As China’s military exercises around Taiwan become the new normal, foreign companies are reassessing the risks and costs of doing business in Taiwan, seeking to move through or on autonomous islands that China considers its own territory. We maintain supply chains that pass nearby.
Neil Thomas, a senior China analyst at the Eurasia Group, a political risk consultancy, told VOA Mandarin that the expansion of PLA exercises around Taiwan could be linked to a prolonged military confrontation or another type of conflict. He said it would increase the risk of an accident or miscalculation that would escalate into an international security crisis. .
China’s military drills following US House Speaker Nancy Pelosi’s visit to Taiwan are raising operating costs for foreign companies, Thomas said in an emailed response. Adding Supply Chain and Transaction Costs”
wall street journal reported that insurers were hesitant to offer new policies to cover Taiwan-related political risks. One insurance broker said it would not offer policies to new customers “at least until things settle down.”
Pelosi visited Taiwan on August 2 to defy threats from China, where she has long criticized her record on human rights and democracy. In response, China launched live-fire military exercises in seven of her waters around the autonomous island, according to Taiwanese officials.
Rupert Hammond-Chambers, chairman of the US-Taiwan Business Council, told VOA Mandarin that most global companies would reconsider what it means to invest in Taiwan if things don’t settle down soon.
Christina Lai, a professor and assistant research fellow at the Institute of Political Science at Academia Sinica in Taipei, told VOA Mandarin that recent incidents clearly demonstrate China’s coercive measures against Taiwan, which employ a combination of economic sanctions and military exercises. said to have revealed a pattern.
She warned that rising levels of military confrontation could have a negative impact on Taiwan’s economy in the long run.
“For example, hundreds of flights were canceled last week due to PLA training near the Taiwan Strait,” she told VOA Mandarin in an email. then the trade route connecting the northeast and southeast would be [Asia] It will quickly become confusing. This is a worst-case scenario that could seriously affect Taiwan’s trade volume and economic development. “
Others point out that China is no stranger to the supply chain disruptions its actions create.
David Wren, a senior fellow at the Australian Strategic Policy Institute, said in a recent article that disruption of Taiwan’s sea lanes to the east and west would have devastating effects on China’s own economy. Dalian, Tianjin, etc. depend on the passage of waters near Taiwan. “
The Taiwan Strait, which separates Taiwan from continental Asia, is one of the world’s busiest trade routes for ships carrying goods to and from China, Japan, Korea, and the rest of the world.
Taiwan’s Ministry of Defense said every day this week, 15+ People’s Liberation Army Found (People’s Liberation Army) fighters and at least five ships in the Taiwan Strait.
China’s new exercise came in response to a visit Monday by a US delegation led by Democratic Senator Ed Markey of Massachusetts.
Vice Adm. Carl Thomas, commander of the U.S. 7th Fleet, on Tuesday described China as “the gorilla in the room” ahead of the Southeast Asia cooperation and training naval exercise commonly known as SEACAT.
“It’s very important to dispute this kind of thing. I know the gorillas in the room are launching missiles over Taiwan,” he said, adding that China will launch missiles over Taiwan into the high seas. added that it was irresponsible.
Dale Buckner, CEO of Global Guardian, a security solutions company headquartered in Virginia, said some of his biggest customers were concerned about doing business in Taiwan.
He said companies should start looking at whether they have key talent, hard and soft assets in the region, and financial assets parked within the Chinese or Taiwanese system.
“If you’re a leader and you’re thinking about the horizon not just for the next 12, 18 months, but for the next decade, you have to think about these things. I don’t think there are, but I think they take it very seriously, and they don’t want to repeat what happened between Russia and Ukraine on a larger scale,” he said by phone to VOA. Told Mandarin.
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