Chinese military expert warns of warning shots if Pelosi's plane enters Taiwan airspace

China asserting military dominance in the Taiwan Strait and challenging US freedom of navigation; US testing resolve through high-profile congressional visit; Taiwan caught between competing powers. China attempting to establish de facto air defense zones and deter future US visits through military intimidation.

Similar to 1996 Taiwan Strait Crisis when China conducted military exercises to intimidate Taiwan's presidential election, though current rhetoric is more explicit about potential kinetic action.

Potential military escalation could disrupt semiconductor supply chains (affecting electronics prices), increase shipping costs, raise energy prices, and create broader inflation pressures. Consumer confidence may decline due to geopolitical uncertainty.

Governments may increase defense spending, implement strategic reserves for critical semiconductors, strengthen supply chain diversification away from Taiwan/China, and coordinate multilateral responses. Central banks may adjust monetary policy in response to market volatility and inflation concerns.