If Chinese Forces Paralyze 5,000 US Water Plants Before Attacking Taiwan, Will the US Save Itself or Aid Taiwan? Latest War Game Reveals Cruel Dilemma

What should the United States do if Chinese hackers paralyze critical infrastructure on US soil just before a Taiwan Strait crisis erupts? Would Washington still have the capacity to assist Taiwan? US media outlet Wired has revealed details of a closed-door war game simulating a cyberattack by a Chinese hacking group on July 1, 2027—just before US Independence Day—targeting 5,000 water treatment facilities across the country. The simulated attack disrupts water supply systems, triggering cascading crises in healthcare, food supply, data centers, and military logistics, forcing government and military leaders to confront the agonizing question: who should be rescued first?

The war game was organized by CyberAcuView, a cybersecurity group within the insurance industry, and involved around 30 senior executives from the insurance sector. It was led by Joshua Corman, a former strategic expert at the US Cybersecurity and Infrastructure Security Agency (CISA). The exercise’s core objective wasn’t merely to test cyberattack resilience, but to force insurance firms, government agencies, and the military to confront the ethical and strategic dilemma of allocating limited resources during a national disaster.

What happens when 5,000 water plants are hacked and 2,000 hospitals simultaneously lose water?

According to the scenario, within 24 hours of the attack, water pipelines across the US begin to rupture and water pressure drops, causing the crisis to rapidly escalate. Cold storage systems fail, disrupting insulin and other pharmaceutical production. Data centers go offline as cooling systems halt, interrupting cloud services. Most critically, up to 2,000 hospitals are left without water, forcing the evacuation of some patients.

Even more troubling, the attack doesn’t just disable digital systems—it causes physical damage to pipelines, meaning recovery could take far longer than typical cyberattacks. Participants quickly faced a stark reality: with limited cybersecurity response personnel and financial resources, should insurers prioritize large clients, notify all policyholders, or concentrate efforts on areas where human lives are most at risk?

Military demands mobility assurance—insurance industry faces life-or-strategy dilemma

As the scenario intensified, a Taiwan Strait crisis element was introduced. In the simulation, US military officials demanded that the insurance sector support national security needs by prioritizing the mobility of US forces and dual-use infrastructure to counter a potential Chinese military move against Taiwan.

This placed participants in an even more brutal dilemma: when hospitals are losing water and patients’ lives are at stake, should resources still be diverted to telecommunications, military, or logistics infrastructure? Most insurance executives instinctively chose “save lives first,” but some warned that if pressured by the US Treasury, regulators, or the military, companies might not be able to act purely on humanitarian grounds.

Chinese hacking group threat escalates—experts fear China has already pre-positioned attack capabilities

The report stresses this war game is not science fiction. As early as 2023, the US government exposed the China-linked hacking group “Volt Typhoon” for infiltrating critical US infrastructure, including manufacturing, power grids, telecommunications, water systems, and targets in Guam. US officials believe these operations may not be for mere intelligence gathering, but rather to pre-position cyberattack capabilities designed to paralyze US response capacity during a Taiwan Strait or Indo-Pacific crisis.

Former CISA Director Jen Easterly has also warned that China’s strategy of establishing access points within US civilian infrastructure remains unchanged. With the advancement of AI technology, the feasibility of large-scale cyberattacks could increase significantly in the future.

Expert: The best victory is preventing the disaster from happening

Mark Camillo, CEO of CyberAcuView, stated bluntly that catastrophic cyberattacks like this may already exceed the insurable limits of the insurance industry. If war exclusion clauses are not triggered, the entire insurance sector could face bankruptcy. But if insurers refuse to pay claims, public trust in the insurance system could collapse.

Corman argued that the true purpose of the war game is not to determine who wins in a disaster, but to dismantle false assumptions within the industry. He urged insurers to move beyond post-incident payouts and instead use policy terms to require clients to strengthen cybersecurity—such as patching vulnerabilities and joining threat intelligence sharing groups. He noted that only a tiny fraction of the 151,000 water facilities in the US currently participate in such cybersecurity information-sharing mechanisms, warning, “The best way to respond is to ensure the opponent never gets to open the game this way.”