US Reporter

China’s Trade Sanctions to Taiwan Only Represent a Small Fraction of Overall Trade

Photo Credit: Jerome Favre

According to experts, Beijing’s trade sanctions against Taiwan are more political than they are economical.

China made it plain that they disagreed with the American officials’ choice after US Senate Speaker Nancy Pelosi visited Taiwan. Pelosi nevertheless managed to enter Taiwan despite earlier warnings from the Chinese authorities, which caused joy for some people and worry for others.

In immediate retaliation, China conducted military drills close to Taiwan’s territorial waters. Following the event, many analysts claim that Taiwan will experience the worst aspects of China’s reaction rather than the US.

China put economic pressure on Taiwan by halting imports of frozen fish, candy, biscuits, and citrus following their military drills. Due to Taiwan’s defiance of the superpower, Beijing has also prohibited the export of natural sand from Taiwan.

China claims the territory of the tiny island, despite Taiwan’s proclamation that it is a sovereign, democratic, and independent nation. This assertion is what prompted the Chinese administration to respond to Pelosi’s visit because, in their perspective, Taiwan should not establish any diplomatic ties without their permission.

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The restrictions made by China on Taiwan

The Taiwanese Trade Bureau said that the value of the Taiwan-China export industry hit $113 billion last year, compared to $82 million in imports from China. However, re-imports and re-exports are not included in these statistics.

The bulk of the amount stated by the commerce bureau is made up of electrical machinery and technology components. China did not focus on these areas despite being the largest. $82 billion is the expected value of Taiwan’s imports of electrical and technology equipment. At the same time, these goods account for 65% of the nation’s overall exports in terms of value. In summary, Taiwan benefits greatly from these products.

Trade sectors targeted by Beijing are trivial in comparison

The trade areas Beijing focuses on are minor compared to other sectors that account for most of Taiwan’s export and import economy.

Natural sand exports have been prohibited by China, despite the fact that, in terms of total exports, they represent a minor portion of the overall trade sector. The trading region had a value of around $3.5 million, according to all the information provided by the Taiwanese trade office. The value is a “drop in the ocean” when compared to the natural sand exports from Australia and Vietnam.

Chinese officials have also imposed limitations on the citrus trade, which barely reached a value of $10 million last year.

Nick Marro from the Economist Intelligence Unit said, “It’s already had restrictions on Chinese visitors to Taiwan in place for a few years, which carry more economic significance; the agricultural products now in the headlines are only a fraction of Taiwan’s export basket. And so the headline impact on Taiwan won’t really be noticeable.”

The export of frozen fish, particularly large head hairtail and horse mackerel, which were valued at $50 million and $3 million, respectively, as well as bread, cakes, biscuits, and pastries, are among the other trade limitations enforced by China.

“China’s economic retaliation against Taiwan is a long-standing strategy in its diplomatic playbook. That said, its decision to target relatively low-value trade items reflects the limits of its economic pressure toolbox,” said Marro.

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Impacts that the restrictions give to other global players

Even though the value of Taiwan’s limited trade zones only makes up a small fraction of its overall trade industry, many analysts think that China’s other measure of retribution against Taiwan could harm global commerce.

“China’s economic retaliation against Taiwan is a long-standing strategy in its diplomatic playbook. That said, its decision to target relatively low-value trade items reflects the limits of its economic pressure toolbox,” Marro added.

“It’s not just a story for Taiwan and China, but also for their neighbors, as well.”

According to Container xChange, a logistics platform, when businesses start the shipping season, China’s military drills may slow down the rapid movement of shipments through the waterways between China and Taiwan.

Source: CNBC

Opinions expressed by US Reporter contributors are their own.