War over Taiwan would have a cost in blood and treasure so vast that even those unhappiest with the status quo have reason not to risk it. Bloomberg Economics estimate the price tag at around $10 trillion, equal to about 10% of global gross domestic product — dwarfing the blow from the war in Ukraine, COVID-19 pandemic and 2007-2008 Global Financial Crisis. China’s rising economic and military heft, Taiwan’s burgeoning sense of national identity, and fractious relations between Beijing and Washington mean the conditions for a crisis are in place. With cross-strait relations on the ballot, Taiwan’s Jan. 13 election is a potential flashpoint.

Few put a high probability on an imminent Chinese invasion. The People’s Liberation Army (PLA) isn't massing troops on the coast. Reports of corruption in China’s military cast doubts on President Xi Jinping's ability to wage a successful campaign. U.S. officials say tensions eased somewhat at the November summit between President Joe Biden and Xi, who pledged "heartwarming” measures to woo foreign investors.

Still, the outbreak of war in Ukraine and the Gaza Strip are reminders of how long-simmering tensions can erupt into conflict. Everyone from Wall Street investors to military planners and the swathe of businesses that rely on Taiwan’s semiconductors are already moving to hedge against the risk.