SINGAPORE – Investors are overestimating the risk of conflict across the Taiwan Strait, a top U.S. East Asian diplomat said, stressing that deterrence and "substantial consequences" would keep Beijing from taking the island by 2027.
While the U.S. government has often indicated Beijing's directive for the People's Liberation Army to be ready for military action in Taiwan by 2027, Beijing has never publicly confirmed the timeline.
"I actually think the most mispricing is with regard to Taiwan, where actually I think people are overpricing the risk of something happening across the Taiwan Strait," said Michael DeSombre, assistant secretary of state for East Asian and Pacific affairs, told CNBC on Thursday.
"Both China and the U.S. don't want conflict, and we're able to deter conflict," he told CNBC's Sri Jegarajah in an exclusive interview on the sidelines of the Milken Institute Asia Summit. "Concerns of that perhaps are priced at too high a level."
Beijing claims Taiwan as its territory and hasn't ruled out force to bring it under its control. The democratically governed island's government rejects Beijing's claims.