Taiwan China Economic Fallout
FILE - Customers buy fruit at a stall in Taipei, Taiwan, Sept. 20, 2021. China has blocked imports of citrus and fish from Taiwan in retaliation for a visit to the self-ruled island by a top American lawmaker but avoided sanctions on Taiwanese processor chips for Chinese assemblers of smartphones and other electronics, a step that would send shockwaves through the global economy. (AP Photo/Chiang Ying-ying, File)

China blocks some Taiwan imports but avoids chip disruption


China blocked imports of citrus and fish from Taiwan in retaliation for a visit by Nancy Pelosi, a top American lawmaker, to the self-ruled island but has avoided disrupting one of the world's most important technology and manufacturing relationships.

The two sides, which split in 1949 after a civil war, have no official relations but multibillion-dollar business ties, especially in the flow of Taiwanese-made processor chips needed by Chinese factories that assemble the world's smartphones and other electronics.

They built that business while Beijing threatened for decades to enforce the ruling Communist Party's claim to the island by attacking.

Two-way trade soared 26% last year to $328.3 billion. Taiwan, which produces half the world's processor chips and has technology the mainland can't match, said sales to Chinese factories rose 24.4% to $104.3 billion.

“The global economy cannot function without chips that are made in either Taiwan or China,” said Carl B. Weinberg of High-Frequency Economics in a report.

On Wednesday, Beijing blocked imports of citrus fruits and frozen mackerel from Taiwan after Pelosi, speaker of the House of Representatives, arrived in Taiwan late Tuesday. But the ruling party avoided disrupting the flow of chips and other industrial components, a step that would send shock waves through the shaky global economy.

Beijing also announced four days of military exercises with artillery fire in waters around Taiwan. That might delay or disrupt shipping to and from the island, one of the biggest global traders.

The potential disruption adds to concerns over weakening global economic growth, but Asian stock markets rose Wednesday after there was no immediate sign of Chinese military action.

The Communist Party says Pelosi's visit might embolden Taiwan to make its decades-old de facto independence permanent. Beijing says that would lead to war.

The administration of U.S. President Joe Biden has sought to tone down the volume on the visit, insisting there’s no change in America’s longstanding “one-China policy,” which recognizes Beijing but allows informal relations and defense ties with Taipei.

Meeting leaders in Taiwan, Pelosi said she and other members of Congress in a visiting delegation were showing they will not abandon their commitment to the self-governing island.

“America’s determination to preserve democracy, here in Taiwan and around the world, remains ironclad," Pelosi said in a short speech during a meeting with Taiwan’s President Tsai Ing-wen.

“Facing deliberately heightened military threats, Taiwan will not back down,” Tsai said.

The ban on imports of citrus fruits and frozen mackerel will hurt suppliers seen as Tsaí's supporters.

Taiwan plays an outsize role in the chip industry for an island of 15 million people, accounting for more than half the global supply.

Its producers including Taiwan Semiconductor Manufacturing Corp. make the most advanced processors for smartphones, tablet computers, medical devices and other products. Taiwan says chip sales to China factories rose 24.4% last year to $104.3 billion.

Beijing has invested billions of dollars in developing its own industry, which supplies low-end chips for autos and appliances but cannot support the latest smartphones, tablet computers, medical devices and other products.

Chips are China’s biggest import at more than $400 billion a year, ahead of crude oil.

That concentration has fueled concern in the United States and Europe about relying too heavily on supplies that might be disrupted by conflict. The U.S. government is trying to expand its domestic chip production capacity.

Overall, China is Taiwan’s biggest trading partner, taking more than twice as much of its exports as the United States, the island’s No. 2 foreign market.

Beijing has tried to use access to its markets to undermine Tsai and other Taiwanese leaders it accuses of pursuing independence.

The customs agency blocked imports of cookies and other food products from more than 100 Taiwanese suppliers on Monday ahead of Pelosi's visit, according to the Global Times and other Chinese news outlets. There was no official announcement.

