No notable trade disruptions due to tensions in China

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Most member companies of American Chambers of Commerce in Taiwan said there had been no significant disruption to business despite escalating tensions between China and Taiwan in recent weeks, a survey found.

China began conducting military exercises around Taiwan in recent weeks, but 77% of respondents said they had not faced “appreciable disruption” to their activities, said Andrew Wylegala, Chairman of AmCham Taiwan.

China launched military drills after US House Speaker Nancy Pelosi visited Taiwan, despite China’s warnings for weeks not to visit the island.

Taiwan is a self-governing democracy, but Beijing considers the island part of its territory and a breakaway province.

Nevertheless, while there has been no “panic” or “exodus” of business in Taiwan, almost half of its members predict “some kind of dislocation and disruption” as China continues its military exercises, Wylegala said.

There was “no short-term panic, but an appropriate degree of concern for the future,” Wylegala said on CNBC’s “Capital Connection” on Friday.

AmCham Taiwan conducted the survey of 529 member organizations from August 8-17, just days after Pelosi’s visit to Taipei.

According to the survey, 17% of respondents said they had already experienced disruption to their business, of which a third said they faced higher shipping or insurance costs and supply chain delays. .

AmCham Taiwan also said 46% of companies surveyed expect to see an increase in Chinese military activity from 2022 to 2023 that will affect their operations. Other respondents do not expect to be affected or do not know if they would be.

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According to the trade association, respondents raised the following issues when asked about the specific “spectrum of threats” that concerned them: concerns about disinformation and psychological campaigns targeting Taiwan; constraints or barriers on the periphery of the island; and “sanctions, travel bans, boycotts and embargoes against Taiwanese products and people”.

Trade negotiations between the United States and Taiwan

The United States and Taiwan agreed on Wednesday to begin talks on a trade and economic initiative as the United States continues to bolster its support for the island in light of growing tensions with China.

However, the likelihood of a free trade deal – which is broader in nature and something Taiwan has been pushing for – remains unknown.

Wylegala said Taiwan “has done a tremendous job as a partner with the United States” and recent tensions have strengthened the case for a bilateral trade deal.

The U.S.-Taiwanese 21st Century Trade Initiative announced in June is “not a free trade agreement per se,” Wylegala said, but it is a “stepping stone” nonetheless, he added. .

“Four years ago we had no channel of ongoing economic talks. And now we have four separate deals and more waiting in the wings,” he added.

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