The Banking Executive Magazine - September Issue 2022

Us-China Tension Over Taiwan at reassuring allies in the region. The visit triggered opposition from Beijing and sparked concerns within the United States and around the Indo-Pacific about the impacts of the visit and the Chinese military re- sponse on regional security. Follow- ing the visit, Beijing launched large-scale military exercises, raising discussion of a possible Fourth Tai- wan Strait Crisis. CHINA RESPONSE TO PELOSI VISIT Live fire drills. Immediately on the confirmation of Ms Pelosi’s visit to Taiwan, China an- nounced live fire drills in six areas surrounding Taiwan’s main island and effectively closed them to civil- ian airplanes and vessels for the four days period from 4-7 August 2022. This is breaching both territorial and internal waters from Taiwan’s per- spective. China also took other mili- tary actions as well by imposing economic restrictions such as a ban on imports of citrus fruits and fish from Taiwan. The White House is maintaining that this visit does not represent any shift to the United States ‘One China’ pol- icy. However, Beijing perception is that the visit is part of US long-term strategy to hollow out the existing commitments that underpin the two countries’ bilateral relationship. There is also a strong incentive for Beijing to prevent future similar visits from the legislative leaders of other Group of seven (G7) countries. Although China fire drills could turn out to be a one-off gesture, they could easily become a prolonged or regular occurrence, creating signifi- cant disruptions in Taiwan’s trade with the rest of the world. Ban of food import. Chinese media reported that the China General Administration of Customs had banned the import of food from 107 Taiwanese compa- nies. Many agricultural products have been affected by the ban, in- cluding aquatic products, such as live fish, fresh refrigerated fish, frozen fish, dried fish, prepared fish, and canned fish, as well as honey and tea leaves. Reduction of semiconductors import. China is already seeking to become more self-sufficient in its semicon- ductor industry in order to reduce the reliance on imports. The main driver of this push has not been directly re- lated to Taiwan, but rather a means of mitigating the impact of possible sanctions and trade tensions with the US. The ultimate effect will also be to become less reliant on Taiwanese- made chips and technology. Labelling products from Taiwan. Several media outlets have reported that China’s customs will strictly im- plement labelling requirements for products imported from Taiwan. Goods labelled as being from “Tai- wan”, “Republic of China”, or “Made in Taiwan” will now no longer be permitted to enter main- land China. This means companies that source components from Taiwan may find their imports confiscated or otherwise blocked at the ports of entry. ISSUE 165 SEPTEMBER 2022 the BANKING EXECUTIVE 37 Figure 1: Visit of Speaker of the US House Of Representatives Nancy Pelosi to Taiwan (Source: iStock, www.news.com.au August 03, 2022 in Taipei, Taiwan) Figure 2. China live fire drills in six areas surrounding Taiwan’s main island (Source: iStock, www.news.com.au August 03, 2022 in Taipei, Taiwan)