TAIWAN STRAIT CRISIS ALERT! | 2026-01-01 | PLA Concludes "Justice Mission 2025" Blockade Drills, Rockets Land in 24nm Zone, Xi Vows Reunification Unstoppable
Key Takeaways
- The PLA announced the completion of "Justice Mission 2025," firing live rockets into Taiwan's 24nm contiguous zone for the first time.
- Xi Jinping reiterated in his New Year address that reunification is an "unstoppable trend of the times."
- Taiwan brokers halted buy orders for Chinese military-linked stocks and ETFs due to geopolitical risks.
- Japan, EU, UK, and Australia expressed strong concern over the drills; Trump stated he is "not worried" and cited his good relationship with Xi.
Risk Context
Following the US approval of an $11.1 billion arms sale package, Beijing launched the massive "Justice Mission 2025" drills focused on "port blockades" and "strikes on land targets." A significant escalation signal is the PLA firing rockets into Taiwan's 24-nautical-mile contiguous zone for the first time, attempting to shatter Taiwan's defensive depth and normalize close-in deterrence. Although Beijing announced the end of the drills, a large number of vessels remain in the area. This "anaconda strategy" is gradually eroding Taiwan's defensive status quo and international shipping confidence by compressing warning times and increasing maritime risks.
News Items
1) PLA Rockets Approach 24nm Zone as Drills End
- One-Sentence Summary: The PLA announced the completion of drills but fired 27 rockets and simulated port blockades, with some rounds landing within Taiwan's 24nm contiguous zone.
- Simplified Summary: The People's Liberation Army Eastern Theater Command announced on Wednesday the successful completion of "Justice Mission 2025," claiming to have fully tested integrated joint combat capabilities. During the exercises, the PLA fired 27 rockets into waters around Taiwan, with Taiwan's Ministry of National Defense confirming some landed within the 24-nautical-mile contiguous zone, the closest ever recorded. The drills simulated sealing key ports, seizing maritime control, and striking land targets, utilizing fighters and warships to encircle the island. The MND detected 77 military aircraft and 25 naval vessels within 24 hours, with 35 aircraft crossing the median line.
- Taiwan Impact: Military coercion mechanism. This establishes Beijing's capability to cut off Taiwan's external shipping lines at will and pushes the rules of engagement boundary to within visual range of Taiwan's main island, drastically compressing defensive reaction time.
- Watch Point: Whether the number of PLA vessels remaining around Taiwan significantly decreases within the next 72 hours, or if they shift to a normalized combat readiness patrol.
Original Title: China announces it 'successfully completed' Taiwan military maneuvers
Source / Time: AP, CNA｜2025-12-31
2) Xi Jinping Reaffirms Reunification in New Year Speech
- One-Sentence Summary: Xi emphasized the blood ties across the strait in his New Year address, calling reunification an "unstoppable historical trend."
- Simplified Summary: Chinese President Xi Jinping delivered his 2026 New Year address the day after the drills concluded. While focusing on China's economic growth and technological progress, he specifically mentioned Taiwan. Xi stated that Chinese people on both sides of the strait share a bond of blood and kinship, asserting that "the reunification of our motherland is a trend of the times and is unstoppable." Coming immediately after large-scale drills targeting US arms sales, these remarks are seen as consolidating domestic nationalist sentiment and sending a political signal to the US and Taiwan.
- Taiwan Impact: Political psychological warfare mechanism. Beijing will continue to assert the uncompromising nature of its Taiwan policy through the highest leadership's will, limiting space for resuming official cross-strait dialogue.
- Watch Point: Whether Beijing will implement "anti-independence and pro-reunification" rhetoric into concrete legal or administrative sanctions during the upcoming "Two Sessions" in March.
Original Title: Xi Jinping vows to reunify China and Taiwan in New Year’s Eve speech
Source / Time: Guardian, PRC official｜2025-12-31
3) Taiwan Brokers Freeze Chinese Military Stock Trading
- One-Sentence Summary: Due to geopolitical tensions, Taiwan brokers will stop accepting client orders to buy stocks and ETFs linked to the Chinese military.
