U.S. Officials, Businesses Gearing Up For Continued Beijing Pressure On Taiwan

U.S. House Speaker Nancy Pelosi wrapped up a trip to Taiwan more than two weeks ago, but the reverberations from the visit don’t appear likely to conclude anytime soon.

Unprecedented follow-up missile tests and military exercises by mainland China in the waters around Taiwan are “part of an intensified pressure campaign” against Taipei that Washington expects “to continue to unfold in the coming weeks and months,” Daniel Kritenbrink, Assistant Secretary of State for the Bureau of East Asian and Pacific Affairs said in a call with journalists on Wednesday.

Similarly, a new survey by the American Chamber of Commerce in Taiwan this week found expectations of continuing action by the People’s Liberation Army. Some 46% of the companies surveyed expected that increased military activity during 2022-2023 would affect their operations, while the remainder were either unsure or did not anticipate being affected, the business group said on Friday.

Beijing, led by the Communist Party, claims sovereignty over Taiwan, a self-governing democracy of 23 million people, and hasn’t ruled out the use of force to take over in spite of public opinion polls that show a clear majority favor no change in the status quo.

The two sides have been divided since the Communists won a civil war on the mainland in 1949 and founded the People’s Republic of China. The U.S. switched diplomatic recognition to Beijing from Taipei in 1979 and follows a “one China” policy under which it opposes any unilateral changes to the status quo by either side. “We do not support Taiwan independence and we expect cross-strait differences to be resolved by peaceful means,” Kritenbrink said.

Pelosi’s visit to Taipei with a Congressional group this month came ahead of a Communist Party Congress expected in the second half of this year at which President Xi Jinping is expected to seek a third term as leader. Beijing called her trip an intrusion into its internal affairs; U.S. critics have said Pelosi’s visit was poorly timed given the mainland’s sensitive political calendar.

Kritenbrink said Beijing used her trip “as a pretext to launch an intensified pressure campaign against Taiwan and to try to change the status quo, jeopardizing peace and stability across the strait and in the broader region.”

Taiwan’s relatively small geography belies its economic influence. It is the world’s 22nd largest economy, a leading source of the semiconductors worldwide, and one of the mainland’s largest investors. Island businesses that rank on the Forbes Global 2000 list of the world’s top publicly traded companies include Hon Hai Precision — the big supplier to Apple led by billionaire Terry Gou, and Taiwan Semiconductor Manufacturing Corp., or TSMC, which makes computer chips for Intel. Others among Taiwan’s numerous Apple suppliers include Pegatron, Lite-On Technology, Inventec, Catcher Technology, Largan Precision and Compeq Manufacturing.

The area around Taiwan also matters because almost half of the global container fleet and 88% of the world’s largest ships by tonnage passed through the Taiwan Strait this year, Kritenbrink noted.

In a survey of its member companies following the recent tensions, the American Chamber of Commerce in Taiwan said it Friday it found that over three-quarters of the respondents said they had not been significantly impacted by the Chinese military exercises in the Taiwan Strait.

The survey was conducted from August 8-17 in the wake of Pelosi’s visit to Taipei and the Chinese military exercises that followed. Of the 126 out of 529 AmCham Taiwan member organizations that responded, 77% reported their business had not been significantly impacted, according to a chamber statement. However, 17% said they had experienced disruption, a third of which reported increased shipping or insurance costs or supply chain delays, AmCham said. Roughly half of respondents — 46% — expect that increased military activity during 2022-2023 would affect their operations.

Looking forward, the U.S. and Taiwan this week announced new trade discussions. And looking ahead more regionally, Kritenbrink said: “We’ve reinforced our ironclad alliances, as we did on August 9 with a joint air force exercise with Japan near Okinawa and will continue to do so.”

“We will continue to fly, sail, and operate anywhere and everywhere international law allows, consistent with our longstanding commitment to freedom of navigation, and that includes conducting standard air and maritime transits through the Taiwan Strait,” he added.

Stay tuned.

See related posts:

U.S. Companies Escape Sanctions Over Pelosi Visit: U.S.-China Business Forum

Growth Prospects Top Today’s Angst Among American Companies: U.S.-China Business Forum


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