Beijing’s new trade restrictions on Taiwan after Pelosi’s visit are a drop in the ocean

The new trade blocks against Taiwan are more political than economic.

Despite warnings from Beijing, Beijing took action against Taiwan. Natural sands were exported to Taiwan, as well as frozen fish, sweets, and biscuits.

Taiwan is a self-ruled democracy that Beijing considers part of its territory.

U.S. House Speaker Nancy Pelosi with Taiwan’s President Tsai Ing-wen, after arriving at the president’s office on August 3, 2022, in Taipei, Taiwan. Pelosi’s visit infuriated China, which regards the self-ruled island as its own and responded with test launches of ballistic missiles over Taipei for the first time, as well as ditching some lines of dialogue with Washington.

Nuclear reactor and boilers were among the electrical machinery, electronic and technological parts that Taiwan imported from mainland China in 2011.

The majority of Taiwan's exports to China were similar to electrical machinery and technological parts.

The amount of trade in areas that Beijing has targeted is relatively small.

Natural sand exports to Taiwan were a drop against the figures. According to the Taiwanese trade bureau, they amounted to about $3.5 million.

Natural sand from Australia and Vietnam was the biggest supplier of natural sand to Taiwan last year. 70% of Taiwan's purchases are made up of the raw material supplied by them.

The targeted trade of oranges was worth $10 million last year, but mainland China was Taiwan's largest buyer.

The agricultural products now in the headlines are only a fraction of Taiwan’s export basket. And so the headline impact on Taiwan won’t really be noticeable.

Last year, Taiwan's exports of bread, pastry, cakes and biscuits to mainland China were worth more than 50 million dollars.

The suspension of horse mackerel and largehead hairtail in Beijing was worth over $3 million in 2021.

The Chinese government has a long-standing strategy of economic reprisal against Taiwan. Nick Marro, global trade lead analyst at the Economist Intelligence Unit, said that the decision to target relatively low- value trade items reflects the limits of the economic pressure toolbox.

The restrictions on Chinese visitors to Taiwan have been in place for a few years and carry more economic significance. The headline impact on Taiwan won't make a difference.

Beijing has been suspending trade with Taiwan for a long time.

Tensions between the two have resulted in the banning of mainland travelers to Taiwan in the past.

Last year, China stopped imports of Taiwanese pineapples due to the fact that they were carrying harmful creatures. China was Taiwan's largest pineapple buyer.

The information and communications technology sector in which the two trading partners have the most trade is not the focus of the recent Chinese trade restrictions, according to Natixis.

The bank said that mainland China will continue to import from Taiwan as long as it needs the goods, similar to what it has done in other trade conflicts.

In the China-Australia trade dispute that began in 2020, China restricted the purchase of some goods but continued to purchase iron Ore from Australia, a key ingredient for China's steel production and the bedrock of the countries' trade.

There could be other repercussions from the Pelosi visit. Increased military drills in the Taiwan Strait may cause delays.

The shutting down of these transport routes has consequences not only for Taiwan, but also for Japan and South Korea.

It is a story for Taiwan and China as well as for their neighbors.

Any rerouting of shipping lines to avoid military exercises may be problematic for the trading world as it enters peak shipping season, according to analysis by Container xChange.

Over the course of the Pandemic, supply chains have become more resilient.

A few days to ship voyages will be added by any rerouting of vessels away from the Taiwan Strait.