tool for Middle Eastern nations to push back against Beijing.
• Infrastructure Risks from Seismic Activity: A magnitude 6.1 earthquake struck Taitung. While there was no major damage and TSMC did not evacuate, frequent seismic activity remains a persistent vulnerability for Taiwan's high-tech supply chain and infrastructure resilience.

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May peace across the Strait last forever