China’s military fireworks exercises around Taiwan threaten to disrupt trade and commercial travel in East Asia, forcing ships to veer off one of the world’s busiest waterways and putting more pressure on already strained chains. world supply.
On Thursday, China began exercises involving the navy, air force and other military forces in the seas and airspace around Taiwan. The exercises – in unprecedented numbers – are a direct show of force in response to the visit of the Speaker of the House [dos Representantes] from the US, Nancy Pelosi, to the self-governing island, which Beijing has repeatedly warned against.
China’s military exercises around Taiwan
The Chinese Defense Ministry on Tuesday released a map of six zones around the island, where it said it would conduct air and sea exercises, as well as long-range live fire exercises that will last until Sunday. Ships and planes were warned to stay clear of areas during exercises.
Taiwan said the military exercises amounted to a “sea and air blockade” and that they “violated Taiwan’s territorial waters and its contiguous zone”.
They also threaten to disrupt trade flows on one of the world’s busiest shipping lanes.
The Taiwan Strait, an artery some 180 kilometers wide that separates the island of Taiwan from mainland Asia, is a key trade route for ships transporting goods between major Northeast Asian economies such as China, Japan. and South Korea, and the rest of the world.
London-based navigation consultancy VesselsValue said there are currently 256 container ships and others in Taiwan’s territorial waters, with an estimated 60 more arriving between Thursday and Sunday, when the exercises will be carried out.
“There is potential for substantial disruption to trade in the region,” said Peter Williams, a trade flows analyst at VesselsValue.
Closing trade routes around Taiwan, even temporarily, “raises concerns about whether China can successfully do so again, and what this could mean not only for future trade, economic and travel patterns, but also potentially defense and security scenarios,” said Nick Marro, lead analyst for global trade at the Economist Intelligence Unit.
It is not yet clear what the long-term impact will be, but shipping companies expect delays due to rerouting, potential lost sales and higher costs for workers who will work longer hours.
Global supply chains have already been shaken by the pandemic and the war in Ukraine, which have disrupted the flow of goods and led to rising inflation in many parts of the world.
Any conflict in Taiwan, which dominates the semiconductor industry, could exacerbate the global shortage of computer chips, which are vital components of virtually all modern electronics.
Taiwan has seven major ports. The Port of Kaohsiung, located on the southwest coast, is the largest port in Taiwan and the 15th largest in the world, according to the World Navigation Council.
Taiwan’s Maritime and Ports Office issued three warnings on Wednesday, urging ships to use alternative routes to ports in the cities of Keelung, Taipei, Kaohsiung and others.
Taiwan redirects international flights
Taiwan also redirected 18 international flight routes, following negotiations with Japan and the Philippines. Approximately 300 flights would be affected as a result of the rerouting, Taiwan’s Transport Minister Wang Kwo-tsai said on Wednesday.
“The repercussions are not over yet, as they are just beginning,” said Clifford Bennett, chief economist at ACY Securities, an Australian brokerage.
How China’s exercises are affecting international flights
“Much worse than that will be any economic delay in Taiwan-China relations as a result of Pelosi’s visit,” he said.
China has already hit Taiwan with some trade restrictions since Wednesday, including the suspension of some fruit and fish imported from Taiwan, and exports of natural sand to the island.
The entire event could “continue to reverberate, causing further damage for months, or even years, to both Taiwanese and US relations with mainland China,” Bennett concluded.