The Banking Executive Magazine - September Issue 2022

Us-China Tension Over Taiwan porting Taiwan, it could harm the US–Japan alliance. Relationship with Australia • Australia has signed a defence and trade pact with the United States and the United Kingdom (UK) and has vowed to support Taiwan. • Australia has been facing increas- ing restrictions and friction with China over the past few years, which has impacted trade growth prospects. Relationship with India • India does not hold formal diplo- matic ties with Taiwan. However, informal ties have been strong since the mid-1990s. India’s sup- port to Taiwan mean a potential tie that would help India establish semiconductor plants. ROAD AHEAD FOR ARAB COUNTRIES The impact of the tension between US and China over Taiwan may be- come similar the impact of Russia- Ukraine war, if this tension escalates. The impact on high tech semicon- ductor supply to the world has al- ready disrupted the global supply chain, and further disruption is ex- pected. Arab banks and government author- ities in the Arab world should take precautionary measures in order to protect their trade supply chain, high tech industries relying on semicon- ductors, and their road to digital transformation. Below, we offer some recommenda- tions to Arab banks and government authorities to address the new threat to digital economy and global supply chain: Recommendation #1. Support the diversification of trade and supply chain. Recommendation #2. Businesses in Arab countries are ad- vised to look for alternate suppliers, like South Korea, for semiconductor chips and intermediate electronic goods to deal with any supply chain issues. Recommendation #3. Procurement leaders in the Arab world must put in place diversified strategy for sourcing that balance global, regional and local suppliers in an ecosystem that establishes a balance between cost and resilience. Recommendation #4. Arab banks and businesses should expand investments into new devel- oped markets. Recommendation #5. Arab banks and authorities should support the reconfiguration of supply chain to make it more diversified and resilient. Recommendation #6. Arab countries should adopt a uni- fied diversification strategy for supply and production. the BANKING EXECUTIVE 44 ISSUE 165 SEPTEMBER 2022