China blocks some Taiwan imports but avoids chip disruptions

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

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

China blocked imports of citrus, fish and other foods from Taiwan in retaliation for a visit by top US lawmaker Nancy Pelosi, but has avoided disrupting one of the world’s most important technology and manufacturing ties.

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

They built that company as Beijing threatened for decades to enforce the ruling Communist Party’s claim to the island by attacking.

Two-way trade rose 26% last year to $328.3 billion. Taiwan, which produces half of the world’s processor chips and has technology unmatched by the mainland, said sales to Chinese factories rose 24.4% to $104.3 billion.

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

On August 3, Beijing blocked imports of citrus and frozen scabbard and mackerel from Taiwan after Ms Pelosi, Speaker of the House of Representatives, arrived on the island. China has not disrupted the flow of chips and other industrial components, a move that would send shockwaves through the shaky global economy.

Also this week, China blocked imports of hundreds of other foods from Taiwan, including biscuits and seafood, though the timing was unclear. The customs website showed that their import status had switched to ‘suspended’.

Fruit, fish and other foods make up a small portion of Taiwan’s exports to China, but the ban hurts areas seen as supporters of President Tsai Ing-wen. Beijing has used import bans on bananas, wine, coal and other goods as leverage in disputes with Australia, the Philippines and other governments.

Beijing also announced four days of military artillery fire drills in the waters around Taiwan. That could delay or disrupt shipping to and from the island, one of the largest international merchants.

The potential disruption raises concerns about weakening global economic growth, but Asian stock markets rose on Aug. 3 after there was no immediate sign of Chinese military action.

The Communist Party says Ms Pelosi’s visit could encourage Taiwan to make its decades-old de facto independence permanent. Beijing says that would lead to war.

The administration of US President Joe Biden has tried to appease Beijing by saying there is no change in Washington’s ‘one China policy’. That says the United States does not take a position on the status of the two sides, but wants their dispute to be resolved peacefully.

Read: Taiwan | The next flashpoint in the US-China match

Washington has no formal relations with Taiwan, but maintains unofficial ties and is required by federal law to ensure that the island has the means to defend itself.

Ms. Pelosi, who met with leaders in Taiwan, said she and members of Congress traveling with her showed that they will not give up their commitment to democracy on the island.

“America’s determination to preserve democracy, here in Taiwan and around the world, remains rock solid,” Ms Pelosi said in a short address during a meeting with President Tsai. She left for South Korea later in the day. military threats, Taiwan will not back down,” Tsai said.

According to the island’s government, Taiwanese companies have invested nearly $200 billion in the mainland over the past three decades. Entrepreneurs, engineers and others have migrated to the mainland to work, some recruited by Chinese chipmakers and other companies looking to overtake Taiwan.

At a 2020 census, 1.58,000 Taiwanese were found on the mainland, according to the police ministry. Taiwan plays an outsized role in the chip industry for an island of 24.5 million people, accounting for more than half of the global supply.

The manufacturers, including Taiwan Semiconductor Manufacturing Corp., make the most advanced processors for smartphones, tablet computers, medical devices and other products.

Beijing has invested billions of dollars in developing its own industry, which provides cheap chips for cars and appliances, but cannot support the latest smartphones, tablet computers, medical devices and other products. Chips are China’s largest import product at more than $400 billion a year, ahead of crude oil.

That concentration has raised concerns in the United States and Europe about over-reliance on supplies from East Asia. The US government is trying to expand US manufacturing capacity.

Overall, China is Taiwan’s largest trading partner, exporting more than twice as much as the United States, the island’s second-largest foreign market. Beijing has tried to use access to its markets to undermine Tsai and other Taiwanese leaders it accuses of pursuing independence.

The Communist Party has also taken military action in the past to try to hurt Taiwanese leaders by disrupting the island’s economy. The mainland attempted to drive voters away from then-President Lee Teng-hui ahead of the island’s first direct presidential election in 1996 by firing rockets into shipping lanes.

That forced shippers to cancel trips and increased insurance costs, but backfired by letting Lee brag about standing up to Beijing in front of cheering supporters. Lee won the quadruple election with 54% of the vote.

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