Can You Make Money by Predicting the Likelihood of “China Attacking Taiwan”? Polymarket Predicts a Probability of Only 8% This Year
The question of whether China will attack Taiwan is a matter of curiosity and concern for many Taiwanese people. On the decentralized prediction platform Polymarket, the question of “Will China attack Taiwan by the end of 2024?” has even become a betting market, where participants can place bets by purchasing “YES” or “NO” options, and those who accurately predict the outcome can receive a reward.
According to CoinDesk, this betting market opened as early as January this year, and its rules state:
“If China begins a military attack to control any part of Taiwan before 11:59 PM on December 31, 2024, the resolution will be ‘YES.’ Otherwise, the resolution will be ‘NO’.”
As of the time of writing this article on the 17th, bets worth $612,000 have been placed, and the probability of China attacking Taiwan by the end of 2024 is only 8%.
Polymarket offers users the ability to predict various future events, such as the outcome of the US presidential election, when the Federal Reserve will cut interest rates, and which project will have an upcoming airdrop. During the 2024 Taiwan presidential election period, users on the platform initiated related predictions. However, because it is against Taiwan’s Election and Recall Act for citizens to participate in any “election betting,” the Taiwanese police summoned 17 Taiwanese users at that time.
️ Further reading:
Predicting Presidential Elections on the Blockchain May Violate the Law! Police Summon 17 “Predictors,” What is Polymarket?
Foreign media outlets report that participating in these predictions can yield higher returns than buying Taiwanese bonds. According to CoinDesk, data shows that the interest rate on the 2-year bonds issued by the Central Bank of Taiwan is slightly higher than 1.26%. However, if China does not attack Taiwan by the end of 2024, those who participate in Polymarket predictions can earn an 8% return.
CoinDesk believes that historically, people who buy bonds are betting on the future prospects of a country. In developing countries with political instability and economic turbulence, bond yields are usually higher. In the past, bond trading premiums in El Salvador were higher than those in developed countries like Canada. However, this trend is changing with the Salvadoran president’s series of Bitcoin policies and measures to combat organized crime.
In contrast, the Taiwanese government operates stably, the economy is highly developed, and there is also a trade surplus. The bond market tends to believe that the Taiwanese government will regularly repay its debts, so there are not many premiums. According to Fitch Ratings, Taiwan’s sovereign credit rating remained at the AA level last year, higher than Hong Kong, South Korea, China, and Japan.
Polymarket predicted a 1% chance of an attack on Taiwan last year, but why has the probability increased this year?
Interestingly, Polymarket users launched a similar prediction last year, allowing people to bet on whether China would attack Taiwan by the end of 2023. The final result showed that the probability of an attack on Taiwan was only 1%, but the amount of money placed in bets was relatively small, worth only about $100,000.
In contrast, this year’s prediction has been ongoing for 4 months, and the average probability falls between 8% and 12%. This is higher than last year’s prediction. It is uncertain which factors directly influenced Polymarket users’ judgments. However, overall, the platform still predicts a low probability of China attacking Taiwan this year.
According to Central News Agency, Chinese Communist Party Chairman Xi Jinping denied plans to attack Taiwan in 2027 and 2035 when he met with US President Biden at the end of last year. He even showed “a hint of anger” when discussing this issue. US strategic experts believe that Xi Jinping’s statement indicates that China believes it is not the appropriate time to intensify tensions at present.
However, Commander of the US Indo-Pacific Command, John Aquilino, stated in March this year that China is determined to be ready to invade Taiwan by 2027. National Security Bureau Director Chiu Ming-yan also stated that 2027 is an important political year. In addition to being a turning point for Xi Jinping’s possible fourth term, it is also the 100th anniversary of the founding of the Chinese People’s Liberation Army. They have received intelligence from the United States and are conducting necessary analysis based on that information.
This article is authorized to be republished by Crypto City.
Proofread by Kao Ching-yuan