China’s military maneuvers on Thursday around busy trade routes around Taiwan threaten to disrupt global supply chains, already compromised by the Covid pandemic and the war in Ukraine.
These exercises around the island, the most important in China’s history, are a response to the visit made to Taiwan on Tuesday and Wednesday by the Speaker of the United States House of Representatives, Nancy Pelosi.
The maneuvers touch points of trade routes among the busiest on the planet and of crucial importance, since they connect East Asian semiconductor and electronic equipment factories with the world and are also used to transport natural gas.
Intended to simulate a “blockade” of Taiwan, they include “live ammunition and long-range artillery fire,” missiles that are to fly over the island for the first time, according to various state media.
As a security measure, China’s Maritime Safety Administration has “prohibited” ships from entering affected areas.
In the first seven months of the year, almost half of the world’s container ships passed through the Taiwan Strait, according to data compiled by Bloomberg.
“Since a large part of the world’s container fleet passes through this waterway, diversion (caused by maneuvering) will inevitably lead to disruptions in global supply chains,” said James Char, a research associate in the School of International Studies. Internationals S. Rajaratnam from Singapore.
– Flights canceled –
Supply chains had already been severely affected by the pandemic and the war in Ukraine.
“The closure of these transport routes – even temporarily – has consequences not only for Taiwan, but also for trade flows linked to Japan and South Korea,” says Nick Marro, an analyst at the Economist Intelligence Unit.
The same goes for air routes: in the past two days, more than 400 flights have been canceled at major airports in Fujian, the closest Chinese province to Taiwan. Taiwanese authorities have warned that the drills will disrupt 18 international air routes passing through the area.
On the Taiwan Stock Exchange, the Taiex index dedicated to air and maritime transport companies fell 1.05% on Wednesday after having lost 4.6% of its value since the beginning of the week.
Several shipping companies contacted by AFP said they were waiting to see the impact of the exercises before changing their routes, while others do not foresee any changes.
“We do not expect any impact during (this) period and we have no plans to divert our ships,” said Bonnie Huang, a China spokeswoman for Maersk, one of the world’s largest shipping companies.
– ‘Lock the island’ –
During the previous Taiwan Strait crisis in the 1990s, Chinese military exercises, including missile launches in the island’s waters, lasted for months.
This time, the Chinese want to “show their resolve in a way that goes beyond what they did in 1996,” says Bonnie Glasser, director of the Asia program at the American German Marshall Fund.
To its show of military force, China could add cyberattacks, and has already begun to apply trade sanctions.
But with the Asian powerhouse’s economy already suffering from health restrictions in place since 2020, Beijing is unlikely to go for a major trade lockdown, analysts say.
“Closing all traffic within the strait for a long period of time would hurt the Chinese economy,” observes James Char.
“Given the dramatic expansion of its air and sea capabilities in recent years, China most likely has the ability to impose an air and sea blockade on Taiwan,” said Thomas Shugart, a military innovation expert at the Center for the New Security. American, in Washington.
For Shugart, Beijing’s final decision depends on the political and economic risks that the government is willing to take to do so.