Strategy Soup
Report 011 · Rock and a Hard Place: Australia in a Taiwan Crisis
An exercised scenario: one question run as a simulation, then reported with the record attached. It is not a forecast.
In this simulation, from 1 April 2027 China puts military pressure on Taiwan with exercises and coast guard patrols. It can go on to a of ships bound for Taiwan, or a .
Australia sends almost 30 per cent of its exports to China and imports most of its fuel by sea. In the first turn the United States asks its allies for use of their bases, for fuel and for a public statement of the role their forces would play in a conflict.
Each choice can send a to another area a turn or more later. What each holding is worth to a player also changes as tension, trade and the sea lanes change. Ten turns, from a week to six months long, run to December 2028.
Why it matters. In March 2026 the war in the Middle East cut shipping through the Strait of Hormuz, and many Australian service stations ran out of fuel. A crisis near Taiwan would test the same fuel supply, the same trade and the same alliance at once.
At the start
The simulation counts each side's military strength as a level from 0 to 5, not as ships, aircraft or troops. These are the levels it starts from, and the bases the public record names.
The rules
Day 0 · 1 April 2027
Tension in the Strait starts at . Each named exercise has gone further than the last.
starts at , close to the level at which service stations ran dry in March 2026. The government has for large spending decisions.
Turn 1 of 10 · 1 to 7 April 2027
The US ask came with a delayed bill: if Australia gave nothing within two turns, the US would mark its down. The Prime Minister underwrote fuel cargoes, and the fuel importers ordered more from Europe, North America and Africa. Both logged fuel as Australia’s worst exposure.
China readied forces for a quarantine, hidden from the other players. Foreign Affairs and Trade called on all sides for restraint, and tension fell to 19.
Turn 2 of 10 · 8 to 14 April 2027
The Prime Minister approved wider US use of the bases at Tindal and Darwin and made no announcement. Its logged reason: access is where Australian and US interests overlap, and giving it without an announcement avoids the tension an announcement would add.
The approval came with a delayed bill: a chance that it leaks in the next turn. Defence raised the readiness of Australia’s forces, and Foreign Affairs and Trade agreed a minerals deal. Each used one , so the budget units fell from 3 to 1.
Turn 3 of 10 · 15 to 28 April 2027
The leak cost a point of the , and Foreign Affairs and Trade won it back in the same turn by keeping the ministers’ line to Beijing open.
The approval also cleared the US bill. The US had been set to mark Australia’s down for leaving its ask unanswered, and that bill lapsed. A US back channel to Beijing failed badly.
Turn 4 of 10 · 29 April to 29 May 2027
China offered to ease trade if Australia took no side over Taiwan, though its forces were ready for a quarantine. Its logged reason: Australia staying out of the Strait question is worth more than any punishment this quarter.
Defence raised readiness again and used the last budget unit. The first fuel cargoes from Europe, North America and Africa arrived, and fuel cover rose to about 35 days.
Turn 5 of 10 · 30 May to 28 June 2027
Taiwan gave its chip plants first call on gas and power, after a cable cut had cut chip supply. That move came with a delayed bill: power rationing for homes, due in two turns.
The fuel importers ordered a second set of cargoes from Europe, North America and Africa. Public support kept drifting back, 2 points a turn, to 53.
Turn 6 of 10 · 29 June to 29 August 2027
The deal had an chance to land on time. It did not, so critical minerals sold outside China stayed at 1 of 5.
Foreign Affairs and Trade called for restraint again and did not take up China’s offer of trade relief. Its logged reason: taking it would look like Australia was being paid to stay out. Fuel cover reached about 45 days.
Turn 7 of 10 · 30 August to 28 November 2027
A typhoon pushed the sea lanes past Taiwan down from 90 to 80, and a cable was cut. The rationing bill from Taiwan's power decision in turn 5 came due.
Taiwan appealed to its partners and left China's offer of talks unanswered. Its logged reason a turn earlier: accepting the talks would cost public resilience and point toward subordination. Foreign Affairs and Trade began work on other markets for Australian exports.
