Leaders go to war because they believe they can win, as did Putin in Ukraine. It is entirely feasible to reinforce both Taiwanese and US capabilities in the region, to a point at which Beijing must doubt its ability to prevail in the necessary amphibious assault, a perilous and difficult undertaking.

The Ukraine experience has rewritten in lights a towering lesson of history: To deter aggression, there is no substitute for credible armed forces. We in the UK and the rest of the West are supremely fortunate that America still possesses these, despite the caveats about the Navy’s vulnerabilities in the Pacific.

Yet more important even than weapons is will. Many people, sometimes including myself, have doubted and continue to doubt whether, if China does invade Taiwan, the US and its allies will undertake military action in response. This is a reprise of the 1950 Korean uncertainty, with one important difference: 73 years ago, there was nothing in South Korea of material value to the West; its armies fought instead to defend a principle. In modern Taiwan, by contrast, advanced semiconductors represent an industry of towering importance both to China and ourselves.

Eoin Treacy's view

The USA downed a Chinese balloon over the weekend after allowing it to traverse the entire continent. That speaks to a great deal of indecision about the right way to deal with an airspace incursion and not least because it is so unexpected.

The Cambridge dictionary describes kite-flying as “the act of making a suggestion in order to find out how others react to it” Using a balloon, which is blown by the winds and whose path one can claim is unguided, to collect data, is about as close to the literal meaning of kite flying as one can imagine.

I witnessed this exact pattern of behaviour from my children when they were younger. The younger would pick at the elder, probing her tolerance for annoyance, and bawl when the inevitable retribution arrived.  

Several countries have big decisions on the horizon about how, and whether, to fund their militaries. The reality is much of Europe has taken the peace dividend from reduced Cold War defense spending and invested in social services. Reorienting spending to defense will mean either higher taxes, much stronger growth or sacrifices in social spending. Obviously growth is the most preferrable but that is not a foregone conclusion without significant regulatory and tax reform. As the above article highlights it is often easier to rouse public support when the need is obvious rather than precautionary.
The iShares U.S. Aerospace & Defense ETF continues to probe the upper side of the five-year range.