China’s military maneuvers around busy trade routes around Taiwan on Thursday threaten to disrupt global supply chains already compromised by the Covid-19 outbreak and the war in Ukraine.
The exercises around the island – the largest in Chinese history – are in response to US House Speaker Nancy Pelosi’s visit to Taiwan on Tuesday and Wednesday.
The maneuvers touch points of contact on the busiest trade routes on the planet and are crucial as they connect the world with semiconductor factories and electronic equipment in East Asia, while also being used to transport natural gas.
Missiles aimed at simulating a “blockade” against Taiwan include “live ammunition and long-range artillery fire”, missiles expected to fly over the island for the first time, according to state media.
As a safety measure, China’s Maritime Security Administration “banned” ships from entering the affected areas.
In the first seven months of the year, about half of the world’s container ships passed through the Taiwan Strait, according to data compiled by Bloomberg.
“Since most of the world’s container fleet passes through this waterway, diversion (caused by maneuver) will inevitably lead to disruptions in global supply chains,” said James Char, a research fellow at the S. Rajaratnam School of International Studies in Singapore.
canceled flights
Supply chains have already been severely affected by the outbreak and the war in Ukraine.
“The closure of these transport routes, albeit temporarily, has implications not only for Taiwan but also for trade flows linked to Japan and South Korea,” said Nick Marro, an analyst at the Economist Intelligence Unit.
The same goes for airlines: More than 400 flights have been canceled in the last two days at major airports in Fujian, China’s closest province to Taiwan. Taiwanese officials have warned that the simulations will disrupt 18 international airlines passing through the region.
On the Taiwan Stock Exchange, the Taiex index for air and shipping companies fell 1.05% on Wednesday, after falling 4.6% since the start of the week.
Some shipping companies contacted by AFP said they expected to see the effects of the exercises before changing their routes, while others did not expect changes.
“We do not expect any impact during (this) period and we have no plans to divert our ships,” said Bonnie Huang, China spokesperson for Maersk, one of the world’s largest shipping companies.
“Lock the Candidate”
During the last Taiwan Strait crisis in the 1990s, Chinese military exercises, including launching missiles into the island’s waters, lasted for months.
This time, the Chinese wanted to “prove their decision in a way that goes far beyond what they did in 1996,” says Bonnie Glasser, Asia program director of the American-German Marshall Fund.
China can add cyber attacks to its military show of strength and has already begun to impose trade sanctions.
However, with the Asian power’s economy already suffering from health restrictions imposed since 2020, it is unlikely that Beijing will bet on a major trade blockade, according to analysts.
“Closing all strait traffic for a long time will hurt the Chinese economy,” says James Char.
“Given the extraordinary expansion of air and sea capabilities in recent years, China is more likely to have the capability to impose an air and naval blockade on Taiwan,” said Thomas Shugart, military innovation expert at the Center for New Security. in Washington, USA.
According to Shugart, Beijing’s final decision depends on the political and economic risks the government is willing to take.
source: Noticias
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