Turn 8 of 10 · 29 November 2027 to 28 February 2028
China offered talks again, and Taiwan restated the status quo after its election. Exporters found other buyers for discretionary goods, the ones China can most easily do without. That was the delayed bill, a gain this time, from the work of Foreign Affairs and Trade on other markets in turn 7.
A second US back channel to Beijing failed. The sea lanes past Taiwan recovered to 85.
Turn 9 of 10 · 29 February to 29 June 2028
The port is leased to a Chinese company, Landbridge. In January 2026 the Prime Minister kept his plan to return it to Australian control after a Chinese warning.
The Prime Minister’s logged reason: the position had held for a decade, and acting in a calm quarter avoids the look of taking sides in a crisis. The delayed bill: a chance, each turn, of Chinese measures on trade and investment.
Turn 10 of 10 · 30 June to 30 December 2028
The channel to Beijing fell from 5 to 4 as well. China logged Darwin as a real loss, and still chose to offer Taiwan talks, not more pressure.
The US moved a carrier group toward Taiwan for the fifth time. Allies' trust in US commitments ended at 72, up from 55.
The end · December 2028
No quarantine or blockade came. Australia ended with of 5 of 5, China trade of 9 of 10 and about 45 days of fuel, so it .
Replayed from the start with rule-based players and the same chances, this world reached the same ending, and Australia again kept both.
How it ended
1
We changed one move at a time in this world, 602 times, and played the rest of the crisis 300 times from each change, with . None of the 260 changes to Australian moves shifted to another ending. The largest shifted 7%. 33 of them (13%) did shift 10% or more of the re-runs to another result for (outcome 6).
73 of the 278 changes (26%) by China, the US and Taiwan shifted 10% or more of the re-runs to another ending. None of Japan’s 64 did. The players’ logged reasons show why. China chose trade relief for Australia over a quarantine its forces were ready for, and Taiwan left China’s offer of talks unanswered.
2
In the 7,200 , when Australia announced wider US access, China protested a turn later in 99 of every 100 of those replays. When Australia underwrote fuel cargoes, the budget paid again in 97 of every 100 replays that did so. When Australia returned the Port of Darwin, Chinese measures on trade and investment followed in 75 of every 100. Most bills come due a set number of turns after their move. The Darwin bill can come in any later turn.
In 300 control replays with the delayed bills switched off, Australia in 81 of every 100, against 76 in 300 with them on. The Prime Minister’s logged reason in turn 9, when it returned the port, ends: ‘Watch for a trade bill from Beijing in the next turn.’
3
Defence raised readiness twice and Foreign Affairs and Trade agreed a minerals deal, each for a logged reason. Defence called the second unit a real cost that needs to go through the committee. By the end of May 2027 all 3 budget units were used, and the budget stayed at 0 to the end.
The minerals deal then missed its date. The unannounced access approval leaked a turn after it was given. Returning the Port of Darwin drew Chinese trade measures in the next turn, on a chance.
4
Half the replays started with about 25 days of fuel, as in early 2026, and half with about 35. The endings came out almost the same: grey-zone pressure went on in 43 of every 100 either way.
The starting stock decided how often fuel ran short. Fuel cover fell below 25 days, where service stations ran dry in 2026, in 63 of every 100 replays with the thin start, against 35 with the rebuilt one. When we forced a quarantine in turn 4 of this world, fuel cover fell below 10 days in 185 of 300 , against 1 as played.
5
In this world we changed the Prime Minister’s answer in turn 2 and played the rest 300 times. After the unannounced approval, Australia in 83 of every 100 . After an announced approval it kept both in 86, and after a refusal in 62. After a refusal, Australia kept its China trade but lost its alliance credit in 31 of every 100.
The replays show the same thing. Left to the Prime Minister’s own rules, Australia lost its alliance credit in 34 of every 100 replays, against 9 with an announced approval in turn 2. Those rules favour an unannounced approval, but sometimes refuse or wait. An announced approval sent its own bill: Australia kept alliance credit but lost its China trade in 12 of every 100, against 4.
