After Pelosi’s Visit, China Imposes Trade Sanctions On Taiwan.

China has banned commerce with Taiwan in retaliation for Nancy Pelosi’s visit.
Suspended imports from Taiwan include fruits, seafood, and natural sand.
China is Taiwan’s major trading partner, accounting for 33% of the island’s overall commerce last year. Bilateral trade was $273 billion.

Experts worry about the impact of increasing tensions on Taiwan’s semiconductor industry.
The self-governed democratic island of 24 million people is a global leader in semiconductor chip supply. Semiconductor chips are used in practically all modern devices, from cars to mobile phones.
China’s Taiwan Affairs Office announced it will stop importing grapefruit, lemons, oranges, and other citrus fruits from Taiwan, as well as chilled white striped hairtail and frozen horse mackerel.
Chinese customs officials cited “pest management” and “excessive pesticide residues” for the citrus fruit import suspension and “Covid prevention” for the seafood import suspension.

China’s commerce ministry stopped natural sand supplies to Taiwan, a major semiconductor chip component.

ING Group analysts said Wednesday that Nancy Pelosi’s visit to Taiwan angered Chinese authorities.
Taiwan officials said China’s sand export restriction will have a “limited” effect and accounted for “less than 1 percent” of their total need.
During rising tensions, China prohibited some Taiwanese imports. China barred pineapples and apples from the island last year, citing “pest management.” This year, it banned high-value Taiwanese grouper fish, alleging drug detection.
Beijing’s new statements coincide with Pelosi’s first travel to Taiwan in 25 years, after Beijing warned it would take retaliatory actions.
After Pelosi’s visit, the military launched “targeted military operations”
China’s Foreign Ministry stated Wednesday that the US and Taiwan separatist groups must pay for their blunders. Her comments came after she was questioned if the latest export embargo is meant to punish Taiwan for Pelosi’s visit. She declined to answer directly, adding “please ask relevant department in charge.”
China is tense during Pelosi’s visit.
This fall’s 20th party conference will see a leadership transition. At the gathering, President Xi Jinping will seek a third term.
As a result of rigorous Covid lockdowns and a collapsing property market, domestic tensions are high. Record-high youth unemployment. Mortgage crisis and rural bank scandals are fueling social unrest.

Supply chain impact

Traders and economists worry about China-Taiwan tensions’ influence on the global supply chain and inflation prospects.
Major stock indices fell Tuesday, and safe-haven currencies rose. Asian markets rallied Wednesday morning, although risk sentiment remains low.
“China’s response to Pelosi’s travel to Taiwan could affect supply chains and demand, keeping inflationary pressures high,” said Oanda’s Edward Moya on Wednesday.
Pandemic and Ukraine war have shook global supply systems. World Bank: many countries have double-digit inflation.
Any confrontation in Taiwan, a crucial semiconductor supplier, might exacerbate the global chip shortage, which has already hurt the auto sector. The Taiwan Strait is a key shipping corridor for Asia-West trade.
Taiwan Semiconductor Manufacturing Company is the world’s largest contract chip maker, powering Apple, Qualcomm, and Nvidia products.
TSMC chairman Mark Liu said everyone would lose in a war between China and Taiwan. “A military force or invasion would cripple TSMC,” he warned.
TSMC makes 90% of the world’s super-advanced semiconductors and is one of Asia’s most valued firms.
Eurasia Group researchers expected Beijing to use “unprecedented” cyberattacks, economic sanctions, and diplomatic protests in the Taiwan Strait.
“The immediate effect on clients will be a moderate but likely temporary disruption of supply chains,” they stated in a study on Wednesday.
“The lasting impact” will depend on the episode’s duration and intensity, but it will push enterprises and regulators to plan for supply chain interruptions, notably for semiconductors.

“The possibility for catastrophe may not abate soon,” they said, adding that China could announce more responses in the coming days, weeks, or months.

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