Taiwan official plays down impact of China’s trade restrictions

Taiwan official plays down impact of China’s trade restrictions

China’s economic measures against Taiwan are unlikely to have a major effect on trade, a finance ministry official said [File: Bloomberg]
Finance ministry official says island does not expect further sanctions by Beijing due to ‘highly reliant’ economic ties.

A Treasury official said China’s economic measures against Taiwan were unlikely to have a significant impact on trade because the two economies are closely intertwined.The two countries’ electronics industries are “highly interdependent.” and Taiwan is China’s largest importer of integrated circuits, Beatrice Tsai, the foreign ministry’s chief statistician, told reporters in Taipei on Monday.

Tensions between Beijing and Taipei escalated last week when China fired missiles at Taiwan and imposed trade restrictions on some agricultural and building materials after U.S. House Speaker Nancy Pelosi visited the island. .
Tsai said, “We anticipate little chance that China will impose tougher economic sanctions on Taiwanese companies due to its strong economic ties with Taiwan.”

Taiwan reported stronger-than-expected trade data on Monday, with July export growth up 14.2% year-on-year. That pushed total shipments to $43.3 billion, the second-highest ever, faster than the most optimistic forecasts in a Bloomberg poll of economists.

Export growth to China has been sluggish this year as Beijing struggles with his Covid outbreak and lockdown. Shipments to China and Hong Kong increased just 3% year-over-year in July after declining in June, compared to his double-digit growth in early 2022. By contrast, shipments to the US last month he increased by 24.8%.

Biggest export market

Nevertheless, China and Hong Kong together remain Taiwan’s largest export markets. Shipments totaled more than $16 billion in July, while total exports to the United States were about $7 billion. 4,444 economists said Taiwan’s risk depends on whether Beijing extends restrictions on manufacturing and semiconductors. According to a survey report by DBS Group Holdings, Taiwan’s agricultural exports to China last year accounted for only 0.6% of total exports. “But given the unstable geopolitical situation, risks remain for other major exports to China.”

Another major concern was whether a series of military exercises around Taiwan would have a significant impact on the shipping industry. But on Monday cross-strait traffic showed signs of returning to normal.

Tsai said on Monday that it was difficult to predict how the situation would evolve across the strait. But she said that despite financial markets and consumer confidence taking a hit, the last time Beijing significantly increased pressure on Taiwan in 1995 and 1996, exports were largely unaffected. pointed out that Tsai said Taiwan’s total exports were expected to grow between 8% and 12% in August, absent major disruptions to shipping routes and new trade measures by China.

Taiwan is also grappling with a global economic slowdown, which could weigh on demand for electronics products. JPMorgan Chase Bank NA economist Grace Ng said demand momentum in Taiwan’s tech sector is likely to wane in the second half of the year as demand for working from home eases.

“There are some worrying signs about the overall global demand situation,” Ng wrote in a research note. “The recent loss of momentum in Taiwan’s technology exports, in particular, seems very concerning as the level of technology exports appeared to have peaked in the first quarter.”

Electronics parts exports increased by 15.6% year-on-year, marking the slowest growth rate in 2022. Compared to the previous month, semiconductor exports he fell 1.8%.

Credit/Source : Aljazeera

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