China blocked citrus and fish imports from Taiwan in retaliation for a visit by House Speaker Nancy Pelosi, but avoided upsetting one of the world’s most important technology and manufacturing ties.
The two sides, which split in 1949 after a civil war, have no official ties but boast a multibillion-dollar business relationship, particularly in the flow of Taiwanese-made processor chips needed by Chinese factories that have -assemble the world’s smartphones and other electronics.
They built the business while Beijing threatened for decades to enforce the ruling Communist Party’s claim to the island by attacking it.
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 at Chinese factories rose 24.4% to $104.3 billion.
“The global economy cannot function without chips made in 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 the arrival of Pelosi (D-San Francisco) in Taiwan. Those products are only a fraction of Taiwan’s total exports to mainland China. Beijing has avoided disrupting the flow of chips and other industrial components, a move that would send shock waves through the reeling world economy.
Beijing also announced four days of military exercises with artillery fire in the sea around Taiwan. That could delay or disrupt shipping to and from the island, one of the largest global traders.
The potential disruption adds to concerns of weakening global economic growth.
The Communist Party says Pelosi’s visit could encourage Taiwan to make permanent its decades-old de facto independence. Beijing says that will lead to war.
The Biden administration has sought to lower the number of visits, insisting there will be no change to America’s long-standing “one-China policy,” which recognizes Beijing but allows informal ties and ties. in the defense of Taipei.
Banning imports of citrus fruits and frozen mackerel will hurt suppliers seen as supporters of Taiwanese President Tsai Ing-wen.
Taiwan plays a big role in the chip industry for an island with 23 million people.
Beijing has invested billions of dollars in developing its own industry, which supplies low-end chips for cars and appliances but cannot support the latest smartphones, tablet computers, medical devices and other products.
Chips are China’s biggest import at over $400 billion a year, ahead of crude oil.
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That concentration has raised concerns in the United States and Europe about an over-reliance on supplies that could be disrupted by conflict. The US government is trying to expand its domestic chip production capacity.
Overall, China is Taiwan’s largest trading partner, taking more than twice as many exports as the United States, the No. 2 foreign markets on the island.
Beijing has tried to use its market access to undermine Tsai and other Taiwanese leaders it accuses of pushing for independence.
The customs agency blocked the import of cookies and other food products from more than 100 suppliers in Taiwan on Monday ahead of Pelosi’s visit, according to the Global Times and other news outlets. in China. There is no official announcement.