- Simplified Summary: As Beijing conducted drills around Taiwan, the Taiwan Securities Association confirmed that brokers would stop accepting buy orders for stocks and ETFs related to Chinese military companies via the Shanghai-Shenzhen-Hong Kong Stock Connect. While regulators described the move as an industry consensus rather than a direct response to the recent drills, the timing is sensitive. Taiwan's Financial Supervisory Commission estimates this affects less than 0.5% of Taiwanese investors' foreign stock exposure. This represents a concrete defensive move by financial markets to avoid geopolitical risks and potential sanctions.
- Taiwan Impact: Financial decoupling mechanism. This shows that geopolitical risk is beginning to affect the underlying rules of cross-border capital flows; similar "preventive decoupling" could extend to other sensitive tech sectors in the future.
- Watch Point: Observe if other foreign institutions follow suit in limiting investment exposure to Chinese defense or dual-use technology companies.
Original Title: Taiwan Brokers Freeze Buy Orders for China Military Stocks, ETFs
Source / Time: Bloomberg｜2025-12-31
4) Trump Reacts Coolly to Military Drills
- One-Sentence Summary: US President Trump stated Xi did not inform him of the drills, but he is not worried and reiterated his good relationship with Xi.
- Simplified Summary: Responding to a reporter's question about China's massive military drills, US President Trump appeared unconcerned on Monday. He stated that Xi Jinping had not informed him in advance but that he was "not worried" about it. Trump noted that China has been conducting naval exercises in the area for 20 years and emphasized his "great relationship" with Xi, dismissing the idea that Xi would actually attack. This reaction contrasts with the State Department's strong action of approving massive arms sales, indicating a strategy of ambiguity in White House rhetoric.
- Taiwan Impact: Alliance confidence mechanism. Trump's low-key response might be interpreted by Beijing as tacit consent or strategic hesitation, potentially increasing Beijing's willingness to test US red lines in the gray zone.
- Watch Point: Whether the US State Department or Pentagon releases a more specific condemnation or deploys a carrier strike group to the relevant waters following Trump's remarks.
Original Title: China announces it 'successfully completed' Taiwan military maneuvers
Source / Time: AP｜2025-12-31
5) Philippines and Japan Confront China Amid Tensions
- One-Sentence Summary: The Philippines deployed aircraft to verify a Chinese research vessel; Japan expressed concern over drills, drawing a "hypocritical" label from Beijing.
- Simplified Summary: Geopolitical tension is spreading to neighboring countries. The Philippine Coast Guard deployed aircraft to challenge a Chinese deep-sea research vessel, Tan Suo Er Hao, spotted just 19nm off Northern Luzon near Taiwan; the Defense Secretary expressed deep concern over China's drills. Meanwhile, Japan conveyed concern to China regarding the drills escalating tensions. China's Foreign Ministry hit back strongly, accusing Japan, Australia, and the EU of turning a blind eye to "Taiwan independence" forces and criticizing their concerns as "extremely hypocritical."
- Taiwan Impact: Regional linkage mechanism. The Taiwan Strait crisis is rapidly internationalizing, drawing First Island Chain nations in, which may accelerate the substantiveness of US-Japan-Philippines defense cooperation.
- Watch Point: Whether Chinese research vessel activity in the Bashi Channel and Luzon Strait continues to increase, which is often a precursor to submarine activity.
Original Title: Philippines challenges Chinese vessel off northern province amid Taiwan tensions / Beijing hits back
Source / Time: Reuters, SCMP｜2025-12-31
Trends & Scenarios
- Normalization of Contiguous Zone Presence: After breaking the median line tacit agreement, the PLA is now attempting to normalize activities within the 24nm contiguous zone. This means Taiwan's strategic buffer has been compressed to the limit, making any future miscalculation highly likely to trigger direct military conflict.
- Lawfare and Blockade Rehearsals: With drill code names like "Justice Mission," Beijing is reinforcing the domestic legal basis for using force against Taiwan and testing the feasibility of paralyzing Taiwan's economy without a full-scale invasion through simulated port blockades.
- Variant of US Strategic Ambiguity: The Trump administration is approving record arms sales while verbally downplaying drill threats. This "hard substance, soft rhetoric" strategy may aim to avoid immediate military escalation but risks creating doubts among allies regarding US security commitments.