China blocks some imports from Taiwan but avoids chip breaks

BEIJING (AP) – China has blocked imports of citrus fruits, fish and other foods from Taiwan in retaliation for a visit by an important American legislator, Nancy Pelosi, but has avoided interrupting one of the most important technological and production relationships in the world.

The two sides, which split in 1949 after a civil war, have no official relations but multi-billion dollar business ties, especially in the flow of Taiwanese-made processor chips needed by Chinese factories that assemble smartphones and other electronic devices around the world. world.

They built that business while Beijing has been threatening for decades to assert the claim of the ruling Communist Party on the island by attacking.

Bilateral trade rose 26% last year to $ 328.3 billion. Taiwan, which produces half of the world’s processor chips and has technology that the mainland cannot match, said sales to Chinese factories increased 24.4 percent 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 frozen citrus, furred tail and mackerel from Taiwan after arriving on the island of Pelosi, chairman of the House of Representatives. China hasn’t stopped the flow of chips and other industrial components, a step that would send shockwaves through the shaky global economy.

Also this week, China blocked imports of hundreds of other food products from Taiwan, including cookies and seafood, even though the timing was unclear. The customs website showed that their import status has been moved to “suspended”.

Fruit, fish and other foods are a small fraction of Taiwan’s exports to China, but the ban hurts areas that are 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 exercises with artillery fire in the waters around Taiwan. This could delay or disrupt shipping to and from the island, one of the largest global traders.

The potential disruption adds to concerns over weakening global economic growth, but Asian equity markets rose Wednesday after there was no immediate sign of Chinese military action.

The Communist Party says so Pelosi’s visit could encourage Taiwan to make its 10-year de facto independence permanent. Beijing says it would lead to war.

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

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

Meeting with leaders in Taiwan, Pelosi said she and the congressmen traveling with her are showing that they will not abandon their commitment to the island’s democracy.

“America’s determination to preserve democracy, here in Taiwan and around the world, remains ironclad,” Pelosi said in a brief speech during a meeting with the president, Tsai. She left later in the day for South Korea.

“In the face of deliberately heightened military threats, Taiwan will not back down,” Tsai said.

Taiwanese companies have invested nearly $ 200 billion in the mainland over the past three decades, according to the island government. Entrepreneurs, engineers and others have emigrated to the mainland to work, some recruited by Chinese chip makers and other companies wanting to catch up with Taiwan.

A 2020 census found 158,000 Taiwanese living on the mainland, according to the police ministry.

Taiwan plays a huge role in the chip industry for an island of 24.5 million people, representing more than half of the global supply.

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

Beijing has invested billions of dollars in the development of its own industry, which provides low-end chips for automobiles and home appliances but cannot support the latest smartphones, tablets, medical devices and other products.

Potato chips are China’s largest import with over $ 400 billion annually, ahead of crude oil.

This concentration has fueled concerns in the United States and Europe of relying too much on supplies from East Asia. The US government is looking to expand American manufacturing capacity.

Overall, China is Taiwan’s largest trading partner, absorbing more than double of its exports than the United States, the island’s second largest foreign market.

Beijing has tried to exploit access to its markets to undermine Tsai and other Taiwanese leaders whom it accuses of pursuing independence.

The Communist Party has also used military action in the past to try to hurt Taiwanese leaders by upsetting the island’s economy.

The mainland tried to turn voters away from then-president Lee Teng-hui before the island’s first direct presidential election in 1996 by firing missiles at sea routes.

This forced shippers to cancel trips and raise insurance costs, but it backfired, allowing Lee to brag to stand up to Beijing in front of cheering supporters. Lee won the four-party election with 54% of the vote.

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