The Communist Party also has used military action in the past to try to hurt Taiwanese leaders by disrupting the island's economy.

The mainland tried to drive voters away from then-President Lee Teng-hui ahead of the island's first direct presidential elections in 1996 by firing missiles into shipping lanes.

That forced shippers to cancel voyages and raised insurance costs but backfired by allowing Lee to brag about standing up to Beijing in front of cheering supporters. Lee won the four-way election with 54% of the vote.

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I like that photo. No prepackaged plastic wrapped fruit in sight!

5 ( +8 / -3 )

Taiwan should limit and reduce it's chip exports to China every time they carry out threatening "exerises" around Tawan. The more threatening, the greater the reduction.

9 ( +11 / -2 )

Hold on, China says Taiwan is theirs, so they are sanctioning themselves?

Its a bold move Cotton, let's see if it pays off.

7 ( +9 / -2 )

The interesting thing about people once they get a taste of democracy/self-determination/ liberty (or whatever synonym one chooses): once they get a taste of it, they’re willing to put up with a rather larger amount of deprivation to hang on to it.

If the Chinese think economic sanctions or a blockade (assuming one could be maintained which is quite an assumption) will make them buckle to the CCP’s will, they are likely to be disappointed.

8 ( +9 / -1 )

Chip disruption is all and fine, but what about the guacamole?!

1 ( +3 / -2 )

Food will become increasingly scarce due to climate change. China refusing to import it is great news. More for the RotW.

If they really wanted to annoy the US, they would open a military base in Cuba.

-1 ( +2 / -3 )

@GBR48 LMFAO Ask yourself what does China grow? Ask yourself why the people of China shop outside their own country and want to leave. If the country was that great the people would stay. If you are aware of what is going on in China today, the real estate market is bankrupt, the banking system is broke people can't get their own hard earn money out, but the country wants them to make deposits to banks. How backwards thinking is that. The construction of large building are doing the same thing the people are doing and that is laying "FLAT" I wouldn't live in one of those high rise building for free if they paid me to. My advice research and see what is going on in China. The people are getting flooded out of their homes because they gov released over filled dams that their brilliant engineers build only to realize it to was a failure so they release the water and it flooded outed cities. LMFAO you said annoying the US and building a military base in Cuba, the cubans can't trust the Chinese never has and never will. China is a hungry dog with a large bark and no teeth!!!! The only thing the Chinese invented was gun powder and they really put on a great fireworks show, while the US military sat and watched!!! Its a chess game and they did exactly what was expected put on a show and now the US knows!!!

Food will become increasingly scarce due to climate change. China refusing to import it is great news. More for the RotW.

If they really wanted to annoy the US, they would open a military base in Cuba.

1 ( +4 / -3 )

Every time China (or West Taiwan) has blocked food imports from Taiwan they have ended up increasing their exports to the rest of the world to their long term advantage and reduction of legacy reliance on one unstable market. Keep it up China and Taiwan will no longer need to do any business with you, especially chips!

7 ( +8 / -1 )

“but avoided sanctions on Taiwanese processor chips for Chinese assemblers of smartphones and other electronics, a step that would send shockwaves through the global economy”

Translated, that means it would COST THEM HARD Currency, from all the manufacturing done in china, we just want to hurt the Taiwanese.

1 ( +2 / -1 )

Taiwan, please export your products to Japan instead of China.

4 ( +5 / -1 )

Amazon - an American Company, should be the aim of our complaints. it supports the CCP by flooding the Marketplace with Chinese made rip-offs, which are both dangerous and poorly constructed.

I would hope, people, who are concerned about China's dominance, start paying attention to the role that Amazon plays here - and it's lack of transparency for buyers of products upon it's website too.

3 ( +4 / -1 )

Well said, JTC. Amzn refuses to crack down on cheap chinanese rip-offs of other people's stuff.

0 ( +2 / -2 )

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