6
Of the 260 changes to Australian moves in this world, 33 shifted by 10 or more. 17 of them cost China trade more often: joining the US and Japan in condemning China (8 of them), saying in public what role Australia’s forces could play (7) and returning the Port of Darwin in turn 4 or 5 (2). 14 cost alliance credit more often: refusing the US request (6), or doing something else in turn 2 instead of approving US access (8). The other 2 were approving US access in turn 1, which kept both more often.
Beijing sent the trade costs, through its trade measures. Washington sent the credit costs, by lowering Australia’s alliance credit. Across the 7,200 , Australia lost its alliance credit in 17 of every 100 and its China trade in 8. With alliance credit one unit lower at the start, Australia kept both in 68 of every 100 control replays, against 76. Budget units one higher or lower at the start moved that by 1 in 300 at most, and 10 more days of fuel by less than 1 in 100.
7
Across the 7,200 replays, grey-zone pressure went on in 43 of every 100, 22 ended in a negotiated de-escalation and 16 in a US-China deal over allies’ heads. A wider conflict came in 5.
Australia in 75 of every 100. This world’s case, grey-zone pressure going on with both kept, came in 32 of every 100. The deal over allies’ heads was the ending in which Australia most often lost its alliance credit: in 30 of every 100 of those replays.
Every move
Bold moves are the ones the story above turns on. Each move opens its reason.
Endings
Each count is out of 300 from the turn where the paths split. A, B and C are how the crisis ended. D is what Australia kept.
Ending A · The ending this world reached
This world reached it, and so did 203 of 300 re-runs from its first turn.
Who comes out ahead. No player gains much. Australia keeps both.
What has to happen. China declares no quarantine, and Taiwan does not take up China’s offer of talks.
Ending B
275 of 300 re-runs, if Taiwan accepts the talks in turn 7. As played, 37.
Who comes out ahead. Taiwan and China. Australia keeps both in 292 of 300 either way.
What has to happen. Taiwan accepts talks it had called a step toward subordination.
Ending C
76 of 300 re-runs, if China declares a quarantine in turn 4. As played, none.
Who comes out ahead. No player. Fuel cover falls below 10 days in 185 of 300, and exports fall to 60 per cent of normal or less in 146.
What has to happen. China uses the quarantine it readied, with a chance that it takes hold.
Ending D
147 of 300 re-runs end with alliance credit but without the China trade, if Foreign Affairs and Trade joins a joint condemnation of China in turn 6. As played, 8. How the crisis ends barely moves.
Who comes out ahead. The US, a little. China’s state buyer halts purchases of an Australian product line in 177 of 300 re-runs, against 86, which lowers the ceiling on Australia’s access to China’s market for good.
What has to happen. Australia joins the US and Japan in condemning China, and China takes trade measures against Australia.
The main take-away
This scenario suggests that Australia can keep both its alliance credit in Washington and its China trade through a Taiwan crisis: it kept both in 75 of every 100 of the 7,200 replays. But its own choices barely changed how the crisis ended. None of 260 changed Australian moves shifted 10% or more of the re-runs to another ending. What Australia’s choices did decide was which delayed bills came due: costs that land in another area a turn or more after a move. In this world the unannounced approval of wider US access leaked a turn later, and public support fell from 55 to 49. The government had used all its budget units by May 2027, and the minerals deal they paid for never landed. Returning the Port of Darwin to Australian control cost a tenth of the China trade a turn later. The replays show the same pattern: announcing US access drew Chinese protests in 99 of every 100 replays that did it, and returning Darwin drew Chinese measures in 75. Of the four holdings, alliance credit was lost most often, and China trade was put at risk by the most Australian choices (outcome 6). Our judgement, beyond what the simulation tested: decide in advance which of budget, fuel, alliance credit and China trade Australia will spend first.
Status as at 17 October 2026.
Nine chances and starting values, each with why it has its size. The one that moves the endings most is the first.