China hits Taiwan with trade sanctions after Pelosi’s visit

Hong Kong
CNN Business

China has suspended some trade with Taiwan in apparent retaliation for a visit US House Speaker Nancy Pelosic For the self-governing island.

The sanctions include suspending the import of some fruits and fish from Taiwan and the export of natural sand to the island.

According to Taiwan, China is Taiwan’s largest trading partner, with bilateral trade of $273 billion last year, accounting for 33% of the island’s total trade with the rest of the world. government,

Experts are also concerned about the impact of rising tensions between Taipei and Beijing on Taiwan’s semiconductor industry.

US House Speaker Nancy Pelosi, center left, speaks with Taiwan's President Tsai Ing-wen, center right, after arriving at the office of the President on August 03, 2022 in Taipei, Taiwan.

A self-governing democratic island of 24 million people is a global leader in the supply of semiconductor chips, They are a vital component to almost all modern electronics, from cars to refrigerators to mobile phones.

China’s Taiwan Affairs Office said on Wednesday it would suspend imports of grapes, lemons, oranges and other citrus fruits as well as cold white striped hairtail and frozen horse mackerel from Taiwan.

In a separate statement, Chinese customs officials said the import suspension of citrus fruits is a result of “pest control” and “excessive pesticide residues”, and cited “Covid prevention” for the suspension on imports of seafood.

Meanwhile, China’s commerce ministry suspended exports of natural sand to Taiwan, a key ingredient for the production of semiconductor chips.

“Nancy Pelosi’s visit to Taiwan has sparked the expected outrage of Chinese officials,” analysts at ING Group said on Wednesday.

In response, Taiwanese officials said China’s sand export suspension This would have a “limited” impact and sugar sands account for “less than one percent” of its total demand.

China has previously banned imports of some Taiwanese products amid rising tensions. Last year, China banned the import of certain types of apples from the island, citing “pest control”. Earlier this year, it also banned Taiwanese grouper fish, a high-value seafood product from Taiwan, citing trace amounts of certain banned drugs.

coincides with Beijing’s recent announcements Pelosi’s visit to TaiwanThe first visit by a seated speaker in 25 years, and after being released by Beijing Stern warning that he will take retaliatory measures.

country army Pelosi said after the visit that he was “launching a series of targeted military operations to counter the situation.”

In a press briefing on Wednesday, a spokesman for China’s foreign ministry said that “the separatist forces of the US and Taiwan must take responsibility and pay the price for their mistakes.” His remarks came when he was asked whether the latest export suspension was aimed at punishing Taiwan for Pelosi’s visit, to which he declined to answer directly, saying, “Please ask the department in charge.”

Pelosi’s Journey Comes Here a tense moment for China.

This fall the Communist Party will make a leadership reshuffle at its 20th Party Congress. President Xi Jinping is expected to seek a historic third term in power at the meeting.

Domestic tensions high as country’s economy slips Lowest growth in more than two years harsh covid lockdown and a . among falling property market, Youth unemployment has reached an all-time high. Social protests are on the rise as nationwide hostage crisis and a series of gramin bank scam

Traders and analysts are concerned about escalating China-Taiwan tensions and their impact on the global supply chain and inflation outlook.

Global markets fell on Tuesday, with major stock indices closing in the red and safe-haven currencies. Asian markets rose slightly on Wednesday morning, but risk sentiment remains muted.

“China’s response to Pelosi’s visit to Taiwan could impact supply chain and demand, which could keep inflationary pressures strong,” Edward Moya, senior market strategist at Oanda, said on Wednesday.

global supply chain The pandemic and the war in Ukraine have already rattled. world Bank recently said That many countries are facing double-digit inflation.

any conflict in Taiwan, which is The key to supplying the world with semiconductors, could exacerbate the global chip shortage that has already strained the global auto industry. The Taiwan Strait is also an important shipping lane for ships carrying goods between Asia and the West.

Taiwan Semiconductor Manufacturing Company is the world’s largest contract manufacturer of chips and plays a key role in powering products designed by tech companies such as Apple, Qualcomm and Nvidia.

In an interview with CNN This week, TSMC President Mark Liu said that a war between China and Taiwan will lose everyone. “If you take a military force or attack, you will not operate the TSMC factory,” he said.

TSMC is one of the most valuable companies in Asia, and is responsible for 90% The world’s super-advanced chips.

Meanwhile, analysts at the Eurasia Group expect Beijing to mount an “unprecedented” display of military force in the Taiwan Strait, alongside cyberattacks, economic sanctions and diplomatic protests.

“The immediate impact on customers will be a moderate but potentially temporary disruption of the supply chains that traverse the waters around Taiwan, as planes and ships reroute to escape [People’s Liberation Army] practice,” he said in a report on Wednesday.

The “lasting impact” will depend on the duration and intensity of the episode, although at the very least it will prompt further planning and contingencies around supply chain disruptions, including by semiconductors, firms and policy makers, he said.

“The crisis likely cannot subside anytime soon,” he said, adding that China could unveil further responses in the coming days, weeks and even months as the 20th Party Congress approaches.

CNN’s Simone McCarthy, Akanksha Sharma and Wayne Chang in Hong Kong contributed to this report.

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